The Rt. Hon. Sir John Major KG CH

Tag: Economy

  • Mr Major’s Conservative Central Council Speech – 30 March 1996

    Below is the text of Mr Major’s speech made to Conservative Central Council on Saturday 30th March 1996.

    PRIME MINISTER:

    Within a year or so we’ll fight a general election.

    At stake will be not just who forms the government, but what that means.

    In the Tory years, the quality of life has changed immeasurably for the better and now it’s moving up again.

    We are poised for a step change in prosperity.

    The world knows it and says it. The Opposition knows it – but denies it. Because Conservative success means Labour failure. But I can live with that. And so, I think, can you.

    We must tell people about the opportunities ahead.

    Tell them what’s at risk.

    Never mind the opinion polls. Bucking the trend is the story of my life.

    So, it’s time to stop underselling what we’ve done, what we stand for, and time to start selling what we care about and what we’re going to do.

    Mr Chairman, as you know we have been holding hundreds of meetings up and down the country. It has been the biggest consultation exercise the party has ever had.

    It’s shown our gut instincts haven’t changed: we still back the traditional values that brought us into the Party in the first place.

    But we’ve always been able to move with the times.

    So, we’ve been turning our beliefs into practical political action.

    Enterprise

    Now to business. First, some facts.

    We’re enjoying the longest period of low inflation for nearly 50 years.

    The lowest mortgage rates for 30 years.

    Fewer days lost to strikes since records began.

    More of our people in jobs, more investment.

    And the lowest tax burden of any major European economy.

    And yet it is fact, fact, fact. When – in all the long history of our country – could any Government have said as much?

    This is the result of a government getting the important things right. It didn’t happen by magic. That’s the prize tough decisions have won for us.

    Britain can be proud of what Britain is achieving. But we must go on. We must build on what we’ve done and make Britain the unrivalled Enterprise Centre of Europe.

    There can be no future for high taxing, high spending governments. That’s a nightmare from the past. A socialist vision – let it go. We don’t want it back.

    Our aim is to get taxes down.

    And not only income tax. I want to cut and, when possible, abolish inheritance tax. Labour wince when I say that.

    But I can’t defend a tax that stops children inheriting what their parents have worked to earn and save.

    It’s a tax on the family. And helping the family is what we’re about.

    So I don’t want our children to see the fruits of their parent’s life time work disappear forever into the Government’s coffers. I just believe it’s wrong.

    Taxes should come from a growing economy. And a growing economy comes from competition – the drive of the market.

    Competition works.

    The state once ran industries into the ground, often. But look at them now.

    Telephones – now amongst the cheapest in Europe.

    Electricity – where prices have fallen and are set to fall further.

    Gas – where prices have fallen by 20% and are set to fall further still.

    This hasn’t happened in the water industry – yet. But it will. And I’ll tell you why.

    Because we’re going to introduce competition into the water industry. It’s worked wonders in gas, phones and electricity. And it should do the same for water.

    How Labour hate all this. They know none of it would have happened if they’d been in power. They mouth the words of the market – but they don’t believe a syllable.

    They loathe the thought of the private ownership of British Rail.

    They can’t stomach the fact that enterprise and competition will improve the service and bring down the price.

    They’re positively mortified that new private investment will build in a new railway system for a new millennium.

    They’d rather defend a public sector monopoly that’s become a music hall joke.

    Perhaps you think I’m being unfair.

    But am I?

    These are the same people who said that privatising British Airways would turn it into the pantomime horse of capitalism.

    Well, some pantomime. Some horse.

    British Airways is now one of the most successful airlines in the world.

    Don’t ask me. Just ask the champagne socialists. Would they rather travel on British Airways or good old state run Aeroflot?

    Privatisation has given millions of people the chance to own shares. There are now more shareholders than trade unionists. And there are many Trade Unionists who are shareholders.

    Take the rail union, RMT.

    They own shares in privatised companies. They want the profits of the market. But that doesn’t stop them attacking the privatisation of British Rail.

    Don’t do as I do. Do as I say. That’s the theme that runs right through the Labour movement.

    Once Labour promised common ownership. Now they call it stakeholding. But – as usual – it’s common deception.

    We mean ownership by individuals for themselves and their families. They don’t.

    We want to make the capital owning democracy a living reality. They don’t.

    They want people’s wealth. We want wealth for the people.

    More ownership.

    More people owning a share of the company they work for.

    Let’s be clear. I’m not just talking about directors or managers on the executive floor. I’m talking about staff on the factory floor and at the supermarket checkout. They can be owners too.

    In the last Budget, Ken Clarke made it even more attractive for employees to own shares in their company. Now it’s up to industry to spread employee share ownership.

    Here’s a challenge for them. Let’s have the majority of workers in Britain’s large companies holding shares in those companies by the end of this decade.

    That will be an important part of making Britain an enterprise culture to its core.

    We must make change work for us. That’s what enterprise is about.

    Twenty years ago, pocket calculators were an oddity. Portable phones were hardly heard of. The information superhighway was somewhere off the M6. A lap top was something you sat on, not worked on.

    We’re having to learn a whole new vocabulary.

    New technology is going to affect all our lives.

    We’ll be able to work or shop from home, to send messages to anyone, anywhere, any time. These opportunities are on our doorstep, but for many people it’s still difficult to imagine. We need to open the Nation’s mind to the opportunities ahead.

    So we’re getting together with industry on a project for the millennium. To let as many people as possible try out computers – in schools, libraries and shops in the high street. These skills will equip us for the new century. They offer tremendous and exciting opportunities. We need to know about them.

    We’re not just creating jobs and prosperity, this year and next year. We’re out to build the enterprise and skills to secure jobs and prosperity that lasts.

    Opportunity

    I tell you who does love these new things: children.

    Tomorrow’s their world. But they won’t stand a chance of making the most of it unless we deliver world class education.

    Education is the door to opportunity.

    Every parent wants the best for their children. Especially parents in the Shadow Cabinet.

    There’s nothing wrong with that. It’s every parent’s right.

    But there’s the little matter of other people’s children too.

    We believe it’s right to offer them the best as well.

    We do. Labour don’t. And that’s the difference.

    Labour can’t decide its policy on education.

    For GM schools, against GM schools: for selection, against selection.

    Every time they settle the line, some Labour frontbencher breaks it.

    While they divide, we deliver.

    Under the Conservatives, education has changed a lot.

    Year by year, we’ve been clawing back from the worst excesses of the comprehensive system. Choice is expanding. Standards are rising.

    The National Curriculum, tests, performance tables, regular inspection, a whole range of schools.

    All this is new.

    But there’s more to be done.

    Gillian Shephard has put standards and discipline firmly back on the agenda – and she’ll have more to say about them soon.

    Teachers deserve our support on this and I promise you, they’ll get it.

    Every parent is concerned about those crucial years at the start of schooling. So we’re turning nursery education over time from a nice dream to a reality for every four year old whose parents want it.

    But that’s not all. We have ambitions to ensure that by the time children are seven, they can master the basic skills that underpin all learning.

    Teaching children basic skills is just the bare minimum. Children need to use today’s technology with confidence. They can access a huge library of information in seconds. The computer can be their personal tutor to help them learn arithmetic or a foreign language.

    So we’re working on training teachers and staff, putting the latest kit in our schools and linking schools up to the new world of information.

    Britain already has a head start.

    We’re now developing substantial and practical plans to build on that progress. To engage industry and private finance in our ambitions to transform technology in schools for the next century. Giving our nation’s children the skills they’ll need for our nation’s future.

    Not just pipe dreams – we’re delivering practical action.

    The education system we’re building reflects a simple truth every child is different. And every child is special.

    Let me turn to a controversial matter.

    I believe choice and selection does have a place in education. And so do you.

    Not the old 11 plus – that’s gone – but more selection in schools. And if parents want them, that could mean more schools like the old grammar schools.

    It’s time to say goodbye to the political correctness of the levellers-down. We’re going to give all schools more control over their own affairs.

    Earlier this week, Gillian Shephard set out our aim: to give all schools as much power as possible to take their decisions about as much as possible of their budgets.

    More of the money delivered straight into the hands of teachers and governors, bypassing bureaucracy.

    We want to free our schools from the straitjacket of uniformity.

    Freedom to demand the best from our brightest pupils.

    Freedom to help the weaker pupil.

    Freedom to give opportunity to every pupil.

    Conservatism instinctively knows that freedom works.

    Mr Chairman, there’s another point: there’s no place for intellectual snobbery in the classroom.

    Practical skills must be respected.

    We’re planning a single clear national framework of qualifications with common certificates that all children can aim for. And with that will come new opportunities to combine academic work with learning at work. New modem apprenticeships are a success. We intend to open that opportunity to more and more of our young people.

    Welfare

    Mr. Chairman, fate does not equip everyone with the same gifts or the same good fortune. We are a generous hearted nation. We’re more than willing to help those who genuinely need it.

    I believe we must encourage the successful so that we can protect those who need help.

    To do that, we must build a welfare system we can afford: one that reflects Conservative values – self-sufficiency. Responsibility. Independence.

    That means doing three things.

    First, cracking down on fraud and abuse. On Monday, Peter Lilley will launch another step in our campaign – an area by area focus to put the spotlight on benefit cheats. We’re going to protect the taxpayer and close down the welfare rackets.

    Second, we’re going to direct money to those who genuinely need it to help them back on their feet.

    People out of work and looking for a job deserve help. They’ll get it.

    The long term unemployed need special help. They too will get it. We’re piloting schemes to help get them back to work. But after that, if they refuse to accept work on offer, their benefit will be reduced. I believe that’s fair and right.

    Third, we must help people secure independence for themselves and their families.

    More people are living longer. We need to help families support relatives who can no longer be cared for at home. Our Party feels strongly about this.

    So, next month we’ll set out our proposals to deal with this challenge – to help protect the family home and lifetime’s savings.

    Our starting point is the classic Conservative theme of partnership.

    Very simply, if people take out insurance to help pay for their care, the state will reward their contribution by safeguarding more of their assets when that insurance runs out.

    And we’re looking at ideas to help people in the near future, not just in the far distance. There is no perfect solution to this. But our ideas are fresh and far- reaching.

    Responsibility will be rewarded. Prudence will be recognised. And the elderly will have the chance to protect the savings they’ve worked for all their lives.

    Public services

    Mr. Chairman, the usual dismal voices say Britain won’t be able to afford high quality public services in the future. I think that’s nonsense.

    We taxpayers pay for public services. We pay with taxes compulsorily taken from our income. I’ll tell you what I think.

    We taxpayers have a right to expect the best as if we’re paying cash on the nail. In fact, we’ve done better; we’ve paid in advance. And when we deal with the public sector, we shouldn’t be shunted from file to file.

    To make sure they’re not, we’re breaking down the large bureaucracies.

    Wherever possible, less bureaucracy at the centre, more choice at the grassroots.

    In this, we are the polar opposite to Labour.

    They’re wedded to control by anyone except the people. Bureaucracy, not taxpayers. Trade unions, not consumers. Politicians, not people. Labour don’t trust people. Unless they’re people in authority – lots of them – calling the shots.

    I’m not prepared to let public services remain an outcrop of socialist planning, a kind of prescriptive service, oblivious to the needs and wishes of the people who pay for it.

    So, let’s have an end to the faceless institutions, the bureaucratic assault courses, the unanswered telephones, all run from the top down. Instead, services should be run on a human scale. Decisions taken close to those they affect. And that’s what we’re building. The benefits are already clear.

    In self-governing schools – schools run by teachers, governors and parents.

    And in our hospitals – where team work has cut waiting lists. Are our reforms working? Yes – indeed they are.

    One example: since our reforms began, the number of people waiting more than a year for an operation has fallen by 90%. Thousands of people, old and young, are enjoying a better quality of life because they have been treated better and earlier.

    Let no one doubt our commitment to our National Health Service. Our commitment is there – in concrete, bricks and mortar.

    Labour founded the NHS. They’re proud of it. But built it up. Every week, since 1979, we’ve seen a new capital scheme worth a million pounds.

    And we should be proud of that.

    And we should also be proud that, thanks to our reforms, GPs now have greater power and freedom to serve more and more of their patients’ needs.

    We’re going to build on that. We want to give Britain’s 30,000 GPs the freedom to provide, in the communities they serve, the treatments that people need.

    In the summer, we’ll set out some of the next steps down this road – including opportunities for GPs to offer a range of hospital treatments in their surgeries.

    Our aim now is a far reaching one: it is to allow GPs’ practices to become the cottage hospitals of the 21st century. To ensure we offer better health care, closer to people, than any other nation can provide.

    Law and Order

    Mr Chairman, in building Our Nation’s Future we must also take forward our natural Conservative instincts for a society based on law and order.

    For decades rising crime and lawlessness seemed unstoppable.

    There was a culture that tried to excuse crime.

    But crime is caused not by society, by poverty, by circumstances. It’s caused by criminals kicking the door in for personal gain.

    For every crime there is a victim. A victim for whom the fear, loss, outrage and intrusion far outweigh the financial consequences.

    Let me take one illustration of many.

    Burglary.

    I had a flat burgled many years ago. Not much was taken because there wasn’t much to take.

    But it was vandalised.

    I was young. Fit. But I never felt quite the same in that flat again.

    How much worse for people whose family home has been ransacked.

    Whose possessions have been rifled through, whose security and safety shattered – quite apart from financial loss.

    I have no hesitation in seeking tougher punishment for such a crime. And especially for the criminal who burgles again and again – the serial thief.

    Let me tell the Conference: I am absolutely behind Michael Howard’s proposals to secure longer sentences for those who commit crimes like this time and again. And we will introduce laws to that effect.

    I believe it’s a fair punishment. Let me tell you why. I believe it will deter.

    But more important still, if we know somebody is likely to go out and commit more crimes, we owe it to the public to put them out of harm’s way.

    That’s the surest way to continue cutting the crime rate. And that’s exactly what we’ll do.

    But we need to put equal emphasis on order – or perhaps civility. On a society where the decent common courtesies are expected and observed.

    We should not have to tolerate loutish behaviour. People’s rights to quiet and privacy should be respected. Simple obvious rules – on the roads, in the parks, on public transport – should be followed.

    To some, these things may seem unimportant compared with major crimes. But they cause many people distress in their daily lives.

    So, as we build and extend the role of schemes like neighbourhood watch, we’ll put order as well as law back where it belongs – in our communities.

    So when people say to me, is it cost effective to have policemen on the beat, to have special constables patrolling our neighbourhoods, my answer is unequivocally yes. That’s how we’ll give people reassurance. That’s how we’ll nip crime in the bud.

    That’s what you want. That’s what we’ll deliver.

    The Nation

    Mr Chairman, amidst a sea of change, a united nation brings security. We need that security now more than ever.

    Our nation’s history is one of change. But sensible, careful change, never change for change’s sake.

    Scotland and England united are the cement that binds the United Kingdom together. Scotland is vital to the Union. The Union is vital to Scotland. And the whole United Kingdom would suffer if that Union were damaged.

    For me, this issue dwarfs the daily political debates.

    Some cynics ask: why do I care about the Union? After all, they say, why should I care about devolution? With Scotland out of the Union, there’s more likely to be entrenched Conservative majorities at Westminster for ever and a day.

    That may be true, but they’re forgetting the overall interest of the United Kingdom.

    I reject the narrow selfishness of a little England or a little Scotland. I believe that Scotland and England – and Wales and Northern Ireland – have all benefited from the historic constitutional settlement which created our United Kingdom. A unity Labour plans put at risk.

    So Scotland faces a choice.

    It can share in that success – lead it even – and be at the heart of the Enterprise Centre of Europe.

    Or it can cut itself off. Saddle itself with higher taxes. Destroy jobs with the Social Chapter and minimum wage – carrots held out by Labour that would become sticks across industries’ backs.

    And it would watch, helplessly, as investors get out their pocket calculators and their airflight timetables and go away.

    The scheme for a tax-raising Scottish parliament is separatism by instalments. The Scottish Nationalists have already acclaimed it as the fast track to independence and they’re right.

    Could there honourably be devolution without fewer Scottish members at Westminster? No, there could not. Without such a cut, Scotland would become the most over-represented part of the United Kingdom. There’s a word for that – an old word: gerrymandering.

    And could it possibly be right that Scottish MPs at Westminster should be able to vote on purely English matters, while English MPs would have no say over matters devolved to a Scottish Parliament?

    My answer to that is simple.

    ‘I don’t believe that we could for ever maintain a situation in which Scots and Welsh Members vote on, say, English education and pay beds while the English cannot vote on Scottish and Welsh equivalents’. You won’t ever guess who said that. Robin Cook. That’s what Robin Cook thinks. The first good sense he’s ever spoken.

    Then there’s Labour’s Tartan Tax. Why should people in Scotland pay more tax than in England? What does the Labour Party have against the Scots?

    Labour have the cheek to suggest that they might even cut taxes. What an untruth to set before the nation! For how long do they think English MPs will vote 30% more money to Scotland so that a Scottish Assembly can use it to cut taxes north of Berwick? The proposition is ludicrous.

    Mr Chairman, my commitment to the Union is total. It’s not just a political commitment. It’s emotional as well. I admit it. And I’m not ashamed of that.

    I feel, with every fibre of my being, that the result of this folly would be the dismemberment of the United Kingdom.

    That would be the burial of our history, the interment of a great good. It would deprive future generations of a sane, flexible, tolerant system. It would weaken England, weaken Scotland and would begin the destruction of a kingdom whose very reason for being is to be united.

    People who support a tax-raising Scottish parliament are sowing dragon’s teeth. These proposals will lead – implacably and irrevocably – to the break-up of the United Kingdom. That is not speculation, it is fact. I do not say “may” or “might”; I say “will”.

    Scotland and the Scots are central to the British identity. We are that close.

    Let us work and live together, as one nation, as we have been for centuries. If we do anything else, we shall grow smaller – all of us – separately.

    PERORATION

    Mr Chairman, I’ve set out some of our plans. There is much more yet to come.

    Ahead of our United Kingdom lies tremendous – and exciting – opportunities.

    The opportunity for more people to realise their ambitions and their hopes and their dreams.

    A better life for their family. Their own home. Their own savings. A secure job. A good education for their children.

    I became a Conservative because I was brought up to be proud of our country. Our traditions, our heritage.

    I still am.

    And so are the vast majority of the British people.

    Our hopes are their hopes.

    That’s why we’ve trounced Labour four times in a row.

    And that’s why we’ll do it again.

  • PMQT – 5 March 1996

    Below is the text of Prime Minister’s Question Time from 5th March 1996. Michael Heseltine responded on behalf of John Major.

    PRIME MINISTER:

     

    Ministerial Visits

    Q1. Mr. Wilkinson: To ask the Prime Minister when he next intends to visit the Ruislip-Northwood parliamentary constituency.

    The Deputy Prime Minister (Mr. Michael Heseltine): I have been asked to reply.

    My right hon. Friend has no plans to do so.

    Mr. Wilkinson: Before my right hon. Friend fixes a date, can he reassure my constituents in Ruislip-Northwood about the grave consequences of the European Court of Justice’s retroactive decision today to demand compensation of the British taxpayer for the loss of Spanish fishermen’s rights? Will my right hon. Friend the Deputy Prime Minister endorse the comments of the Minister of State, Ministry of Agriculture, Fisheries and Food, the hon. Member for Banbury (Mr. Baldry), that the quota hoppers must go? Can my right hon. Friend confirm that the Government will raise the common fisheries policy at the forthcoming intergovernmental conference?

    The Deputy Prime Minister: I am grateful to my hon. Friend and to my hon. Friend the Member for St. Ives (Mr. Harris), who have taken the matter extremely seriously. We obviously regret the European Court’s decision and we shall certainly take it up in the context of the intergovernmental conference. We believe that there have to be changes.

     

    Engagements

    Q2. Mr. Kirkwood: To ask the Prime Minister if he will list his official engagements for Tuesday 5 March.

    The Deputy Prime Minister: I have been asked to reply.

    My right hon. Friend the Prime Minister is carrying out official engagements in the far east.

    Mr. Kirkwood: Let me return to the question of the European Court’s decision; does the Deputy Prime Minister agree that the concept of the common fisheries policy is based on relative stability, with the allocation of quotas within member states according to historic fishing rights? Does the right hon. Gentleman further agree that the European Court’s decision is most unhelpful– the most recent in a series of unhelpful decisions concerning the common fisheries policy? What concrete proposals will Ministers take to the upcoming intergovernmental conference, to stop continuing back-door access to fishing stocks that are so vital to our coastal communities?

    The Deputy Prime Minister: That comes rich from the hon. Gentleman, whose party is committed to giving up the British veto in all circumstances. That is a classic example of the Liberals trying to have it all ways in all circumstances.

     

    Q3. Dr. Michael Clark: To ask the Prime Minister if he will list his official engagements for Tuesday 5 March.

    The Deputy Prime Minister: I have been asked to reply.

    I refer my hon. Friend to the reply that I gave some moments ago.

    Dr. Clark: Has my right hon. Friend noticed, when assessing Government policy, that when it is eventually time to put votes in ballot boxes, electorates reject Labour policies and choose Conservative ones, as they have in Australia and Spain? Is this not a sign of what will happen here? After all, these are recent results, and the parties which were beaten were not socialist but new Labour.

    The Deputy Prime Minister: I am grateful to my hon. Friend for his question. I could not help remembering that, not long ago, the Leader of the Opposition said that he was a fully paid-up member of the Paul Keating fan club. Unfortunately, there are not many others left in that club. The fact of the matter is that, when people have to choose between no Labour and new Labour, they choose no Labour. No leading western European country is left with a Labour Government. I cannot believe for one minute that the United Kingdom will embrace what everybody else has rejected.

    Mr. Prescott: Why is it that in Tory Britain in 1996, 1,000 families every week have their homes repossessed, 120,000 families are homeless, and 1,700,000 families are trapped in negative equity? On that miserable record, is not my right hon. Friend the Leader of the Opposition correct in identifying the Conservatives as the party of home wreckers?

    The Deputy Prime Minister: Nobody would ever accuse the right hon. Member for Kingston upon Hull, East (Mr. Prescott) of being new Labour. He is one of the old lags of the business, and therefore, of course, it is not surprising that his statistics are so carefully selected. The fact is that the number of households that face negative equity is down by 26 per cent. since 1992, and the number of people with mortgage arrears has fallen by 16 per cent. in the past year alone.

    I noticed that the Leader of the Opposition made a speech today about the need for special help for those with negative equity–that may seem to Opposition Members a very interesting and ingenious scheme. I sent out to inquire whether mortgages are available from the building society movement at more than 100 per cent. of the purchase value of homes on the market. The Abbey National, Cheltenham and Gloucester, Alliance and Leicester and the Halifax all have in existence schemes similar to that which the Leader of the Labour party says that his Government would introduce if his party were ever elected. They are already there. Building societies are doing it. The market has spoken. Tory Government works.

    Mr. Prescott rose–[Interruption.]

    Madam Speaker: Order.

    Mr. Prescott: How can the right hon. Gentleman be so complacent in the face of the sheer misery created by the Government’s policies? If the Government are so proud of their housing record, why not put it to the test by setting the date for the by-election in South-East Staffordshire, and let the people decide?

    The Deputy Prime Minister: This is the Labour party which fought to stop council tenants getting anywhere near owning their own homes. This is the Labour party which has not realised that banks and building societies have approved 13 per cent. more loans in January than they did last June. The Labour party is out of date. The housing market is showing signs of recovery.

    Mr. John Marshall rose–[Interruption.]

    Madam Speaker: Order. I call Mr. Marshall.

    Mr. Marshall: I ask my right hon. Friend to condemn the Hamas guerillas, who have killed 68 Israelis in recent days. Will he offer our sympathy to the relatives of the victims and to the Israeli people as they battle with this attack upon them and their democracy? Will he convey our understanding to the Israeli Government as they react to this attack upon themselves and upon the peace process itself?

    The Deputy Prime Minister: I am sure that the House will be grateful to my hon. Friend for raising the appalling situation in Israel. I am sure also that the House shares my feelings of horror and anger at the renewed terrorist outrages, which have killed more than 30 people over the past two days in Jerusalem and Tel Aviv.

    I shall make two points. First, it is the duty of the international community to support Israel and the Palestinian Authority in their efforts to keep the peace process on track and to encourage them in their efforts to curb terrorism. We particularly urge President Arafat to do his upmost to step up those efforts. That is a message that we have repeated to him unequivocally since the beginning of this tragic train of events nine days ago.

    Secondly, I make it clear that it is illegal for anyone in this country to support terrorist attacks abroad. We are carefully monitoring the situation of Hamas activists in the United Kingdom. We shall investigate vigorously any evidence of such criminal acts, which will not be tolerated.

     

    Q4. Mr. Sheerman: To ask the Prime Minister if he will list his official engagements for Tuesday 5 March.

    The Deputy Prime Minister: I have been asked to reply.

    I refer the hon. Member to the answer I gave some moments ago.

    Mr. Sheerman: Can the Deputy Prime Minister confirm reports that he has changed his mind and that he now supports a referendum on the single European currency? If he has, is he aware that the Chancellor of the Exchequer believes that anyone of that view is slightly up the creek?

    The Deputy Prime Minister: The hon. Gentleman will be fully aware of the Government’s position, which my right hon. Friend the Prime Minister has spelt out extremely clearly. It is a position to which my right hon. and learned Friend the Chancellor of the Exchequer fully subscribes.

    Mr. Budgen: If the Government’s proposals to the intergovernmental conference were accepted by the other members of the European Union, would we have any protection against judgements, such as the recent one in respect of Spanish fishermen?

    The Deputy Prime Minister: I do not know whether my hon. Friend heard the reply that I gave some moments ago. I made it clear that we would raise today’s judgement in the intergovernmental conference. We believe that there is need for change, and we intend to press that. As my hon. Friend, and the House generally, will be aware, the Government intend shortly to publish a White Paper on the Government’s policy towards the IGC, which the House will be able to consider carefully.

     

    Q5. Mr. Battle: To ask the Prime Minister if he will list his official engagements for Tuesday 5 March.

    The Deputy Prime Minister: I have been asked to reply.

    I refer the hon. Member to the answer I gave some moments ago.

    Mr. Battle: As a thousand families suffer repossession of their homes every week, by deliberately reducing the income support system for home owners, are not the Government’s policies shamelessly ensuring that in our society, after 17 years of Tory rule, if someone loses his job, he will lose his home?

    The Deputy Prime Minister: The hon. Gentleman cannot square that with the facts that I gave the House recently, which show that the number of mortgage arrears has fallen by 16 per cent. and that the housing market is beginning to recover. He will know, of course, that unemployment has been falling for the past 29 months.

     

    Q6. Sir John Hannam: To ask the Prime Minister if he will list his official engagements for Tuesday 5 March.

    The Deputy Prime Minister: I have been asked to reply.

    I refer my hon. Friend to the answer I gave some moments ago.

    Sir John Hannam: Has my right hon. Friend seen the recent Lloyds bank business survey report, which shows that businesses in Devon, Cornwall and Somerset have achieved the highest increase in export orders of all regions in the country, and increased investment and profitability? Will he accept the congratulations of all those from the south-west on those results? Would he like to conjecture on what would happen to such achievements if we ever had a Labour Government?

    The Deputy Prime Minister: I am extremely grateful to my hon. Friend, who has commented on what is extremely good news for the west country. As for conjecture about what would happen in the unfortunate event of this country electing a Labour Government, we can see, from the facts of what has happened in Europe, what would be likely to happen here. In Spain, nearly one in four people are unemployed. In France, under socialism, nearly one in eight were unemployed, whereas, in this country, the figure is one in 12 and has been falling for 29 months.

    Perhaps the other judgement is that of the international investors. Spain achieved 7 per cent. of inward investment into the European Union and France 18 per cent. whereas the UK attracted 30 per cent., proving beyond peradventure that, under this Government, the UK is the enterprise centre of Europe.

     

    Q7. Mr. Mullin: To ask the Prime Minister if he will list his official engagements for Tuesday 5 March.

    The Deputy Prime Minister: I have been asked to reply.

    I refer the hon. Member to the answer I gave some moments ago.

    Mr. Mullin: On reflection, does the Deputy Prime Minister regret his refusal to sign a public interest immunity certificate, given that we now know that the Attorney-General was right all along?

    The Deputy Prime Minister: The hon. Gentleman has conveniently forgotten that the Attorney-General advised me about the form of the PII certificate that I signed.

    Mr. Garnier: Does my right hon. Friend agree, and will he confirm what he said a moment ago, that the UK is the enterprise centre of Europe? Is it not right that the Prime Minister should be in the far east encouraging business men there to invest in this country, and is it not surprising that they invest in this country, given the burdens of the non-labour wage costs that the Europeans must deal with?

    The Deputy Prime Minister: It is one of the most satisfactory aspects of the many satisfactory aspects of our economic performance that we are attracting inward investment, which has created the jobs leading to enhanced exports–already at record levels. It has come to this country because the Government’s policies have made it the most attractive place to invest. One of the reasons for that is that we have avoided the social chapter, which all the Opposition parties are committed to introducing.

  • Mr Major’s Speech in Hong Kong – 4 March 1996

    Below is the text of Mr Major’s speech given in Hong Kong at the British Chamber of Commerce and the Hong Kong General Chamber of Commerce on Monday 4th March 1996.

    PRIME MINISTER:

    Mr Chairman, Mr Governor, Ladies and Gentlemen. I am delighted to have the opportunity of being back here in Hong Kong. It is now just over a quarter of a century since I first came here, working in that occasion for the Chartered Bank. I had arrived to carry out an inspection or two and you can recall how popular I might have been.

    Hong Kong of course has changed very greatly since my first visit. In fact, to be frank, it has changed quite a bit in the four and a half years since I was last here. But not I think changed for the worst. The doomsters, the gloomsters, always with us in this part of the world and elsewhere, have been proved wrong again and again. There have been arguments certainly, arguments about principles certainly, arguments about things that mattered, of course, arguments but no disasters.

    Later on I shall have some announcements to make about the future. But before I turn to those, let me just spend a moment or two on what has actually happened. Hong Kong has become the world’s eighth largest trading economy, up from 10th four years ago; your foreign exchange reserves have risen by 60 percent, from 29 billion US dollars to around 52 billion, they are now the second highest per head anywhere in the world; your gross domestic product has gone up by a quarter, it now corresponds to over one-fifth of China’s GDP, a truly astonishing achievement for a territory with a population of 6 million at a time of uncertainty; your spending on public services has gone up by 75 percent on education, by 99 percent on health, but because you have grown overall and restrained expenditure elsewhere, expenditure as a proportion of your income has remained about 16 percent of GDP – in European terms an almost unimaginable statistic; taxes meanwhile have been cut, cut, cut, cut and cut again, not as far enough clearly as some of you would have wished, but I can tell you I would happily defend a 15 percent rate of income tax back home. Your top rate of salaries tax, that infamous 15 percent, now has to be paid by only 2 percent of the working population, though I do appreciate that many of that 2 percent will be present here on this occasion.

    And when you just have a look at some of those indications of what has happened in Hong Kong, it is no wonder it has become an even more international city. Over 200 more regional headquarters than in 1991, as well, as 11,000 more Britons, 11,000 more Americans and almost 9,000 more Japanese.

    There have been other visible signs of progress as well. The last time I came here I had just returned from Peking where I signed the Memorandum of Understanding for the airport. There was no West Kowloon reclamation, no new airport, no Tsing Ma Bridge – I saw both of them just yesterday; no convention centre extension, a great building, a building which will quite literally become one of the best known buildings anywhere in the world; no British Consulate General which is going to be, by some measure, our biggest Consular post in the world, a symbol of Britain’s commitment to the future of Hong Kong.

    So Hong Kong, as so often in its history, has defied the pessimistic smart Alecs. Indeed it has defied the odds. You have shown that it is possible to prosper while standing up vigorously for your way of life, the way of life, the freedoms and values that generate the prosperity that you can see right across Hong Kong.

    People often ask: what can we learn from Hong Kong? The best answer is go to Hong Kong and see for yourself, see the energy, the dynamism, the sheer guts in business enterprise, the determination to make the best of life however unpromising it may sometimes look, to think positive and to act positive. And those are some of the reasons why Hong Kong packs such a big punch in Asia and right around the world.

    Last week I attended a meeting of European and Asian Heads of Government in Bangkok, the first meeting of its kind, an initiative long overdue and one I welcomed with enthusiasm. There are very few foreign policy questions that matter more today than the relationship between West and East, between Europe and Asia. Hong Kong is at the heart of the economic relationship between the two. Annual two-way trade is worth 40 billion US dollars. Literally thousands of European firms are based here, doing business not only in Hong Kong but in the whole region. And what a remarkable region it is, north to China and Japan, south to Australia, West as far as India.

    Europe has no better market and no better business base in the whole of this vast and booming region. And that is why Hong Kong needs to be involved in any economic follow-up to the Heads of Government meeting in Bangkok last week. Hong Kong of course is already a member of APEC and the World Trade Organisation.

    And Britain occupies a special position in this relationship, and I am not talking here just about the historical link, vital though that is, I am talking about something a good deal broader than that. Hong Kong is the Europeans’ first choice as a base to do business with Asia. Across the globe the United Kingdom is the Asians’ first choice as a base to do business with Europe, Asian banks in London, European banks in Hong Kong. Japanese, Korean, Taiwanese and Hong Kong investment in Britain exceeds Asian investment in the whole of the rest of Europe added together. European, especially British investment, in Hong Kong far exceeds other external investment in the territory. This is partly a product of history, indeed everything is partly a product of history, but it is very much also a product of present circumstances of hard-headed calculations about the future.

    Asian businessmen naturally wish to increase their stake in the world’s largest market – Europe – and they have calculated that much the best gateway is the United Kingdom. And they come to Britain because we share a common belief in enterprise. They like our relatively low taxes, not as low as yours of course, but Britain now enjoys the lowest tax burden of any major European economy and when possible we intend to get them lower still. They like our low inflation, Britain is enjoying the longest period of low inflation it seems for over 50 years. They like our commitment to free trade and fair competition. They like being treated on exactly the same basis as domestic investors. And they like a country that has resisted Europe in burdening employers with extra costs. In Britain, for every 100 pounds spent on wages, an employer has to add an extra 18 pounds for non-wage costs, 18 pounds in the UK but an extra 32 pounds in Germany, 34 pounds in Spain, 41 pounds in France and 44 pounds in Italy. So no wonder Britain remains the first choice for foreign investors coming to Europe – low taxes, low inflation, low costs.

    My aim is to turn Britain into the enterprise centre of Europe, an economy that rewards get up and go. Now that may sound familiar to you. We seek those virtues, you have them here in Hong Kong, they are the economic virtues of Hong Kong. And just as I would like Britain to be the enterprise centre of Europe, I see Hong Kong as the enterprise centre of Asia, the channel for European trade and investment into the huge markets of China and Asia.

    Overseas investors flock here for exactly the same reasons. And they come here because underpinning all these policies, Hong Kong has the most important legacy that Britain has given to its former colonies across the globe – the rule of law. You are all here, and your businesses and your families have thrived here precisely because of the rules of law. You have been able to enjoy living here, without interference from government, without harassment from the police, with a confidence that a contract once signed is a real contract, not just the beginning of year upon year of negotiation, with confidence in a fair and transparent legal process in which no-one is above the law, with confidence that the tendering process is fair and that all your companies can compete in an open market according to the same rules, and with confidence that there is that free flow of information, uncensored and unfiltered which is so vital to market decisions. You have benefited too from the work of the truly exceptionally dedicated civil servants of Hong Kong who set such high standards of administrative ability and can-do spirit.

    The rule of law in Hong Kong, the rights and freedoms of Hong Kong, the free flow of information, all that has been crucial to the development of Hong Kong as the pre-eminent business centre of this region. Who doubts, who seriously doubts that if Hong Kong had not developed its laws and had not preserved its rights and its freedoms, its success as a world centre for business would be far, far less than it is today?

    Twelve years ago the Chinese government clearly recognised these important facts of life when they undertook, in the Joint Declaration, to maintain Hong Kong’s laws, its rights, its freedoms and the application here of the International Human Rights Covenants. Why did they do that? It was because they saw that it was in their Chinese interests that Hong Kong should continue to thrive and develop as an international business centre. They knew that it was in this role that Hong Kong could best contribute to the spectacular modernisation of China. And they saw, wisely, that Hong Kong’s formula for success was one that included as vital ingredients, not optional extras, the rights and freedoms that the people and the businessmen based here had been guaranteed for years under the law.

    We have been working with China in order to achieve a successful transition incorporating these elements. The road has not been smooth but we have kept at it so far, and we will keep at it in future. The Chinese Foreign Minister’s visit to London in October last year, and the Foreign Secretary’s visit to Peking in January, allowed detailed and businesslike discussions on all aspects of the transition. My own meeting with Premier Li Peng last week has confirmed our commitment to this process. Our consistent aim has been to forge agreements which are clearly in the interests of Hong Kong and which will ensure the continuity of Hong Kong’s systems and Hong Kong’s institutions.

    There is still much to do, but a good deal has been achieved since the Joint Declaration of 1984 agreements on Hong Kong’s membership of international bodies like the World Trade Organisation; on the Court of Final Appeal; on the future of defence lands; on the network of international treaties applying to Hong Kong; on agreements that the pessimists said at the time could not be done, and much else besides. So the groundwork has been laid for the final phase of the transition, for the final push.

    The overriding priority in this period of the transition must be to maintain the rule of law and ensure that it commands the confidence of the local community and the international community after 1997. That has been the number one item on Chris Patten’s agenda for the last three and a half years. It is the number one item on the British government’s Hong Kong agenda over the next year and a half. If the rule of law does not rule the market, you enter it only with the greatest of caution, because you never know whether your contract will stick, whether your competitor has an inside track that you cannot hope to compete with, or even whether you will find yourself arbitrarily detained in a commercial dispute. But if you know that the market is ruled by law, you can commit yourself to it whole-heartedly. It is why we believe, and will continue to believe, that the voice of the people of Hong Kong, plainly heard in free and fair elections in 1994 and 1995 must be respected. We didn’t suddenly dream up that proposition by ourselves, it was a central feature of the Joint Declaration, agreed by Britain, agreed by China as the necessary underpinning for the confidence of the people of Hong Kong in the maintenance of their way of life.

    We are quite clear that electoral arrangements, passed by the Legislative Council in 1994, were and are wholly compatible with the Joint Declaration and the Basic Law. Those elected by the people of Hong Kong, in record numbers, should be allowed to serve their full four year term. That is what Hong Kong people wish to see, that is what the world would wish to see, that I am convinced would also be in China’s, as well as Hong Kong’s best interests.

    We have insisted too, therefore, that the laws of Hong Kong should not be changed by decree in 1997, that the human rights of Hong Kong people must continue to be protected in every respect, as they are now, including the obligation to report under the international covenants, and that the interests of all who live, work and invest in Hong Kong will be given equal treatment under the law after 1997 as they are today.

    We have put these arguments, arguments both of principle and of sensible practice at the highest levels to the Chinese leadership. Malcolm Rifkind did so in Peking in January, I did so with Premier Li Peng last week. In response he confirmed China’s commitment to key elements of the Joint Declaration, but we reached no agreement on LEGCO or on the Bill of Rights. We did not agree to disagree, we just disagreed.

    We are not going to leave it there. We are not going to go on saying in public and private something we don’t believe, we will say only what we do believe. We do not, and we will not, simply lie down and accept what we are told.

    Let me reiterate what Malcolm Rifkind said to LEGCO in January:

    If there were any suggestion of a breach of the Joint Declaration, we would have a duty to pursue every legal and other avenue available to us but standing up for Hong Kong way of life isn’t only a job for British ministers. If Hong Kong people want the undertakings made in the Joint Declaration and the Basic Law to be fully and faithfully honoured, they too will have to be prepared to stand up and say so and that goes for all walks of life, lawyers, journalists, civil servants, businessmen, policemen.

    Hong Kong businessmen have a special responsibility not least because many of the opportunities you have to make these points lie with interlocutors in China and your interests will be directly affected if things go wrong. If you don’t appear to care about the survival of Hong Kong’s system, its rule of law, clean government and a free society, then others may draw the conclusion that they don’ t really matter but of course they do and everybody in this room knows that they matter.

    British sovereignty will end on 30 June 1997. A chief executive will take over the reins of one of the most challenging jobs in the world in which he or she will need the support of Hong Kong and the understanding of the international community. The flags will change, Britain will no longer have colonial responsibility for Hong Kong but Britain’s commitments to Hong Kong will not end next summer, far from it. The guarantees in the Joint Declaration extend for 50 years until 2047, the Joint Liaison Group will continue to function until the year 2000. That means that we in Britain will have continuing responsibilities to the people of Hong Kong, not just a moral responsibility as the former colonial power and as staunch friends of Hong Kong but a specific responsibility as a signatory to the Joint Declaration. We shall watch, vigilant, over the implementation of the treaty to which Britain and China have solemnly committed themselves. That treaty is of course registered at the United Nations but it will not just be Britain which will be watching, which is watching now over the implementation of the Joint Declaration. We shall ensure that others are watching as well Hong Kong will never have to walk alone. Every trading nation, every country engaged politically, economically or commercially with China and with the whole East Asian region has a direct interest in Hong Kong’s continuing success, not just success but success founded firmly on the specific promises made by Britain and made by China in the Joint Declaration, every member of the international community, all Hong Kong’s friends and partners around the world in both hemispheres and five continents will be watching to see that the letter and spirit of the Joint Declaration are honoured now, next year and for 50 years beyond and we will be making sure that they do.

    Our commitment – our British commitment – to take such a lead does not stem just from our moral responsibility; it is powerfully reinforced by Britain’s own self-interest. After the handover, there will still be a massive British presence in Hong Kong, a thousand British companies operate here, our investment in Hong Kong is around £70 billion sterling, our exports to china are £800 million per year but to Hong Kong they are £2.7 billion a year. Moreover, some 200,000 people here will be British citizens, some 3 million may be holders of British National Overseas passports, up to 2. 4 million may hold Special Administrative Region passports. Whichever passport Hong Kong people hold, they are concerned about ease of travel. It is an important issue, important for Hong Kong’s self-confidence as well as for its economy and trade but Hong Kong knows that we are living in a world of more restrictive visa regimes because of the abuses which governments are rightly expected to tackle.

    At present, British National Overseas passport-holders have visa-free access to the United Kingdom. That will continue, there are no plans to change that. The question now is whether the United Kingdom should also extend visa-free access to future holders of the Special Administrative Region passport. I have reflected carefully on this with Cabinet colleagues in London in the light of the powerful arguments put by the governor, by the Legislative Council, by business people and by the wider community in Hong Kong in recent months and the answer is yes, we shall extend visa-free access [Applause]. We have decided that holders of SAR passports will not – I repeat will not – be required to obtain visas for visits to Britain after 30 June 1997, there will be visa-free access. This will be an improvement for many Hong Kong people who held Certificates of Identity at the moment and who at present require visas to enter Britain; from July 1997, with an SAR passport they will not.

    I hope that this decision will be welcomed in Hong Kong. We shall be placing the details before Parliament in London today. In addition, the British Government will also be urging other like-minded countries around the world to follow our lead, to do what they can to maximise ease of travel for Hong Kong people after 1997. In particular, we look to the incoming sovereign power, to China, to work with us in promoting visa-free travel for Hong Kong people whatever passport they may hold. We hope that China will place all this on a firm foundation by bringing forward soon fair, practical arrangements for ensuring that all those who have right of abode in Hong Kong now continue to do so after 1997.

    There are two other immigration and nationality matters which have been raised many times by Hong Kong people: the position of the wives and widows of ex-servicemen who fought for Britain in the War and that of the non-Chinese ethnic minorities in Hong Kong after 1997. Let me address first the question of the non-Chinese ethnic minorities with no nationality other than British.

    This is a limited group; their right of abode in Hong Kong after 1997 is guaranteed by the Joint Declaration; the British Government have made clear that any member of this group who would otherwise be stateless will be entitled to British Overseas Citizenship as will their children and grandchildren. We have also said repeatedly that if against all expectations, any solely British nationals come under pressure to leave Hong Kong, the British Government of the day would consider with considerable and particular sympathy their case for admission to the United Kingdom. Let me make clear today to this group that we are prepared to guarantee – repeat to guarantee – admission and settlement if at any time after 1 July 1997 they were to come under pressure to leave Hong Kong. It is the position of course, that this group do not wish to leave Hong Kong, they are settled here, their business is here, their families ties are here but they wish to be sure that if they come under pressure to leave that they will have a country to go to. Mr. Chairman, from today, they have that assurance [applause].

    The second matter concerns the wives and widows of ex-servicemen from Hong Kong. The Home Secretary has written personally to each of them to make clear they are free to come to the United Kingdom at any time and to settle there if they wish. What they continue to press for is full British citizenship in view of their husbands’ service to the Crown in time of war. Because the numbers involved are extremely small, this is an issue that could be satisfactorily dealt with by a Private Member’s Bill in Parliament. The Government would be happy to see such a Bill come forward and would encourage and facilitate its passage through Parliament. As a result, these ladies will then receive full British citizenship [applause]. Let me summarise the assurances I have been able to give today:

    First, Britain’s commitment to Hong Kong will continue well beyond the summer of 1997. That is both our moral responsibility and overwhelming in our own self-interest.

    Second, if in the future there were any suggestion of a breach of the Joint Declaration, we would mobilise the international community and pursue every legal or other avenue open to us.

    Third, we will give visa-free access to holders of the passport of the Special Administrative Region.

    Fourth, we are prepared to guarantee to the ethnic minorities admission and settlement in the United Kingdom if after 1997 they were to come under pressure to leave Hong Kong.

    Fifth, we will facilitate a Private Member’s Bill to give British citizenship to the wives and widows of the ex-servicemen from Hong Kong who fought in the War.

    Mr. Chairman, these five points will I hope help to provide reassurance to you, the people of Hong Kong, about Britain’s active interest in your future.

    As I said earlier, Hong Kong is at Europe’s and Asia’s crossroads, 1997 will not change that. Europe’s ties with Asia are ties of culture, of commerce, of history. That is especially true of Britain – of 24 Asian countries 8 are members of the Commonwealth. Britain is the largest European investor in China and in Asia as a whole but nowhere do we have as large a stake as we have here in Hong Kong.

    Will Hong Kong continue to succeed? You have succeeded magnificently already often against the odds. You have been an example to the world of what can be achieved by an open-market economy. It is your values – Hong Kong values – that are being copied all around the world. It is Hong Kong that points the way in the region. “Made in Hong Kong” is stamped these days on ideas and values, not just on toys and on textiles so it matters that Hong Kong continues to succeed, it matters to Britain, it matters to China, it matters to the world that Hong Kong succeeds.

    Next summer, the eyes of that world will be on Hong Kong, the world’s television cameras will be trained on the Territory, the world’s journalists encamped here literally in their thousands. For the next sixteen months people everywhere will be asking one question over and over again: “Will it all survive? Will it all work?” I am sure that it will, sure with one caveat, with one qualification, to be honest with one “if”: it will work and survive, as Anson Chan has said, if you remain true to yourselves, if you remain true to your values, true to the values that helped you create here in this Chinese city a community that is decent and prosperous, mightily successful and the whole world hopes abidingly free – not just now but for the future. Thank you very much! [Applause]

     

    QUESTIONS AND ANSWERS

    QUESTION:

    Mr. Chairman, Mr. Major represents the Westminster tradition of democracy, the home of free speech and so forth. In a meeting here with Mr. Rifkind here he dodged this question. I would like to ask you to answer it:

    The question simply is: Given the situation in which 6 million people are being handed to a country and a government which over 70 per cent do not want, how on earth can you sleep comfortably at night?

    PRIME MINISTER:

    I think you put it in the most aggressive way possible [Applause] and in the tradition of Westminster democracy, don’t be surprised if I am tempted to reply the same way!

    When you say “handed over”, you are a businessman, you enter into deals, you operate under the rule of law. We operate under the rule of law as well and the rule of law required that on 30 June, whether we like it or not, the British lease on Hong Kong actually ended. That is not a matter of an option, not a renewable option, it was a matter of international law. I don’t like it any more than you like it but I have to obey the law, I can’t simply address a reality as though it were a fiction and ignore it so our responsibility is to make sure that we mobilise our resources in negotiation and our resources in international pressure to make sure that the law is fully obeyed and to make sure that the agreements that have been reached between ourselves and China are fully obeyed as well and if you are inviting me to upend the original agreement that ends on 30 June 1997, hope you are not also going to say to me that I should take a tough line with the Chinese if they don’t obey the agreements and the law that they made in 1984 with Geoffrey Howe and Margaret Thatcher because this Colony exists because of the rule of law and that is something the Westminster tradition has to obey as well – and we will – but our interests in Hong Kong do not disappear, they don’t find people handed over bound hand and foot and powerless; that is not remotely the way things are going to be in 1997 as I have just spent the last half an hour trying – I hope successfully with many but perhaps not with you – to explain to people. [Applause] I think it is very doubtful that Malcolm Rifkind dodged the question but by God, I am not going to!

  • Mr Major’s Speech to the Institute of Directors – 19 January 1996

    Below is the text of Mr Major’s speech to the Institute of Directors in Birmingham, held on Friday 19th January 1996.

    PRIME MINISTER:

    I am delighted to be here on this occasion to have the opportunity of talking about some of the matters that lie ahead of us economically and some of the opportunities that are there for us to take.

    I had the opportunity this morning to reflect on these in a rather philosophical mode. I spent the early part of this morning at Ironbridge – the cradle of the industrial revolution. And there at Ironbridge, by innovation, enterprise, investment, sweat and courage, new industries were born and the world followed Britain’s lead. It helped in its day build an unparalleled prosperity for this country.

    As we meet here today we are in the middle of another more complex but equally important industrial revolution. It is one that will have a just as far reaching effect upon this country if we are successful in the way we approach it.

    Last year at this very same convention centre, I set out five core principles, core themes, for our future. Today I would like to elaborate, to concentrate, upon just one of them. But let me remind you what those five themes were: to build a nation of enterprise and prosperity, a nation of opportunity and ownership, to safeguard law and order, to deliver first class public services and to defend a strong, united and sovereign United Kingdom.

    All of those are important. But today I want to focus on just one of them, I want to focus upon enterprise.

    Not all that many years ago Britain was universally regarded as the sick man of Europe. We had over mighty trade unions, strikes brought the country to a standstill, inflation hit all time highs and nationalised industries cost the taxpayer 50 million pounds each and every week. Today that is all behind us and I for one never wish to see those set of circumstances return to this country again.

    What is true as we meet here at lunchtime, though it is unfashionable to say so, is that Britain is today building a platform for success that is outstripping more and more of our competitors across Europe.

    In our adversarial political system, and I make no complaint about the nature of that, but in that adversarial political system many have a vested interest in scoffing at our success. But they can’t deny the fact of it.

    We have seen the longest period of low inflation for 50 years. When inflation is there it is a mighty peril, when it has gone it is speedily forgotten. But I recall how it rendered us uncompetitive, how it destroyed our savings, how it brought this country almost to its knees in earlier years, and now we have the psychology of inflation under firmer lock and key than ever in my lifetime. I am proud of that and I have no intention of letting that lock go in the future.

    We have now got the lowest basic rate of tax for over 50 years, the lowest mortgage rates for over 30 years. We have more of our people in the United Kingdom actually in jobs, and fewer unemployed, than any major European economy. And I wonder how many people in this room can remember when last that was the circumstance.

    We have exports running at record levels. We have days lost for strikes falling to the lowest level since we first began to keep records of that. And Britain is the leading recipient in Europe of foreign investment. Indeed over the recent years we have received more foreign investment from outside Europe into the United Kingdom than has gone into the rest of the European Union added together.

    That is what Britain has achieved. It is not a negligible achievement. Of course there is a great deal more to be done, but the position that we have reached offers very great opportunities for the future provided the policies to take advantage of those opportunities are not thrown to one side and are followed through in the years that lie immediately ahead.

    I have no doubt about the key to that future. The key to that future is enterprise, enterprise at the heart of a free and prosperous society. With enterprise comes risk, but also reward. It creates competitiveness and builds prosperity and economic growth. Growth – a buzzword to some, but a reality for all our hopes. It is growth that pays for our national security,our defence forces, that pays for our social inclinations, our education system, our social provision, and so it is crucial for our future well-being.

    And it is for that reason, the belief that I have that we need growth with low inflation if we are to maximise our opportunities for this generation, this country and future generations, that leads me to say that I believe that what we need to do is to promote the opportunities of enterprise for the future. And it is because of that that the government that I lead aims to turn Britain into the unrivalled enterprise centre of Europe, not just in the short term but for the long term future.

    That will not be achieved without effort, it cannot be achieved by empty slogans. Britain can only do it if we believe in the values of enterprise and we then follow the policies that promote enterprise. Enterprise benefits society through the goods it makes and the services it provides, through the jobs it creates and the taxes it pays to support public services, through the contribution that businesses make to the communities around them. And it is worth considering that just for a moment. That contribution takes many forms, working to improve the local economy, to improve training, in Techs, in Chambers of Commerce and countless other local business groups, getting involved in local schools, helping voluntary groups, sponsoring sport and sponsoring the arts.

    Our businesses, in my judgement, enrich our society in every sense of the word. They don’t need someone to instruct them to do this any more than they need someone to instruct them upon how to run their business.

    But this enterprise culture, this opportunity, this belief in enterprise and all the wider benefits it brings, would be very easy to destroy. Vilify our businessmen for their very success, interfere on the grounds that the government knows best, make it impossible for them to earn a fair reward for their efforts, that would do it, that would destroy what is currently being built in this country for the benefit not just of businessmen but of all the people of this country.

    And there is an idea, passed on from generation to generation by a curious mix of the well meaning, the envious and the confused, that it is wrong for business to make a profit. What nonsense that is. It is about time not just the politicians but that business defended the need to make a profit in the common wheel as well as in the interests of the shareholder. Profit should be applauded, not condemned. It is not a dirty word except to the peddlers of envy. It funds investment, it generates jobs, it is not only respectable, it is essential for the future that we wish to build.

    If there is no profit then there is no enterprise. If there is no enterprise then there are no jobs. If there is no enterprise and no jobs then we will all be the poorer.

    Government has its own role in fostering enterprise. I am not in favour of unadulterated laissez faire. Enterprise depends on government to follow sensible economic policies and create the right tax and regulatory environment, and we Conservatives are tax-cutters by conviction whenever we have the opportunity. And when I say tax-cutters by conviction, when I look at the demands for the future, the demands that demand an enterprise system for this country in the future, I don’t just refer to income tax when I refer to the Conservatives being tax-cutters by conviction. Taxes on capital are like taxes on jobs. If they are too high it is not worth building up a business and employing people. And that is why I want to cut, and in due course, and I offer you no timescale for this, but that is why I want to cut and in due course abolish both capital gains tax and inheritance tax.

    Our opponents, playing their old game of the politics of envy, claim that reducing these taxes only benefits the few. But what that shows is how little they truly understand enterprise and all its effects. By denying businessmen and their families the rewards of their efforts, these taxes discourage enterprise, discourage job creation and discourage the growth of prosperity right across this country.

    This country today, Britain today, now has the lowest tax burden of any major European economy. Forty-two percent of our national income is spent by the government on behalf of the taxpayer. That is going on for 10 percent less than the European average. That gap is worth 60 billion pounds a year, the equivalent of around 30p on the basic rate of income tax. So we are doing far better than Europe, even our competitors admit it. Even Germany, for so long seen as the strongest and most competitive economy anywhere in Europe.

    But listen to what the Head of the German CBI had to say about the German economy just the other day: “We have too rigid labour laws, we have too high social costs and taxes. We work the shortest working week in Europe. The German government spends 50 percent of GDP as opposed to 42 percent in Britain – no wonder we have a problem.” That is the voice of modern Germany looking enviously at the situation that is applying in modern Britain.

    And I believe that 42 percent that we spend, that we the government spend on behalf of the taxpayer, still isn’t good enough. I want to get government spending down to below 40 percent of our national income in the first instance. We need to raise our eyes beyond the competition with our European partners. We need to compete worldwide where half of all our trade goes outside the European Union, with Japan, with the United States and with countries like Korea, Singapore and Taiwan.

    It is not just enough to have warm aspirations and to set soft targets. Controlling public spending requires tough decisions, determination and foresight. And here we have built up an advantage over our competitors. We have taken many of the difficult decisions and accepted the political unpopularity that inevitably goes with them. And I believe we were right to do so.

    Elsewhere that has not happened. Throughout Europe governments are waking up to the gap between the expectations of their citizens and the state’s ability to support them. And that is not some abstract problem. In France it erupted on to the streets. But we foresaw the problem and began to tackle it years ago.

    Let me give you just one of a number of examples. By encouraging occupational pensions we have ensured people’s security and limited the burden on the state. And as a result we now have in this country, in Britain, more invested in pensions for the future than the rest of Europe added together.

    And it is the same for the rest of our welfare system. Social security currently costs every worker 15 pounds every single day of the year. Until we began to reform it a few years ago, spending on benefits was set to grow faster than the economy as a whole, Clearly that couldn’t go on. Our reforms are now beginning to give us a social security system that is fair, that is reasonable and that the taxpayer can support, one which promotes incentives to save and be self-reliant – the values of an enterprise economy and above all makes it worthwhile to go out and get and accept a job.

    But there is no point giving people incentives to get a job if firms themselves cannot afford to create jobs. Too often in Europe that is precisely what is happening. Approaching 20 million adults in Europe, as we meet here today, are unemployed. From the 1950s onwards, in good years of growth as well as bad years of no growth, the underlying level of unemployment has risen across Europe. I believe that that is a problem that Europe dare not ignore and I have repeatedly raised this point at European meetings.

    When I say dare not ignore, I don’t just mean talk about, I mean determined policies that will actually encourage business to create jobs for the future. It is often said, not least by our political opponents, that we British are often isolated on some aspects of European policy, that we won’t accept the European consensus. Well I make no apology for rejecting consensus when that consensus in my judgement is wrong and not in the British interest.

    Our political opponents say it is tedious, nationalistic of us, to oppose signing the social chapter. They think we should sign it. I believe we should not sign it and I believe this because of the facts of what it is, but more relevantly what it would do to the prospects of people in this country, as it has already done for the prospects of people across Europe.

    And let me spell it out for you, because the campaign of mis-information about the cuddly sounding social chapter deserves to be exploded.

    At present unemployment in Germany is 8.5 percent and rising. France and Italy 11.5 percent. Spain 22.5 percent. But here in Britain unemployment is 8 percent and falling. It has been falling month in, month out, month in, month out for around about two and a half years.

    And why is it that Britain is doing better at creating jobs than the rest of Europe? In Britain, for every 100 pounds spent on wages, an employer has to add an extra 18 pounds for non-wage costs for every employee. But that same employer would have to add, not 18, but 32 pounds in Germany for every employee, 34 pounds in Spain, 41 pounds in France and 44 pounds in Italy. Why should entrepreneurs create jobs in those countries at that expense if it is cheaper to create jobs and more profitably in this country?

    Our political opponents try to denigrate our record. They claim those new jobs are temporary and not real. Well let me nail that lie immediately. A higher proportion of the workforce are temporary employees in Germany, France and Spain. In Spain almost one-third of the workforce are temporary, and that compares with 7.5 percent only of employees in the United Kingdom. And why is there that disparity? Because temporary jobs are higher elsewhere because it is a loophole to escape the costs of restrictive employment and social regulations. These are the sort of costs that could be imposed on British business if we ever signed up to the social chapter.

    Our opt-out that I negotiated at Maastricht, and to which I shall passionately hold for as long as I am in politics, that opt-out helps to protect Britain’s competitiveness at home and in Europe, and if we surrendered it that competitive edge would no longer be safe.

    In many areas proposals under the social chapter will be put forward for decisions by qualified majority voting. I have no doubt that if it suited them, others would find a way to blur what can be imposed by majority voting and what cannot. If Britain were in the social chapter we would have precious little say over which bits of it applied to the United Kingdom. We could not rely on being able to block proposals that we thought were damaging. To think that we could pick and mix if we joined the social chapter is naive and wrong. There would be no opportunity to pick and mix.

    Experience of negotiating in Europe has taught me that we must not just look at what is in the Social Chapter today, we must also look at what it can be used for in the future. The reality is that it will become the channel through which our European competitors could impose upon the United Kingdom their social costs, regulations and potentially their trades union laws.

    Measures on working conditions could be imposed upon us and what does that mean? A ban on overtime, the Social Chapter already producing proposals regulating paternity leave and part-time employment. And then there is consultation: huge numbers of decisions businesses take clogged up by harmonised European rules about who needs to be consulted, how and when, with the inevitable cost, delay and difficulty in making those decisions in the interests of the country, the company and the workforce and that would put a very significant spanner in the works of successful businesses.

    The fact is no-one knows precisely what the European Community might or might not propose under the Social Chapter or how the European Court would interpret it. It is a blank cheque, the thin end of a very dangerous and uncompetitive wedge.

    It sounds very attractive to some politicians, it sounds like painless charity. It may sound nice for those people with jobs but I believe that it is dishonest because loading costs and regulation onto business makes it more expensive to employ people and that means only one thing: employers cannot hope to create new jobs and might well have to scrap existing jobs.

    The Social Chapter should be seen for what it is – a European jobs tax, a tax on jobs by the front door and in time a tax on jobs by the back door and that is why I judge it to be immoral. That is why, if I had signed the Social Chapter, I would not have been able to look the unemployed in the eyes again. Europe needs more jobs; it does not mean more taxes on jobs – that is not in the interests of Europe and it is emphatically not in the interests of the United Kingdom. [Applause].

    I opposed the Social Chapter at Maastricht and I opposed it on principle. I believed then that it would cost jobs and not create them and I was right. I still believe it. Our enterprise economy is not negotiable, our economic success is too valuable to be wrecked by Socialist experiments.

    Let me say a word about our success at attracting inward investment. We are again here outstripping the rest our European partners but does anyone seriously believe that Japanese and American companies would still be coming here in their droves if we crippled ourselves with extra social costs as other people have done? I don’t think they would. Those companies bring not just jobs and investment; just as importantly, they bring innovations, new technology, new management techniques and the spur of competition and we must build on these skills but for that we need people who are able and motivated to learn from the success of others, people who can keep up with the pace of change, people who can dictate the pace of change for the future. I don’t doubt for a minute that the British nation are capable of that; they have the ability, the inspiration but it needs nurturing and above all, tomorrow’s businesses need a workforce with first-class education and skills, enterprise and education go together.

    Education is the raw material not just for a satisfying life for the individual but for providing the skills that industry and commerce will need in the years that lie ahead and yet for too long too many of our children were getting a very raw deal from our education system. It would have been very easy to leave things as they were to avoid a row with the establishment and with establishment thinking, not to traipse into that secret garden of education that was kept so quiet and secret for so long. We could have avoided change and avoided many rows but I believe it would have been wrong to do so, so we tackled the problem and we took the rows because I believe there can be no compromise on standards in education – our future and our children’s future is too important for that.

    Despite the scars – and there have been one or two – I am proud of what we have done in changing the education system. Thanks to the national curriculum, children are now taught the basics from an early age; now we are making sure we give our children the best possible start in nursery education; special literacy and numeracy centres will ensure children don’t miss out on the essentials; children are tested on a regular basis at 7, 11 and 14; exam results are published for all to see, giving parents the information they have always deserved but once did not get, essential information to exercise choice, a choice that now includes grant-maintained schools, city technology colleges so often sponsored by individual companies or individual businessmen, grammar schools, specialist schools and the whole system backed up by far more regular inspection and far more effective inspection than education in this country has ever known before.

    Look at what we have done in some of those aspects of education by establishing a proper framework of vocational qualifications and by introducing modern apprenticeships. For far too long in this country education was regarded as a matter for academics and not something that should teach practical vocational skills as well and the way in which it led to an artificial class distinction between white-collar jobs and blue-collar jobs in my judgement was wholly wrong and did immense damage to this country over so much of the last century.

    Look at the success also of investors in people and what the techs are now beginning to achieve. Look at the number of our young people who are now going on to further education, to higher education, to university. For many of my generation, that still remained an impossible dream. Today, one in every three of our young people go on to university; only fifteen or sixteen years ago, that was one in eight – today it is one in three.

    We are seeing a revolution in education, a revolution in standards, a revolution in achievement. Of course, there is a great deal to be done and I am determined to continue to do it but it could not have been done unless we, the Conservative Party, had been in Government and it would not be carried forward in the future unless we remain in Government to carry out and carry through the education policies that we have been following. Our ambitions for enterprise and the whole quality of our life in the future depend upon carrying those policies forward.

    I have spoken about how the Government is fostering enterprise but enterprise – important though profit is as I have acknowledged – is not only about that. The core of enterprise is not Government either, it is individuals, individuals with a special spark of magic, of imagination, of innovation, of a willingness to take risks, that “get up and go!” instinct that drives them to achieve what many other people believe to be impossible, often flying in the face of conventional wisdom, individuals inspired by a dream not of what is but a dream of what might be.

    We do well to remember, those of us who promote innovation and enterprise and perhaps even more so those who despise it and fear it, that it wasn’t Government that invented the steam engine, the telephone, the motor car, the radio, it certainly wasn’t the Government that built British Railways – it was Government and nationalisation that ran down the service of British Railways and once again it will be private enterprise that builds it up when we have finished the privatisation of them – and indeed, Mr. Chairman, I somehow doubt it was a government that invented the wheel many years ago though I have to say I can read the memos that would have come to me at the time explaining how the invention of the wheel would undoubtedly have destroyed jobs and how we should not maximise this new and startling invention.

    This spirit of enterprise isn’t confined to inventors who have changed the world, it is what has made thousands upon thousands of people every year set up in small businesses putting their security and their livelihoods on the line because they have an idea that they believe will work and they have that instinctive gut instinct that has always been in the British nation that they wish to set up something themselves, run it themselves, build it up for themselves in their interests and in the interests of their own families. That is a culture that we should encourage and it does mean putting aside another culture, it means putting aside the old culture of disparaging success and all those who aspire to it. If we wish to be a successful society, we cannot afford to be an envious society and we should turn our back on all those who preach envy whenever they have the opportunity. [Applause].

    I don’t interpret enterprise narrowly. It is not just a business culture, it is a set of values that can be expressed in countless other ways as well – and it is – in charities, sports clubs, schools, hospitals and throughout the public service. I wonder how many of the successful businessmen here today actually use those precise same skills on behalf of the community generally in some other way, in hospital trusts, in school governorships, in sports bodies, in arts bodies, in whatever it may be? I suspect a very large number use that skill for enterprise that is their profession in the interests of the community in other ways as well and it is a Socialist myth that enterprise creates a selfish and greedy society; it is a myth that society can only be made fair and just by bureaucracy meddling and corporatism; it is a myth that you can make the weak stronger by making the strong weaker.

    No-one disagrees in politics today that we have common obligations to help and protect people in our society who are vulnerable. The argument between the parties is not upon that principle, it is upon whose policies can create the wealth to do it. There is no point in having your heart upon your sleeve if your business enterprises are so unsuccessful there is no money in your wallet in order to meet the social obligations that all of us wish to accept.

    I speak as a Conservative, Conservative by instinct not by learning. Some people occasionally say: “What great Conservative philosophers did the Prime Minister read?” and I say to them: “I didn’t read any Conservative philosophers, I learned my conservatism in the back streets of Brixton when I saw how Socialism had failed the people who lived there and I saw the only opportunity for getting out of that was to give people individual opportunity and choice for the future and make sure that opportunity and choice was available to everybody in this country wherever they came from, whatever their background, whatever their income, whatever their class, whatever their colour and whatever their creed!” That is what made me a Conservative and it is what keeps me a Conservative and it is the only thing that is going to make this country great. [Applause].

    I stand for enterprise opportunity for the whole nation, one nation, undivided and whole, not one nation racked by false of devolution that will set one part of the United Kingdom against the other within immense damage to all of us in the years that lie ahead if such policies were to be carried through.

    Mr. Chairman, you cannot build such a nation – the nation of enterprise, of hope and prosperity, the inclusive nation, with everybody having those choices that I passionately believe they should have – on warm words and soft policies and no substance. You cannot build it if your policies are for the short term and not for the long term, you cannot build it if you will not take the decisions unpopular in the short term that you believe to be right for the long term but you can build it if you are prepared to make the decisions you know are right, to defend those decisions and to promote them in Britain’s long-term interests.

    I will tell you what I believe: I believe we are building a nation that creates prosperity by encouraging ownership, not ownership by the state extending its powers and right to meddle under the cloak of public interest, not ownership by the bureaucrat at the taxpayers’ expense but individual ownership through enterprise, shares, pensions, savings, homes and small businesses, the right to own and the power to choose. Those are the things that genuinely give people a stake in society for this generation and the next. That, I believe, is the way to build a nation that provides a ladder of opportunity and rewards success, a nation where there are incentives to work and a safety net for those who need it. That has been an intrinsic part of Conservative philosophy and Conservative gut instinct since the party had its founding days and it will never change. That is the Britain that we are building, the Britain that I care about, an enterprise Britain, a nation that is successful and of which we can be proud.

    If I had a single wish, it would be that the people of this country could see the success of this country, its values, its institutions and its nation, with the same clarity that the rest of the world can see the success and the values of this country.

    As we take the decisions ahead to build that enterprise Britain, some of them will be difficult. Not all decisions will be easy, not all the rewards will be swift but there is no choice. we must travel the enterprise road or we will fall behind those countries that do. The choice is very clear and I have made my choice. We will build this country as the enterprise centre of Europe and we will not be deflected. I believe in that we will be successful and I wish each and every one of you the same success in your individual endeavours. It is the amalgamation of those endeavours that will build up our nation.

    It is our job as Government not to carry out your job for you but to provide the opportunity, the economic background and the incentives to encourage you and not discourage you and prevent you from playing your part in building up this country and its enterprise prospects for the future. It can be done. We are outstripping others. What would be fatal would be if we were to let go of the policies we have followed for so long and that are beginning to show the clearest fruits of success at present; if we were to throw them away in the future, generations ahead would look and say: “Why did they do it? On the eve of such success, why did they turn away from the opportunities that lay in front of them?” I do not believe that we will. I believe that enterprise centre of Europe is being built and will be built and I intend to see it through. [Applause].

  • PMQT – 16 January 1996

    Below is the text of Prime Minister’s Question Time from 16th January 1996.

    PRIME MINISTER:

     

    Engagements

    Q1. Mr. Skinner: To ask the Prime Minister if he will list his official engagements for Tuesday 16 January.

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

    Mr. Skinner: How on earth can the Prime Minister justify sacking 3,000 prison officers at a time when his Home Secretary has forecast that the prison population will increase, and what will he do with 3,000 extra pairs of handcuffs? Is he going to use them on Lady Thatcher and the bastards in the Cabinet?

    The Prime Minister: My right hon. and learned Friend is seeking to ensure that we receive from the Prison Service the efficiency that both we and taxpayers have a right to expect from the Prison Service. The hon. Gentleman may not be concerned about efficiency for taxpayers’ money, but we are.

    Mr. Trotter: Did not the Saudi Government prove to be stable and sound allies in the Gulf war? Is it not in the interests of Britain that the Saudis should continue to have a stable Government, and has not Mr. Al-Masari abused his position as a guest in this country? Do not the thousands of people whose jobs he puts at risk, especially in the north of England, feel that he is very fortunate to be offered a home on a Caribbean island, rather than being sent back to where he came from?

    The Prime Minister: As my hon. Friend will know, the United Kingdom has a long and honourable tradition of protecting and helping people who seek asylum, but if people abuse that hospitality, we should not ignore that. The stability of the Saudi Arabian Government is a matter of importance throughout the Gulf and for stability more generally, and we should not give comfort to people who seek to undermine it.

    Mr. Blair: Can the Prime Minister tell us why the Minister for Social Security and Disabled People has been reprimanded for writing his letter to The Times?

    The Prime Minister: I set out my views on that issue last week and they have not changed.

    Mr. Blair: What we would like to know is: has the Minister been reprimanded, yes or no?

    The Prime Minister: Matters in my Government are for me and not you.

    Mr. Blair: To which I can only say, looking at the Government, thank goodness.

    So the Prime Minister cannot tell us. He cannot make up his mind whether he has reprimanded the Minister or not. He cannot make up his mind, presumably, whether he agrees with the Minister, or whether he agrees with Lady Thatcher. Is it any wonder, when the Prime Minister cannot even answer simple questions about his own Government, that the country despairs of weak leadership and a divided Government?

    The Prime Minister: While we are on the subject of being clear about views, perhaps the right hon. Gentleman could tell us whether he would renationalise British Rail to please his party, or leave it alone to give his slogan some substance. Let him tell us some more. Would he abolish the grant-maintained schools that he voted against, or would he let parents enjoy the choice that he talks about? Would he tax more successful people to please his left wing, or does he believe that success should be rewarded? Can he make up his mind about any of those examples, and a dozen more that I can give him–or does he not know the answer?

    Sir Norman Fowler: Will my right hon. Friend take this opportunity to congratulate Land Rover on the major new overseas order that was announced this morning, on its continuing success in the overseas market and, above all, on the design of its new military ambulance?

    The Prime Minister: Land Rover is an excellent company with a long and honourable record, and I am delighted to congratulate it.

     

    Q2. Ms Glenda Jackson: To ask the Prime Minister if he will list his official engagements for Tuesday 16 January.

    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

    Ms Jackson: If, as the Prime Minister claims, his policies have created strong economic growth, why are the appalling 500,000 job losses in the construction industry due–according to the Building Employers Confederation–to rise by a further 22,000? Where will those workers look for jobs, and where will thousands of homeless families look for homes?

    The Prime Minister: Let me remind the hon. Lady of some of the economic circumstances–including the fall in unemployment–that now pertain in this country. No significantly sized country in western Europe has as much of its population in work; none of the major European countries has unemployment as low as ours; none of them has seen unemployment fall for over two years; and none of them can combine that with the lowest inflation levels for 50 years, the lowest mortgage rates for 30 years, the lowest basic rate of tax for 50 years and the best prospects that we have seen for many years.

    Mr. Marlow: Are more murders, muggings and mindless acts of violence carried out by adolescents now, or were there more in the days when corporal punishment was available both in schools and to the courts? If the answer is now, can we have corporal punishment back? I am sure that many people are concerned about the state of our streets and cities.

    The Prime Minister: I do not have the figures immediately to hand, but I can tell my hon. Friend, if he wishes to exercise arguments of that sort, that if he went back far enough and extended his thoughts to capital as well as corporal punishment, he would find that the number of murders committed many years ago when capital punishment applied was far larger than it is now. I am not sure that I draw the conclusion that was implicit in my hon. Friend’s question.

     

    Q3. Mr. Jon Owen Jones: To ask the Prime Minister if he will list his official engagements for Tuesday 16 January.

    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

    Mr. Jones: Will the Prime Minister confirm that the average age of a member of the Conservative party is now 62, that there are no more than 5,000 members of the Young Conservatives and that the Young Conservatives’ conference had to be cancelled this year owing to lack of interest? Will he tell us why young people in Britain have lost all interest in the Conservative party, and want nothing to do with it?

    The Prime Minister: The answers to the hon. Gentleman’s three questions are no, no and no; so the last part of what he said does not apply.

     

    Q4. Lady Olga Maitland: To ask the Prime Minister if he will list his official engagements for Tuesday 16 January.

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

    Lady Olga Maitland: Does my right hon. Friend agree that the way to give people a stake in society is to allow them to own their homes, to own shares, to have their own pension schemes and, above all, to pay low taxes? Does he agree that that contrasts sharply with the Labour party’s vision of a stakeholding society, which would place burdens on business men and, indeed, bring back vested interests in Labour’s old friends?

    The Prime Minister: My hon. Friend is right in what she says. There has been some discussion recently about the term “stakeholder society” or “stakeholder economy”. The Leader of the Opposition now tells us that it is a slogan, and the hon. Member for Brent, East (Mr. Livingstone) tells us that he has not the faintest idea what it means. But we know and have been practising what it means for the past 16 years. It means giving people a direct, personal interest in what happens–lower taxes, more home ownership, more personal pensions– exercised by the holders themselves, not exercised by other people allegedly on their behalf.

     

    Q5. Mr. Pickthall: To ask the Prime Minister if he will list his official engagements for Tuesday 16 January.

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

    Mr. Pickthall: Will the Prime Minister look into the case of my elderly constituent, Teresa Stewart, who was referred to Fazackerly hospital by her GP? She arrived there at 4 o’clock in the afternoon but was not seen by a hospital doctor until 10 o’clock that evening. Thereafter, she remained on a trolley until noon the next day. Does not her case, and the hundreds of others up and down the country, demonstrate yet again that the national health service is not safe in the Tories’ hands?

    The Prime Minister: Of course I will look into the individual case that the hon. Gentleman raises and I will ask my right hon. Friend the Secretary of State for Health to respond to him. But the hon. Gentleman should realise that, with a service the size of the national health service, he will from time to time find matters of concern. There are now something over 8.5 million patients treated in total each year. The hon. Gentleman might care to consider how much lower that number was when last his party was in government.

    Mr. Day: Will my right hon. Friend take this opportunity to reassure the House that he will not follow the example of the Leader of the Opposition in seeming to imply to the nation that he has rejected everything he has ever believed? Will he also give an assurance that he will never, as Prime Minister and leader of our party, give the impression that he has accepted totally the philosophy of the party that he has fought all his political life? Will he assure Conservative Members of that so that we will not have a similar fear to that of many Labour Members–that the leader of the Labour party is about to cross the Floor and join us?

    The Prime Minister: I can certainly give my hon. Friend the assurance he seeks. The Leader of the Opposition seems to base the prospects for his future on the belief that he has always been wrong.

     

    Q6. Mr. Khabra: To ask the Prime Minister if he will list his official engagements for Tuesday 16 January.

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

    Mr. Khabra: Does the Prime Minister have any new policies to end the recession in the housing market?

    The Prime Minister: If the hon. Gentleman looks, he will see that house prices have risen throughout the past five months. That is a very welcome trend. [Interruption.] The right hon. Member for Kingston upon Hull, East (Mr. Prescott) seems neither to understand nor to hear anything that is said to him. I repeat the point–house prices have risen throughout the past five months. That is a welcome development, and I hope and expect to see it continue.

    Mr. Legg: Has my right hon. Friend found time to read the latest book by the Labour guru, Will Hutton, especially the chapter entitled “Stakeholder Capitalism”? If my right hon. Friend has read that chapter, does he agree that Labour’s vision of stakeholder capitalism owes more to the failed corporatism of the 1970s than to anything happening in Singapore today? Does he have any plans to introduce stakeholder trade unions, which would enjoy extra powers and rights?

    The Prime Minister: The distinction between the Government and the Opposition on this matter is that we believe people should have a personal interest, personally owned, in the country. The Opposition seem to believe– if the idea is more than just a slogan, although that is not clear–in a corporatist approach in which special interest groups operate on behalf of the public at large, as the shadow Secretary of State for Transport said just the other day. The Leader of the Opposition, desperately trying to put flesh on his slogan, has failed to do so and has reaffirmed me in my belief that all he is concerned about is the readmission of a corporatist Britain of the sort we rejected in the 1980s and will not have back in the 1990s.

     

    Q7. Mr. Miller: To ask the Prime Minister if he will list his official engagements for Tuesday 16 January.

    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

    Mr. Miller: We are always on the look-out for fresh ideas from the Prime Minister. [Hon. Members: “Oh!”] So is his own party. What new plans does he have to increase investment in the British economy?

    The Prime Minister: The hon. Gentleman is certainly right, in that the Opposition have sought, rather inadequately, to borrow many of our ideas–just as they have sought, without real conviction, to ditch their own.

    Investment is rising, which is why this country has a higher growth rate than elsewhere in Europe. It is why unemployment is falling; it is why the economy is in better shape at the moment than it has been for many years–and in better shape than the economy of anywhere else in western Europe.

  • Mr Major’s Speech to Businessmen in London – 10 January 1996

    Below is the text of Mr Major’s speech to businessmen in London on Wednesday 10th January 1996.

    PRIME MINISTER:

    Peter, Good Morning and thank you for taking the trouble to organise this event. It has been such a quiet and dull political period over Christmas that I have been looking forward to this morning with great anticipation.

    As you said a moment or so ago, Peter, we have gathered here in this room a very substantial number of the most senior businessmen representing the largest corporations and newspapers throughout the United Kingdom. Here are many of the people who make many of the crucial decisions about where investment goes and what actually happens to the future prosperity of this country. And so I want to spend most of the time speaking to you this morning about matters economic in one form or another, and then leave as much time as possible for you to ask the questions that concern you.

    Let me just back-track for a few moments and look over the last years to perhaps put today and tomorrow in a slightly better context. No-one doubts how difficult the last few years have been, the recession was longer than it was expected, it was deeper than we expected, it had a more profound psychological effect upon thinking in this country than many people anticipated when it began or even as it continued and seemed at one stage to be going on almost forever.

    Not just of course a problem for the United Kingdom, it was a recession that spread throughout all of the Western world and some parts of the rest of the business world as well. But it is behind us now and what I want people to concentrate on at the moment are the circumstances that face us at the moment and to wipe away the mindset that we have had for so much of the past 3 or 4 years.

    There is a tendency in human nature generally that if things are difficult they are going to go on being difficult forever; if things are excellent they are going to go on being benevolent forever. Neither of those things are true. We did have, as a country, in company with the rest of Western Europe, a very difficult economic period. But we have actually been out of recession technically for over 2 years and in reality out of recession quite substantially for a very substantial period now.

    What we need to do is to look at where we are, uncluttered by the memories of what happened, and look at the prospects that lie immediately ahead of us at the present time. And I say that because if we don’t do that, if we, government and business, leave ourselves with the mindset of 1992 and 1993 then we will miss the opportunities of 1997 and the years that follow it.

    Let me try and break some of the distorting prism of opinion that occasionally entraps people when they think about our prospects. I suppose you might call it an alternative news summary, some of the things that get less publicity than they might unless they appear in a brown sealed envelope.

    You touched upon some of them, Peter. Inflation probably, I think certainly, under more secure lock and key than we have known certainly in my political lifetime, and I don’t just mean in Parliament, I mean since I first entered politics as a 16 year old. We are certainly going to be well within our inflation targets. I suspect if the election is when I anticipate it will be that we will have met our 2.5 percent target that we set ourselves for inflation by the time we reach the next election. It is no longer, almost for the first time in the memory of most of the people round this room, a material problem to future investment because there is an acceptance that inflation is now under proper control.

    If we have broken the inflationary psychology, and I pray that we have, then both in the short term and the long term I think that is one of the most remarkable and benevolent changes for British industry and commerce that we have seen literally for decades.

    Secondly, interest rates, not quite at an historic low, but certainly by comparison with most of the last quarter of a century low and no serious risk in the short term that they are going to be significantly higher and we hope, all things being well, that it may be possible to reduce them.

    Mortgages at their lowest level for 30 years. Unemployment now having fallen for 26 months in a row, down to 8 percent. Our nearest neighbours, perhaps the closest economy – France – with unemployment stuck at around 12.8 percent, no major European economy having either unemployment as low as us in the United Kingdom or, and perhaps this is a better measure, no other major European country with as high a proportion of its adult population in work as we have in the United Kingdom. We have now beaten Germany on both those counts for the first time that I can! ever remember. And of course tax at its lowest level we have seen for 50 years.

    Now that wasn’t easy to achieve. It didn’t happen by magic. It did happen because throughout the past 3 or 4 years, often when we were invited to take decisions that would have been popular in the short term but damaging in the long term, we didn’t take those damaging long term decisions, instead we took the short term unpopularity and as a result of that we have the economic opportunities that lie immediately ahead of us at present.

    They are opportunities, they are yet to be taken, but I believe they are opportunities that put us well on track for the doubling of living standards in 20 years that I set out as our objective 18 months or so ago.

    Let us look at some of the other indicators that are now becoming apparent. At last, much slower, much later than I would have hoped, we are beginning to see house prices having increased for each of the last 5 months. After having had to put up taxes because of the size of the fiscal deficit, and it was frankly a choice between taxes going up or interest rates going up, and think it was right to deal with it, taxes are reversible when the time is right and we now have personal taxation back I hope on a downward trend. Sales rising. And although it isn’t directly an economic matter, it affects many people in this room, for the first time in 40 years the clearest possible indication that crime is now on a downward trend. And for those cynics who say, and there are sadly cynics in public life, that the crime statistics are rubbish, it is simply that people are not reporting crime, I would refer them to the insurance companies and the statistics that they have released for theft of motor cars for example. Because I think it is very hard to argue that anyone who has had their motor car stolen would not actually report it to the insurance company in order to make a claim. And that shows a distinct downward trend as well and you can see that elsewhere across crime.

    If I may make some other points. We have, despite the criticism of privatisation, the best single method of giving people a personal stake in society I would have thought, a shareholding stake in society, despite the criticism there has been of the privatised industries, some of it justified, some of it not, the reality is that the price of utilities, crucial to the living standards of people right across this country, are more stable than we have known them at any stage before and in most of the cases, in real terms, the price is actually falling.

    And if I may make a political point for a moment. That has been achieved over the past 4 years with a tiny parliamentary majority, all of which, as we have occasionally seen, not absolutely steady on parade on every single occasion, it has been achieved in a hostile economic environment and with a totally opportunistic and destructive political opposition.

    We have immediately ahead of us some legislation that is crucial for the future. It is very fashionable to take the view that there is an empty legislative programme. I don’t regard a Finance Bill that cuts taxes as being empty; I don’t regard an Education Bill that extends opportunity and choice as being empty; I don’t regard a Broadcasting Bill that begins to prepare us better than we have been prepared for, for the IT revolution that is taking place as being empty; neither do I regard the rest of the parliamentary programme as being anything other than absolutely necessary.

    We are now within 16 months or so of a general election. And if the principal opposition party can force it, of course they would like that election a good deal earlier. And I will tell you why. They would like the election earlier because like me they know they know that the economy is improving, they know that that is beginning to become apparent to people, they know that there is now going to be a rising level of net disposable income and people will feel noticeably better than they have done in the past and they would like to have the election early before that becomes increasingly apparent to people up and down the country.

    But there is at this election a great deal at stake, not just the protection of the remarkable changes that have been made throughout the last 16 years, not just the protection of those for they have made to our competitiveness a dramatic difference over that period, but much else besides. And I would say to those people who may be tempted by an alternative, it is a very dangerous proposition to play Russian roulette with all the barrels loaded, and no-one should assume that the advances that we have made would be safe with any alternative government. So people, not just business, but people up and down this country have a great deal to lose if they decide upon a reckless gamble of that sort.

    Let me touch upon some of those points and then I want to come to something which is very current at the present time. Benign circumstances, certainly; huge opportunities for the future, beyond a doubt, but they won’t necessarily be there with the wrong policies or with the wrong government. Does one really accept, do the people out there in the country really believe that Gordon Brown would have the same rigorous control over inflation that we have accepted, with great political unpopularity? Do people really believe that Robin Cook would defend our position in Europe with the same vigour that we have done over recent years? Are there people present who believe that Margaret Beckett is so concerned about competitiveness that she would ditch her personal wish to return much of the old trade union legislation that existed in the past? Is there anyone present, or indeed in the country, who seriously believes that Jack Straw would take a tougher line on crime than Michael Howard?

    Well I don’t think that there are. I could go on, I have overlooked John Prescott. Now I come to think of it, this is one of the things Tony Blair and I have in common because we both overlook John Prescott, I don’t invite him to meetings either and I appreciate why Tony doesn’t.

    It is worth concentrating on the fact that a government requires 18 Members in the House of Commons and something up to 30 in the House of Lords. And the mindset of most of our opponents, there may be a leader with one view but where is the heart of the party elsewhere? While the majority of the Labour Party still sings the red flag, the Leader may be humming Mandelson rather than the red flag, but the instinct of the party is where the instinct of the party has been in the past.

    Over the last few months it has been interesting to try and see the way in which political programmes for the future have been set out and I will return to our plans for making the United Kingdom the enterprise centre of Europe in a few moments. But just a few days ago, in Japan, the Leader of the Labour Party set out his plans for what he called a stakeholder society. It is not entirely clear what he meant by that. As with his reversal of Clause 4, there was a hint in his speech and his spin-doctors then explained what it was that he might have meant by what it was that he almost said.

    But a stakeholder society is either a soundbite too many or alternatively it is the beginnings of the return to some form of corporate society. And I will set out for you why I believe that is so. Perhaps it is meaningless, who can tell? We certainly in the past have frequently seen spin-doctors elaborating on what has been said, that is the style of the Labour Party. But if it is old-style corporatism then I think we had better flush that out before people just overlook it and we skim on. Because what that potentially is is very damaging for the United Kingdom.

    Who are the stakeholders to be? Are the stakeholders to be 30-odd million adults? And if they are to be the stakeholders, why are they not to be stakeholders in the form we have built up over the last 16 years, with their own personal pensions, with their own homes, with the lowest level of taxation, with shareholdings, more shareholders now than there are trade unionists in this country? That is a genuine stake. People have a real interest, literally a share in this nation that is personally theirs and not determined by some other body on their behalf telling them that they, the body, are looking after their interests for them.

    But if the stakeholders, as I suspect from what we hear, are quite different bodies then we are in a different ballgame. And I rather suspect, as so often, that Margaret Beckett was revealing the truth of what is planned when she said just the other day, and I quote: “There is growing concern that the many interest groups, in particular the general public, consumers and so on”, she wanted to soften it of course, “are excluded from some of the thinking in industry in the past and there is a general exploration of how we can create more common ground, how we can make sure that all interests are taken into account when we look at stakeholders.”

    Well I will tell you who they really mean. They mean the special interest groups, they mean the trade unions, they mean the people that so often are covered by so much of the social chapter type of thinking in this country. That is what I suspect they mean when they actually talk about stakeholders.

    What I believe we are seeing is the tip of a plan which is nothing better than a fancy packaging for new burdens on business of one sort or another. And although some of those burdens that have already been apparent that sound benign, they are not. A minimum wage does sound benign, particularly to those who are very poorly paid, but it is not benign because it often means that those who are poorly paid would not be paid in a job at all if you had a minimum wage legislation. A training levy, which I think would be a great mistake to introduce. The social chapter – the problem with the social chapter is twofold, it is not just what is in the social chapter at the moment, damaging enough though that is, the real danger were the United Kingdom to sign up to the social chapter in Europe and leave it free across the whole of Europe is not so much what is in it now but what would then be brought into the social chapter because that is the ambition of nearly all the rest of our European partners to bring much of their domestic social legislation, under the social chapter heading, in order to remove their competitive disadvantage against the United Kingdom in particular and other countries in general.

    And I will not sign up to that, and I will not sign up to that for a moral reason and I will tell you the moral reason. When our political opponents talk of the social chapter they talk of it in very benign terms from the point of view of someone who is in work getting greater protection. Well I gloss over the fact that few of them would be in work. But I would put this question to you.

    If you make it more expensive to employ people who are in work, the employer will firstly employ less and it will be correspondingly more difficult for those not in work ever to get themselves into work. It is politicians across Europe, using employers’ money to buy popularity for themselves and the losers are the people not in work who, as a result of that, might never get into work or certainly would have their chance of getting into work greatly reduced.

    And I have to tell you, I don’t just think that is economically wrong, I think that is plain immoral when you actually look at what the practical effect would be. Right the way across the European Union there is too much unemployment. 20 million or so adults in the European Union are unemployed. And if you look at the trend from 1950 onwards, it doesn’t matter whether it is good days or bad days, boom or bust, you have had that underlying growth in unemployment. And why, when the rest of the world has been creating jobs? Because we have become relatively less competitive. It does not matter a tuppenny damn within the European Union if there are minor changes in competitiveness.

    What does matter is if throughout the whole of the European Union we become less competitive to Japan, to the United States, to Latin America, to the Pacific Basin countries, and that over 30 years is what has been happening. And that is the matter, the principal matter, that so many people in the European Union ought to be turning their mind to rather than so many of the narrow and institutional questions that have bothered people so much over the last few years.

    Now let me turn to the ambitions that I would wish to see this country achieve. Let me firstly put our position in context. The government, on behalf of the public, spends at the moment about 42 percent of the national income. I compare that 42 percent to the average of 52 percent elsewhere in the European Union – 52 percent elsewhere, 42 percent here. But that 42 percent also needs to be compared with our other competitors around the world, and it is too high, and the expenditure plans that we have will bring it down below 40 percent and then I believe there is scope to reduce it a little further, though precisely how far I wouldn’t care to judge at this moment, but certainly we will get it down below 40 percent and then lower still if we can to open up the prospects of greater competitiveness and lower tax burden on both industry and on individuals. And I believe that is eminently achievable providing we keep a proper grip on inflation and the sort of economic policies that we have followed over the past few years.

    Where are the priorities? When? And I make no promise about the date, nobody say I am making distinct tax promises, but let me set out the objectives that we will reach when it is affordable.

    Certainly we retain the objective of a 20 pence basic rate of tax. I can offer you no promises of changing the 40 pence, I don’t think that is a priority and I don’t wish to pretend to you that it is. But to get a 20 pence basic rate of tax does seem to me to be a very attractive priority.

    I think in terms of enterprise taxes, and I will have a lot to say about enterprise over the next few months so I won’t concentrate on too much of that this morning. But in terms of enterprise, as it becomes affordable, let me repeat what I have said in the past. I believe it is in the country’s interest, economic, socially and certainly in terms of competitiveness, to over time abolish both inheritance tax and capital gains tax. I believe that the impact that the change in those taxes will have on the flow of investment will be of great benefit to many of the people who will wish for themselves and their children to have secure and growing employment prospects. I know it will be criticised as being aid to fat cats, of course that is always the politics of envy argument that can be used. But the best aid to people is to make sure that they actually have the opportunity of a decent job with decent prospects for the future, and that doesn’t magically appear without using the private sector to generate the investment that is necessary. And if people themselves earn success and rewards for that investment, I am not going to object to that. I would prefer to look not at the gains that they may get but at the opportunities that that investment by then will provide for many other people to be in proper and gainful employment. So I see those changes.

    Clearly there is a great deal more to be done on deregulation. It is, I have to tell you frankly, like wrestling with a greasy pig, every time you deregulate here there is a new regulation that pops up elsewhere that is often gold plated because the people determining the regulations say well if I don’t gold plate it and something happens to go wrong, when the inevitable inquiry occurs I will be blamed. And so there is a great deal of gold plating of regulation and I think business is right to be critical of that fact over the years and we must look further to see how we can deregulate.

    I just want to indicate one other point about the social chapter. I said how damaging it could become, but let me just illustrate in terms of social on-costs what it might mean. You employers, many of you round here in the United Kingdom, for every 100 pounds in wages that you pay out you would pay out an extra 18 pounds in on-costs of one sort or another. In Germany it wouldn’t be 18 pounds, it would be 32 pounds. In Spain it would be 34 pounds. In France it would be 41 pounds. And in Italy it would be 44 pounds. Is it any surprise when you begin to hear those figures and see the reality of what it means, that we are the principal centre for inward investment across the whole of Europe and that it is this country that is creating new jobs and seeing unemployment fall, and our European partners who are losing jobs and seeing unemployment remain at a stubbornly high level?

    We have immediately ahead of us, and because I wish to leave questions for it I will not enlarge on it in any detail, some crucially important decisions for this country. Just because we have an economy that is benign doesn’t mean there aren’t very big decisions to be taken. There will be important decisions on European matters on a number of fronts – the Intergovernmental Conference, the single currency in due course, difficult questions on defence and the way in which NATO evolves and also its relationship with the Western European Union and conceivably the European Union itself. And most crucial of all in many respects, the way in which enlargement of the European Union is itself handled, something that I regard of critical importance. Again, while so much of the debate and discussion has been about institutional matters within the existing Europe, the opportunity for this generation of politicians to fundamentally improve our security in the future by extending the borders of the European Union, of the free market and embracing in the democratic embrace of Western Europe lots of countries of Central and Eastern Europe, the opportunity for doing that is greater than we have known in the past, and if this generation of politicians misses that opportunity the time may come in the future when people would curse us for our short-sightedness in not having ensured democracy in those countries that only escaped from a communist embrace within the period of the last few years.

    They are big questions, apart from the domestic questions of continually expanding and unfolding the entrance into what was once the secret garden of education so that parents have proper choice and opportunity. These are matters of crucial importance to our future, they are matters where the choice between the parties is very great.

    You asked me, Peter, at the beginning, was this election there to be won, and the answer is yes it is. I have not a shred of doubt in my mind that the opinion poll figures are wholly illusory, neither do I have a shred of doubt in my mind that we can and that we will win that general election. Of course it is going to be a fight. I recall what I think it was John Paul Jones said when faced with a particularly difficult naval battle: “Fight”, he said, “I have not yet begun to fight”. And there is up to 16 months before the general election with a growing difference between the parties. The stakeholder speech the other day may well open red water between the two parties because I believe, if it means the corporatism I think it means, it is a fundamental political error that the Labour Party have just made.

    So yes we are going to fight for this election, not just because we want another period of power, we have had 16 years of power, but we are going to fight for this election because we have built up in the last 16 years a greater stock of improvement in the life standards of the average Briton than we have seen in any 16 years of government by any political party at any stage in this century.

    And I don’t wish to see that thrown away, I do wish to see it built on over the next few years, and I intend to see that it is and I intend to be there to do it.

     

    QUESTIONS AND ANSWERS

    QUESTION (Peter Jay):

    Prime Minister, do you believe the Chancellor’s forecasts for growth over the next 18 months can be achieved with interest rates at their present level and if you do, why?

    QUESTION (Geoffrey):

    Prime Minister, taking that you want to get people under control on parade, do you think you’ll be able to achieve that from now on?

    QUESTION (Nigel Wright):

    The Prime Minister talked about an enterprise society and his wish to abolish capital gains tax. As the First Lord of the Treasury do you think you could actually approach them to find a way of doing this sooner rather than later?

    PRIME MINISTER:

    Let me start with Peter’s question, do I think the growth forecast is going to be reached? Yes, I do. What you are inviting me to do is to offer you a suggestion as to what is going to happen with interest rates and I am pleased to see you nod in agreement that is what you’re inviting me to do and you will know, as a very distinguished journalist, that I’m not going to do that but yes, I do think the growth forecast is going to be reached and I admire the way in which you approached the question.

    Geoffrey’s question, whether we can keep people on parade: I made the point perfectly clearly when I spoke to David Frost on television on Sunday morning. I know you will all have been up early watching so it is barely worth repeating but I will repeat it in any event.

    People in this country don’t like parties that are divided and squabble amongst themselves. I said this election is there to be won and I said it is there to be lost. I think we can win it. If the Conservative Party divides and squabbles, then it will lose it and that is a fact of life and all of my colleagues in the House of Commons had better recognise that and the things that most of them don’t wish to come about would almost certainly come about if we lost the election and our opponent was there. I think the only conclusion from that is self-evident: they had better be on parade because then we will win the election.

    On Nigel’s point about capital gains tax, it is the first tax plea I have had for 1996, it certainly won’t be the last. I said earlier I am not going to give you a time-scale for this, the Chancellor will announce his budgets in due course. What I set out was the ambition and the reason for the ambition.

    The reason for the ambition is that I think it would have a beneficial effect on investment domestically, investment externally into the United Kingdom and the creation of wealth, the creation of jobs and the dispersal of wealth so we will do it as soon as possible but I think your question was in the Peter Jay class and I am not going to tell you when.

    QUESTION (Peter Stothard):

    The message that you set out of the economic advantages are very similar to the ones that appeared in a set of advertisements in June in the press. It can be very expensive I think to get that message across via direct advertisements. Do you feel like taking the opportunity of talking to all these wealthy chaps to ask them to support your attempt to get that across?

    PRIME MINISTER:

    There is more than one way of getting a message across.

    Certainly advertising is one and it is a very important one and I hope we advertised in “The Times” amongst others on this particular occasion in order to do so.

    If that was an offer of a contribution, Peter, I accept it. I am happy to stay behind and take the cheque personally and hand it over to the party treasurer. I am sure others will have heard your plea on behalf of the Conservative Party.

    I will try and get the message over by repeating time after time the practical opportunities that lie ahead. I will just digress for one second because the point Peter makes is a very important one.

    When I said there are huge opportunities, we are also in a world where change is moving more rapidly than we have ever seen it before, it is very bewildering for people. I am not surprised that out there many people are bewildered and unsettled in a world that is changing faster than anything we have ever experienced before.

    I saw a presentation just a few days ago of the IT revolution that is coming upon us. I thought I was pretty up-to-date on what was happening but I have to say I was astonished at the speed at which that revolution was moving and of what it will actually mean for life standards, living styles and opportunities not just in the distant future but over the period of the next five years or so and I believe if we don’t take those opportunities here in IT, in broadcasting or elsewhere, we can be certain that our competitors around the world will take them to our disadvantage so that is why I think it is so crucial to maintain that stable economic situation because only in that stable economic situation will we have the right investment and the right confidence to take those particular developments into the future and so that is a further reason that Peter reminds me of, that I think it is so crucial we maintain present economic policies and build on them.

    QUESTION (Michael Cassidy):

    Prime Minister, in spite of your very novel but nonetheless welcome article in the “Evening Standard” on issues to do with the capital city and the sound of Whitehall gunfire now reaching us on the question of is there going to be a London or non-London solution for the millennium site, I wonder if you would care to comment on what appears to be a change of policy on the part of the Leader of the Opposition towards embracing an elected-mayor solution for our capital city and perhaps for other parts of the country.

    QUESTION (Alan Shepherd):

    You mentioned enterprise, Prime Minister. Could you say a word about what was said by you and Malcolm Rifkind at the Party Conference about getting closer working of the European Union and NAFTA as part of that enterprise?

    QUESTION (Sir Michael Jenkins):

    A little bit the same question, Prime Minister. Two years ago addressing this group, you invited business “to put its head above the parapet” I think was the phrase you used about Europe. I wondered whether you would be issuing the same invitation to us today and if so, what kind of message about the parapet you would like to see coming from the business community on Europe.

    PRIME MINISTER:

    Let me deal with Michael Cassidy’s point about elected mayors. I am not very attracted to elected mayors. We flirted with the same idea ourselves three or four years ago. We looked at it, we examined it, it had some attractions – not everything suggested by our political opponents is completely loopy! It does have some attractions and we examined it for some time but I think the downside of it is greater than the attraction. It is not an instinctive part of the way in which we have governed ourselves in the past.

    If elected mayors were to have the sort of credibility that is supposed, they would have to be elected in much the same way that the Mayor of New York, for example, is elected and I think that would have very significant ramifications for the way in which local government operates and the way in which local government raises its money and the relationship between local government and central government and when you examine the details of that, I think on balance the arguments fall against it rather than for it. I don’t object at all to the matter being examined. We examined it ourselves quite carefully before we rejected it three or four years ago.

    On Alan Shepherd’s point about the European Union and NAFTA, we do feel strongly feel about this. What has brought the matter forward is a combination of two factors:

    Firstly, the sheer difficulty there was in agreeing the GATT round and I mention GATT with some deference with Peter Sutherland sitting next to me, without him we wouldn’t have had the GATT round. The sheer difficulty there was of reaching agreement between Europe and the United States very nearly at one stage, because of the tensions, drove the GATT round into the sidings, we wouldn’t have had it and I think that would have been economically disastrous for us and I remember meeting after meeting – most of which remained entirely private even to this day – where there were some very harsh arguments indeed inside the European Union at Heads of Government level over the desirability of the GATT round and the need to ensure that an agreement was reached.

    I very much favour free trade. That is one of the two principal arguments, the first being security, that I want to see the European Union spread further across central Europe and further towards the east but if we believe in free trade, we need to extend it as far as possible and that is why I see great attractions in trying to extend it to North America as well, North America and western Europe.

    It won’t be easy. The principal difficulty, as so often it has been in the past, will be agriculture. We have horrendous difficulties in terms of changing the agricultural situation in Western Europe and to be strictly fair, the Americans have huge trouble with their own agricultural lobby in the United States as well, but we should certainly move towards that objective.

    Free trade is an idea that has developed wings in an astonishing way in the last decade or so when one considers the general atmosphere about it ten years ago and I think we should build on that while the opportunity is there and we will certainly continue to do so.

    On business speaking about Europe, Michael, yes, I do think business should make their views known about Europe. What distresses me so much about the European debate is that it often seems to be principally conducted upon the fringes of opinion about Europe – those people who are very very hostile to it and those people who can see absolutely nothing wrong with it. The truth, I believe, in this as in so many other areas, lies down the middle and if I may make the point, you don’t have to be on the extremes of an argument to have convictions about the matter under discussion. There are lots of people in the centre of the European argument who have convictions about Europe as well and I do and my convictions about Europe haven’t changed, you can see them in the speeches I made before I became Prime Minister in 1990 and earlier.

    We must be in the European Union. Of course, we could survive outside it but we would be far less well-off were we to do so economically and in terms of political authority so we should remain within Europe but that does not mean that because we remain within Europe that it is our role simply to go with the majority opinion that happens to exist within Europe at any particular moment. That would not be a proper role for the United Kingdom.

    I believe that some of the policies that Europe are following at the moment are just plain wrong and potentially damaging and I think it is perfectly proper for us to argue for pragmatic changes to European policy where we think they are wrong and I will continue to do so. I hope I can do so in company, I will do so without company if I have to but if we want the argument to be sensible and informed, then I think undoubtedly it will benefit from those people who have a material, commercial and trading interest with Europe making their views known as well; they are speaking from experience with a practical stake in European trade and I hope that they will make their voice felt.

  • Mr Major’s Commons Statement on the 1995 European Council at Madrid – 18 December 1995

    Below is Mr Major’s statement on the European Council held at Madrid from the 18th December 1995.

    PRIME MINISTER:

    The Prime Minister (Mr. John Major): With permission, Madam Speaker, I shall make a statement on the meeting of the European Council at Madrid, which I attended with my right hon. and learned Friends the Foreign Secretary and the Chancellor of the Exchequer. I have placed the conclusions of the Council in the Library.

    I shall deal first with economic and monetary union and then with enlargement – the two most important matters discussed over the weekend.

    The decisions that the European Union must take on those two issues over the next few years could be the most crucial steps for Europe since the European Community was founded. They will have a profound effect on the political and economic stability of our continent over the next generation.

    On economic and monetary union, the Madrid Council decided on a name for the single European currency. “Euro” was not a name that attracted universal enthusiasm around the Council table; it will not ease the task of those seeking to market the idea of a single currency, but one or more of the member states had rooted objections to each of the other names suggested.

    A more fundamental decision was to study the implications of seeking to introduce a single currency in 1999. As the House knows, I have for a long time argued that the introduction of a single currency by a small minority of states would raise very serious questions about its economic consequences and about the way in which Europe functions. At the informal meeting in Majorca in September, there was general agreement that those questions needed to be examined carefully. At Madrid, a study was formally commissioned.

    The Maastricht treaty lays down strict criteria for entry to a single currency. It is now certain that, on a proper interpretation of the criteria, only a small number of member states will meet them if a single currency is introduced in January 1999. Before taking such a step, the European Union needs to consider what it would mean in practice. It must consider its effect on the states outside the single currency area, as well as those inside it. It must consider how decisions would be taken. It must ask whether the result would be divergence rather than convergence of European economies. It must consider the potential effects on employment and the demand for resource transfers. The risk of monetary instability is one of the questions to be examined.

    Some have argued for rigid linkages between those inside and those outside a single currency, by reverting to an old-style exchange rate mechanism. That is a course that has been tried and has failed. I have made it clear to our partners that I would not recommend that sterling should return to such a system.

    Europe needs coherent answers to those and other questions, and I am glad that the Madrid Council decided to examine them. The opt-out that I negotiated at Maastricht protects the United Kingdom from being forced into an unworkable system, but it is vital to our interests and to the interests of Europe as a whole that a single currency does not begin and then fail, thus causing economic turmoil right across the European continent.

    I now refer to enlargement. Ahead even of prosperity, the European Union exists to provide security and stability for the peoples of Europe. For that reason, I believe that enlargement is the most important task facing the European Union. Having demolished the iron curtain, we must never again have a dividing line running through the middle of Europe.

    Ten or more countries are hoping to negotiate entry to the European Union in the coming years. This is an historic opportunity to entrench stability through a union of democracies right across the continent, and one that I passionately believe we must take. The Madrid Council gave further impetus to enlargement. The European Commission has been asked to produce opinions on all eastern and central European applicants as soon as possible after the end of the intergovernmental conference. That is a necessary step towards full accession negotiations, which are likely to begin with at least the most advanced of the new applicants, as well as with Malta and Cyprus, in about two years’ time.

    The Madrid Council considered reports from the Commission on the implications of enlargement for the European Union’s policies, and those are profound. To be affordable and to be consistent with the EU’s obligations under the general agreement on tariffs and trade, the common agricultural policy will have to be reformed when the Union enlarges, and so will the structural and the cohesion funds. At my insistence, it was agreed that future meetings of the Council would examine the implications. The Madrid Council has therefore taken an important step towards combining policy reform with enlargement, both of which are essential to the European Union’s future.

    I shall deal briefly with some of the other subjects that were discussed at Madrid. It was agreed that the intergovernmental conference would start at Turin on 29 March. The conference will be conducted by meetings of Foreign Ministers supported by a working party made up of a representative of each Minister and of the President of the European Commission. No decisions were taken at Madrid on the substance of the intergovernmental conference. Work on the agenda will be carried out under the Italian presidency by Foreign Ministers.

    The drive to promote subsidiarity was again strongly in evidence at Madrid and was vigorously supported in informal discussion. The Commission has been instructed to examine the continued need for existing Community legislation and for proposals that are now on the table. It is now widely recognised that the United Kingdom was right to reverse the trend towards greater intrusiveness by the Commission. There was also support for our approach to job creation, flexible pay relating to performance, the curtailing of non-wage labour costs and the reform of social protection systems. Increasing emphasis is being given to small and medium-sized enterprises and to the need to cut the burden of red tape and over-regulation.

    The campaign against fraud and for better financial management, which I launched at the Essen Council a year ago, gained further weight at Madrid. The House will welcome the higher priority that is being given to intergovernmental co-operation against drug trafficking. At Madrid I presented, with President Chirac, an initiative to help Caribbean states to crack down on the trans-shipment to Europe and elsewhere of huge quantities of drugs that are produced in Latin America. That initiative was agreed by the Council and is now part of the European Union’s policy. On external affairs, the Council underlined the importance of successful implementation of the Bosnian peace agreement and gave support to Mr. Carl Bildt, who will be there leading the international civilian effort. It also discussed the European Union’s relations with Russia, Ukraine and Turkey and welcomed the agreement at the recent European Union/United States summit to strengthen the relationship with the United States.

    At the Council, the key decisions for the future were identified rather than taken. The programme of work for the next five years, the “Political Agenda for Europe”, is set out in the Madrid conclusions. It is a formidable programme. In that period Europe must review the treaty at the intergovernmental conference; review the Union’s policies, including the common agricultural policy and the structural funds; take decisions on a single currency; carry out enlargement negotiations; determine the Community’s future financing; contribute to new European security arrangements; and develop its relations with neighbouring countries, especially Russia, Ukraine, Turkey and other Mediterranean countries. The decisions that we take in that period will determine the shape of Europe well into the next century. They will vitally affect the United Kingdom’s interests and our future security and prosperity. That is why, at successive meetings of Heads of Government, I have argued for cautious and careful consideration before decisions are finalised.

    The European Union must carefully weigh the practical consequences of all those issues. Its decisions must be securely grounded in reality. We need, above all, a Europe that works. In that respect, important steps were taken at Madrid, as they were at Majorca a few months ago. They would not have been taken if we had not been prepared to raise the difficult questions and to demand practical answers to real problems. In the interests of the United Kingdom, it is essential to continue taking a hard-headed approach at the centre of European policy making, and I intend to go on doing so.

    Mr. Tony Blair (Sedgefield) May I thank the Prime Minister for his statement? There are several areas with which we can obviously agree.

    On enlargement, I warmly welcome the European Council’s commitment to begin negotiations at an early date. Will the Prime Minister clarify whether those negotiations will indeed begin at the same time as negotiations with Cyprus and Malta? Will he also tell us how the European Union intends to differentiate between countries that will enter more rapidly, such as Hungary, the Czech Republic and Poland, and the others that will take more time? I agree totally with what he says on the common agricultural policy, but instead of using the need to reform the CAP as an excuse to delay the entry of those countries into the European Union, should not we rather be using enlargement as the lever for changing the CAP?

    I welcome the agreement at the Council to open the intergovernmental conference in March next year. I also welcome the agreement on the importance of the European Union tackling unemployment as “its principal social, economic and political objective”,” as well as the strongly expressed support in the President’s conclusions for social partnership and job creation measures. However, how is such support for job creation measures and for help for the unemployed consistent with the savage cuts in the training in work programmes for the unemployed in this country today?

    I accept and agree with the Council’s decision to take more effective action on racism – the Ministers all committed themselves to taking further action on that issue. Will the Prime Minister perhaps tell us what further action he believes we should take here? I also welcome the progress towards implementing the principle of subsidiarity in European law making at the Council, but how can he agree so much with the principle of subsidiarity in Europe and deny it so completely here at home in the United Kingdom?

    May I come to the heart of the matter, which is monetary union? Can we be clear on that which has now been agreed unanimously by the European Council: that the Maastricht timetable stands, that the third and final stage of monetary union should begin on 1 January 1999, that all the criteria for convergence, for the setting up of the European central bank and for the fixing of currency conversion rates have been reaffirmed; and that the Prime Minister has agreed to it all in Madrid, despite his objections?

    Why then has the Prime Minister been so utterly powerless in this situation? Whatever happened to those great new alliances that we kept reading he built with the French, his triumphal visit to Italy, and his constant claims that the rest of Europe was coming round to his way of thinking? Why was he driven to concealing his impotence with the fig leaf of some study into the effect of the single currency, which was so threadbare as to be an embarrassment to behold? May I tell him why? It is because no one knows what his position on monetary union is. [HON. MEMBERS: “Oh!”] Conservative Members criticise us for our position – [Interruption.] They cannot have it both ways. They spend half the time criticising us for having a position on the single currency and the other half criticising us for not having one.

    Can the Prime Minister tell us whether he still believes in monetary union, as he used to say he did? Does he want to delay it or does he in fact want to abandon it? Are his hesitations about a single currency those of economic practicality or are they those of constitutional principles?

    We do not know what the Government’s position is. We do not know because one half of his party believes, as we do, that it depends on Britain’s national interests – [HON. MEMBERS: “What about the Labour party?”] I am saying what our position is. Our position is, like that of some members of the Prime Minister’s party, such as the Chancellor, that it depends on national economic interests. The other part of his party, however, believes that there is an insuperable constitutional objection to monetary union. But what is the Prime Minister’s position? We have made our position clear: what is his position?

    Is not it the case that the divisions between those Conservative Members who believe one thing and those who believe another are so deep that they consign the Prime Minister perpetually to weakness and indecision on the very issue that matters? Is the Chancellor right, for example, in saying that it is likely that there will be currency union? Does he agree with that or not? Is the Chancellor right in saying that we may have to decide by March 1998 whether we shall aim at joining?

    Is the Prime Minister seriously going to go into an election not telling us where he stands on the issue of constitutional principle? Is he going to tell us or not? Is he going to be driven to a referendum despite his earlier rejection of it and despite the fact that his Chancellor described it as madness – not as a way of letting the British people decide, but as a way of letting the Conservatives avoid deciding the issue of principle? If that is what he is going for, as the papers have been briefed, is it credible that the Cabinet – with one half siding with the Chancellor and the other half with the Defence Secretary – could ever put a united proposition on joining the single currency to the British people? [Interruption.] Some Conservative Members are shouting out that we are the poodles of Europe, and others are saying that we have not made up our minds. The fact is that we have a position set out and the Prime Minister does not. Until he is prepared to say personally what his position is, they cannot resolve the impasse.

    For too long, is not it the case that Government policy has proceeded on the fantasy that the rest of Europe was not actually going to proceed with monetary union? Of course it may still not happen, but we can no longer assume that it is not going to happen. Indeed, after Madrid, we should surely assume the opposite. I put it to the Prime Minister that it is simply no longer tolerable that, because of the divisions in the Conservative party, a proper national debate on the single currency is postponed, the Cabinet muzzled and the Chancellor sworn to silence on an issue that profoundly affects the future of this country.

    Is not it time for a serious and well-informed national debate to begin? The Government’s European policy after Madrid is still in tatters and uncertain. Rebuilding that policy is essential for Britain’s credibility. To rebuild it, we must have the debate on this issue that has been suppressed for too long, and time is running out.

    The Prime Minister I shall first touch on the points on which I am in agreement with the right hon. Gentleman. I, too, as he acknowledged, am in favour of enlargement. On the timing of enlargement, as I said in the statement, a small number of states – and in answer to his particular question, that will depend on the Commission’s opinion, which will largely be based on economic criteria, so it is an unknown number – will begin negotiations at the same time as Cyprus and Malta. The matter of which ones they are will depend on the detailed examination of their economies, which will take place immediately.

    On the common agricultural policy, I am of course doing precisely what the right hon. Gentleman asked me to do over using enlargement as a lever for change – which we have long argued is necessary – and reform, to which a number of Labour Members are late converts.

    Of course unemployment is important. Much of the debate on unemployment was concerned with the need for deregulatory moves and for cutting down the costs that have led to so much unemployment across Europe. What was signally missing from the right hon. Gentleman’s tirade was an acknowledgment that it is here, in this country, that unemployment is falling, and that it is in the socialist countries of Europe that unemployment is in some cases well over 20 per cent., and in other cases 12 or 13 per cent., where non-socialist Governments have inherited the effect of socialist Governments.

    There was no substantive discussion among Heads of Government on racism. There had been discussion at an earlier stage. There is general agreement that where there are loopholes in legislation across Europe, individual countries will seek to deal with them. The loophole that arises with the United Kingdom is over the fact that it is possible to print racist material here. It cannot be distributed here, but it could conceivably be printed here for distribution abroad. Clearly, that is a loophole that we would wish to block and I have indicated that we will certainly block that. There are some minor technical issues still being worked out, but I do not envisage that they will cause any great difficulties. They will be examined.

    The points about subsidiarity are familiar. We have debated them on many occasions in the past. We are a single nation state. The point about subsidiarity is taking authority from nation states to a central body, not the distribution of authority within a nation state.

    On economic and monetary union, the right hon. Gentleman is certainly correct to say that we reiterated the treaty timetable. The treaty timetable was originally in the Maastricht treaty. For those who are able to meet it – that is an unknown and probably small number – it has again been reiterated.

    The right hon. Gentleman had something to say about divisions. He was not of course as clear as he might have been about his own position. Does he agree with the deputy leader of the Labour party, who again was in Europe making mischief on other matters over the weekend? Does he agree with the right hon. Member for Kingston upon Hull, East (Mr. Prescott), who said of a single currency, “Yes we are against a single currency”?” Or does he agree with the right hon. Member for Copeland (Dr. Cunningham), who said that he was”Personally…in favour of a single currency”?” Does he agree with his Members of the European Parliament, who are in favour of a single currency within the time limits and timetable, or with the hon. Member for Livingston (Mr. Cook), who said some time ago that setting such a timetable would be “irresponsible”?

    It is good to see that there is such clear-cut agreement and leadership in the Labour party on that vital issue. If the right hon. Gentleman had observed the faces behind him, I do not think that he would have said much about agreement in the Labour party. I seem to recall reading recently that one third of the Labour party is in favour of a single currency, one third is against, and one third of them have not yet made up their minds or do not know. That is the right hon. Gentleman’s idea of agreement on that extremely difficult and complex position.

    I have made it perfectly clear on a number of occasions that there are questions about a single currency that are vital to this country’s interests, which are not yet known. It is the answers to those questions that I have demanded are examined in the European Union. If the right hon. Gentleman wants to make up his mind on the most important single economic issue that we have faced this century without the facts, let him take that position in this great national debate – although if he is entering into a great national debate, he might make up his own mind what his own position is before he tries to debate with anybody else. Those are issues of immense importance. We will demand that they are properly discussed so that a proper decision can be taken in the interests of this country, when the facts are known and not before.

    The right hon. Gentleman contradicted himself. He said that I had said that a single currency could not proceed, and that it would not happen. Then he said that, of course, it may not – in successive sentences. What I have said consistently is that the small minority may proceed. It is dangerous if a small minority proceeds and is not ready, and it is potentially damaging if a small minority proceeds without knowing the implications for the majority of countries that do not proceed.

    Even on the most favourable interpretation and the most optimistic scenario, fewer than half the citizens in the European Union would be part of a single currency union at the outset. That is quite apart from the position of the 10 or more countries that may enter the European Union over the next few years, but which will not be remotely ready for European currency union for very many years in most cases.

    For as far ahead as we can see, whether a minority goes ahead – there is certainly a chance that a minority will – it is undeniable that a majority will not be in a single currency in 1999, and a majority will not be in a single currency for very many years.

    Mr. Douglas Hurd (Witney) Will my right hon. Friend, in contrast to the Leader of the Opposition today, keep his mind open to the idea of a referendum on a single currency, should the Government at any stage decide that it is in Britain’s interests to join?

    The Prime Minister I recall discussing that matter with my right hon. Friend as long as two years ago. I know that he has thought long and hard about the implications for Europe and for this country of a single currency. I agree with him that we need to be clear about the circumstances and the conditions. The study that we commissioned in Madrid will help in that.

    I can certainly reassure my right hon. Friend that, for a decision of such magnitude, we shall keep in mind the possibility of a referendum, if the Cabinet were to recommend British entry. That has been in my mind, as my right hon. Friend knows, for a long time and it remains there. I think that it is right to keep that before us for consideration.

    Mr. Paddy Ashdown (Yeovil) Watch that space. Is not it the case that what the Prime Minister has today described as a formidable programme is what he told us a year ago had about as much relevance as a rain dance? Some rain dance.

    Does the Prime Minister understand that the whole nation has now spotted and understands his formula for ducking difficult decisions on Europe? It consists of obstructionism abroad, and appeasement at home; of playing the Euro-realist in the conference chamber, and the Euro-sceptic in the columns of The Daily Telegraph. Does the Prime Minister believe that that is the kind of leadership this country needs on an issue of such importance, and that we should be asked to hide from our future to cover the divisions in the Conservative party?

    Does not the Prime Minister understand that trying to face both ways at once in Europe means that he cannot see what is right in front of him? What is now in front of us in Europe is rising nationalism within our borders, deepening chaos outside, and – I regret – the strong probability of isolationism growing in the United States of America. Chancellor Kohl can see that; President Chirac can see that; and every other leader in Europe can see that. But the Prime Minister is so mesmerised by the divisions in his party that he is blind to it.

    The Chancellor said only two days ago that he believed that there was a 60:40 chance of monetary union occurring before the end of the century, and that the economies that would join it would be the strong ones. Does the Prime Minister agree?

    The Prime Minister The right hon. Gentleman started off by completely misquoting what I wrote in The Economist two years ago. The answer to his first question, therefore, is no. He was talking complete unadulterated rubbish, and continued to do so for some time. What I actually wrote in The Daily Telegraph was what I said in the conference chamber to my fellow Heads of Government. The right hon. Gentleman can therefore be in no doubt that the message I deliver here in this Chamber is–

    Mr. Ashdown indicated dissent.

    The Prime Minister Oh, the right hon. Gentleman shakes his head. He was there, was he? It was he who brought in the tea, coffee and the biscuits. What I said in that conference chamber is what I said here, what I wrote down and what I will take to the country.

    The fact is that the right hon. Gentleman does not understand the issue. He has a slogan. He believes that whatever happens in Europe, he and his colleagues should rattle along behind it whether it is right or wrong, whether it is considered or not and whether it is in this country’s interests or not. He does not know enough about the subject to consider the implications.

    What the right hon. Gentleman said was copper-plated nonsense. He does not know, for example, what would be the effect of a partial EMU among some countries on Community decision taking. Can he tell me the answer to that question? Of course, he cannot. He does not even understand the question, let alone the answer. I shall spare the House the long list of the other questions that he does not understand.

    Sir Terence Higgins (Worthing) Is not it high time that we stopped talking about a single currency, as what is now envisaged is clearly a core currency? That is the expression that we should use. Is not it equally apparent that it is inconceivable that the members of an enlarged Community would be able to move towards a single currency in the foreseeable future?

    On a referendum, is not this a highly complex issue? My right hon. Friend has rightly pointed out that the leader of the Liberal party does not understand it. The public do not even know the difference between a single and a common currency. Will my right hon. Friend therefore bear the complexity of the issues in mind?

    The Prime Minister My right hon. Friend is entirely right to draw the distinction between a single and a core currency, because, as I said to the House a moment ago, at the outset only a minority would be members. In the couple of decades ahead, with the growth of the European Union, there is no prospect that there would be one single currency right across the enlarged European Union. Of course, it may cover some countries – that has certainly always been possible – but it will not cover them all. My right hon. Friend is right about that. On the complexities of a referendum, I understand entirely my right hon. Friend’s point, and that is why we are considering the matter carefully.

    Mr. Peter Shore (Bethnal Green and Stepney) The Prime Minister is clearly moving in the right direction – [Interruption.] Will he confirm what he has previously said: that the United Kingdom will not join, or rejoin the exchange rate mechanism during this Parliament? If that is so, as I believe it is, will he confirm that the United Kingdom will not join a single currency on 1 January 1999 for the simple reason that whatever may be the wishes of the Chancellor of the Exchequer, we shall not conform with the necessary qualifying rule of rejoining the ERM two years before the actual decision about the single currency is made in March 1998?

    Finally, will the right hon. Gentleman confirm that when he said that he would not recommend that Britain should join or rejoin the ERM after some countries have gone ahead and joined the single currency, that means in effect that we shall never join the single currency because one cannot join it unless one first rejoins the ERM?

    The Prime Minister Let me try to clarify matters for the right hon. Gentleman. I was interested when he said that I was moving in the right direction, because the look of pain upon the faces of those on the Opposition Front Bench was a joy to behold. That was one of those occasions when I am so pleased that we have television in the Chamber.

    I certainly reiterate to the right hon. Gentleman that I made it perfectly clear that we would not go back into the ERM in this Parliament. As I said in my statement, I do not propose that I would take sterling back into a changed ERM in the next Parliament either. The right hon. Gentleman concluded from that that we shall not meet the Maastricht criteria, but that is no longer the case, because the ERM that existed at the time of our membership no longer exists. If one were to apply those strict criteria, the reality would be that nobody would be able to enter a single currency. The other Maastricht criteria, of course, fully apply, while the ERM criteria for all of Europe disappear because, the right hon. Gentleman may recall, they were effectively to be a part of the inner band of the ERM, which no longer exists.

    Mr. Tristan Garel-Jones (Watford) As the number of difficult and technical issues connected with the move to a single currency mount, does not the wisdom of my right hon. Friend in negotiating a double option for Britain become more and more apparent? Will he give the country an assurance that he does not intend to throw away either of those options in the near future?

    Secondly, will my right hon. Friend comment on the fact that the Leader of the Opposition, while criticising the opt-out that my right hon. Friend negotiated, clutches it to his own bosom? As the Leader of the Opposition says that there are no constitutional issues attached to a move to a single currency, is not the logic of his position that, if Britain were to be convergent, we would automatically enter a single currency?

    The Prime Minister That is certainly the logic of the Leader of the Opposition’s position, and we look forward to his early confirmation of that, so that no one can be in any doubt when he begins the great national debate that he has called for. With regard to my right hon. Friend’s earlier remarks, both the opt-outs are the envy of many of our European partners, which wish that they had negotiated them. I intend to exercise to the full the opportunities given to this country by that negotiation.

    Mr. Giles Radice (North Durham) May I congratulate the Prime Minister and the Chancellor of the Exchequer on publicly resisting the demand of the right hon. Member for Wokingham (Mr. Redwood) and other Euro-sceptics that the Government rule out the option of Britain joining a single currency within the next Parliament?

    The Prime Minister I indicated, first in my reply to the Leader of the Opposition 10 days ago and again over the weekend, that I was not prepared to rule out the option of joining a single currency in the next Parliament. Nobody should draw any conclusions either way about that, and I will reiterate to the hon. Gentleman why that is the case.

    It is very important that this country’s voice – raising questions that would not have been examined but for this country – is heard in the negotiations right up to the time when a decision is taken as to who should join and who should not. Whether we exercise the right to opt in or to opt out, this country – and every other country in the European Union – will, in one form or another, be affected by the decision to proceed to a single currency, even if only a minority of countries proceed. Upon that basis, I do not believe that this country’s voice – one of the most powerful in Europe – should be excluded from that debate.

    Mr. William Cash (Stafford) I very much hope that my right hon. Friend succeeds in his opposition to federalism in Europe, but does he accept that monetary union is tied up with political union? Does my right hon. Friend agree that we sold the pass at Madrid, because we did not disagree with the determination of the other member states – buttressed by the determination of Germany and by a capitulating France – to go ahead with political union? Does he agree that we must ensure soon – in a White Paper or by some other means – that we no longer go down the route of political union? Should we not utterly repudiate the use of British taxpayers’ money on a propaganda exercise by the European Commission to promote the very political union that my right hon. Friend has expressed himself to be so against?

    The Prime Minister I do not believe that the pass was sold in our discussions in Madrid. We agreed to discuss questions which must be discussed but which have not yet been discussed. It would be folly to proceed without having detailed and proper answers to those questions. Many aspects of political union will come up in different parts of the intergovernmental conference. We are considering carefully our precise response to all the important points that will come up there.

    On the expenditure on publicity, I am bound to say that the Commission’s public relations campaign was not, as reported, put to Heads of Government at Madrid and received no specific endorsement from Heads of Government at Madrid. The reason is that the Commission has authority to determine the proportion of its budget to be spent on information work and has chosen to exercise it in that fashion. It was emphatically not a matter that was put to Heads of Government at Madrid and endorsed by them.

    Mr. James Molyneaux (Lagan Valley) The Prime Minister will have noted that on page 8 of the communiqué, there appear the words: “kept on a sound track”.” Assuming that those words refer not to some method of amplification but to sound money within Europe, and in view of the fact that the Prime Minister has rightly said that the decision is one of the most important this country has taken for, perhaps, 200 years, will he consider the establishment of a super, high-powered Select Committee, with representatives of all parties in the House thereon, to examine and come up with hard facts as opposed to opinions? Such a Committee would have the extra benefit of enabling certain parties to concentrate their own minds.

    The Prime Minister I can certainly confirm to the right hon. Gentleman that the words “sound track” relate to sound money and sound economic policies. The guiding lights of those were first put in the Maastricht treaty, at British insistence. They remain there for any move forward to EMU and have the strong support of a number of other nation states. I shall reflect on what the right hon. Gentleman said. Within Government, we shall conduct our own examination of whether those matters are being followed, quite apart from an examination of the outcome of the Maastricht criteria.

    Mr. David Howell (Guildford) Does my right hon. Friend accept that his excellent questions at Madrid about the ill-named “Euro”, its huge potential cost for the European budget, its divisive potential and its threat to employment in Europe were penetrating and timely? It is a great pity that we have not heard similar intelligent questions from Opposition Front-Bench Members.

    Looking ahead, does my right hon. Friend accept that if we get to the transitional period, when a hard “Euro” will circulate along with the national currencies, the system will have some resemblance to his own plan for the hard ecu, which he put forward five years ago? Will my right hon. Friend suggest a more intelligent and modified version, if we get to the transitional period, to make it a permanent period on the ground that nothing lasts like the provisional?

    The Prime Minister My right hon. Friend is correct to say that in the proposed transitional period of 1999–2002, the new currency will effectively co-exist as a parallel currency with national currencies rather than as a core currency, to use the words of my right hon. Friend the Member for Worthing (Sir T. Higgins). That is similar to the hard ecu proposal which I first put forward in 1990, except that it would not proceed, as the hard ecu would have proceeded under my proposal, by a market-driven route to become a single currency, but would move, under the present proposals, arbitrarily on a fixed state to become a single currency.

    It may be that as we approach that period, the prospect of reviving the sound economics of the hard ecu proposal will return. At the moment, enthusiasm for proceeding under the Maastricht treaty route remains and I am not optimistic about the hard ecu reappearing. In economic terms, I do not believe by any stretch of the imagination that I am the only Head of Government sitting round the table who now regrets that we did not take that route.

    Madam Speaker Mr. Andrew Faulds.

    Hon. Members Oh.

    Mr. Andrew Faulds (Warley, East) Thank you, Madam Speaker. Was there any discussion in Madrid that because of the plasticity of European purpose, or perhaps lack of policy, America had to step in to sort out the Bosnian imbroglio and bring just the possibility of peace?

    The Prime Minister There was some discussion of future policy in Bosnia. There was no look back on how the present position came about. There was considerable discussion about the peace implementation force and about the activities of Carl Bildt in ensuring that the civilian aspects of the Bosnian peace are carried forward. We spent some time discussing that and no one is in any doubt about the huge matters that still have to be dealt with.

    Mr. Nicholas Budgen (Wolverhampton, South-West) Does my right hon. Friend agree that any core currency is bound to contain both France and Germany? France’s attitude towards the core currency will be vitally influenced by whether Britain is there as a balancing power against Germany. Are we not going to create great resentment if we do not tell France and Germany as soon as possible what our attitude in principle is?

    The Prime Minister Our attitude is one of practice. We shall make our decision when we know precisely what the circumstances may be that would impact upon our country. Whatever interest we may have in helping France or other countries to make up their mind, and I appreciate that they may welcome a view of where Britain might be at some stage, the first obligation that we have is to make the right decision for this country. I do not believe that we can make the right decision for this country until we know the answer to questions as yet unanswered and know the economic circumstances that have not, as yet, unfolded.

    Dr. Jeremy Bray (Motherwell, South) Does the Prime Minister exclude UK participation in any exchange rate arrangements if EMU does go ahead?

    The Prime Minister I certainly do not exclude UK agreement to matters such as inflation targets in order to ensure a market-driven route towards largely convergent economic policies and secure exchange rates. I do not believe that going back into the artificiality of an exchange rate mechanism, which, on this occasion, would be outside the core currencies, is a negotiable proposition among the Heads of Government and it is not one that I would wish sterling to join, as I said earlier.

    Sir Giles Shaw (Pudsey) May I congratulate my right hon. Friend on the way in which he is handling these issues? I remind him that a policy which is both careful and cautious is a policy of prudence and that, bearing in mind the complexity and the scale of the ultimate decisions on the matter, he is absolutely right to occupy the crease and bat for Britain as long as it takes?

    The Prime Minister I am grateful to my hon. Friend, who has a long and distinguished interest in European matters. I assure him that I shall continue to do that. When I indicated to the House earlier that the decisions taken upon monetary matters and enlargement were crucial not just to the future of this country but to the future of all Europe, I did not regard that as a casual throwaway line, but I meant it to be taken absolutely as I stated it. It is fundamentally true. For that reason, I believe that we have an obligation to be cautious. The burden of proof must rest upon those who wish us to make the change rather than those who wish us not to do so. I think that we are right to be cautious and I will remain cautious.

    Mr. Dennis Skinner (Bolsover) Is not the truth of the matter that the Madrid decisions, with which the Prime Minister acquiesced, represent another two or three small steps towards economic and monetary union? Why did not the Prime Minister vote against some of the issues that were presented to him? Why did not the Government decide to oppose that barmy name “Euro” for the currency? Is not the fact of the matter that the Prime Minister has come here today to represent a lot of camouflage about the Madrid summit to try to appease his Back Benchers, when the truth is that he sold out at Madrid and that the people out there will understand that?

    The Prime Minister If camouflage was needed, I would have thought that it was between the Labour Front Bench and below the Gangway on that side of the House. If there is going to be a debate, I suggest that it starts on Labour Benches, and Labour Members can try and work out precisely what their position is. We now see just how split, despite all they have said, they really are on European matters, and have been right from the start. [HON MEMBERS: “Answer the question.”] The answer to the hon. Gentleman’s question, in every respect, is no.

    Mrs. Edwina Currie (South Derbyshire) While it is correct, as my right hon. Friend has said, that if the wrong decisions are taken on monetary union, the result will be turmoil and chaos, could I possibly dig out of him an admission, however tentative, that if the right decisions are taken, to create a currency union among 150 million of the world’s richest citizens could be highly beneficial to all the nations concerned?

    The Prime Minister My hon. Friend puts precisely the question to which an answer needs to be found. We cannot be certain of an answer to that question without answers to the questions that I asked in Madrid, which is precisely why I asked those questions. We need to know the answers before making a judgment, which is the view of a number of people in Europe. Equally passionate views are held in the opposite direction. Until we know the details and answers to those questions, it is not possible to take a rational view of the implications of a single currency. That is what I seek to provide.

    Mr. Tam Dalyell (Linlithgow) My question is on a different but increasingly important issue, in view of events in Russia: the Community’s relations with the Ukraine. What exactly are we doing to help those people? In his talks with President Kuchma last week, what did the Prime Minister respond to the President, who is also the former technical director of Baikenor, on technical co-operation, not least in relation to the Ukraine’s valuable resources in space, which are left over from the Soviet Union, and the skills that could benefit us all?

    The Prime Minister I raised a number of matters when I spoke to President Kuchma a week or so ago. As the hon. Gentleman and the House would have expected, we discussed Chernobyl and spent some time discussing the package of support that the international community has now provided for closing Chernobyl at the turn of the century. We also looked at a variety of ways in which we could increase the trading and investment relationship between the United Kingdom and the Ukraine. There is huge scope, particularly in the energy sector, for the mutual benefit of British investment and for British technology to go into the Ukraine, where it would be warmly welcomed by the Ukrainians. I also stressed to President Kuchma that one of the inhibitions to ensuring that that investment can proceed are the present financial and legal restraints in parts of the Ukraine.

    That was the substance of our discussion. It was an extremely worthwhile visit, which will be followed up by further ministerial visits to the Ukraine. I hope that some of those will take with them high-powered delegations of business men, so that we can examine the business relationship between the United Kingdom and the Ukraine and build on it, because the Ukraine will be an important part of the European business scene in future.

    Mr. Hugh Dykes (Harrow, East) Despite the usual trading of insults between the party leaders today on this momentous matter, which is of great importance to this country, and the regrettable lack of listening to the sensible suggestions made by the leader of the Liberal Democrats, would not it be a good idea for the party leaders to get together? As a large majority of Members of this House are in favour of EMU, they could, on a free-vote basis, present the positive factors in favour of monetary union to the British public.

    The Prime Minister I always believe in the politics of rationality. My hon. Friend pitches a question that would demand a high price for the Leader of the Opposition in terms of discussing the reality of what lies immediately ahead. I saw no great sign of it from the leader of the Liberal Democrats this afternoon. If we can determine the answer to the questions that I have put, they will be material to framing the opinions of people in this House and beyond about the desirability or otherwise of the course that was set out some time ago. I reiterate the same point because it is undeniable: without that information, credible decisions cannot be taken. I am trying to provide it. I shall then willingly make it available to the Leader of the Opposition in a tutorial or in any other way that he wishes.

    Mrs. Margaret Ewing (Moray) As a decision must ultimately be taken, will a time limit be placed on the study? What will happen once the study becomes available? Will it be widely available and how will we move into decision mechanisms?

    The Prime Minister It is not quite clear how long the study will take. I saw it reported that it will take two or three years. That is clearly nonsense – it will take nothing like that. I would expect a report when we get to Florence in the summer, but I am not sure whether it will be the definitive report, and neither is anybody else. Once the report has been produced, I am sure that it will be discussed by ECOFIN and the European Council. It may be placed on the European Council’s agenda, but that has not yet been decided.

    Sir Teddy Taylor (Southend, East) In view of the substantial misery and unemployment created already by European fixed exchange rates, is the Prime Minister aware that people with all kinds of views of EMU will enthusiastically welcome his statement that, in the event of the “Euro” being established by a small number of countries, there is no way that sterling will have a fixed relationship with it? Am I correct in my interpretation and, if so, does the Prime Minister accept that that will be very widely welcomed, not only in the Conservative party?

    The Prime Minister Yes, my hon. Friend sets out the position entirely accurately. It is as he says.

    Mr. Tony Banks (Newham, North-West) May I say to the Prime Minister that, personally; I very much welcome the concept of a single currency, although certain safeguards are necessary, including making unemployment levels part of the convergence criteria?

    On a more practical matter, was the story in the Sunday newspapers – that the Queen’s head is too large for the “Euro” coin – true? If that is so, does the Prime Minister intend to negotiate the size of the coin, or does he have more drastic measures in mind?

    The Prime Minister On the hon. Gentleman’s first argument about unemployment levels, I simply have to say to him that, if he were to make unemployment levels part of the convergence criteria, there would be no single currency in his political lifetime, however long that is likely to be.

    Ms Clare Short (Birmingham, Ladywood) It depends what the banding is.

    The Prime Minister The hon. Lady says, “It depends what it is.” She probably believes that the 13 per cent. of France is a good convergence level. I am not sure that that is what her hon. Friend had in mind. Perhaps that is another difference between Labour Front and Back-Bench Members; I cannot imagine. We seem to be uncovering so many differences today that it is difficult to determine. Let us hope that we can go on and find some more.

    Sir Peter Hordern (Horsham) As very few countries will be able to qualify for the single currency, will my right hon. Friend say what the position of those countries will be when they find that their economies are subject to intense competition from the countries that do not form part of the single currency? Will he give the House an assurance that, in that event, there can be no suggestion of any reprisals being taken by members of the single currency against countries outside it?

    The Prime Minister My right hon. Friend puts his finger on precisely one of the matters that I have been raising with our colleagues at the European Council. It is precisely for that reason that some of the countries that anticipate that they will be in a single currency have asked for an exchange rate mechanism outside the single currency, to prevent the flexibility with which countries usually deal with economic difficulties. The danger of that, apart from the inherent difficulties that have been demonstrated several times in the past six or seven years, is that it would lead to very high structural levels of unemployment in some of the weaker-performing countries in the southern part of Europe.

    That is precisely the matter that the hon. Member for Newham, North-West (Mr. Banks) brought to the forefront of my mind a moment or so ago, when he suggested that unemployment levels should be convergent. If that were the case, many of the southern countries of Europe would never, on that basis, be likely to meet the criteria for gaining admission to a single currency. That might mean that a European Union – although I believe that it will become more variable in the application of its policies to different members, and I believe that that is desirable – would for the first time find a fundamental variation in policy on one of the very basics of the whole basis of the European Union, that is, the currency question.

    Those are questions of immense importance. There is, as yet, no credible answer to the question that my right hon. Friend asks. I am asking for one.

    Mr. Nigel Spearing (Newham, South) As economic and monetary union surely requires the convergence of the total economies of the member states, why is it that only certain indices in the public sector are included? Why not also include comparable indices in the balancing private sector?

    Surely economic and monetary union also requires the establishment of a centralised, absolute monarchy of bankers, who are separate from national Governments and from the institutions of the Community. However, surely one of the principles of European Union is to defend the western view of democracy, which is voting into power assemblies that, in turn, control government? Is not that an anomaly, and will the Prime Minister tell us whether the European Council has explained that anomaly? If it has not, will he do so now?

    The Prime Minister I have some sympathy with the hon. Gentleman’s earlier comments about convergence, although he is plainly wrong when he refers to convergence as only affecting matters in the public sector. One of the most important convergents is a high degree of price stability. Price stability, which has clear implications for what is happening elsewhere in the economy, not only is a matter for the public sector, but goes right across the economy as a whole. The hon. Gentleman is wrong on that point and I think that his subsequent points were addressed and determined many years ago.

    Mr. Bernard Jenkin (Colchester, North) May I congratulate my right hon. Friend on his description of the other member states, which he said were rushing like lemmings over a cliff towards currency union? While 150 million people may be inside the currency union, is it not a fact that 5.5 billion people remain outside it? Is it not a perfectly viable option for this country to choose to opt out of monetary union and model ourselves on the thousands of economies round the world – large and small – which have independent currencies?

    The Prime Minister That is certainly an option. From the moment when I negotiated the opt-out at Maastricht, it has always been possible that this country might decide to take the decision, in its own interests, not to be a part of a larger currency union. There is no doubt that we could continue without entering into a currency union. We would have to decide whether the balance of advantage for the Government, the City, the economy and our future trading relationships rested with our being in or being out. That is precisely the substantive point. Of course we could be out and there is no doubt that we could stay out. We shall have to weigh the balance of advantage when the time comes.

    My hon. Friend is correct in his earlier point: more citizens of Europe will be outside the single currency at the outset, and for some years afterwards, than inside it.

    Mr. Donald Anderson (Swansea, East) Will the Prime Minister confirm that it was the common understanding of our partners at Madrid that no substantive decisions would be made on the IGC until after the conclusion of the election in this country? Does that not mean that, increasingly, this Administration will be seen by our partners as a lame duck Administration, which is bad for Britain?

    The Prime Minister The hon. Gentleman builds his question upon a false premise, as there was no such agreement at Majorca or at Madrid. When we begin the intergovernmental conference, which will be launched in Turin on 29 March, I hope that we shall begin to take decisions as we move through the year. Decisions will not all be held to the end of the year. We may complete the intergovernmental conference within a year, or it may take longer. If we complete it within a year, the whole matter may be determined within the lifetime of this Parliament. That is the decision that I have reached and, unless the hon. Gentleman was serving biscuits somewhere, he is in no position to shake his head.

    Sir Archibald Hamilton (Epsom and Ewell) Does my right hon. Friend agree that much of the drive in Europe has come from Germany, which has a lot to do with the fact that Chancellor Kohl is ashamed of Germany’s past and frightened for its future? Does my right hon. Friend also agree that the democratic institutions in Europe are woefully inadequate? If we drive towards political union without proper democratic representation at the centre, it will lead to the emergence of fascist and ultra-nationalist parties, which will want to withdraw from Europe and break up the European Union. That would deny Chancellor Kohl the goal that he is seeking and, for many hon. Members, would lead to a very unsatisfactory outcome.

    The Prime Minister The democratic institutions of Europe are bound to be considered at the intergovernmental conference. That is true of both the present powers and nature of the European Commission and the other institutional questions, which will be considered expressly during the forthcoming intergovernmental conference. We must examine those issues for another reason, apart from those set out by my right hon. Friend. As the European Union enlarges – as I profoundly hope that it will – I believe that it will provide an historic opportunity for this generation of politicians to change the face of Europe in a thoroughly beneficial way. In those circumstances, many of the present institutions of the European Union will prove inadequate to deal with the enlarged number.

    Several hon. Members rose –

    Madam Speaker Thank you, Prime Minister. We must now move on to the second statement. I regret that so many hon. Members are disappointed, but I have kept the Prime Minister at the Dispatch Box for more than an hour.

  • Presidency Conclusions Following Madrid European Council – 16 December 1995

    Below is the text of the Presidency Conclusions, following the Madrid European Council meeting held on 15th and 16th December 1995.

    INTRODUCTION

    The European Council, meeting in Madrid on 15 and 16 December 1995, took decisions on employment, the single currency, the Intergovernmental Conference and enlargement to bring in countries of Central and Eastern Europe and the Mediterranean.

    The European Council considers that job creation is the principal social, economic and political objective of the European Union and its Member States, and declares its firm resolve to continue to make every effort to reduce unemployment.

    The European Council adopted the scenario for the changeover to the single currency, confirming unequivocally that this stage will commence on 1 January 1999.

    The European Council decided to name the currency, to be used from 1 January 1999, the “Euro”.

    The European Council continued its deliberation on the future of Europe, which was launched in Essen and continued in Cannes and Formentor.

    In this connection, having welcomed the Reflection Group’s report, the European Council decided to launch the Intergovernmental Conference on 29 March 1996 in order to establish the political and institutional conditions for adapting the European Union to present and future needs, particularly with a view to the next enlargement.

    It is essential that the Conference achieve results sufficient to enable the Union to bring added value to all its citizens and to shoulder its responsibilities adequately, both internally and externally.

    The European Council notes with satisfaction some significant achievements in the area of external relations which have occurred since its last meeting and in which the European Union has played a decisive role:

    – the signing in Paris of the Dayton Agreement, which puts an end to the terrible war in former Yugoslavia and builds on considerable European efforts over the preceding months in military, humanitarian and negotiating terms. The European Council recognizes the decisive contribution made by the United States at a crucial moment;

    – the New Transatlantic Agenda and the Joint EU – US Action Plan signed at the Madrid Summit on 3 December 1995, which are major joint commitments with the United States to revitalize and strengthen our association;

    – the signing in Madrid of the Inter-Regional Framework Agreement between the European Union and Mercosur, the first agreement of this type to be concluded by the European Union;

    – the Barcelona Declaration, launching a new, comprehensive Euro-Mediterranean association which will promote peace, stability and prosperity throughout the Mediterranean through a permanent process of dialogue and cooperation;

    – the signing in Mauritius of the revised Lomé IV Convention by the European Union and the ACP States, which will consolidate the association between the two sides;

    – the European Parliament’s assent to the customs union between the European Union and Turkey, which opens the way for the consolidation and strengthening of a political, economic and security relationship crucial to the stability of that region.

    The European Council began its proceedings by exchanging ideas with Mr Klaus HÄNSCH, President of the European Parliament, on the main subjects for discussion at this meeting.

    Finally, a meeting took place today between the Heads of State and Government and the Ministers for Foreign Affairs of the associated countries of Central and Eastern Europe, including the Baltic States (CCEE), as well as Cyprus and Malta. There was a broad exchange of views on these conclusions, matters concerning the pre-accession strategy and various issues relating to international policies.

    I: ECONOMIC REVITALIZATION OF EUROPE IN A SOCIALLY INTEGRATED FRAMEWORK

    1. ECONOMIC AND MONETARY UNION
    2. The scenario for the changeover to the single currency
    3. The European Council confirms that 1 January 1999 will be the starting date for Stage 3 of Economic and Monetary Union, in accordance with the convergence criteria, timetable, protocols and procedures laid down in the Treaty.

    The European Council confirms that a high degree of economic convergence is a precondition for the Treaty objective to create a stable single currency.

    1. The name of the new currency is an important element in the preparation of the transition to the single currency, since it partly determines the public acceptability of Economic and Monetary Union. The European Council considers that the name of the single currency must be the same in all the official languages of the European Union, taking into account the existence of different alphabets; it must be simple and symbolize Europe.

    The European Council therefore decides that, as of the start of Stage 3, the name given to the European currency shall be Euro. This name is meant as a full name, not as a prefix to be attached to the national currency names.

    The specific name Euro will be used instead of the generic term “ECU” used by the Treaty to refer to the European currency unit.

    The Governments of the fifteen Member States have achieved the common agreement that this decision is the agreed and definitive interpretation of the relevant Treaty provisions.

    1. As a decisive step in the clarification of the process of introduction of the single currency, the European Council adopts the changeover scenario attached in Annex 1 which is based on the scenario elaborated at its request by the Council, in consultation with the Commission and the European Monetary Institute. It notes with satisfaction that the scenario is compatible with the EMI report on the changeover.
    2. The scenario provides for transparency and acceptability, strengthens credibility and underlines the irreversibility of the process. It is technically feasible and aims to provide for the necessary legal certainty, to minimize adjustment costs and to avoid competitive distortions. Under the scenario, the Council, in the composition of Heads of State or Government, will confirm as early as possible in 1998 which Member States fulfil the necessary conditions for the adoption of the single currency. The European Central Bank (ECB) will have to be created early enough so as to allow preparations to be completed and full operation to start on 1 January 1999.
    3. Stage 3 will begin on 1 January 1999 with the irrevocable fixing of conversion rates among the currencies of participating countries and against the Euro. From that date, monetary policy and the foreign exchange rate policy will be conducted in Euro, the use of the Euro will be encouraged in foreign exchange markets and new tradeable public debt will be issued in Euro by the participating Member States.
    4. A Council Regulation, whose technical preparatory work shall be completed at the latest by the end of 1996, will enter into force on 1 January 1999 and provide the legal framework for the use of the Euro, which, from this date, will become a currency in its own right, and the official ECU basket will cease to exist. This regulation will establish, as long as different monetary units still exist, a legally enforceable equivalence between the Euro and the national units. The substitution of the Euro for national currencies should not of itself alter the continuity of contracts, unless otherwise provided in the contract. In the case of contracts denominated by reference to the official ECU basket of the European Community, in accordance with the Treaty, substitution by the Euro will be at the rate of one to one, unless otherwise provided in the contract.
    5. By 1 January 2002 at the latest, Euro banknotes and coins will start to circulate alongside national notes and coins. At most 6 months later, the national currencies will have been completely replaced by the Euro in all participating Member States, and the changeover will be complete. Thereafter, national banknotes and coins may still be exchanged at the national Central Banks.
    6. The European Council calls on the ECOFIN Council to speed up all the additional technical work necessary to implement the changeover scenario adopted today. The labelling of Euro banknotes and coins in the different alphabets of the Union will also be defined.
    7. Further preparation of Stage 3 of EMU

    Durable economic convergence

    Budgetary discipline is of crucial significance both for the success of the Economic and Monetary Union and for the acceptance of the single currency by the public. It is therefore necessary to ensure that, after moving to Stage 3, public finances are kept on a sound track in line with Treaty obligations.

    The European Council notes with interest the Commission’s intention to present in 1996 its conclusions on ways to ensure budgetary discipline and coordination in the monetary union in accordance with the procedures and principles of the Treaty.

    The relationship between Member States participating in the Euro area and non-participating Member States.

    The future relationships between Member States participating in the Euro area and non-participating Member States will have to be defined prior to the move to Stage 3.

    The European Council requests that the ECOFIN Council, together with, in their respective fields of competence, the Commission and the EMI, study the range of issues raised by the fact that some countries may not initially participate in the Euro area. In particular, the study should cover those issues related to monetary instability.

    Work ahead

    The European Council requests the ECOFIN Council to report on the two foregoing questions as soon as possible.

    Work on both questions should respect the Treaty requirement that Member States entering the Euro area after 1999 should be able to do so on the same terms and conditions as those applied in 1998 to the initial participating Member States.

    1. BROAD ECONOMIC POLICY GUIDELINES

    The European Council reiterates the need to maintain a high degree of convergence between Member States’ economies on a durable basis, in order both to create stable conditions for changing over to the single currency and to secure smooth functioning of the internal market. In that connection, it approved the Council report on the implementation of the broad economic policy guidelines adopted in July 1995.

    1. EMPLOYMENT
    2. The European Council reaffirms that the fight against unemployment and for equal opportunities is the priority task of the Community and its Member States.

    The medium-term strategy outlined in Essen and confirmed at Cannes provides the appropriate framework for developing the measures agreed. These measures have already begun to apply in the Member States with generally positive results, thanks mainly to an appropriate combination of structural measures and policies favouring sustained economic growth.

    The European Council welcomes the Commission’s interim report and assessment of the mutually beneficial effects of greater coordination of the Union’s economic and structural policies. It requests the Commission to submit its final report at the European Council meeting in December 1996.

    1. The European Council is pleased with the way in which the procedure for monitoring employment provided for in Essen, based on a strategy of cooperation between all those involved in this common endeavour, has been formulated and put into practice for the first time:

    – the Member States have translated the Essen recommendations into multiannual employment programmes incorporating innovative measures which have already started to bear fruit and which are the appropriate instrument for transposing the recommendations to be adopted by the Council in the socio-economic area;

    – the job-creation strategy in the European Union will receive a new impetus with the approval by the European Council of the joint report submitted by the Council (ECOFIN and Labour and Social Affairs) and the Commission (Annex 2). For the first time a convergence of views has been achieved on the approach to be followed to ensure that the current economic recovery is accompanied by a more thoroughgoing improvement in the employment situation.

    The approval of that report fulfils the Essen instructions on monitoring employment and consolidates the employment policies agreed at previous European Council meetings. With the cooperation of all parties involved, new steps are being taken not only towards identifying the obstacles in the way of reducing unemployment but above all in connection with the macro-economic and structural aspects which substantially favour the creation of new jobs;

    – it welcomes the fact that, in their Declaration from the Social Dialogue Summit in Florence, the social partners at European level arrived at a common criterion for measures to promote employment. Similarly, it is pleased to note the broad degree of convergence between this agreement by the social partners and the criteria in the single report;

    – within this same line of involvement of the various players and institutions operating within the European Union, the European Council has examined with great interest the European Parliament Resolution on employment, observing here too the broad convergence between that Resolution and the single report.

    1. On the basis of the recommendations in the single report, the European Council urges Member States to regard as priorities the following spheres of action in their multiannual employment programmes:

    – stepping up training programmes, especially for the unemployed;

    – rendering business strategies more flexible in areas such as the organization of work and of working time;

    – ensuring a pattern of non-wage labour costs appropriate to unemployment-reducing objectives;

    – continuing the current wage restraint by linking it to productivity, as an essential element in promoting intensive use of manpower,

    – obtaining the maximum level of efficiency in social protection systems so that, while maintaining where possible the level attained, they never act as a disincentive to seeking work;

    – pressing for greater conversion of passive policies to protect the unemployed into active job-creation measures;

    – substantially improving the machinery for information between those providing and those seeking employment;

    – promoting local employment initiatives.

    The above measures will be applied with particular emphasis on those categories requiring special attention, such as young people seeking their first job, the long-term unemployed and unemployed women.

    As regards measures on wage restraint, it recalls that such action falls within the social partners’ own sphere. The development of social security contributions points to the need to act within a margin for manoeuvre which will preserve the financial stability of social protection systems.

    The degree of application of the multiannual employment programmes and the recommendations adopted in Madrid will have to be reviewed at the European Council meeting in December 1996, with the aim of reinforcing the employment strategy and adopting further recommendations.

    1. The European Council reiterates the need to ensure economic growth which generates more employment and urges Member States to persevere with policies in line with the broad economic policy guidelines, backing them up with the structural reforms already initiated or awaiting application, with the aim of eliminating existing rigidities and achieving better operation of labour markets in the goods and services sectors.

    Maximum advantage must be taken of the opportunity offered by the current phase of economic expansion to achieve additional progress in the structural reforms required.

    1. The European Council emphasizes lastly the important job-creation role played by internal policies, especially the internal market, environment policy, SMEs and the trans-European networks.
    2. Members of the European Council that participate in the Agreement annexed to the social protocol to the Treaty note with satisfaction that for the first time an agreement has been reached with the social partners in the framework of that Agreement, in connection with the draft Directive on combining working and family life (parental leave). It hopes this agreement will open the way for subsequent agreements in other important social and employment areas.
    3. Lastly, in order to ensure the continued success of this strategy, it requests the Council (ECOFIN and Labour and Social Affairs) and the Commission to monitor the application of those programmes continuously and to submit a further joint annual report for its meeting in December 1996. So as to facilitate practical application of the employment monitoring procedure decided on in Essen, it is necessary to establish as soon as possible the mechanisms envisaged in the joint report (stable structure and common indicators). The European Council reaffirms its determination to continue to give the objective of job creation maximum priority in the European Union in the years to come.
    4. OTHER POLICIES

    Internal market

    The European Council takes note of the Commission report on the internal market and welcomes the agreements reached on a significant number of proposals and the adoption of a new procedure for notifying national measures which could hinder the free movement of goods, thus ensuring effective application of the principle of mutual recognition.

    The European Council took note of the CIAMPI report on competitiveness and instructed the Council to examine it.

    The internal market must benefit its citizens and integrate them to the full, through the application of the Treaty provisions on freedom of movement, better protection for consumers, an improvement in the social dimension and the development of mechanisms to inform citizens of the advantages they can obtain from the internal market and to gain a better understanding of their needs.

    The European Council stresses the importance of completing the establishment of the internal market by introducing greater competition in many sectors in order to improve competitiveness with a view to job creation. In this connection the European Council reaffirms its 1995 Cannes conclusions regarding the need to make that objective compatible with the performance of tasks of general economic interest specific to the public services. In particular, it is necessary to ensure equal treatment for citizens, uphold requirements as to quality and continuity of services, and contribute to balanced regional development.

    The European Council confirms that trans-European networks can make an essential contribution to competitiveness, job creation and the cohesion of the Union. It takes note with satisfaction of the Commission report and of progress recently achieved in this area. It calls upon the Council and the Parliament to complete the legislative framework rapidly and upon Member States to give top priority to the effective implementation of projects and, in particular, those identified by the European Council as being of special importance.

    The European Council requests the ECOFIN Council to adopt, on a proposal from the Commission, the necessary decisions to complement the financial resources currently available for the Trans-European Networks.

    SMEs

    The European Council took note of the Commission report on the role played by SMEs as a source of jobs, growth and competitiveness, which points in particular to the need to:

    – simplify administrative formalities;

    – ensure better access to information, training and research;

    – remove obstacles affecting SMEs within the internal market and promote their internationalisation;

    – improve the financial environment for them by means of better access to capital markets and encourage development of the European Investment Fund function with regard to SMEs.

    The European Council urges the Commission to put these aims into practice as swiftly as possible in the framework of the next integrated programme for SMEs.

    Environment

    The European Council welcomes the clear and decisive role the Union has been playing internationally in defence of the environment, especially in the control of transboundary movements of hazardous wastes and their disposal (Basle Convention), biological diversity, substances that deplete the ozone layer (Montreal Protocol) and other subjects dealt with at the Third Pan-European Conference of Environment Ministers.

    The European Council notes with satisfaction the important agreements reached in the context of that policy and the debate on a new integrated approach centring not only on the quality of water but also on its scarcity as a limited economic and environmental resource.

    Agriculture

    The European Council welcomes the progress of work on the reforms of the common market organizations (CMOs). It urges the Council to ensure that the common organization of the market in rice is adopted before the end of the year and the common organization of the market in wine as soon as possible. It asks the European Parliament to deliver its Opinion on the proposed reform of the common organization of the market in fruit and vegetables with a view to its adoption at the earliest opportunity.

    Fisheries

    The European Council notes that Council proceedings have resulted in full compliance with the instructions given by the European Council at Essen, leading to full integration of Spain and Portugal into the common fisheries policy.

    II: A CITIZEN-FRIENDLY EUROPE

    1. SUBSIDIARITY

    The European Council held an exchange of views on the application of the principle of subsidiarity as set out in the Treaty. It confirmed the guidelines established at its meetings in Birmingham and Edinburgh, which should inform Union action.

    The European Council took note of the second annual report from the Commission on the application of the subsidiarity and proportionality principles, and is pleased that the 1993 programme on the adaptation of existing legislation to the principle of subsidiarity is practically finalized.

    It requested the Commission to report to the European Council at its meeting in Florence on the application of the principles of subsidiarity and proportionality to current EC legislation and to proposals under consideration.

    1. POLICIES CLOSE TO THE CITIZEN

    The European Council urges progress in the fight against social exclusion in its various forms, taking the view that solidarity is an essential factor for integration and the attainment of common objectives within the European Union.

    The European Council takes note of the approval of the fourth programme on equal rights and opportunities for women and men and wishes to continue action in favour of women with a view to achieving fully equal treatment. For the same purpose, the European Union will also monitor annually the action platform which emerged from the Beijing Conference.

    The European Council reaffirms the importance of cultural action as a way of fostering a Community dimension in the cultures of all the Member States of the Union. The European Council stresses its interest in very shortly arriving at a viable agreement on the RAPHAEL programme regarding cultural heritage of European significance.

    The European Council welcomes the renewal of the Media programme and also the decisive progress achieved in the Council on the proposal to amend the Directive on television without frontiers, which will, it hopes, be adopted as soon as the necessary conditions obtain.

    The European Council notes the work done on the protection of public health and urges adoption of the programmes to combat cancer and to combat AIDS and the programme of action on health education and training.

    The European Council notes the major report on the state of health in the European Union and trusts that the European Parliament and the Council will be able to adopt the programme of action on health monitoring and inspection as soon as possible.

    The European Council expresses satisfaction at the progress made in achieving greater transparency in Council proceedings, through the approval of a Code of Conduct to facilitate public access to Council minutes and statements when the Council acts as legislator, and at the growing number of debates which have been broadcast to the public.

    The European Council welcomes the adoption of two Decisions on consular protection, which will give citizens of the Union access to all the Member States’ consulates in third countries, in compliance with Article 8c of the Treaty.

    1. JUSTICE AND HOME AFFAIRS

    The European Council took note of the report on activities carried out in 1995 in the field of justice and home affairs, which describes a very wide range of activities, among them the conclusion of four Conventions and the establishment of the Europol Drugs Unit.

    It is the European Council’s ambition that the Union can create an area of freedom and security for its citizens and it requests that, with a view to extending cooperation in these areas, future activities be focused on programmed priority areas, including Europol, over a number of Presidencies, particularly in relation to:

    1.Terrorism

    The European Council notes with great satisfaction the Council’s approval of the La Gomera Declaration on terrorism (Annex 3) as evidence of the Union’s firm resolve to reinforce collaboration in the fight against terrorism, one of the priority objectives of cooperation in justice and home affairs. It urges the Council to give expression to such cooperation in the form of effective practical measures.

    1. Drugs and organized crime

    The European Council approves the report of the Group of Experts on Drugs and stresses the urgency of translating the guidelines it contains into precise, coordinated operational activities within the Union.

    The European Council invites the incoming Italian Presidency, in collaboration with the future Irish Presidency and after consultation of the Member States, the Commission, the Europol Drugs Unit and the European Monitoring Centre for Drugs and Drug Addiction, to prepare a programme of activities which takes account of the guidelines in that report. The European Council will examine progress in the application of that report in December 1996.

    In this connection, the European Council considers it a matter of priority to establish a mechanism for cooperation between the European Union and Latin America, including the Caribbean, to combat drugs. It considers that the international strategy for combating drug abuse and unlawful trafficking in drugs must be based on a comprehensive, coordinated approach designed to reduce drug supply and demand through bilateral cooperation between both regions. It welcomes the Franco-British initiative on the Caribbean, which proposes regional action to combat trafficking in narcotics and which is also included in action under the Transatlantic Agenda.

    The European Council calls upon the Council and the Commission to prepare a report and the requisite proposals for action in both areas by April 1996. An ad hoc Working Party on drugs will be set up for the purpose.

    The European Council is pleased that an Agreement on precursors will be signed in Madrid on 18 December 1995 between the Community and the five countries of the Andean Pact, an important step forward in this strategy. In that connection, it supports the maintenance of preferences for the Andean countries and Central America as part of the special arrangements for combating drugs in the Generalized Scheme of Preferences.

    The European Council also expresses satisfaction at the Conference on drugs held in Brussels on 7 and 8 December 1995.

    The European Council takes note of the proceedings on organized crime and urges the Council to adopt the necessary operational measures to combat this threat to all the Member States.

    The European Council calls upon the Council and the Commission to consider the extent to which harmonisation of Member States’ laws could contribute to a reduction in the consumption of drugs and unlawful trafficking in them.

    1. Judicial cooperation

    The European Council considers that priority should be given to extradition and mutual judicial assistance in criminal matters and to the extension of the Brussels Convention and document transmission in civil matters. It expresses satisfaction at the signing of the Convention on insolvency proceedings.

    1. Immigration and asylum

    The European Council expresses satisfaction at the results achieved regarding third-country nationals residing illegally in the Union, readmission agreements and combating illegal immigration and illegal employment, and urges the Council to continue proceedings in this area.

    The European Council also expresses satisfaction at the approval of the Resolution on burden-sharing with regard to the admission of displaced persons, and the Decision on an alert and emergency procedure for burden-sharing.

    The European Council takes note of the common position aimed at harmonized application of the definition of the term “refugee” within the meaning of Article 1 of the Geneva Convention and calls for ratification of the Dublin Convention to be completed.

    1. External frontiers

    The European Council urges the Council to settle as soon as possible the issues outstanding with regard to the adoption of the Convention on persons crossing the external frontiers of the Member States of the European Union and welcomes the results achieved on visas.

    1. Racism and xenophobia

    The European Council took note of the results obtained on defining strategies to combat racism and xenophobia (Annex 4); it urges adoption of the Joint Action concerning action to combat racism and xenophobia with the aim of approximating Member States’ laws and enhancing the opportunities for judicial assistance between the Member States in this area.

    The European Council took note of the interim report from the Consultative Commission and instructs it to continue its proceedings on that basis and complete the feasibility study for a European Monitoring Centre on Racism and Xenophobia in time for the European Council meeting in June 1996.

    1. FRAUD AND PROTECTION OF FINANCIAL INTERESTS

    The European Council took note of the comparative analysis and synthesis document on national measures taken to combat wastefulness and the misuse of Community resources, prepared by the Commission on the basis of reports from the Member States.

    The European Council supports the conclusions approved by the Economic and Financial Affairs Council (Annex 5) and calls upon the Member States and the Institutions to adopt the necessary measures to ensure an equivalent level of protection throughout the Community and in the Community budget and the EDF as a whole.

    The European Council also expresses satisfaction at the imminent adoption of the Regulation on the protection of the European Communities’ financial interests and the signing of the relevant Convention.

    It calls upon the Commission to submit a proposal shortly on checks and verifications in situ and requests the Economic and Financial Affairs Council to adopt those provisions before the European Council meeting in June.

    The European Council also notes with satisfaction that consensus has been reached on an Additional Protocol to the Convention on the protection of the European Communities’ financial interests which is designed to harmonize treatment of corruption on the part of both national and European officials and members of Community or national institutions and bodies as a criminal offence.

    It calls upon the JHA Council to continue its proceedings in order to supplement the Convention, particularly in the field of judicial cooperation.

    The European Council welcomes the Commission initiative on sound financial management and particularly its decision to establish a group of personal representatives to identify priority action at Community and national level with a view to improving budget execution and making good the shortcomings in financial management identified by the Court of Auditors.

    It invites the Commission and the Council to examine the possibility of extending the system of clearance of accounts from agriculture to other sectors.

    1. LEGISLATIVE AND ADMINISTRATIVE SIMPLIFICATION

    The European Council reaffirms the importance of preventing the imposition of unnecessary burdens on business activity, through a process of legislative and administrative simplification which must preserve the “acquis communautaire” and be accompanied by national measures contributing to the same objective. In this respect it refers to the Commission report on the report from the independent experts group.

    It calls upon the Commission to table its new proposals for the consolidation of Community law and upon the Council to act as soon as possible.

    III: A EUROPE OPEN TO THE WORLD, ENJOYING STABILITY, SECURITY, FREEDOM AND SOLIDARITY

    1. ENLARGEMENT

    Enlargement is both a political necessity and a historic opportunity for Europe. It will ensure the stability and security of the continent and will thus offer both the applicant States and the current members of the Union new prospects for economic growth and general well-being. Enlargement must serve to strengthen the building of Europe in observance of the acquis communautaire which includes the common policies.

    With that in mind, the European Council took note of the Commission reports on the effects of enlargement on the policies of the European Union, on alternative strategies in agriculture and on the progress of the pre-accession strategy for the associated countries of Central and Eastern Europe.

    The European Council takes note of the Council report on relations with the associated CCEE during the second half of 1995 (Annex 6).

    The PHARE programme, as supported by the European Council’s decisions at its Cannes meeting, and the continued activities of the European Investment Bank will allow an overall increase in the input for accession preparations.

    The European Council reiterates that the accession negotiations with Malta and Cyprus will commence, on the basis of the Commission proposals, six months after the conclusion of the 1996 Intergovernmental Conference, and will take its results into account. It is pleased that structured dialogue with both countries began in July 1995 within the framework of the pre-accession strategy.

    The European Council also confirms the need to make sound preparation for enlargement on the basis of the criteria established in Copenhagen and in the context of the pre-accession strategy defined in Essen for the CCEE; that strategy will have to be intensified in order to create the conditions for the gradual, harmonious integration of those States, particularly through the development of the market economy, the adjustment of their administrative structures and the creation of a stable economic and monetary environment.

    The European Council calls upon the Commission to take its evaluation of the effects of enlargement on Community policies further, particularly with regard to agricultural and structural policies. The European Union will continue its review at its next meetings on the basis of reports from the Commission.

    It asks the Commission to expedite preparation of its opinions on the applications made so that they can be forwarded to the Council as soon as possible after the conclusion of the Intergovernmental Conference, and to embark upon preparation of a composite paper on enlargement. This procedure will ensure that the applicant countries are treated on an equal basis.

    It also calls upon the Commission to undertake a detailed analysis as soon as possible of the European Union’s financing system in order to submit, immediately after the conclusion of the Intergovernmental Conference, a communication on the future financial framework of the Union as from 31 December 1999, having regard to the prospect of enlargement.

    Following the conclusion of the Intergovernmental Conference and in the light of its outcome and of all the opinions and reports from the Commission referred to above, the Council will, at the earliest opportunity, take the necessary decisions for launching the accession negotiations.

    The European Council hopes that the preliminary stage of negotiations will coincide with the start of negotiations with Cyprus and Malta.

    1. EXTERNAL RELATIONS

    FORMER YUGOSLAVIA

    The European Council expresses satisfaction at the fact that the Peace Agreement negotiated in Dayton was signed in Paris on 14 December 1995 and confirms its determination to make a substantial contribution to implementing it.

    The European Council welcomes the adoption by the United Nations Security Council of the Resolution supporting the peace agreements signed in Paris and applying their provisions at both civil and military level.

    With regard to civilian aspects, the European Council endorses the conclusions of the Conference held in London on 7 and 8 December 1995. It welcomes the appointment of Mr Carl Bildt as the High Representative and assures him of its full support.

    The application of the Peace Agreement involves the implementation of a stable military equilibrium based on the lowest possible level of weaponry. The European Council hopes that the parties involved will take advantage of the opportunity for dialogue offered by the Conference to be held in Bonn on 18 December 1995.

    It is now for the parties to shoulder their responsibilities in fully implementing the Agreement in order to bring an end to the war once and for all.

    For its part, the European Union reiterates its willingness to make a contribution to the reconstruction of former Yugoslavia in the context of equitable international burden-sharing. A preparatory conference will be held in Brussels on 20 and 21 December 1995 with a view to identifying the most urgent needs.

    The European Council reaffirms the right of refugees and displaced persons to return freely and safely to their homes throughout the territory of former Yugoslavia and to obtain fair compensation as a fundamental right.

    The European Council approved the Declaration in Annex 7.

    FORMER YUGOSLAV REPUBLIC OF MACEDONIA

    The European Council is pleased that the conditions exist for establishing contractual cooperation relations between the Union and the FYROM and asks the Council to approve the negotiating directives before the end of 1995 with a view to concluding a Cooperation and Trade Agreement which takes full account of its aspirations.

    SLOVENIA

    In the light of the Cannes conclusions and bearing in mind the compromise proposal from the Presidency, the European Council reaffirms its desire to have the Association Agreement with Slovenia signed as soon as possible.

    BALTIC SEA REGION

    The European Council took note of the Commission report on the current state of and prospects for cooperation in the Baltic Sea Region.

    The Union has an interest in promoting political stability and economic development in that region. The European Council therefore urges the Commission to propose a suitable regional cooperation initiative to be presented to the Heads of State and of Government of the Council of Baltic Sea States at their Conference in Visby on 3 and 4 May 1996, and thereafter report to the European Council in Florence.

    RUSSIA

    The European Council trusts that Russia will continue its action to promote stability, development, peace and democracy. It means to support its efforts. It wishes to strengthen permanently the ties between the European Union and this great country.

    It is convinced that the development of cooperation in the field of security between the European Union and Russia is essential for stability in Europe.

    It notes with satisfaction that the Interim Agreement with Russia signed in Brussels on 17 July 1995 is to come into force on 1 February 1996 and it urges the Contracting Parties to ratify the Partnership and Cooperation Agreement as soon as possible. It also welcomes the outcome of the Summit between the European Union and Russia which took place in September in Moscow. It confirms the European Union’s overall political approach to its future relations with Russia, as formulated by the General Affairs Council on 20 November 1995 (Annex 8).

    It approved a Declaration on the forthcoming holding of parliamentary elections in Russia (Annex 9).

    It supports Russia’s efforts to achieve complete integration into the international economy and its admission to the WTO and other international organizations.

    It also confirms its support for Russia’s accession to the Council of Europe in the near future.

    TACIS

    The European Council reaffirms the readiness of the European Union to continue its assistance programme to the Republics of the former Soviet Union with the aim of supporting the process of political and economic reform which these Republics have initiated. It underlines the importance of adopting the new TACIS Regulation at the next General Affairs Council.

    UKRAINE

    The European Council expresses satisfaction at the recent accession of Ukraine to the Council of Europe and supports its authorities’ undertaking to continue the current process of economic reform. The Union continues to provide support for Ukraine through macro-economic assistance and welcomes the important agreement reached with Ukraine on the definitive closure of the Chernobyl nuclear power station by the year 2000, in accordance with the timetable and conditions foreseen.

    TURKEY

    The European Council reiterates the priority it attaches to the development and strengthening of relations with Turkey and welcomes the assent given by the European Parliament which will enable the final phase of the Customs Union with Turkey to enter into force on 31 December 1995, together with the arrangements for strengthening political dialogue and institutional cooperation. It hopes that the Regulation on financial cooperation with Turkey will enter into force as soon as possible.

    The European Council recalls the importance it attaches to respect for human rights, the rule of law and fundamental freedoms and strongly supports all those in Turkey endeavouring to put reforms into practice. In that spirit, it welcomes the measures already adopted by the Turkish authorities and urges them to continue along that path.

    CYPRUS

    The Council reiterates the importance which it attaches to making substantial efforts to achieve a just and viable solution to the question of Cyprus in line with the United Nations Security Council resolutions, on the basis of a bi-zonal and bi-community federation.

    SECURITY

    In the security field, the European Council welcomes the progress made within the Union on developing a common policy for the integration of the countries of Central and Eastern Europe into the European security architecture, and the place which Russia and Ukraine will have in it.

    The European Council expresses its satisfaction at the approval by the Ministerial Council of the Western European Union, meeting in Madrid in November 1995, of the WEU contribution to the 1996 Intergovernmental Conference confirming the desirability of strengthening links between the European Union and the WEU. It takes note of the wish expressed by the WEU to contribute, as necessary, to the proceedings of the Intergovernmental Conference on security and defence aspects and to keep a close watch on their development. The European Council also takes note of the Reflection Group’s contribution in this area.

    It stressed the need to continue encouraging disarmament and non-proliferation within the framework of the common foreign and security policy. In this connection:

    – it expresses its firm desire that the negotiations for a Comprehensive Nuclear Test Ban Treaty be completed no later than June 1996;

    – it supports an immediate start to negotiations for a Treaty banning the production of fissile material for nuclear weapons (cut-off);

    – it welcomes the adoption, in the first round of the Conference to review the 1980 Convention on Inhumane Weapons, of a new protocol prohibiting the use of blinding laser weapons;

    – it reiterates the European Union’s wish that all its members ratify the Convention on Chemical Weapons at the earliest opportunity so that it can come into force shortly.

    OSCE

    The Union welcomes the results of the OSCE Budapest Conference which are intended to reinforce the structures and capacities of the OSCE so that it can fulfil its ever-increasing number of tasks, particularly in the field of preventive diplomacy.

    It reiterates the European Union’s intention of continuing to contribute actively to strengthening the OSCE and, in particular, to drawing up a common and comprehensive security model for the 21st century.

    The European Council welcomed the adoption on 13 December 1995 in Royaumont, at the suggestion of the European Union, of the Declaration on the process of stability and good-neighbourly relations in South-eastern Europe.

    ANDORRA

    The European Council welcomes the renewed impetus given to the Union’s relations with Andorra and calls upon the Commission to submit appropriate proposals for developing new areas of cooperation.

    TRANSATLANTIC RELATIONS

    The European Council underlines the great importance of the New Transatlantic Agenda and the Joint EU-US Action Plan signed at the EU-US Summit in Madrid on 3 December 1995 (Annex 10). It considers that this initiative constitutes a qualitative leap forward in strengthening our relations, moving on from a stage of consultations towards a new stage of concerted and joint action. It is resolved that the Union for its part should put fully into practice what was agreed in Madrid and to resume examination of this issue at the European Council in Florence.

    It welcomes the initiatives put forward at the meeting of the Transatlantic Business Dialogue in Seville.

    It hopes that other Atlantic democracies will share the goals of the New Transatlantic Agenda.

    MEDITERRANEAN

    The European Council highlights the major significance of the results achieved at the Barcelona Euro-Mediterranean Conference and calls upon the Council and the Commission to put into practice the Barcelona Declaration and Work Programme (Annex 11).

    The Barcelona Conference marked the start of a new stage in which the goal of securing peace, stability and prosperity in the Mediterranean region constitutes a common task for all parties to the new Euro-Mediterranean association. The “Barcelona spirit” must inform this on-going process, which should culminate in the conclusion of a pact for the Mediterranean.

    The European Council warmly welcomes the Agreements concluded with Tunisia, Israel and Morocco. It hopes that the negotiations under way with Egypt, Jordan and Lebanon will reach a rapid conclusion, and points out that the European Union is ready to negotiate such agreements with Algeria and Syria as soon as possible. In this connection it confirms its Cannes conclusions regarding the nature of the Euro-Mediterranean free-trade area.

    It notes with satisfaction the recent presidential elections in Algeria and trusts that there will shortly be new moves towards restoring a normal political situation in the country through dialogue and the holding of free and above-board general and local elections. It notes that Algeria wishes to conclude a new association agreement with the European Union, and calls upon the Commission to submit draft negotiating directives to that end.

    MIDDLE EAST

    The European Council welcomes the Interim Agreement between Israel and the Palestine Liberation Organization, signed in Washington on 28 September.

    The European Council deeply regrets the tragic assassination of Prime Minister Yitzhak Rabin and supports the undertaking given by the new Prime Minister, Mr Peres, to take the peace process forward with the same resolve. It accordingly appeals for rapid progress to be made on the Syrian track and for all parties to step up their efforts to reach a comprehensive, just and lasting peace.

    It welcomes the rapid disbursement of the EIB loans for ECU 250 million granted to the Palestine Authority, and hopes that the Commission will submit to it, at the earliest opportunity, draft directives for negotiating an agreement with the European Union. It similarly welcomes the implementation of the measures needed to coordinate the monitoring of the Palestinian elections.

    It notes with satisfaction the progress made at the Amman Economic Summit and trusts that positive results will be achieved at the Ministerial Conference for Economic Assistance to the Palestinian People, to be held in Paris on 9 January 1996.

    IRAN

    The European Union will continue to ensure that cooperation with Iran is conducted with all the guarantees necessary to avoid any contribution whatsoever to the acquisition of a military nuclear capacity.

    In the context of respect for fundamental rights and freedom of expression, the European Union will keep up its efforts, within the framework of critical dialogue, to obtain a satisfactory solution in respect of the British writer Salman Rushdie and calls upon the Iranian authorities to respond constructively to its efforts. It requests the Council to keep a close watch on the matter.

    LATIN AMERICA

    The European Council stresses the significant progress made in the process of strengthening relations with Latin America. It requests the Council and the Commission to expedite implementation of the conclusions on enhancing cooperation between the European Union and Latin America in the period 1996-2000 (Annex 12).

    It welcomes the signing in Madrid of the Inter-Regional Framework Agreement on Trade and Economic Cooperation between the European Union and Mercosur, the final objective of which is to achieve political and economic association.

    It emphasizes that the Joint Declaration on Political Dialogue between the European Union and Chile is to be signed shortly. This marks an important step towards the early negotiation of a new agreement directed ultimately at political and economic association.

    The European Council calls upon the Council and the Commission to begin negotiations as soon as possible with Mexico for a new political, economic and trade agreement which includes progressive and reciprocal trade liberalization, taking account of the sensitivity of certain products and in line with WTO rules.

    It also declares its interest in renewing the San José dialogue between the European Union and Central America, on the basis of the communication recently submitted by the Commission.

    It notes the wish expressed by the Andean Presidential Council to strengthen relations between the Andean Pact and the European Union, and calls upon the Commission to submit appropriate measures. It also considers an early renewal of the General Scheme of Preferences for the Central American and Andean Pact countries to be of particular importance, and asks the Council to adopt this at the earliest opportunity.

    It considers that dialogue and cooperation should be continued with Cuba in order to lend active support to the process of reform under way, to foster respect for human rights and fundamental freedoms and to broaden the scope of private initiative and the development of civil society. To that end, it asks the Commission to present, in the first half of 1996, draft negotiating directives for a trade and economic cooperation agreement, which will be examined by the Council in the light of developments in the political and economic situation in Cuba.

    Lastly, it calls upon the EIB to step up its activity in Latin America in line with its financing procedures and criteria.

    LOME CONVENTION

    The European Council welcomes the signing in Mauritius on 4 November of the Agreement on the revision of the 4th ACP-EC Convention, together with the Protocol on the Accession of Austria, Finland and Sweden, as well as the immediate adoption of provisional implementing measures.

    AFRICA

    The European Council expresses its grave concern at the situation in Nigeria, confirms the sanctions adopted within the European Union and appeals once more to the Nigerian authorities to ensure full respect for human rights and a swift transition to democracy, failing which it reserves the right to take further measures.

    To put an end to the violence, particularly in Burundi, and to ease the return of Rwandan refugees, the European Council emphasizes the importance of national reconciliation and stability in the Great Lakes region. It restates its support for the convening of the Conference on the Great Lakes region under the auspices of the United Nations and the Organization for African Unity, as well as the rapid appointment of a new special representative of the United Nations Secretary-General to Burundi.

    It welcomes the political dialogue which has begun between the European Union and the OAU, and particularly the Council conclusions of 4 December on preventive diplomacy, conflict resolution and peace-keeping in Africa (Annex 13).

    It notes with satisfaction the negotiations under way with South Africa with a view to drawing up an agreement on creating a free-trade area and highlights the importance of these negotiations being brought to a rapid conclusion.

    ASIA

    The European Council welcomes the adoption of the Council report which will serve as a basis for preparing the Europe-Asia Meeting to be held in Bangkok on 1 and 2 March 1996 (Annex 14).

    It confirms the importance which the European Union places on the development of relations with China. It notes the conclusions adopted by the Council on a long-term policy for China-Europe relations.

    The European Council reiterates its deep concern at the heavy prison sentence imposed on the Chinese human rights campaigner, Mr WEI GING XENG, and urges China to show clemency at his appeal and grant his swift and unconditional release.

    The European Union will participate, in conditions to be negotiated, in the Korean Peninsular Energy Development Organization (KEDO).

    The European Council, bearing in mind in particular the latest events in Djakarta in connection with the increased tension in East Timor, pledges support for any appropriate action which could contribute towards a just, overall and internationally acceptable solution to this issue and particularly towards the mediation efforts being made by the UN Secretary-General.

    UNITED NATIONS

    On the occasion of the fiftieth anniversary of the United Nations, the European Union expressed its continuing support for the UN as a global forum fostering mankind’s aspirations for peace, security and economic and social progress.

    The European Union, whose Member States together constitute the UN’s main financial contributor, expressed its concern in its Declaration of 25 October 1995 at the current critical financial situation of the United Nations. The European Council appeals again to all States which are members of the UN to pay their contributions to the normal budget and to peace-keeping operations, in full, on time and without conditions.

    The European Council hopes, in this connection, that progress will be made on adjustments to improve UN structures and institutions, including the Security Council.

    IV: LAYING THE FOUNDATIONS OF THE EUROPE OF THE FUTURE

    THE POLITICAL AGENDA FOR EUROPE

    The European Council identified the challenges which the Member States of the European Union must meet in order to prepare Europe for the 21st century. In the next five years, we must:

    – carry out adjustments to the Treaty on European Union;

    – make the transition to a single currency in line with the timetable and conditions set;

    – prepare for and carry out the enlargement negotiations with the associated countries of Central, Eastern and Southern Europe which have applied for membership;

    – determine, in parallel, the financial perspective beyond 31 December 1999;

    – contribute to establishing the new European security architecture;

    – actively continue the policy of dialogue, cooperation and association already under way with the Union’s neighbouring countries, and in particular with Russia, Ukraine, Turkey and the Mediterranean countries.

    Success in all these tasks will mean that a large community enjoying the benefits of freedom, prosperity and stability can be set up Europe-wide.

    THE INTERGOVERNMENTAL CONFERENCE

    1. The European Council received with great interest the Report by the Reflection Group, chaired by Mr Westendorp (Annex 15), which had been instructed by the European Council to prepare for the 1996 Intergovernmental Conference. It considers that the guidelines distilled within the Group, following a thorough analysis of the internal and external challenges facing the Union and the possible responses, constitute a sound basis for the work of the Conference.
    2. The Intergovernmental Conference will have to examine those provisions of the Treaty on European Union review of which is expressly called for in the Treaty, as well as those questions which it was decided should be discussed by the Conference, both in the Brussels and Corfu European Council conclusions and in declarations adopted at the time of interinstitutional agreements. The European Council also reaffirms the guidelines laid down at its Cannes meeting. The Intergovernmental Conference will, in general, have to examine the improvements which will have to be made to the Treaties to bring the Union into line with today’s realities and tomorrow’s requirements, in the light of the outcome of the Reflection Group’s proceedings.
    3. The European Council agrees that the formal review procedure stipulated in Article N of the Treaty will be carried out as quickly as possible so that the Conference can be officially opened in Turin on 29 March. The European Council takes note of the intention of the forthcoming Italian Presidency to adopt appropriate measures for preparing the Conference.
    4. The Conference will meet regularly, in principle once a month, at the level of Foreign Affairs Ministers, who will have responsibility for all proceedings; preparations will be conducted by a working party made up of a representative of each Member State’s Minister for Foreign Affairs and of the President of the Commission.

    The Secretary-General of the Council will make the necessary arrangements to provide secretarial support for the Conference.

    1. The European Parliament will be closely associated with the work of the Conference so that it is both briefed regularly and in detail on the progress of the discussions and can give its point of view, where it considers this necessary, on all matters under discussion. The detailed arrangements for such association will be determined by the Ministers for Foreign Affairs in line with the provisions which apply to the review of the Treaties.
    2. The representatives of those countries of Central and Eastern Europe which have concluded Europe Agreements, and of Malta and Cyprus, will be briefed regularly on the progress of discussions and will be able to put their points of view at meetings with the Presidency of the European Union to be held, in principle, every two months. The European Economic Area and Switzerland will also be briefed.

     

  • Mr Major’s Speech to the Conservative Women’s Conference – 1 December 1995

    Below is the text of Mr Major’s speech to the Conservative Women’s Conference, held in London on Friday 1st December 1995.

    PRIME MINISTER:

    I’ve come to talk to you today about one word, pride.

    Pride in our country, pride in ourselves and – yes – pride in what this Government is doing. This week – a momentous one indeed – we have seen what Britain is really about.

    Perhaps the moment when it struck me most forcibly was while I listened to the President of the United States speaking the Royal Gallery of the House of Lords.

    Sometimes it takes a friend from abroad to see us as we really are.

    He gave an historic address to both Houses of Parliament against the grandeur and pageantry which only our country can display to such inspiring effect.

    He knows that we are the ally upon whom America can rely in pursuit of the great values which we share:

    – love of freedom;

    – enrichment of democracy;

    – faith in the individual;

    – and the sense of mission and purpose which has so often given us the strength to stand alone in defence of the things we treasure.

    That relationship is not an empty idea from the vacuum of the sound-bite or the easy phrase. Relationships of this sort are not self-sustaining, bestowed by some charitable act of history upon one nation from another. They have to be worked at, fought for, nurtured.

    America would not look to us in any nostalgic sense, because of events long-since past. They look to us because our nation is a rock. An ally whom they know has the same instincts and interests. An ally upon whom they have relied in the past and upon whom they can rely in the future. Generations now gone would easily understand this. We owe it to them to sustain that same spirit and that same commitment. We will enjoy our relationship with the United States because, by our own endeavours, we are a fitting partner.

    In tackling one of the greatest challenges Europe faces today, we can be proud that Britain is there, soon to be joined by America, playing her part.

    The Bosnian peace agreement is a very helpful beginning.

    Success there is vital, not only for Bosnian, but for international security. Vital for the standing of NATO and the health of Europe.

    That’s why Britain is getting ready to send 13,000 troops to Bosnia over the next year.

    Thirteen thousand of the most effective soldiers anywhere in the world, a contingent second to none.

    This wasn’t an easy or cheap decision.

    But it is the right decision.

    Because we’re not afraid to give a lead, as we have done through three years of terrible conflict. This is an issue of massive potential and consequence. I would have made that commitment if it were only for humanitarian reasons, for I hate the loss of life, the brutality, the cynical disregard of every decent value.

    But anyone who has the first understanding of the implications of political collapse in the Balkans realises that Britain’s self interest remains with the peaceful containment and resolution of its problems.

    So we must make sure the peace agreement succeeds, right through to the end.

    Northern Ireland

    Peace is relevant at home as well as abroad.

    The cause of peace in Northern Ireland has received a huge boost this week.

    Can anyone who witnessed President Clinton’s remarkable visit to Northern Ireland seriously contemplate a return to bombing and shooting?

    We saw a Northern Ireland enjoying the prospect of a second Christmas in peace.

    A Northern Ireland hearing him support our call for violence and punishment beatings to cease, for ever.

    Earlier in the week, the Irish Prime Minister and I launched a new initiative. It has two aims, two tracks.

    First, it’s time all the political parties of Northern Ireland began to prepare seriously for negotiations on a just and comprehensive settlement.

    It’s time for them – each of them – to make their contribution to peace.

    Their people, their supporters, want a lasting peace and a fair settlement, not just a ceasefire.

    That’s the unmistakable message from the shops and the factories, the streets and the villages of Northern Ireland.

    We, the Government, can facilitate the process.

    But we can’t decide it.

    The parties themselves have to decide how they are going to negotiate.

    If this process is to succeed – as it must – they must begin to show flexibility.

    No-one can have a veto on progress.

    No-one should be allowed to block the road, by sticking to rigid and uncompromising positions which others can never accept.

    Now is the time for the Northern Ireland parties and their leaders to show open-mindedness, and to have the courage to step out of the bunkers they built during Ulster’s troubles.

    It’s time to put aside the old hatreds and the old feuds and the old mistrusts that have served Ulster ill for too long.

    That is the aim of the preparatory talks we are convening.

    And there’s a second aim to our initiative.

    Some parties represent illegally armed paramilitary organisations which, to this day, are training, plotting, intimidating and making savage assaults on other people.

    If they are to enter constitutional negotiations, they are going to have to change their ways. They are going to have to show that they, like other parties, are committed to exclusively peaceful methods.

    Words aren’t enough.

    So we have set up an advisory international body to discuss how the paramilitaries are going to decommission their arms.

    People who mean peace don’t need guns.

    The time has come for them to start ridding themselves of weapons and explosives so that they, too, can join the constitutional negotiations.

    The British and Irish Governments have again given a lead, just as we did with the Downing Street Declaration two years ago.

    That Declaration led, after several months, to the ceasefires.

    I hope this week’s initiative will lead by the end of February to negotiations for which all parties will qualify.

    It’s now up to them to respond to our lead.

    Getting to this stage in the process has taken years of effort. We have always been working for the long term.

    Three years ago, to talk of peace in Northern Ireland seemed like a grim joke. Today, it is becoming a possibility. Tomorrow, I hope it will be reality.

    The Budget

    Madam Chairman, I said my theme was pride.

    Today’s conference is our opportunity to show how this week’s events (and not just in Bosnia or Northern Ireland) fit in to the long term goals for this country which I set myself five years ago.

    I take pride in the strength of Britain’s economy. I can remember no time in my political lifetime when the economic prospects for our country looked more promising.

    Every politician claims they can create economic success. The difference is, Madam Chairman, we have actually achieved it.

    The best industrial relations for a hundred years, the best inflation record for nearly 50 years, record exports, a third of all the inward investment coming into Europe.

    Madam Chairman, surely and securely, we’re building for Britain’s long term prosperity.

    That’s why I’m proud of the budget Kenneth Clarke delivered this week.

    Well, I read all the pre-Budget options. Bribe people. Take risks. Don’t worry about the long-term, it’s the short-term that matters. I’ve heard it all my life, and I tell you this – I won’t do it. I won’t do it for one overriding reason: it would be wrong for Britain.

    If we’d have taken some of the more flamboyant advice we’d been offered, many of them most forward with their views would have been the first to criticise us for being silly enough to take it. The British people have worked too hard, sacrificed too much to achieve the excellent prospects that lie ahead for us to even consider putting it at risk. We are not that sort of Government.

    Ken Clarke’s Budget had three clear objectives.

    To build on the strength that his earlier Budgets had created.

    To increase the nation’s commitment to raise standards in our classrooms, expand the health service and back the police in their growing success in their fight against crime.

    And to reward those millions of our citizens who have worked so hard to help to build the economic success we now enjoy by giving back to people, in as fair a way as we could devise, a growing share of their own money.

    This morning the Chancellor made an excellent speech outlining his Budget. I warmly congratulate him on it.

    In planning the nation’s finances, it’s vital to get the long term arithmetic right.

    And that’s what we’re determined to do.

    Reducing the overall amount Government spends and borrows. Spending more on our hospitals, schools and police. Leaving more money in people’s pockets by cutting taxes.

    Widening the bands. Cutting the basic rate. And introducing a new, lower 20 per cent rate on savings.

    Now a quarter of all taxpayers will pay tax at 20p.

    In time, 20p will become the basic rate.

    That’s the way to the future. To prosperity that lasts.

    And it’s the way we’ll continue to build a prosperity in which we shall all share.

    Welfare

    But this budget also had measures to deal with other long term issues.

    As more people live longer, paying for their care is one of society’s major challenges.

    To leave our children a welfare system which works and they can afford, we must plan ahead. We are developing imaginative solutions to address the growing cost of long term care.

    So we’re examining how to encourage people to provide for themselves and share the cost with the state. Protecting their wealth so it can be passed on to their heirs.

    And shorter term, we’ll be raising the capital threshold so people who face these costs will be able to keep more of their assets.

    We’ll go on working at this problem.

    We owe it to elderly people. We owe it to our children. And we’ll not just talk about it – we’ll do it.

    Welfare should always be there for elderly people with nowhere to turn. Just as it should be there for the unemployed looking for jobs. The weak and disabled with no support.

    The people of this country are always ready to lend a hand to those who, through no fault of their own, have fallen on hard times.

    We have one of the most comprehensive social security safety nets in the world.

    To run it costs the average worker £15 every working day.

    Until recently, the social security budget was rocketing up. Eating into more and more of people’s pay packets. Thanks to the fight against fraud and targeting benefits on those in greatest need, it’s now growing more slowly than the economy as a whole.

    We must keep it that way. And we must ensure that people have incentives to look after themselves and families, and not rely on the state.

    This week’s budget provided more concrete help for the unemployed. We know jobs for the future are created by enterprise, not government.

    But governments can help those who have been out of work for sometime to regain the confidence and work experience they need.

    And we can ensure that people have the incentives and motivation to move from welfare into work.

    In my speech at Blackpool a few weeks ago, I talked about our plans to develop a contract for work.

    And this morning, Gillian Shephard announced we are proceeding with pilots to offer new opportunities for work experience to the long term unemployed.

    The majority who are genuinely seeking work will find this a lifeline. But those who refuse to take an offer of work experience will lose some or all of their benefit.

    Another example, Madam Chairman, of how we develop long term policies to deal with long term problems – and then take real action.

    Once again, we will look with interest at whether the Labour party has the courage to support us.

    Madam Chairman, we’re steadily building the economic foundations to double our living standards in twenty five years.

    Those foundations can easily be wrecked by the wrong policies or the wrong government.

    Compare Ken Clarke’s carefully constructed Budget with Labour’s ramshackle plans.

    Instead of sensible economic policies they offer gimmicks.

    Remember Gordon Brown’s lop tax gimmick? No sooner was it out of his mouth than it became a long term objective, then disappeared into silence.

    The leader of the Labour Party claims that he doesn’t want to put up taxes.

    The Deputy Leader, that affable character from Kingston upon Hull, doesn’t quite agree.

    Labour ‘should not follow the Government down the road of reducing the basic rate of tax’ he said.

    And in case that was just a slip from the mouth of the Humber, he’s also said that under Labour there’d ‘certainly’ be a higher top rate.

    That’s refreshingly frank. And undoubtedly true. But it’s certainly not what the Labour leader told the CBI, or anyone who’d listen.

    I know Labour now say they believe in choice, but the only choice they offer is who to believe: the Labour Leader or the Deputy Leader?

    I know what experience suggests. They’ve voted against tax cuts all their lives.

    They approach every problem with a flapping chequebook. They hold the pen, but it’s your chequebook and your money.

    And spending more means only one thing. They would have to put up taxes. It’s as simple as that.

    Without higher taxes, Labour’s sums don’t add up.

    The Nation

    I don’t usually quote Roy Hattersley with approval, but he was surely right to say Labour has become less a moral crusade and more of a marketing campaign.

    And it needs marketing because it’s a dismal product.

    But, Madam Chairman, while Labour run their marketing campaigns in their own interests, we’re running the country in the national interest.

    We are preparing Britain for the challenges of the future. Immediately ahead of us is the European Council in Madrid.

    I act in Europe with only one interest in mind: Britain’s national interest.

    Sometimes that means we can’t agree with our European partners. If that’s the case, so be it.

    I want Europe to succeed, but not at Britain’s expense.

    The Labour leader says it’s his policy never to be isolated in Europe.

    Think what that would mean.

    Imagine if Margaret Thatcher had never been isolated, we’d never have had our budget rebate worth billions of pounds to British taxpayers.

    If I’d never been isolated we’d have no opt-out from the Single Currency. We’d not have the choice to join or not to join as British interest dictates.

    If I had never been isolated, Britain would now be in the Social Chapter, losing jobs rather than gaining investment.

    Of course, we know that the Labour leader would take us into the Social Chapter. He made out that it was like buffet lunch: you can have some dishes, but not others. Pick and mix. Choose only what you like.

    Of course, European policy is very complex. Some of it is difficult to understand. And the Labour leader hasn’t had any experience of European summits.

    Or, indeed, any summits except Labour summits. And to avoid being isolated at those, he doesn’t invite the Deputy Leader.

    But, on the Social Chapter, he’s plain wrong.

    The Social Chapter is a mechanism, a means to an end. On much of it, there’s no veto. No picking and choosing. You have to swallow the lot.

    Tomorrow, I gather he may be talking about Europe again. Last time, he misled the country. Inadvertently, no doubt. He should put the record straight. We’ll watch to see if he does, and if he doesn’t, we’ll prod him again and again – until he does.

    The fact is – even if you prefer co-operation to confrontation – sometimes it’s necessary to stand up for British interests, even if our partners disagree. I believe that is the job of the British Prime Minister. And if you’re not prepared to do the job, don’t seek it.

    My patriotism is not jingoistic tub-thumping. It’s a deep respect for the people and traditions of our nation.

    The strongest foundation of our society is our United Kingdom.

    Some say the nation state will soon be irrelevant.

    I disagree.

    In a changing world, people want to hang on to what’s familiar. The nation state offers that reassurance and continuity. It matters to people as much today as it ever did.

    I don’t look to mend what isn’t broken. I don’t change things for change’s sake. We are, after all, the Conservative Party.

    But to meet the challenges ahead, we must accept change where change is due.

    That’s why, this week, Michael Forsyth proposed changes to improve the Government of Scotland.

    But we are the Conservative and Unionist Party.

    We must protect the union of proud countries. Some people in Scotland want independence.

    There’s nothing to stop them going their own way. But it’s my task, as Prime Minister of the United Kingdom, to point out the dangers of that happening.

    Will the Scots feel the Union gives them a better deal if they have to pay the extra Tartan Tax? It’s a straight tax on Scottish jobs, on Scottish investment, on Scotland’s future prosperity.

    Moreover, Labour’s Scottish spokesman has made it clear. He believes the majority of MPs in the Parliament at Westminster should not have the final say on the Laws of Scotland, but must defer to the majority party in Scotland. Would they apply the same proposition to England?

    For on that basis, few past Labour Governments could have Governed England – they had no majority in England. What sort of perversion of our Constitution are they prepared to tolerate?

    Either they fail to grasp the dangers of such devolution, or they’re prepared to sell the crown jewels of our political heritage in a desperate bid for votes. For they are putting the whole constitution of our country into question. As they plan that, how dare they talk of the national interest?

    Down the years, our Union has weathered all that our enemies have thrown at us.

    What folly if Labour were allowed to do what our enemies never achieved – split our island apart and set one people against another. What stupidity.

    Yet, that would be the effect of Labour policy. They offer a tax-raising parliament to out-flank the SNP for their Labour Party advantage. Yet that very Parliament would prove to be the very mechanism to maximise conflict and wreck the Union.

    What an irony it would be. In opposition we know Labour knock our country. If they ever came to power, they would divide it and we would all rue it.

    There’s only one Party that will protect the unity of Britain. That represents our whole nation. That’s our Party – the Conservative and Unionist Party. The Party of the Union. We care for the Union. We care for the nation state. And in our hands – and only our hands – it is safe.

    Peroration

    Wherever I go in the world, Britain’s reputation is on a high.

    The resentments of Empire have been replaced by the affections of commonwealth.

    Britain’s economic revolution is studied and copied across the globe.

    Exports markets daily open wider, for products that are made in Britain and sold from Britain.

    Our military services advise Government across the world because our standards are respected and admired.

    Students flock here from all over the world to take advantage of our academic achievements.

    So yes, I am proud to be Prime Minister of this country. Proud to be Leader of this Party.

    The only Party that believes in Britain. That articulates the success of Britain. That travels the world explaining the triumphs of Britain.

    And if we have to do that against the clamour of the Opposition Parties and despite the relentless self-destruct mode of too much of our national media, we must shout louder, shout longer and shout with more conviction.

    Madam Chairman, we should have more confidence in ourselves and in our Party. We have piloted this country through very rough economic weather.

    We have taken decisions unpopular for our Party because we judged them to be right for our country.

    The fruits of those decisions are now becoming clear.

    We have led this country to an opportunity of unimaginable dimensions. Together, we shall ensure not only that the prizes are there to win, but that we are there to win them.

  • PMQT – 23 November 1995

    Below is the text of Prime Minister’s Question Time from 23rd November 1995.

    PRIME MINISTER:

     

    Engagements

    Q1. Sir Alan Haselhurst: To ask the Prime Minister if he will list his official engagements for Thursday 23 November.

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

    Sir Alan Haselhurst: Is it still the target of my right hon. Friend’s Government to reduce the standard rate of income tax to 20p? In that context, did he notice that the shadow Chancellor wasted no time yesterday in his 40-minute speech talking about his 10p target? Which target does my right hon. Friend think that the nation will find more credible?

    The Prime Minister: I can confirm the 20p target. There are a number of ways to reach it: reducing the basic rate, widening the 20p band or both, of course. I look forward, as soon as it is affordable, to making some progress in that direction. I found it rather odd that the shadow Chancellor did not talk about his 10p tax rate. It rather confirms my view that it is more of a gimmick than a proper policy option. I notice that the shadow Chancellor has 101 per cent. support from the Leader of the Opposition. The 1 per cent. I am sure is correct; the 100 per cent. I am not so sure of.

    Mr. Blair: How can the Prime Minister seriously maintain his statement on Tuesday that the 21 tax rises that he has introduced since the last election–the equivalent of 7p on the basic rate of tax–were to protect the vulnerable when it is middle and lower-income families who have suffered most, not least from the imposition of VAT on fuel? Would he now care to explain or withdraw that remark?

    The Prime Minister: Yes, of course I shall happily explain to the right hon. Gentleman. If he cares to examine the figures, he will see that, since I became Prime Minister, take-home pay after inflation has risen by £600 a year at today’s prices. Real disposable income is £400 a year per head higher at today’s prices. In addition, mortgage payments have fallen by £140 a month. That does not suggest to me the sort of tax hike affecting people’s net disposable income that the right hon. Gentleman portrays. Can he confirm that those take-home figures are right?

    Mr. Blair: Perhaps the Prime Minister would like to confirm the tax rises equivalent to a figure of 7p on the basic rate of income tax. Those are the tax rises that he introduced after he promised the British people that he would cut tax year on year. He said that he would never introduce VAT, but he did so. Is not one thing clear? Despite all the promises before the election, after his 7p extra on the basic rate, taxes will be higher at the next election than at the last election, and the British people will remember the Conservatives as the party of broken promises and unfair taxes.

    The Prime Minister: I shall tell the right hon. Gentleman of three things that are clear: people have much higher net disposable income than they did at the start of this Government; interest rates have halved since their peak, cutting mortgages dramatically; and there is no one in the country who does not know that taxes would be far higher under any Labour Government than they are under this Government, and as they have been under each and every Labour Government that has ever been inflicted on the country.

    Mr. Sumberg: Is my right hon. Friend aware of the notice this morning from the Department of Transport that it has abandoned the M62 relief road, which would have devastated my constituency? Can I tell my right hon. Friend that we are all delighted at the news that that disastrous proposal has now been condemned to transport history?

    The Prime Minister: I know that my right hon. Friend the Secretary of State for Transport will be grateful to have my hon. Friend’s support for that decision. I know that my hon. Friend has been a formidable campaigner for that interest.

    Sir David Steel: Following the belated and hesitant reaction of the international community to events in Nigeria, will the Prime Minister put greater force behind his Government’s policy of promoting good governance? In view of the great number of asylum seekers coming from Zaire, will he raise that matter with colleagues in the European Union so that we may secure a timely and united response to despotic regimes?

    The Prime Minister: I am not sure that I quite agree with the right hon. Gentleman in the way that he characterises the Commonwealth’s response to Nigeria. I think that the response was very swift, and it was apt. There is no doubt about the nature of that regime and there is no doubt about the Commonwealth’s response. Certainly, we shall look at the other points that the right hon. Gentleman raises.

    Sir Roger Moate: With regard to the road programme, has my right hon. Friend heard of NOMRAM, which means “no more roads after mine”, and which is a very popular position? Will my right hon. Friend ensure that, if there are to be any reductions in conventional funding, they will be more than replaced by a dynamic private finance initiative for the construction of many projects throughout the land, which are urgently needed both for jobs and for environmental reasons?

    The Prime Minister: There is no doubt about the importance, both in the short term and the long term, of the private finance initiative in the case not only of roads, but of other elements of capital expenditure. I set out in a speech on Monday the extent to which the private finance initiative has already made progress.

     

    Q2. Mr. Michael J. Martin: To ask the Prime Minister if he will list his official engagements for Thursday 23 November.

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

    Mr. Martin: Does the Prime Minister agree that those who are unfortunate enough to suffer from Alzheimer’s, strokes and other long-term diseases should be able to get the best care that the national health service can offer? Does he agree that the provision of that care should never be a lottery or dependent on the part of the country that a patient comes from, but should be there for each and every person? If it is the case that the Government have put tax up by 7p in real terms, that money should go to help those patients and their carers.

    The Prime Minister: The hon. Gentleman neglects to mention that we have put up spending on the national health service by 70 per cent., even taking account of inflation, since the Government came into office. The result has been a dramatic improvement in the number of people treated, and a dramatic reduction in the time that they have to wait for treatment. Half of patients have no wait at all; of the rest, half are admitted within six weeks, and three quarters within three months. Nothing like that record has ever been seen before the arrival of this Government in office and the extra funding that the Government have provided.

     

    Q3. Dr. Goodson-Wickes: To ask the Prime Minister if he will list his official engagements for Thursday 23 November.

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

    Dr. Goodson-Wickes: Will my right hon. Friend confirm his commitment to reducing Government expenditure to below 40 per cent. of the gross domestic product? Does he agree that the country’s competitiveness into the next century depends on low spending linked to low taxation, and that that message is totally lost on the Opposition, whose spending plans simply do not add up?

    The Prime Minister: Unfortunately, the Opposition’s spending plans do add up. They add up to a great deal of extra money and extra taxation. For the Opposition to talk about taxation levels when they have voted against every tax reduction that we have introduced over the past 16 years, when they have stood consistently for higher taxes and higher spending and have never forgone any item of expenditure that might conceivably have been popular in any part of the country, is hypocrisy on a grand scale. The reality is that we need to cut spending to below 40 per cent. of national income as soon as possible and we need to cut spending and taxes so that the fact that this country is the enterprise centre of Europe becomes increasingly recognised, not just here and in Europe but beyond Europe. Spending more and taxing less, which the shadow Chancellor claims is possible, is not possible. Those plans do not add up.

     

    Q4. Mr. Alan W. Williams: To ask the Prime Minister if he will list his official engagements for Thursday 23 November.

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

    Mr. Williams: It is almost five years since the Prime Minister took office. When he looks back, what does he see as his proudest achievement? Is it that we have had the lowest economic growth of any post-war five-year period, is it the 20 per cent. devaluation or tax rises amounting to 7p on the standard rate, or is his proudest achievement simply the fact that he has survived for so long in office?

    The Prime Minister: The hon. Gentleman has his own suggestions and I am sure that he will not mind if I offer him some alternatives. When I became Prime Minister, inflation was 9.5 per cent., but we now have underlying inflation of 2.9 per cent. [Interruption.] Base rates were 14 per cent., they are now 6 per cent. and output is 6 per cent. higher–[Interruption.]

    Madam Speaker: Order. The House must come to order.

    The Prime Minister: If hon. Members care to look at the international projections about what lies ahead for the country, they will see what the Organisation for Economic Co-operation and Development has to say about our performance. They will see that we are top of the growth league and they will see inward investment flooding into the country. The deputy leader of the Labour party claims that he does not see inward investment flooding in. I suggest that he visits the constituencies of the Leader of the Opposition and of the shadow Foreign Secretary and constituencies up and down the country to see the extent to which other countries have recognised the success of this country over recent years.

    Mr. Atkins: Is my right hon. Friend aware of the shambles that is Labour local government in Preston? Given that the chief executive has been sacked in highly dubious circumstances, the chief constable has issued writs on the councillors and the leader of the council, Valerie Wise, has even lost the confidence of her ward committee, will my right hon. Friend set up an investigation into the further abuse of powers by a Labour council, demonstrating yet again what Labour would be like in office?

    The Prime Minister: I was not aware of the details set out by my right hon. Friend but, sadly, that is not a unique case of Labour local government by any means. We have seen what has happened in Monklands and in a large number of other Labour local authorities. If the Labour party were one bit as concerned about good government at local level as it claims to be about good government at national level, it would clean out the nest of Labour local government, which has long needed drastic action.

     

    Q5. Mr. Tony Banks: To ask the Prime Minister if he will list his official engagements for Thursday 23 November.

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

    Mr. Banks: Does the Prime Minister agree with the words of the Minister of State for the Armed Forces, the hon. Member for Crawley (Mr. Soames), that Princess Diana is in an advanced state of paranoia?

    The Prime Minister: I have no intention of being drawn into making any comments in the aftermath of last Monday.

     

    Q6. Mr. Amess: To ask the Prime Minister if he will list his official engagements for Thursday 23 November.

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

    Mr. Amess: Will my right hon. Friend the Prime Minister join me in condemning those people who made a violent attack–[Interruption.]

    Madam Speaker: Order. The House will come to order.

    Mr. Amess: Will my right hon. Friend the Prime Minister join me in condemning those people who made a violent attack on the chairman of the Conservative party last week and those people who, the week before, tried to stop my right hon. and learned Friend the Home Secretary speaking at Canterbury university? Does my right hon. Friend have any idea whether those people are members of new Labour, of old Labour or of fascist Labour?

    The Prime Minister: I condemn anyone who resorts to violence or intimidation to force their own way in democratic politics. They do nothing whatever for their cause. They merely show that their argument does not stand up to rational debate. They deserve condemnation from every corner.

    Mr. Mackinlay: Will the Prime Minister tolerate the Minister of State for the Armed Forces continuing to act as the Prince of Wales’s butler? Can we have an assurance that the Minister of State will not act on behalf of–

    [Interruption.]

    Madam Speaker: Order. The hon. Member for Dover (Mr. Shaw) will remain silent while questions are being asked.

    Mr. Mackinlay: Can we have an undertaking that the Minister of State for the Armed Forces will not speak on constitutional matters which are the sole preserve of the Prime Minister? Will the Prime Minister sack the Minister of State for speaking out of turn against the Princess of Wales?

    The Prime Minister: I do not expect any more comments, Madam Speaker.