Tag: Economy

  • PMQT Written Answers – 22 March 1995

    Below is the text of the written answers relating to Prime Minister’s Question Time from 22nd March 1995.


    PRIME MINISTER:

     

    Objectives

    Mr. Forman: To ask the Prime Minister how many of their objectives of April 1992 the Government have now achieved; and how many remain.

    The Prime Minister: Since April 1992, the Government’s policies have laid the foundations for sustained economic growth. Underlying inflation is down to its lowest for a generation, interest rates are among the lowest in the EC, unemployment is down by over 600,000 since its peak, exports are at record levels, and we are attracting more investment from Japan and America than Germany and France combined.

    We have also pressed ahead with our reforms to raise standards in our schools, fight crime, improve the quality of care in the national health service and, with the Citizen’s Charter, make the public services more accountable to the taxpayers they serve. Our commitment to continuing improvement in standards in education has been achieved by the national curriculum, extension of objective testing of pupils, inspection of primary as well as secondary schools, continuation of publication of school results, and launch of the Teacher Training Agency. Parental choice has been enhanced by the further expansion of the grant-maintained schools and specialist colleges. The national health service is now treating 1 million more patients a year than since before our reforms began; our determination to ensure it is properly funded is borne out by the fact that, for every £1 spent on the service in 1979, over £5 will be spent in 1995-96. Against the backdrop of the largest fall in recorded crime for 40 years, we have introduced a range of measures designed to tilt the balance back in favour of the victims of crime, and ensure that crime does not pay, but criminals do.

    The Government have made significant progress towards achieving a lasting peace in Northern Ireland. The ceasefire has now lasted for almost seven months, giving a new basis on which we can take the peace process forward. There has also been considerable success in winning the argument in Europe–especially in our attempts to make the community more open, outward-looking and decentralised.

    The Government’s objectives for the future remain as stated in the Gracious Speech on 16 November 1994, Official Report, columns 4-6.

     

    Publications

    Mr. Malcolm Bruce: To ask the Prime Minister what was the total expenditure on (a) all forms of publicity and (b) all publications and pamphlets produced for his Department and for all the agencies and public bodies for which his Department is responsible for each year since 1979, including the budgeted figure for 1995-96, (i) including and (ii) excluding privatisation-related expenditures and expressed in 1994 prices; and if he will supply information for the period from 1 April 1993 to 1 March 1995 showing (1) the nature and (2) the purpose of each publicity campaign and of each publication involving the expenditure of more than £50,000.

    The Prime Minister [holding answer 17 March 1995]: I refer the hon. Member to the answer given by my hon. Friend the Parliamentary Secretary, Office of Public Service and Science on 21 March.

  • PMQT – 14 February 1995

    Below is the text of Prime Minister’s Question Time from 14th February 1995.


    PRIME MINISTER:

     

    Engagements

    Q1. Mrs. Ray Michie: To ask the Prime Minister if he will list his official engagements for Tuesday 14 February.

    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.

    Mrs. Michie: Last Tuesday, the Prime Minister said that a single currency was a constitutional issue. Last Thursday, the Chancellor said that it was not. Will the right hon. Gentleman now tell us who is right?

    The Prime Minister: I have told the hon. Lady, I think, directly, and many people in the House precisely what the position is as far as a single currency is concerned, and I have also told people exactly how we propose to approach it. There will be no single currency involving the United Kingdom in 1996 or 1997. When and if it arises at a later stage, whether 1999 or thereafter, we will examine both the economic implications and the other implications, and we will then make a judgement on the national interest.

    Mr. Nigel Evans: Will my right hon. Friend confirm that the Government are determined to protect the country from terrorism, drug smugglers and a tidal wave of economic refugees into this country?

    The Prime Minister: I should say to my hon. Friend that in recent years we have seen a very welcome improvement in race relations in this country and I do not wish to see that put at risk in any way. Raising fears about immigration tends to put that at risk. For that reason, I am entirely determined to maintain our fair but firm immigration policies, and that means that we shall retain our border controls.

    Mr. Blair: Following the Prime Minister’s welcome commitment last Thursday to reducing inequality, may we now put it to the test? As the national electricity grid is an absolute monopoly subject to no competition, will the right hon. Gentleman act against the excesses of the few regional electricity chiefs who stand to make £50 million out of share options on the back of it?

    The Prime Minister: I have to say to the right hon. Gentleman that I find much of his opposition to share options rather synthetic since a good deal of his leadership campaign was financed out of the proceeds of share options.

    Mr. Blair: So the right hon. Gentleman is prepared to do nothing on that. Let me now put this to him: as there still remain about 1 million long-term unemployed and the Government are proposing a £50 million cut in help to the unemployed, will he therefore act in respect of that?

    The Prime Minister: I notice that the right hon. Gentleman did not respond to the earlier point. As for his general concerns about poverty, perhaps I can help him by filling in some of the facts that he overlooks. As he will know, and as there are ample statistics to show, the vast majority of people are better off. Average income has risen by more than one third since 1979, the average income of all economic groups and family types has risen, vulnerable groups have been protected and average incomes are up by more than 10 per cent. for poorer pensioners, and up for the unemployed as well as for those in full-time work. Those are the results of the Government’s actions, and they exceed by far the results achieved by any previous Government.

    Mr. Blair: So the Prime Minister is prepared to do nothing about that either. Whatever he says about reducing inequality, he will do nothing about greed at the top and nothing about protecting the unemployed at the bottom. Are the British people not right to conclude, therefore, that his commitment to reducing inequality will be seen in time as just one more easily made, easily broken Tory promise?

    The Prime Minister: I look forward to the day when the right hon. Gentleman listens to the answer before continuing with his question. As “Social Trends” is a publication often cited by Opposition Members, perhaps they will take notice of the information available in the latest edition, which states that the income of recently retired pensioners has increased by just over a half in real terms since 1981, and the real income after tax of a lone parent on the lowest decile of female earnings and with two children rose by 50 per cent. between 1981 and 1993. Why do we never hear about the reality of what has happened rather than the accusations without base which come from the right hon. Gentleman?

    Mr. Marlow: If European institutions produce measures to dismantle our external immigration controls, and those measures are subsequently supported by the European Court, how will my right hon. Friend maintain our external controls?

    The Prime Minister: As I told my hon. Friend the Member for Ribble Valley (Mr. Evans) a moment or so ago, we believe in our right to maintain controls. My predecessor set out our determination and received a solemn declaration to that effect some time ago. Let me make it clear that we shall argue strongly for the maintenance of that position and shall take whatever steps are necessary to that end. I will tell my hon. Friend the Member for Northampton, North (Mr. Marlow) about that declaration: it was solemnly entered into by all the Heads of Government of the other European countries. They pledged their word, and I intend that they will keep it.

     

    Q2. Mr. Cousins: To ask the Prime Minister if he will list his official engagements for Tuesday 14 February.

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

    Mr. Cousins: Is the Prime Minister aware that, following the Government’s deal with Trafalgar House to kill off Northern Electric this morning, the resulting free-for-all in electricity companies has caused electricity shares to rise by 10 per cent. in a Valentine’s day orgy on the stock exchange, while there has been a Valentine’s day massacre of job security in the north? Does the right hon. Gentleman agree with the Confederation of British Industry that growing unfairness in society affects not only jobs but competition and business?

    The Prime Minister: As the hon. Gentleman will have observed over the last couple of years, competition in business has been creating jobs, not losing them, which is why unemployment has dropped by more than half a million.

    Mr. Foulkes: Rubbish.

    The Prime Minister: The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) has apparently not noticed the drop of half a million in unemployment, so I will tell him that it has dropped right across Scotland, which he cares about, as well as in England, in Wales and in Northern Ireland. If the hon. Gentleman has not understood even that, I can understand why he is on the Opposition Benches–because he understands nothing.

     

    Q3. Lady Olga Maitland: To ask the Prime Minister if he will list his official engagements for Tuesday 14 February.

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

    Lady Olga Maitland: Has my right hon. Friend seen the report that tourism in Northern Ireland has doubled since the ceasefire was announced? Does he agree that that reflects in an important way the outcome of the peace process?

    The Prime Minister: I am aware of the remarkable increases in tourism. There have also been remarkable changes in the life styles of the people in Northern Ireland and in the success of large and small businesses in Northern Ireland. I believe that those are results of the ceasefire, which I hope we shall be able to turn into a permanent peace.

     

    Q4. Mr. Jim Cunningham: To ask the Prime Minister if he will list his official engagements for Tuesday 14 February.

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

    Mr. Cunningham: Does the Prime Minister recall that last Thursday in the House he gave an undertaking to commit the Government to fighting injustice and inequality? Will he now, as a first step, take the opportunity to reintroduce wages councils and, as a second step, abolish the jobseeker’s allowance?

    The Prime Minister: I will not give the hon. Gentleman that undertaking, because I do not believe that wages councils acted in the interests of people who were low paid. I believe that they kept a lot of people out of work who might otherwise have been in work. I accept that the Government have a responsibility to help the poor, and we have sought to do that. That is why extra help of more than £1 billion since 1988, over and above inflation, has been provided to help low-income families. That is the point that I invite the hon. Gentleman and his right hon. and hon. Friends to concentrate upon.

     

    Q5. Mr. Jacques Arnold: To ask the Prime Minister if he will list his official engagements for Tuesday 14 February.

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

    Mr. Arnold: Is my right hon. Friend aware of the decision of the parents of pupils at 88 schools in Kent who voted overwhelmingly for the schools to become grant maintained? Will he congratulate those Kentish parents on their choice? Does he welcome the fact that they had the choice in the first place–a choice exercised by the Leader of the Opposition and a number of Labour Back Benchers–or does he consider that choice to be wicked?

    The Prime Minister: I believe that every parent should have the right to choose what is best for his or her children, and I have no criticism of any parent who does so. I simply ask that all parents should have the same choice.

     

    Q6. Mr. Watson: To ask the Prime Minister if he will list his official engagements for Tuesday 14 February.

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

    Mr. Watson: What does the Prime Minister suggest that I could do to help my constituent, Jane Pepper, who gave up a secure job in the civil service last year to attend an access course for university? She secured three offers of places, but is now having to give them up because she loses £5,000 as a result of the Government’s penny pinching in cutting the mature students’ allowance. Leaving aside the waffle that the Prime Minister usually gives us, what advice can he give to Jane Pepper and the thousands of other people who missed out on higher education the first time around and are now having the door slammed in their faces again?

    The Prime Minister: The hon. Gentleman knows that the number of people going on to further and higher education has increased dramatically. When the hon. Gentleman’s party left office, one in eight of our children went to university. The figure is now one in three, and it is increasing.

     

    Q7. Mr. John Marshall: To ask the Prime Minister if he will list his official engagements for Tuesday 14 February.

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

    Mr. Marshall: Does my right hon. Friend agree that the rather disappointing performance of the English cricketers in Australia illustrates the need for more competitive sport in our schools?

    The Prime Minister: I should certainly like to see more competitive sport in our schools, and we intend to ensure that there is more. Beyond that, we must ensure that there is a much better sports environment through the clubs, so that there is a proper throughput from school to club level and to more senior levels in sport. I intend to do what I can to bring that about.

     

    Q8. Ms Jowell: To ask the Prime Minister if he will list his official engagements for Tuesday 14 February.

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

    Ms Jowell: Is the Prime Minister aware that last week a senior manager at Guy’s hospital in London had to telephone 24 hospitals to arrange cover for patients needing acute and intensive care beds? Does he accept that patients’ lives are at risk because of the shortage of beds in London? Will he instruct the Secretary of State for Health that no further bed closures should be allowed?

    The Prime Minister: If the hon. Lady had wished me to comment on that, no doubt she would have given me earlier notice of the question. Often enough, there have been cases in which a direct answer could have been given if information had been provided, and often enough I have examined matters subsequently and found them to be a touch different from what had been suggested on the Floor of the House. I have no doubt that my right hon. Friend the Secretary of State for Health will have heard what the hon. Lady had to say.

    Mr. Michael Brown: Is not the situation with regard to the single currency quite straightforward–that if my right hon. Friend remains Prime Minister we will not have a single currency, but if the Leader of the Opposition becomes Prime Minister we will?

    The Prime Minister: As I have indicated to my hon. Friend on previous occasions, I will make a judgment on what I believe the national interest demands. If it demands no, I will say no.

  • Mr Major’s Speech to the Conservative Way Forward Dinner – 3 February 1995

    Below is the transcript of Mr Major’s speech to the Conservative Way Forward Dinner on 3rd February 1995.


    PRIME MINISTER:

    When you first invited me to address this dinner some six months ago, I was delighted to accept.

    Your very name begs questions we are wise to address: I’d like to set out some thoughts tonight on the way forward on the economy, on Europe and on Northern Ireland. But before I turn to these, let me touch on the wider question.

    There’s often the tendency to search for a new Holy Grail – a single big idea to enthuse the mind and attract the millions.

    In truth, one idea – however big – won’t do.

    The world changes continually – faster today than ever before – and we must catch and mould that change. That is why I have put in train Policy Groups not only to provide the widest possible review of the right policies for the next Election, but for the new Millennium as well.

    These groups will look at Britain’s role in the world, and the opportunities that lie ahead.

    This will be wide-ranging. And I would certainly welcome contributions from Conservative Way Forward.

    Of course, some will say “We’ve won 4 successive General Elections. Why change?” The answer is we won 4 successive General Elections because we changed. We changed the way governments fought inflation, fought union power, reduced punitive levels of personal taxation and increased our prestige in the world.

    These changes played to our natural instincts. They also reflected what people wanted – articulated what people felt. They put the country first and they increased choice, opportunity and freedom. Now and always, that is always the right way forward for the Conservative Party.

    We are different from other political parties. We are not interested in the nanny state. We’re not interested in managing a graceful decline for our country. We have faith in Britain and in the talents of the British people. We believe Britain’s influence can grow. We plan to make it grow. And we have a lineage and maturity unmatched by any other British political party.

    Our broad objectives are simply stated. First, to build a more powerful economy without which all our other ambitions fail. Second, to lift our national ambitions, and exercise our influence both in Europe and the wider world.

    Over recent years, national morale has been bruised. The recession hurt. It was longer and deeper than anyone expected. But the point is, we’re through it. It’s over. Its time for Britain to be more confident. To reassert our merchant venturing spirit. To be more outward looking and assertive. And we’re right to be so because we’ve come out of our difficulties in better economic shape than anyone imagined.

    That hasn’t happened by magic, by chance. It’s happened because we’ve taken economic decisions to build long-term success, not short-term popularity. We ignored siren voices with quack remedies; those who said don’t worry about the deficit, it’ll go away; go soft on inflation, it won’t rise. We said no.

    And because we did we are now on track to deliver stable growth and low inflation for the long-term. The prospects are good. The pessimists are being confounded. They said

    – manufacturing was dead. It’s expanding.

    – The trade gap would widen. It’s narrowing.

    – Inflation would take off. It hasn’t.

    – Unemployment would reach 5 million. It’s half that and falling.

    The pundits have recast the old phrase “no news is good news”. Now it seems to be “good news is no news”. Well, let me offer an alternative news summary.

    Last year we had growth of 4 per cent. More than anyone else in Europe. That 4 per cent growth went into investment and exports. It packaged the feel-good factor and has cut unemployment by 500,000 over the past two years.

    Exports are booming. Month after month new records are set.

    Not many years ago our motor industry was a basket case. Now we are set to be a net exporter of motorcars.

    A few years ago the British steel industry was at death’s door. Now it is one of our top ten exporters.

    A few years ago the British motorbike industry was ridden off the road. Now British companies are exporting high value motorcycles to the Japanese.

    The fact is British industry is hugely competitive. It’s penetrating markets more deeply than ever before and it is doing so while its markets are still coming out of recession. As they grow, so should our exports.

    Let me just offer one final thought for our alternative news summary. It illustrates our changing circumstances very vividly. When you put visible and invisible trade together, the United Kingdom is now in surplus with Japan.

    All this is important because economic success not only creates jobs, but yields taxes to enable us both to meet our social ambitions and diminish the impact of tax.

    It means as the economy grows, we can return to our tax cutting agenda.

    The policies of the other parties are to put taxes up. The Liberal Democrats have kindly pointed that out by costing Labour’s programme and calculating it would put 5p on the standard rate of tax. The fact is; as Labour head for 30p, I tell you this: we’re still heading for 20p.

    Let me turn now to Europe.

    Europe is important. It is important for our security, and for our industry. Economic well being is at the heart of our European policy. The European market is half of our trade. It is the main reason why companies in Japan, Korea, the United States choose to invest in the UK. It’s one reason why the City remains the world’s leading financial centre.

    So Europe’s future matters to us. To our livelihood. To our living standards. To our jobs. We should debate it. And we have an obligation to shape it and make it congenial to us. The basis of our approach is the framework I set out at Leiden. Let me hammer home some of the points.

    We must have an intelligent, informed and commonsense debate about what is best for the United Kingdom and for the prosperity of Europe as a whole. I believe we are developing a policy that will command the support of the broad mass of the British people.

    It is high time we de-mystified next year’s Intergovernmental Conference. We want it to succeed. We should strip away the speculation and the scare stories and look at the realities.

    I know many people fear the IGC is going to take a leap towards a centralised, high-spend, interventionist Europe.

    But it isn’t. It is not what the people of Europe want. It is not what their economies need. And it is not what a growing number of Europe’s leaders expect. And it is not what Douglas Hurd and I will accept.

    Popular opinion across Europe can’t be ignored.

    Ambitious schemes for centralism simply will not get through. Britain for one will not accept them. Nor will electorates across Europe, where in many countries a referendum would have to be held.

    What we will aim for is a more flexible European Union. That is the only way forward which makes sense as Europe enlarges.

    A Europe of 15, possibly 20 around the turn of the century and more than 25 beyond that, cannot be the same as a Europe of 6. Talk of fast track and slow track misses the point. We do not all have to do the same things at the same time in the same way and we shall resist pressure to do so. Unless Europe is flexible it will simply grind to a halt.

    In the negotiations, a balance will have to be found between competing interests. I’ve set out recently some areas where our position is firm. Ken Clarke made the point again yesterday. We cannot accept that sterling should be part of a single currency in ‘96 or ‘97. We don’t believe anyone could sensibly want to go ahead then but, if they do, we wouldn’t be with them. Nor can we accept a prejudgement – one way or the other – about some unknown time in the future. The right for our Parliament to take the decision it wants when it wants is undoubted.

    That lies in the future. To say “yes” now or “no” now is to operate on hunch not facts. No one knows what future economic circumstances will be. I will tell you my fear: unless economic conditions were right, a single currency would tear the European Union apart. And, by the right economic conditions, the Government does not only mean the Maastricht criteria – they are a necessary but not a sufficient condition to justify a single currency. Ken Clarke will go into further detail on this next week. The plain fact is that the powerful forces of free markets will massively determine these events. And they cannot accurately be foreseen now.

    Nor will we agree to a more prescriptive, centralist Europe, or removal of the nation states veto. The Cabinet are clear about that and our European partners know our views. Moreover, although they may only mutter it sotto voce, a number of our partners agree with us on these points.

    But to categorise this position as though it was our only view on Europe, and therefore – to use the buzz words – “sceptical” or “negative” or “anti” European is just plain wrong. We have our own vision of Europe and we are going to set it out and fight for it just as does every other nation in Europe.

    We will have a detailed menu of positive changes to improve Europe; to make it more responsive to the needs and concerns of its peoples; to make it more effective and more efficient; to make sure it works to our advantage.

    For example, the Single European Market is of huge importance to Britain. We were pioneers in creating it. We have to make sure that its rules are kept.

    We need also to improve the common European contribution to NATO and Malcolm Rifkind and Douglas Hurd have worked long and hard on our plans to do so.

    In this area, Britain must lead Europe and we are well placed to do so. For the Community itself, we need fewer laws but better laws; and we need those laws properly enforced right across the Union. For example, we are rightly concerned about fraud. We know it takes place in nation states. So we need a better mechanism to stop it. Clearly the UK cannot stop fraud in another EU country, so we need a cross-European mechanism to do so. We will need to provide those powers and Michael Howard’s proposals will help achieve this.

    We need recognition that those who make the largest contribution and have the largest populations should have a larger say. So voting weight and patterns need to be considered.

    We need to re-examine and review the institutions of the European Union.

    To re-inforce the democratic authority of the Council of Ministers as the voice of the nation states.

    To make the role of the European Parliament more relevant. To ensure it exercises effective scrutiny of the Commission’s work. And we need also to involve national parliaments more in the legislative process.

    We need fewer Commissioners and a more efficient, cost-conscious Commission. We need to continue to reduce the burden on business and to oppose unnecessary intervention and regulation.

    This list is simply illustrative of the matters we must consider as we approach the IGC.

    One thing above all rules my approach to Europe. Not impractical, elitist opinion, pro or anti. Not dogma or emotion. But a hard-headed view of what is best for this country and for Europe.

    I know there are plenty of things wrong with Europe that we must change. But there are also plenty of opportunities in Europe that we must take.

    We would not help our national interest by turning away or simply trying to obstruct. We help our national interest by changing what is wrong and convincing people of our case. We have a good case. One that suits this country. One that will improve Europe for all its participants. We should not shrink from putting that case and we will not.

    Next year’s Conference will give us an opportunity to do so and we should approach it in that spirit.

    From Europe, let me return to the UK.

    This has been a difficult week for Northern Ireland.

    People have been unsettled. Rumours and fears have swirled around that could damage the prospects of peace.

    I’ve never promised that the present initiatives would lead to a permanent peace.

    I hope they will.

    I pray they will.

    But I’ve never promised.

    These negotiations are difficult and delicate. We’re seeking to overcome generations of mistrust and put in place a better future.

    In preparing a Framework Document, we’re doing what the parties asked us to do. Proposing ideas to help the political talks. And that is what they are – ideas. There’s not a prescription that is going to be imposed.

    I believe it would be a tragedy if this process failed – and a double tragedy if it failed on the back of a misconception. So let me deal with some of the points that worry people.

    Are we going to remove British citizenship from those who cherish it?

    This is inconceivable.

    The people of Northern Ireland are British.

    But they also have long had a right – if they so choose – to citizenship of the Republic.

    We have no intention of changing this.

    The birthright of Northern Ireland’s people, from either tradition, is not an issue.

    Is it true, as The Times said, that a North/South body will “make policy” towards the European Union?

    This is nonsense.

    The European Union deals with all sorts of people right across the United Kingdom. It is helping in Northern Ireland.

    But making policy is a wholly different matter. The Government of the United Kingdom represents Northern Ireland at all levels in Europe. We shall continue to do so. There’s no question of surrendering control of European policy to any other body – in Northern Ireland or elsewhere.

    But what about this plan for the British and Irish Governments to intervene jointly in Northern Ireland? For some over-arching mechanism?

    Let me put it very simply. There will be no joint sovereignty, no joint authority between London and Dublin, and no joint intervention by the British and Irish Governments. I cannot be clearer than that.

    If problems arose, and I naturally hope they wouldn’t, it would be the United Kingdom Government’s responsibility to deal with them – and ours alone. That is our role, and our responsibility.

    Are the people of Northern Ireland going to be on a slippery slope?

    Of course not. The consent principle is our foundation stone.

    The parties must consent to any outcome. And when they have done so the people must consent in a referendum.

    Am I going to be a “persuader” for a united Ireland?

    The answer emphatically is – No.

    Some time ago, I said about Scotland that “no nation can be held within a Union against its will”.

    Equally, the people of Northern Ireland cannot and will not be forced out of the Union against their will.

    They have a constitutional guarantee.

    For my part, I cherish the United Kingdom, and Northern Ireland’s part in it.

    So I take the view it is not for the Government to tell the people of Northern Ireland what their future should be. It is for the people of Northern Ireland to decide that future for themselves.

    To all of these concerns, there is one fundamental answer.

    The sole purpose of the Framework Document will be to help the parties reach agreement. There will be no outcome to these talks unless the parties agree. And the outcome will not be implemented unless the people of Northern Ireland vote for it.

    That is why I repeat that they have nothing to fear.

    Let me also mention the exploratory talks with Sinn Fein and the Loyalist representatives.

    This is an unprecedented dialogue with an unprecedented backcloth.

    In the past 5 months, two murders have tarnished the peace.

    But during the “ceasefire” of 20 years ago, there were around 150 violent deaths.

    A different climate is being established.

    Our assurances have been critical to the dialogue.

    We said that there had been no secret deals to favour one side over the other.

    We promised a level and open playing field – for all who would live by peaceful, democratic rules.

    And on this basis, talks are taking place.

    What matters is that everyone should be ready to talk about all these issues, however difficult.

    Then we can make progress.

    I have no illusions about the task.

    But we shall not concede to the fear of failure.

    For what is the alternative?

    As Archbishop Robin Eames said yesterday:

    “I cannot see an alternative to a political process, an alternative to patient groping on the way forward. The price of failure is to return to where we have come from, to constant human cost in lives and everything else.”

    There is no more to be said.

    At the next election the stakes will be high. There are differences between we Conservatives and the opposition on the economy, on Europe, on the constitution, on health, on education. Right the way across the present Government agenda.

    No one should fear that there is not a distinctive choice to be made.

    The next election will determine whether our world-beating industries stay competitive or sink under a morass of rules from Whitehall and Brussels.

    It will determine whether the state will take ever more money out of the pockets of the people, or whether we will get back to the natural Tory principle of reducing taxes as fast as possible.

    It will determine whether we continue to be a self-determining nation state or not.

    In the 1990s we can build on the great achievements which we have made since 1979 – or we can throw it all away, giving power to the very people who resisted each and every one of the changes that have revolutionised the lives of Britain’s people.

    This fight matters as much as any we have conducted before. These are the policies I believe in. These are the policies I am going to fight for and with which I believe we’ll win.

  • Mr Major’s Speech to the British Retail Consortium – 24 January 1995

    Below is the transcript of Mr Major’s speech to the British Retail Consortium on 24th January 1995.


    PRIME MINISTER:

    President, Chairman, Ladies, Gentlemen.

    Napoleon once referred to the British as a “Nation of Shopkeepers”. Today the Retail Consortium would rightly take that as a compliment. At the time, the British army didn’t.

    And Napoleon was left to reflect on St Helena on the wisdom of his remark. He had plenty of time and not much to do. There were no superstores there and precious few shops. No wonder Napoleon tried to escape. He failed – so he was able to consider at leisure the merits of both the British Army and the British retail trade.

    Whatever the merits of retailing then, no one doubts today it has undergone a revolution. The variety and diversity of goods in our shops has expanded beyond all belief.

    In our supermarket are green beans from Kenya, lemon grass from Thailand, asparagus from Peru and starfruit and ortaniques from Morocco. Ortaniques. And once we used to think bananas were exotic!

    And in the high street, are small specialist shops, selling socks or ties or Belgian chocolates. The idea of a viable consumer market for shops like these would have seemed incredible even a few years ago.

    Has any peacetime activity had a more dramatic effect on our lives in the twentieth century than retailing? Personally I doubt it.

    It used to be so very different. As GK Chesterton – who belonged to the Napoleon School of Charm – wrote:

    “God made the wicked grocer

    For a mystery and a sign

    That men might shun the awful shops

    And go to inns to dine”.

    Rather unflattering – and totally out of date. Today, Chesterton would be tucking into pre-prepared haute cuisine from the chill cabinet, washed down the chateau bottled supermarket wine.

    ECONOMY

    I know, for many of you, the going has been tough in recent years. The economic and competitive pressures have been intense. But the prospects ahead are now enticing. The economic recovery is established, is virtuous and offers the opportunity to build sustained growth into the next century.

    Over the last year manufacturing has grown 5%, with productivity up over 6% and unit wage costs falling. There’s been more good news from the CBI survey only today. We hear so much claptrap about British manufacturing from people who don’t understand how it’s changing – how good its prospects are. In fact it’s once again playing a key role in the economy.

    And that feeds through to exports. Exports are leading this recovery and how refreshing that is. Up 13% on last year, with our first trade surplus since 1987. We’re net exporters of machine tools, TV sets, pharmaceuticals. British Steel are now one of the UK’s top ten exporters. Shorts in Belfast doubled their aerospace exports last year. British exports to China rose an astonishing 43% last year. We even have a current account surplus with Japan.

    With growth at 4% last year, the British economy is growing faster than any other big European country. Every year we’re seeing the international economic forecasts updated in Britain’s favour. They said we’d grow faster in 1993. We did. They said we’d do it again in 1994. We did. Now, they predict we’ll grow faster than all our main European competitors this year too. So we will. From 1994 to the end of 1996 we expect to have grown by 10%. Who’d have predicted that two years ago?

    This hasn’t happened by accident. It’s happened because sixteen years of supply side reforms have revolutionised the attitude and performance of British industry. And because the decisions taken over the last few difficult years – unpopular though they have been – were aimed at ensuring a recovery that would last.

    Inflation has now been below 3% for 15 months running – a record not achieved for 30 years. Of course it will fluctuate. But the underlying level is still the lowest for a generation. And we intend to keep it low.

    Tax cuts there will be. We are instinctively a tax cutting party. Every improvement in the PSBR brings that day closer. But we will only cut taxes when it is prudent to do so, and not before.

    ECONOMY AND RETAILING

    I know that my bullish assessment of our economic prospects is not yet reflected in every part of the retail sector – especially those which depend on a buoyant housing market. But the overall picture shows retail sales at record levels – up on last year and well above the last peak in 1990.

    But consumers are more careful and cautious today. This recovery isn’t coming in a rush. The evidence suggests that the biggest dampener on consumer spending isn’t taxes or take home pay but the fear of unemployment. President: if so, that should soon change. Because unemployment in Britain has been falling for two years – last month’s fall was one of the biggest since records began. It’s falling in all regions. Vacancies are at their highest levels for over four years. The prospects for jobs are good. Over 70% of new jobs are now full-time. So there is good reason for consumer confidence to return more strongly.

    COMPETITIVENESS:

    Let me turn to two aspects of competitiveness: one in your control, one in the Government’s.

    First, quality and supporting local firms. In the 1970s, people turned to German or Japanese goods because British goods were often seen as unreliable or shoddy. But that has changed.

    The best retailers have long known this: now others are joining in. Your Consortium – with DTI and the Textile Confederation – are encouraging greater UK sourcing of clothing, textiles and footwear. Of course, retailers want to offer their customers a world wide choice. But, where it makes sense, they’re buying British.

    This is not just about national preference. It’s about enlightened self-interest. Increasingly “British” has quality stamped right through the product. And increasingly, quality is selling Britain right around the world.

    DEREGULATION

    So, better local sourcing to build on quality is something you can do for yourselves. Deregulation is an area where I can help you.

    I am committed to cutting red tape. Of course we must protect consumers. But over-regulation is deeply damaging. It costs profits, investment, efficiency and jobs.

    We have already made significant progress. Last year we reformed the law on Sunday trading. We have legislated to relax outdated rules on late night shopping and to enable children to go with their parents into suitable hostelries. In the last budget Ken Clarke announced our plans to simplify VAT rules to help up to 600,000 small businesses with their cash flow.

    One area that particularly concerns me is the plight of smaller businesses. Over seven million people – 35% of the workforce outside Government – work in businesses with fewer than twenty employees.This is where the new jobs will come from. So we mustn’t strangle business – especially small business – in red tape. Otherwise over-protected consumers may become unemployed workers.

    We’re tackling three aspects of this problem.

    First, over-fussy regulation. I know that nothing makes businessmen’s blood boil more easily. That dreadful phrase “It’s more than my job’s worth” is the inevitable prelude to over regulation.

    The new Deregulation Act has given us new powers to ensure that rules are enforced fairly and consistently. We intend to make good use of them.

    So we’re reviewing all laws affecting business, to bring them into line with three key principles.

    – Businesses should have the basic right to a clear, written explanation of what action an enforcement official wants them to take. A retailer told to renew his floor or his tiles should be able to ask why; whether it’s just the enforcer’s whim or whether it’s the law; and whether his competitors are having to do the same.

    – Businesses should also have the right to put their point of view to enforcement officials before action is taken – unless it’s a genuine emergency.

    – And in future there will be a new model appeal system to hear the merits of the case. We’re working on that right now and will be consulting business about it.

    The result should be a radical shift in power. The onus will be on the enforcer to avoid excessive action; not on the business which has to count the cost.

    Second, we will continue to sweep away unnecessary regulation.

    The Deregulation Act will give us new and quicker ways to cut red tape without requiring full-scale legislation. We have long needed this power – and we mean to use it. We’re earmarked fifty-five measures already. We shall be bringing the first batch to Parliament very soon.

    We’ll be scrapping bureaucratic controls over a wide area. Cutting back paperwork that burdens building societies and the insurance industry. In future, you’ll be glad to hear, the Transport Secretary will no longer have to approve parking control equipment. We’ll also be changing absurd rules – like those on greyhound betting. At the moment there’s one rule for horses and another for dogs. In future, you’ll be able to bet through the tote on the greyhound derby at Wimbledon, even if you’re enjoying an evening at the track at Hove. At present, for some daft reason, you can’t.

    And we’ll be cutting back on the excessive information businesses have to provide in areas like consumer credit. Of course we’ll protect consumers, but too much paper confuses everyone and it’s a burden on small business in particular.

    Deregulation helps business. But it also makes life simpler for everyone. We will simplify licensing procedures for community buildings, like village halls. We mean to combine licence applications and reduce inspection visits. This should be a real help to local groups like Women’s Institutes, charities and playgroups.

    We have been looking at the rules on how charities can invest their money. Clearly charities must act wisely and prudently. But the present law came into force thirty years ago. I can tell you tonight that Michael Howard will shortly act to increase the proportion of money charities can invest in equities from the present 50% limit, to 75%. On the charities’ own figures, this simple change could boost their income by up to 200 million pounds a year.

    These measures are early steps. I hope you’ll go on helping us identify others: that’s a genuine invitation.

    I can announce one further measure tonight. The present law on sales of liquor on Sunday is absurd. Why can people buy liquor in a shop at noon but not at 11.30; or in a pub at 3.00 o’clock in the afternoon but not 4.00 o’clock? Now we have Sunday trading there is no logic in these regulations. They are old fashioned, out of date, patronising, Government-knows-best restrictions. And they should go.

    So we propose as soon as we can to sweep them away, and replace them with simple and sensible laws. Supermarkets will be able to sell liquor throughout the six hours they may open on Sundays. Smaller off-licences will be able to trade from 10.00 in the morning to 10.30 at night. And the compulsory afternoon break on Sundays, when pubs now have to close from 3.00 o’clock to 7.00 o’clock, will be abolished – though the licensing magistrates will be able to re-impose the break if local circumstances make that necessary.

    Thirdly, as we sweep away out-dated rules here, we must make sure that new rules don’t flood in to replace them. Not least from Europe. That’s why we continue to oppose the European Social Chapter, which all other political parties are committed to introduce in Britain. I’m sure they are sincere but I’m also sure they’re wrong. They are arguing for more regulation. For a minimum wage. I believe both would cost jobs. I want jobs. So we won’t have Social Chapter regulation and we won’t have a minimum wage.

    I do not believe many people realise just how damaging the Social Chapter could be for this country. Before I secured our opt-out we had seen the harm that could be done by attempts to bring in costly social legislation. The attempt to impose rigid hours of work on all employees across the Community in the Working Time Directive. Or the original version of the Parental Leave Directive – which would have imposed costs of over a billion pounds on UK business every single year.

    The Social Chapter could open the floodgate to a new tidal wave of damaging and unnecessary legislation. The European Union shouldn’t decide rules on redundancy payments. They should be decided here. The European Union shouldn’t lay down rules on workplace creche facilities. They should be decided here. The European Union shouldn’t decide terms and conditions of employment for part time workers. They, too, should be decided here.

    It is vital to our competitiveness and jobs that Britain remains outside the Social Chapter. Our opt-out is not negotiable. So far as I’m concerned we’re out and we’re staying out.

    PLANNING

    President, deregulation affects the whole climate in which you work – you need the assurance that Government will not overburden you with red tape. You also need a clear framework for planning where to put your business. Where to expand.

    We will shortly be responding to the Select Committee’s report on shopping centres and their future. But let me make two things clear now:

    – New development is necessary. I know it’s often controversial. But we can’t treat our towns and villages as museums of the past:

    – So our policy is not to smother investment – in either town or country. We have introduced tougher tests for out-of-town development. But we haven’t padlocked the gate to every new, green field site.

    As so often in Government, we have to balance competing interests. The consumer wanting choice and access. Retailers – large and small – who must remains competitive. The attractions for many of large scale shopping. But the need, too, to keep our high streets and town centres vital places both to live and work in.

    Survival was never achieved by standing still. Town centres themselves must adapt – whatever their size. We all have an interest in meeting this challenge: Government, local authorities; and not least you, the retailers.

    One hundred town centre management projects are already under way. I warmly welcome the involvement of a number of you present here this evening – Boots, Marks & Spencer and others – who have been pioneers in this field.

    The age of the motor car has forced many changes on rural areas in particular. We need innovative ideas to help improve choice for country communities which have lost the village shop and for people without cars, particularly the elderly. Can we make better use of new technology in these areas? Can retailers think of better ways to provide transport to shops?

    This year, the Government will be publishing a White Paper on rural issues. There is, I know, a concern amongst those who live and work in the countryside that our thinking is dominated by urban considerations. It isn’t. To prove that, the White Paper must set out a coherent view of the relationship we expect between towns and cities and the countryside. It must take account of changing economic circumstances as well as the need to preserve and enhance the beautiful parts of our country. I intend the White Paper to set out a policy which will last well into the next century, so it is very important that everyone contributes to the debate. I hope the British Retail Consortium will put their ideas to John Gummer and William Waldegrave who are taking this forward.

    CRIME

    Lastly, I want to say a few words about crime.

    We know how devastating crime can be for the victim. What is not so well known are the economic consequences. This is a vital issue for your members. Crime costs retailers some 2.5 billion pounds every year. Or to put it another way: retailers’ profits would increase by over 20% if crime could be eliminated.

    When we think about retail crime, instinctively we think of pilfering and petty shoplifting. They are bad enough. But alas, too often nowadays we are seeing crimes of quite a different order. Arrogant gangs of intimidating youths on organised shoplifting sprees. Ram-raiders who drive their trucks through shop windows. And not least, a number of appalling crimes of violence against your staff.

    You have already launched the Retail Crime Initiative. We will continue to work in partnership with you – retailers, local authorities and the police – to establish effective crime prevention schemes.

    First, we need to get planners and local authorities to think more carefully about town centre designs. We need better liaison between police and retailers to share intelligence. Paging and ring round schemes to give early warning and quick response. Radio links between retailers, private security firms and the police. Local crime prevention panels and security committees. There’s a lot going on. But we need more.

    Second, I believe we’ve got to get more closed circuit TV schemes in city centres. These schemes have huge potential in the fight against retail crime.

    Already, about 250 schemes are up and running or planned:

    – In Airdrie, CCTV in the city centre cut crime by 73% in six months;

    – In King’s Lynn, car thefts fell by over 90%;

    – In Newcastle and North Shields, crime levels were cut by 20%. And business insurance premiums fell too.

    Crime prevention makes excellent commercial sense. Yet only about a fifth of retailers join in crime prevention schemes. A recent survey suggested that a further half of all retailers would like to get involved. I believe we must involve them in schemes like business watch and City Centre TV. And quickly.

    Third, we have to challenge the attitudes that accept crime as a way of life and effectively punish the criminal.

    We’ve given the courts the power to pass long prison sentences for serious crimes: up to life imprisonment for robbery and serious violence, including violence against retail staff. Burglary and theft can also carry substantial prison sentences. We’re acting to tackle persistent juvenile offenders can be dealt with more effectively. Stiff sentencing not only keeps the criminal out of circulation, but clearly demonstrates society’s abhorrence and intolerance of crime.

    These changes have all been put in place. They take time to work but they amount to a comprehensive change in our attitude to the criminal. We will continue to look at what further initiatives may be necessary.

    President, I have always admired the way the retail industry contributes to the community as a whole. The extent to which you take part in voluntary activities – nationally and locally. Charities, sport, help for the needy and disadvantaged.

    Retailing is above all a local activity. And your long term interests have always been intertwined with the interests of the local communities. So I welcome the way in which retailers are becoming increasingly involved in social projects which tackle crime at its roots. It is important for you and it is vital for our society that we help young people to discover that there be better alternatives to crime. You can help to put this message across.

    President, you said in your introduction that retailing is a British success story. I agree. After nearly two hundred years, we are still a “nation of shopkeepers”. We take pride in that. So let’s ensure that in the years to come, we can still take pride in that. Getting that depends on a healthy and flexible economy and a stable and secure society. Tonight I have set out some ways in which we can work together to achieve this. My task above all is to keep the economic framework sound. To avoid the bad old days of boom and bust. I pledge to do so.

  • Mr Major’s Speech to Business People at the Ritz Hotel – 7 December 1994

    Below is the text of Mr Major’s speech to business people at the Ritz Hotel in London, given on Wednesday 7th December 1994.


    PRIME MINISTER:

    Let me turn straight to contemporary events. I don’t propose to mince my words this morning. You wouldn’t expect it and frankly I’m not in the mood to do so. Last night we lost a vote on a tax measure. I don’t take that remotely lightly. Taxes tend to be unpopular. They usually are. The first popular tax has yet to be invented and I don’t think Norman Lamont or Ken Clarke have yet found it. But I know of no tax that has been so misrepresented in such lurid and emotional terms as the tax upon which we lost the vote last evening.

    What has been said about it, frankly, is a travesty of reality and I will tell you who the great gainers are from last night’s vote, it’s you. It isn’t the pensioners, it isn’t the people in particular difficulties, it’s people who will now not be paying the increased tax on energy. I think it was a mistaken vote last night. You’ll be unsurprised to hear me say that. I hope you will be unsurprised to hear me say also, that the Chancellor will come back to the House on Thursday and he will repair the fiscal position that was damaged by last night’s vote. There should not be a shred of doubt in anyone’s mind about that. We set out the fiscal position, we’re determined to bring down borrowing, we’re determined to sustain recovery, we are going to take no risks with the recovery whatsoever and so on Thursday the Chancellor will set out an alternative measure of ensuring that the fiscal position is unaltered as a result of last night’s vote.

    So let me tell you why I feel very strongly about that. If I may take you back a few years. On the first day I became Chancellor, I said at the time – looking at positions where we were clearly heading into recession, where inflation was still going up quite rapidly, where unemployment was clearly on a very rapid rise and we were clearly on the top of a hill that was undoubtedly going to head down – that if it isn’t hurting it isn’t working. What I had in mind was the problem that we had repeatedly faced since the early 1950s. Time and time and time again, we see the economy looking set fair for some time and inflation has just driven us off course. The consistent low inflation economy that we’ve seen in Germany for so many years with the industrial and other benefits that have necessarily followed it.

    I am sick and tired of time and time again seeing us driven off course by inflation. Not just the social consequences. It’s all very well for economists and statisticians to regard inflation as a phenomenon. An economically interesting phenomenon. For ordinary people, if you have to pay bills at the end of the week and you can’t pay them, that is what inflation means and that is the misery that lots of individuals face when inflation remotely begins to get out of hand. From your point of view it means you aren’t going to be able to compete with the French, the Germans, the Japanese, Pacific Basin countries and the United States unless our inflation record as a nation is at least as good as those of our competitors abroad. We are determined that that is the bedrock upon which economic policy is to be built. A bedrock of low inflation. And once people understand that that is the basis of what we are about, they may understand a great deal else that’s happened in the last four years or so.

    I remember very well the period running up to the last General Election. All those seductive voices saying to me, well the economy’s clearly in a downturn. Bring interest rates down speedily. A little extra help here, a little extra help there. Well maybe. I can see the short term attraction for that. But would it have delivered a position where conceivably we might break the inflationary psychology that has damaged this country for so long? That was the prize that we have been pursuing and that was right up to and during the General Election. We ignored the voices encouraging us to buy a little popularity by reducing interest rates and loosening economic policy.

    So I hope no one doubts the determination of the Government to obtain an anti-inflationary strategy and to ensure that the opportunity that I now believe lies out there in the economy, is not an opportunity that is thrown away. Let me just say a word or two about the recovery. Where I think we are. What I think is happening. Some of the down sides of what’s happening and where I think we’re going. I don’t have a shred of doubt that, providing we continue to pursue the right policies we have a series of unprecedented opportunities in front of us.

    Growth over the last twelve months is higher than we expected. Higher, I think, than is sustainable. 4 per cent is not sustainable and our forecasts are for lower growth in the years immediately ahead. But it isn’t only the 4 per cent growth. We have 4 per cent growth with 2 per cent underlying inflation. Some would argue even less in reality. Now, not for decades have we seen a position where growth is double the rate of inflation. Now that is extremely attractive in many ways. Certainly extremely attractive for Great Britain plc. I think there’s not a shred of doubt about that. Greatly attractive for industry.

    Less attractive I think for the retail sector. I don’t think there’s any doubt that the retail sector often is more buoyant when it has an inflationary position. When people are getting large wage increases. When they can see prices rising, then there’s a propensity to spend and spend quickly before prices go up. That is undoubtedly the case. How long that tradition, that transitional instinct, will occur amongst the British purchaser I can’t say. But I am clear that for the country as a whole, a low inflation and high growth strategy is the right strategy for this country.

    We’ve seen unemployment fall quite dramatically over the past twenty months or so. If I can draw a parallel, I suppose the European economy closest to ours is the French economy. They have unemployment at around 12.8 per cent. We have unemployment at just under 9 per cent and falling. Unemployment has fallen, is falling and I believe will continue to fall.

    But not only is it coming down, but the proportion of our adult population in work is second I think only to Denmark, maybe third behind Portugal. Right the way across Europe and certainly far better than our natural comparators in Europe, Germany and France. We have a remarkably changed circumstance. Particularly in manufacturing industry. Exports are hitting record levels. If not quite every month, certainly on a regular basis. If one looks back over a few years. British Steel, a basket case ten years ago. I recommend anyone who hasn’t been to the Port Talbot works to go there and have a look for themselves at the remarkable change there has been there. Anyone attending the Motor Show would see again, an industry if one goes back a few years to Red Robbo, Long Bridge.

    Go and look at what is actually happening to the British motor industry and if you had meetings with a large number of Heads of Government in Budapest, what they had to say about the British economy, British exports and the British capacity to perform, then you would wonder what sort of world many of the critics of British industry and of this Government are actually living in.

    You see the determination they have to attract British investment into their countries, to attract British skills. The belief that they want British products because they are delivered on time. They are as good as anybody else and at the moment we are probably the most competitive industrial nation in Western Europe. They understand that out there and I think it is about time some of those people who seem to pervade a pall of gloom over everything that happens in the British economy began to recognise it in the United Kingdom as well. Is this just a normal recovery? I don’t believe that it is because there are elements of this recovery that are sharply different from those we’ve seen on previous occasions.

    Now it isn’t all that long ago since those wise and gloomy people were telling me, that when you come out of recovery, you’re going to have to balance the payments crisis. If I heard that once, I’ve heard it a thousand times. We are patently out of the recession, have been for two years. We have not got a balance of payments crisis. The balance of payments is actually narrower. You’re going to go straight into an inflationary spiral they said. Well of course we must keep our thumb on inflation and we will. Of course, the natural laws of economics aren’t suspended as you recover. You’re going to have keep a firm hand on inflation.

    But there’s no risk of spiralling inflation wrecking this recovery and they were wrong again about that. And then there were the people who said after the ejection from the Exchange Rate Mechanism that all this devaluation is going to work through the competitiveness advantage. It’ll go straight into wages and as ever the British economy will see it all slip away after devaluation. I do actually see that devaluation having worked its way through into profits, not necessarily all distributed in dividends. The profits going back into reinvestment and it certainly has not gone straight into wages and out to the people. If it had the Government might be a bit more popular.

    I can tell you one thing, anybody who thinks that low inflation is politically popular, wants their political bumps felt. It may be right for this country and I passionately believe that it is. But it certainly doesn’t make the Government popular. People like large wage rises. They like large rises in social security benefits. They don’t like it when they get 2 per cent or 3 per cent or less. They don’t like it because there’s an instinct after years and years of high inflation and having large money increases in their pockets, and the fact that prices aren’t going up is little political consolation to them. How many people out there in the country actually realise that energy prices have been falling and falling consistently? Go out there and ask them. They will look at you if you say that as though you are stark staring bonkers. So low inflation is right, but it isn’t popular politically and you can very clearly see that.

    Now let me turn to another matter that I think is fundamental. Fundamental because to the difficulties the Government has been facing and fundamental to the prospects of this country. There are three views about our membership of the European Union. There is the view that it is the best thing that ever happened and nothing that can happen in Europe can be wrong. There is the view that it is the worst thing that ever happened and nothing that happens in Europe can ever be right and then there is a sane and logical view, which is where in reality 90 per cent of the British nationals truly lie. And that is the belief that our economic and other interests mean we must be in Europe. We must play a central part in Europe. We can only build the sort of Europe that we feel comfortable with if we are in the middle of it pitching for the sort of Europe we want. It is about time we stopped having the argument conducted at extremes with the viewpoint of the vast majority of the people apparently being swept aside as though it was of no consequence.

    I find it immensely frustrating that the argument on Europe only seems to be carried out by the people on either extreme of the argument. You don’t have to be an extremist to have conviction and passion about what is right for this country is Europe. And I don’t have a shred of doubt that our interests are for us to be in the European Union, building the sort of European Union we want. Where would so much of your trade be if we were not? What would be the position if we found ourselves outside real influence? What would happen in terms of the regulations and directives is that they will have taken place and affected us whether we liked it or not. If we were not in there pitching.

    Would you have had a single market across Europe? But for the British you would not. Would you have had a reform, of the common agricultural policy? But for the British you would not. Would you have had the beginning of large scale deregulation across Europe? Emphatically you would have not. Would you have had subsidiarity and a repeal of one quarter of unnecessary European legislation if we hadn’t fought for it at Maastricht and afterwards? You would not. Would you have known about fraud in Europe if we hadn’t demanded extra powers from the Court of Auditors in Europe and got them and published their report so people could see what was happening? You would not. But why do we not get these things presented in a practical and honest way?

    I saw these reports about 6 billion pounds worth of fraud in Europe and the Court of Auditors. But I’ll tell you this, that 6 billion pounds figure wasn’t in the Court of Auditors. I think it was some professor in France who dreamed that up some time ago. How it crept into the Court of Auditors report I don’t know. Of course there’s fraud there. We’ve known there’s fraud there. No Government has done more than this Government to attack that fraud problem in the European Union. I reached an agreement with Mitterrand and Balladur at Chartres, three days after all those headlines about fraud. How much publicity was there for the agreement we reached to take further action on fraud starting with discussions at Essen this weekend? Well, you needed a very long telescope to find it in newspapers of any colour.

    But let us look at the argument as it really is. Should we be in Europe? Yes. Should we fight against some of the things that happened in the European Union? Emphatically we should. Every other nation does and so should we. It’s only because of the absurdities of the way the argument is carried out in this country, that we are deemed to be anti European when we express our view in Europe – though I’m bound to say Mr Balladur’s grand new gesture sounds remarkably like my Leiden speech of some months ago and I’m delighted to see that that is the case.

    Look at what is at stake. I have to say to you here, Peter was talking about the sheer size and scale of the industrial and commercial enterprises that you know. Well, I doubt there’s more than a handful, if even a handful of people in this room, who don’t believe that our interests lie in Europe, and emphatically lie in Europe. If I may say so at the risk of infringing your hospitality Peter, it is about time some of you got up and said that. It is about time you started saying that loud and clear. It is about time you stopped having this debate run by a handful of people who are fundamentally opposed to Europe and who will seem to turn every part of the debate against what is happening in Europe. Of course, we argued about the things that are wrong and we must, but it is about time we looked at their real interest. Why do we get so much investment in this country from abroad? Is it the Government’s popularity do you think? Is it our climate? Is it the excellence of the management of British industry or perhaps men of charm, skill, discretion? Wonderful businessmen no doubt.

    But it just might possibly have something to do with the fact that we are the most deregulated on trade to the richest market the world has ever seen. Ask Robin Cook what he would have done without NEC in his constituency. Prescott said the other day, holding up his telescope to his Nelsonian eye “I see no companies rushing to invest in this country”. He should have had a word with Tony Blair sitting next to him and ask him where Black and Decker had gone, and why they’d gone there. If he sees no investment running into this country, I just wonder precisely what he can see. Because there’s a vast weight of investment coming into this country. We’re getting more United States and Japanese investment than France and Germany added together. NEC, Samsung, Black and Decker. The list rolls on. Not just the list of some years ago, but the list of actual contemporary inward investment as a result of our domestic policies here and the fact that we are the most attractive market in Europe for those international companies who want to be part of the European market.

    Now let’s be in no doubt about the importance of that. And let us be in no doubt about the fact that the Government’s policy is to remain a full and complete part of Europe, but that we will be determined to fight against the things in Europe that we believe are premature or wrong. It’s because I believe the Social Chapter was wrong that I refused to accept it at Maastricht. It’s because I believe a single currency is premature – I believe will remain premature for many, many years to come – that I am also determined that we should not be committed to that in the Maastricht Treaty and I believe that that is right. Were we right on the Social Chapter? Self-evidently right. When Jacques Delors said it would make this country a paradise for inward investment, I could have hugged him. I didn’t. But he was absolutely right.

    Let me just touch on the Budget. Just elaborate on some of the things I’ve been saying. We need to safeguard the recovery we’ve got. That’s why we need to keep public finances under very tight control. That’s why the public spending plans were cut by, more I think on this occasion than any time since the Conservative Government has been in office since 1979. That’s why there were a whole series of supply side measures to help people out of dependency and back in work. Particularly those who’d been unemployed for a long time. And that’s why within the resources available, there was more help for business and industry. But frankly I don’t think you need a lot more help. I think we just need us to produce the right macro economic framework and the minimum amount of regulation so you can get on with your own work. We’ve at last got through the House of Lords the Deregulation Act. The Act gives the capacity to deregulate in many areas by secondary legislation rather than by primary legislation. Now, don’t let me fool you. Deregulation isn’t easy to achieve. For every piece of deregulation we want, there is a lobby determined to oppose it. That has been the position and will remain the position in the future, but I think it is absolutely vital that we deregulate and we intend to.

    I said some time ago, that I regarded education as being right at the top of the priorities. I don’t just see it as a social matter. It’s a supply side measure for industry as well. That is the raw material upon which you would build your enterprises in the next 20 or 30 years. And I’m not satisfied with what is emerging from British schools. It is getting better. But while we find ourselves still behind in qualifications, still behind much of what is happening in South East Asia, we can’t possibly be satisfied. That is why we put the reforms in place, long term reforms, not short term reforms, not day to day management, but long term reforms on testing, on performance tables, on a slimmed down national curriculum, on inspection. To make sure we really know what is going on in the education system, because without that how can we put right the things that don’t seem to be going right.

    We wanted one in three in further education. We had one in eight in further education in 1979, we anticipated one in three by the turn of the century. We will reach that this year, nearly one in three of our young people going into higher education. Now these are remarkable changes. Bit by bit our political opponents, who opposed us bitterly, have clambered on board the sledge and acknowledged that those education reforms are right and those education reforms will continue and entrench, because we need to ensure the best possible education in future.

    Let me just summarise briefly. We will take no risks, whatever the political unpopularity may be, with the recovery that I believe is now firmly established. We want a consistent, sustained, low inflationary recovery with growth at trend or above trend level. We wish to see unemployment continue to fall and I believe it will. We wish to continue to deregulate, to clear the ground for business and industry to maximise their penetration of world markets. There’s no doubt out there across the world there is a great demand, great opportunities for British goods. We may never be certain, we may be on the way to cracking the inflationary psychology that has done us so much harm in the past. Look at the opportunity that is beginning to become apparent in this country. It can be thrown away if we’re forced off course. It can be thrown away if you have policies of minimum wages. As John Prescott engagingly said “any silly fool knows that it will cost jobs”. The Social Chapter, with all the dangers, would do. If you look at costs in this country and compared them to costs in the rest of Europe, you see a significant competitive advantage because we are not piling extra costs on employers and as a result of that we have had more people in employment.

    I see no morality in providing extra benefits to people in work and condemning those out of work to stay out of work. If there’s a moral argument about unemployment between ourselves and our political opponents and ourselves in Europe, I believe we have the moral high ground in terms of trying to price people back into jobs, rather than electorally by favours from those in jobs and to hell with those who are out of jobs who would then never get back in. You of course want the lowest possible tax structure and I have to say to our opponents that a training tax, a windfall tax, a carbon tax – it sounds astonishingly to me like that VAT I have to say – those taxes will do precious little good to British industry. Nor would levelling out corporation and other taxes across Europe which our political opponents regard as their policy.

    Development tax, extra regional assemblies. I cannot think of a policy more irrelevant and more stupid and more damaging and more dangerous than to say you’re going into large scale constitutional change just at the moment when we ought to be concentrating on entrenching for good the economic and other changes that have taken place in this country. And as for closing massive tax loopholes, Howard Davies said they’re not closing loopholes, they disguise fresh taxation on business and nobody should be in any doubt about that.

    So the choice is clear. For those people who think there is no difference. There may even be some journalists here who think there’s no difference between the Parties. I suggest they lift their eyes and actually look at the clear distinct differences in economic and industrial policy between the two major Parties. I’m happy to fight on that. It isn’t always a popular message to preach prosperity in the long term, but I’ll tell you this. It is the right message. It is the message that is actually going to improve our living standards, not just tomorrow, but for a long period ahead. I believe it is the right policy. I think industry knows it’s the right policy and if industry wants to protect that policy, I hope industry will take the opportunity and speak out and say that it’s the right policy.

  • Mr Major’s Speech to 1994 Conservative Women’s Conference – 2 December 1994

    Below are extracts, published by Conservative Central Office, of Mr Major’s speech to the 1994 Conservative Women’s Conference, held at the International Centre in Hammersmith on Friday 2nd December 1994.


    [significant sections missing from transcript]

    PRIME MINISTER:

    Northern Ireland

    Yesterday, after three months of ceasefire in Northern Ireland, we announced that exploratory talks with Sinn Fein would start next week.

    The peace process is about to move into a new phase. A critically important phase. Before Christmas we shall be starting talks about talks not only with Sinn Fein but also with Loyalist political representatives.

    These talks are not yet political negotiations about Northern Ireland’s future. They are the gateway to public life and democratic politics for groups who have long excluded themselves.

    These groups must learn the rules of democratic politics. And those rules can’t be reconciled with gun law, intimidation, or any threat of violence.

    [section missing]

    Not peace at any price, but the lasting peace which can only come from the principles of democracy and law.

    Not just a season of goodwill but goodwill through all the seasons.

    1993 brought hope to Northern Ireland. In 1994, hope has begun to turn into reality.

    In 1995 we must make that a lasting reality, a life for the Province free from violence.

    Strong Economy

    Daily Britain is growing stronger – and it is doing so because of the policies we have followed. So, today, I want to look forward to some of the key issues at the next General Election.

    What will be the economic conditions at the time of that Election? And what will be the issues?

    We can foresee the economic conditions.

    Next time we will not be in the middle of a recession. Instead, we will be campaigning on the back of four years of high growth; of low inflation; of falling unemployment; of investment in industry; of competitiveness; and of rising exports.

    This is not idle speculation – not a wish list. This is the probable background against which we will fight.

    We now have before us the brightest economic prospects any of us have ever seen.

    Over the past 12 months growth in the economy has been a little above four per cent. Rarely have we seen it grow quite so fast. But even that isn’t really the significant point.

    [section missing]

    It hasn’t been easy. It has been painful. Painful for many people. Painful for us politically. Many people said ‘ease up.’ Many a seductive option was urged on us. An interest rate cut here, a bit more protection there – all the short-term palliatives.

    They were often offered for good reasons, these easy options. But they were wrong. And our policy was right – it was long-term and it was necessary. Now we will see the reward. We have now laid the groundwork for sustained growth with low inflation for many years to come.

    We were following a long-term strategy – not a short-term fix.

    We took long-term decisions, not short-term expedients.

    What we did was right for the long-term future of this country.

    We may have faced unpopularity – but we have done what had to be done. And we’ve done it successfully.

    The Conservative agenda is clear. To turn our present low inflation economy into a permanent low inflation economy.

    Not for abstract reasons; but because such an economy delivers security, opportunity and prosperity – and they are important to us all.

    Of course we still wish to cut taxes where we can. And we will.

    And we’ll continue to improve the strength of industry, raise standards in our schools, give better training to our young people. and get more of those long-term unemployed off welfare benefits and back into jobs.

    All that is now happening although there is still much to be done. I am not complacent….

    [section missing]

  • Mr Major’s Speech at the UK Quality Awards – 30 November 1994

    Below is the text of Mr Major’s speech to the UK Quality Awards on Wednesday 30th November 1994.


    PRIME MINISTER:

    PRIME MINISTER’S SPEECH AT THE UK QUALITY AWARDS, WEDNESDAY 30 NOVEMBER 1994

    In the midst of an otherwise dull week, I have been looking forward to this occasion. When I sat there listening to the names of the winners, it occurred to me that I could perhaps have used some TNT a little earlier this week. It might perhaps have encouraged the odd rover. I wonder if ICI could provide some explosives?

    I realise firstly that I am probably the last impediment between you and dinner and I will bear that in mind. But I believe this is an important occasion. I am delighted to be here as I know Michael Heseltine is and there are a few things I wish to say about British business and about quality. When Michael and I launched the Competitiveness White Paper last May, we had three significant messages. The first was that we live, in business terms, in a cut throat world. The second was that Britain’s best companies are literally the best in the world. And the third was that notwithstanding that, in order to maintain that position for some and gain it for others, we needed to raise our standard right across the board. The message is quite clear and it is quite unequivocal. Quality matters. It matters in an increasingly discriminating world. It matters for the pride of what we sell at home and what we export abroad. And it matters perhaps at the very realms of self-interest, because unless you provide quality you are very unlikely to provide and receive the return orders that all of us would wish to see this country obtain. That’s why it matters.

    Michael and I have both led trade missions abroad on a number of occasions in the last year. We have done so because we are proud of what this country produces. We have done so because we are sick and tired of some people who fail to realise how good so much of this country is and are forever running it down. We find, going abroad, there is a ready message and there are ready ears abroad to hear that message about the quality of British business; about the innovation of British business, and about the fact that British business now does deliver on time and does deliver a quality that is the equal of anyone in the world. That is why we’ve taken those trade missions abroad and that is why in the years to come we look forward to taking many more trade missions for exactly the same reason.

    Mr President, the British Quality Foundation has set itself to achieve higher quality across commerce and industry. You have essentially raised a flag of excellence with the UK Quality Award and I think the sheer size of tonight’s audience shows how many companies have responded to that challenge – how many companies themselves have sufficient pride in their own performance to realise that it is important to produce quality and important to compete in order to win the prizes that the best of quality now has available. I very warmly congratulate both the winners and those who came so close to winning on this occasion.

    Rover of course is one of the main companies that the Conservative Government has returned to private ownership. And tonight’s video shown a few moments ago showed precisely what they’d made of that opportunity. It isn’t all that long ago when you could have looked back at the British motor industry, looked back particularly at what is now Rover and seen what looked very much at that time, like a basket case of a company and a basket case of an industry. Anyone who went this year to the Motor Show would see what an absolute revolution has been achieved at Rover and elsewhere across the British motor industry. I believe what Rover had to say in their video about their quality and about their service is justifiable and I offer to them my very warmest congratulations for what they have managed to achieve. TNT Express as well are a success story of the very first order. A success story in the service sector, delivering a huge range of transport services, carrying almost everything from newspapers upwards. My only regret is, that not only carrying the newspapers, so dedicated are they, I’m afraid they also deliver them. With that single reservation, I offer them my warmest congratulations.

    But although their senior executives are here tonight to collect the prizes, I know they won’t mind my saying, that it isn’t just the chief executives on the boards, it’s the workers in Rover and TNT Express upon whom the companies success most depends. It is the shareholders, who work hard, who apply the crucial tests of profitability and performance and also the customers, who have applied the crucial tests of quality and value for money. Rover and TNT have met those tests.

    Tonight’s award gives other companies, not least small and growing companies, clear examples to emulate in the future. Every British company needs to measure up to the best if we are to succeed against hungry competitors in an increasingly open and competitive world market. There are no easy markets these days. No captive markets who will instinctively look to us because they have always looked to us. It is a much more competitive world out there this year than last year and it will be a yet more competitive world next year. And so the prime responsibility is going to be yours. Individual companies, individual businessmen and businesswomen. That is not to say that the Government themselves do not have a role to play, for I believe myself that they do. I believe the policies that are necessary for us to follow, are the policies that provide the framework within which British industry can succeed at home and sell successfully abroad. The fundamental issue, the fundamental responsibility of the Government is to provide the right sort of framework and the right sort of policies to business.

    On Monday of this week we voted on the European Finance Bill. I just wish to say to you this evening, I intend to continue to fight for the right sort of Europe. A genuine single market. One with flexible employment policies. The minimum of regulation and free trade with the rest of the world. And what I regret, is the extent to which the European argument – so vital to your success as business in this country and the employment prospects for all our nations – so much of this argument is carried on in extremes. In order to have any convictions on Europe, some people seem to think you have to be an extreme Euro-Federalist on one side or an extreme Euro-Sceptic on the other. Well I have to say to you, I fit in neither of those categories and neither in my judgement, do 95 per cent of the British nation. They know that the right sort of policies are that we have to be part of Europe, we have to be a leading part of Europe and we have to make a pragmatic and practical examination of what is right for this country and fight for those policies within the European Union. That, I promise you, is what the Government intends to do.

    Yesterday the Chancellor produced his Budget and here again it was the needs of business that were at the forefront of his mind. The overriding need to keep public spending and inflation down. To provide extra help for exporters and I know how hard the President of the Board of Trade has fought for those improvements. Measures to help unemployed people back to work and to reduce employers national insurance contributions for lower paid jobs.

    It is nearly two years ago since I first spoke about the need for work incentives in a speech at the Carlton Club. As is evident to anyone who heard the Budget speech yesterday, we are now putting our principles into practice. The Chancellor also introduced special measures for small businesses including new venture capital trusts. I believe the fruits of many of the difficult and, frankly, unpopular decisions that we have had to take in recent years are now beginning to show through. The whole economy has grown in the last twelve months, much faster than forecast – over 4 per cent, a touch over 4 per cent in the last year. Inflation is at the lowest for a generation and there are very few people in this room who could last remember when growth was double the underlying rate of inflation as it is at present. We’ve seen manufacturing output rise by 5 per cent and productivity rise by 6 per cent. Exports month after month seem to exceed the record figures of the month before and have risen by 12 per cent. Unemployment has now fallen by getting on to nearly half a million.

    The recovery that we are seeing in this country is unmatched elsewhere in Europe. Other things that many of the cynics forecast have not come about. It was said when we moved back into recovery that we’d have a widening balance of payments problem. Self-evidently we haven’t. That inflation would take off. Self-evidently it hasn’t. That after sterling devalued as we came out of the exchange rate mechanism, it would feed straight through the wages and we’d lose our competitive position. Self-evidently it hasn’t.

    I spoke some time ago to some German businessmen and they said “I hope you British realise where you are at the moment. You are at the moment the most competitive nation in Western Europe”. And that I believe is true and what I would wish to see is to see us remain the most competitive nation in Western Europe. I don’t wish to see inflation low for a short term. I wish to see if we can break the inflationary psychology that time after time after time has wrecked recovery in this country, and break it for good. That does mean no dash for growth policies as the Chancellor says. It does mean no reckless manipulation of fiscal policy. It does mean that we will continue to pursue the policies that are right for the medium and the long term to retain a position in which we have an economy with sustainable growth and low inflation.

    When I first went to the Treasury as Chancellor in 1989, one of the first things said to me repeatedly by businessmen was “we don’t want a lot from the Government, just give us a stable framework and remove regulation from us and let us do the job that we wish to do on behalf of our companies and on behalf of our country”. That I believe is what we are now achieving. We now have the fastest growth of all the major economies in Europe. This provides huge opportunities for British business provided British business stays competitive. What we must ensure is that we don’t casually, either we the Government or you industry and commerce, throw away the advantage that has been so hard won over recent years. I know the seductive voices about the feel good factor. Well I confess to you, in the privacy of this meeting, that I have a certain reservation about what people call the feel good factor. My observation over years has been that the feel good factor is often the prelude to a rather bad hangover. And people do feel good when more money is going in their pockets than productivity might perhaps merit. They do feel good is they’ve suddenly seen their neighbour’s house sold for £20,000 more than they thought it was worth. But those are the sort of factors that almost inevitably lead in the short term to economic difficulties. I want a feel right factor rather than a feel good factor. It is towards that aim that we are conducting economic policy at present.

    Mr President, the UK Quality Award has put the spotlight this year on two quite outstanding companies. I am delighted that next year public sector bodies will be able to compete as well as the private sector. All round quality is necessary in the public sector as in the private sector and I am determined that that also will be delivered. Britain’s success, her long term success, the pride that British industry now has in itself, can be maintained and should be maintained. But it does depend upon excellence in both the public and the private sector alike. So let me just conclude with a message I think is self-evidently true and that businessmen will recognise as being so. Let us be blunt. Winning is the name of the game in this hugely competitive world. I wish to see this country win. I wish to see British companies win. I know they will do so if they produce a quality that is the equal of any other in the world, as increasingly they are beginning to do.

    This award will add to the impetus to provide that quality and I warmly welcome it. I add yet again, my congratulations to those who won and look forward to seeing many more winners of the UK Quality Award in future years. Perhaps they are here. I hope, certainly, many people here will apply for this next year. It is worth winning. It has been won by two great exemplars of British industry. I wish all of you the best of good fortune in following their success in the future.

  • Text of the 1994 Budget – 29 November 1994

    Below is the text of the 1994 Budget, held on 29th November 1994 and presented in the House of Commons by the Chancellor of the Exchequer, Kenneth Clarke.


    Budget Statement

    Mr. Deputy Speaker (Mr. Michael Morris): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that at the end of the Chancellor’s speech copies of the Budget resolutions will be available to hon. Members in the Vote Office.

    The Chancellor of the Exchequer (Mr. Kenneth Clarke): The “Financial Statement and Budget Report”, with a number of press releases filling out the details of my proposals, will be available from the Vote Office as soon as I have sat down.

    Mr. Dennis Canavan (Falkirk, West): The Chair has already said that.

    Mr. Clarke: I was making sure that I had the hon. Gentleman’s attention. I congratulate him on his alertness.

    INTRODUCTION

    I have three priorities in my Budget this year. The first priority is to keep the economy on track to achieve the great prize of sustainable growth. This recovery offers the best prospect that the British people have faced for many years to enjoy the benefits of growth that does not pass through illusory boom to painful bust. My second priority has been to use this recovery wisely to encourage the creation of more jobs, particularly for people who have been out of work for some time. We must combine greater prosperity for the majority of our people with measures to prevent the emergence of a deprived underclass, excluded from the opportunity to work and dependent on welfare.

    The third priority is to strengthen the economy in the longer term. We must aim for a modern economy in which the growth of enterprising companies will give people a greater sense of confidence in the flow of new jobs that will always be required to replace the old jobs eroded by technology and competition.

    UK Economy

    The background to this year’s Budget is the healthy growth in output that we are seeing in Britain and overseas. The recovery has been under way at a modest pace for over two and a half years. It is now stronger and output has grown by over 4 per cent. over the past year. That is easily the fastest rate of growth of any of the major European economies. The forecasts I am publishing with this Budget show the economy expected to grow by 3 per cent. next year. As the recovery has got stronger, growth has come increasingly from exports. Over the last year, British exports have grown by over 8 per cent. Investment in plant and machinery has grown by over 5 per cent. Consumer demand has increased by a more modest 2 to 3 per cent. That is a very healthy shape for this stage of the recovery and bodes well for our long-term future as a competitive industrial economy.

    Our exporters have been able to take advantage of the pick-up in growth overseas, by keeping their costs down and raising their productivity. Our producers have succeeded in improving their performance in domestic markets, so that while exports continue to rise, imports are little changed. Overall, I expect our balance of payments on current account to improve by over £6 billion this year. An improving balance of payments is remarkable for this country at a time when the economy is growing stronger. More encouragingly still, inflation has remained low.

    Underlying inflation has fallen to levels that we have not seen for a generation. Indeed, only about one third of the adult population of this country have ever experienced such low inflation during their adult life. The other two thirds are still finding it difficult to adjust to the change to a low-inflation economy. [Interruption.] They are not going to adjust back under the Labour party, either. Unemployment is on a clear downward trend, having fallen by over 450,000 since December 1992. The United Kingdom, as I have already said, is the only major economy in Europe where unemployment has fallen over the past year.

    The unemployment rate in this country is lower than the average for the European Union. And the number of people in work is rising. The “Labour Force Survey” shows an increase of 226,000 in the number of people in work in the last 12 months. That means real new jobs for people up and down the country.

    We are seeing strong output growth, strong export growth, falling unemployment, an improving balance of payments and low inflation. That combination is almost unique in this country since the war. But let us be under no illusions. Those promising conditions have to be sustained if they are to deliver higher living standards and secure jobs for men and women. And these promising conditions have arisen at all only because of the difficult decisions that the Government have been prepared to take in recent years.

    We must not now throw away the gains that have been made by turning to some short-term dash for yet faster growth. Growth will be sustained only if we keep the lid on inflation, get public borrowing down further, and push ahead with measures which strengthen the industrial economy. That is the way to convert growth into prosperity and jobs.

    That way lies the virtuous circle of improved competitiveness, rising productivity, economic growth, low inflation, and more jobs. We must not change our minds now for the sake of short-term popularity. [Interruption.] Those who bask in their short-term popularity and neglect the need for sound economic measures will live to rue the day hereafter. Only by keeping our nerve and sticking to the determined policies that we have put in place over the past couple of years will we be able to enjoy the full fruits of improved economic performance in rising prosperity and lower unemployment.

    Inflation

    Let me deal first with inflation. Low inflation creates a climate of stability which encourages savings and investment in the future of this country. Nothing would be more damaging than if we let inflation off the leash again only to have to take another dose of bitter anti-inflationary medicine. The British experience is that high inflation has brought economic recovery to a halt three times over the past 20 years. That is three times too often for my liking. And while we have succeeded in bringing inflation down to levels that were last seen when England won the World Cup, we must never take that for granted. Before that game I had lived in a low-inflation economy. After that game came Harold Wilson, in political terms.

    I live in a low-inflation economy again now and am glad to say that our inflation rate is now well below the European average. We need to keep up that performance if we are to be a competitive manufacturing nation enjoying the living standards of the best in future. I will therefore continue to set interest rates to meet our objective of keeping underlying inflation in a range of 1 to 4 per cent., and in the lower half of that range by the end of the present Parliament. That is a tough target by Britain’s recent standards, but not by those of some of our best competitors.

    To make sure that we achieve that target, I have backed good intentions and resolve with a number of important decisions over the past year that have strengthened the framework of policy. The Bank of England’s quarterly inflation report is now fully independent of the Treasury. The Governor decides the precise timing of interest rate changes. And, most importantly, I decided in the spring to publish the minutes of my meetings with the Governor. As a result, we in Britain now have one of the most open frameworks for monetary policy-making in the world. This will stand us in good stead in keeping inflation permanently low; but it will most certainly not avoid the need to take tough decisions at times.

    In September the Governor and I agreed that, with the recovery strengthening at home and prices rising abroad, there was a sufficient risk of inflation picking up here to justify raising interest rates by half a per cent. By acting before retail price inflation itself picks up, we will aim to nip inflation in the bud. I expect inflation to rise slightly over the next year, reaching a temporary plateau of around 2 per cent., as a result of higher commodity prices and stronger profit margins in our very buoyant manufacturing industries. But continuing competitive pressures will ensure that producers and retailers keep costs under control and pass on the benefit to consumers. I expect that underlying inflation should then resume its downward trend.

    Gilt Market Repos

    Before I turn to the public finances, I can announce an important further development of the gilts market. The Bank of England is publishing today a consultative document on the establishment of an open sale and repurchase – a so-called repo – market. This should improve both liquidity and efficiency, reducing yields and hence reducing the Government’s debt interest costs. Each reduction in yields of just one basis point – one hundredth of 1 per cent. – will eventually save more than £25 million a year of public expenditure.

    Public finances

    I turn now to the public finances.

    Last year, I continued the process started by my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont). I announced measures which cut the public sector borrowing requirement by 1 per cent. of GDP by the end of this Parliament. Combined with the healthy growth in the economy that we are now enjoying, those measures have helped to bring the public sector borrowing requirement from £45 billion in 1993-94 to an expected £34 billion this year. My objective remains the same: to balance the Budget over the medium term. We remain on course to eliminate Government borrowing entirely by the end of the decade. By 1996-97 borrowing will be approximately equal to the Government’s net capital expenditure.

    About half my own cuts in public borrowing last year were achieved through cutting public spending plans. But, because of the length of the recession, my right hon. Friend and I also had to raise taxes to meet the objective of healthy public finances. Delay and failure to act would have caused, since then, intolerable additional pressures to raise interest rates faster and to raise taxation still further. We would not have had strong and sustainable recovery now if we had failed to cut spending and raise taxes last year.

    For that reason, the public spending cuts and the tax increases that I announced last year remain, of course, quite essential to the strategy of achieving economic recovery. We have restored confidence in our ability to achieve sustained recovery by the process of taking firm measures. We would damage that confidence again if we now seemed to falter, or even to go back on any of the measures that we have already put in hand.

    VAT on Fuel Compensation Package

    I am able to improve the package of help that I announced last year to cushion the effects of VAT on fuel on all pensioners and on vulnerable groups – enormous though that package was when I announced it last year. Last year I doubled public spending on the very effective home energy efficiency scheme so that, for the first time, everyone over the age of 60 became eligible for a grant. This has been a huge success. Soon over a million people will have received grants to improve the insulation of their homes, reducing their excessive heating bills and improving their comfort. That is still not enough. Therefore, on top of last year’s doubling, which will of course be carried forward each year, I am now adding another £10 million a year to the resources to fund grants. Soon British homes will at last be a match for the British weather in every part of the United Kingdom, especially for the elderly.

    Cold weather payments were set at £6 each week only two years ago. I now intend to increase them to £8.50 each week in order to reassure people that they will get help with their bills when spells of freezing weather occur.

    Furthermore, next year, 1995-96, there will be an additional £52 for single pensioners and £73 for couples built into all retirement pensions as compensation for VAT on fuel.

    From April 1996 there will be £68 extra on the single pensioner rate and £96 extra for pensioner couples. That is more than the whole of the VAT on fuel bills for a significant number of them. In addition, electricity prices have been falling for many people. Gas prices are to be raised for the first time since 1991, but this will be coupled with discounts for prompt payment which will reduce many peoples’ bills.

    The House should appreciate that, so far, including the first stage of VAT – the 8 per cent. already in payment – both gas and electricity bills have fallen by 1 per cent. in real terms over the last two years. That real-terms fall is for everybody, before taking into account the package of help for pensioners so far in payment. The full burden of the tax is, of course, only borne by people of working age who are not receiving means-tested benefits. I have made it quite clear that people of working age cannot expect tax cuts or a reverse of previously announced tax increases this year.

    PUBLIC SPENDING

    I would like to turn now to the Government’s new plans for public spending.

    Last year’s Budget set a new milestone in the control of public spending. We managed to reduce the control totals that had been set in the previous spending round, by £8 billion over three years, and we reduced general Government expenditure by £15 billion over the same period.

    That was a measure of the success of the new system of public expenditure control that we first introduced in 1992. Last year saw the first fruits of the programme of fundamental reviews of all Departments.

    The reaction to that new approach was predictable. A welcome from the Government side of the House, criticism and alarmist nonsense from the Labour party and scepticism from the so-called experts who doubted whether those plans could be delivered in practice. In fact, for the current year, 1994-95, the first year after last year’s announcement, we expect to do better than the plans that were set and we expect to underspend by more than £1 billion.

    At the start of this year’s survey, the Cabinet decided that we should also keep within last year’s planned totals for 1995-96 and 1996-97 and allow no more than 1 per cent. real growth for 1997-98. The plans I am about to announce deliver that remit. But it has not been easy. Last year’s settlement was extremely tight. I am grateful to my right hon. Friend the Chief Secretary for his skilful handling of what has been a difficult spending round.

    We have been guided by four basic principles this year. First, we have taken advantage of the welcome fall in inflation since the last Budget. Thanks to lower inflation, the price levels that we will be facing in 1995-96 will be 2 per cent. lower than we expected when we decided on spending plans last year.

    We have not let that feed through into a higher level of real resources for Government Departments. We have reduced our cash plans for almost all programmes. Lower inflation needs to be matched in the public sector by lower cash spending.

    The second principle is that we have built on the increasingly important role played by private finance. All Government Departments are now looking actively at private finance options for their capital expenditure.

    Thirdly, we have focused our search for savings on administrative and running costs, cutting the back office and protecting the front-line delivery of our key public services. Our aim has been to provide a better output of public services, for fewer inputs. Fourthly, we have taken a close look at the Government’s own spending priorities. We have looked for savings on some programmes so that resources can be channelled into the services and policies to which the Government attach most importance.

    Private Finance

    The right hon. Member for Kingston upon Hull, East (Mr. Prescott) reacted to my mention of private finance. Privatisation and private finance for capital investment are rapidly becoming the chosen method for raising the quality of public services in the majority of countries in every continent in the world. They started in this country. Although the political debate here has been transformed since I first became a Minister, an irritating amount of post-socialist resistance still persists. The right hon. Member for Kingston upon Hull, East will welcome the news that, fortunately, the Government’s private finance initiative remains alive and well and is growing rapidly.

    Last year, I announced that a number of transport schemes would go ahead under the private finance initiative. Significant progress has been made – £370 million of private capital has been invested in transport projects in the past two years, with a further £760 million already committed. In addition, £3.5 billion of projects are currently out to competition and the value of contracts placed will steadily build up from a stream to a significant flow. The right hon. Gentleman does not look so cheerful.

    The private finance initiative, however, runs wider than transport. There are now more than 50 health projects either approved or completed, bringing more than £100 million of new capital into the national health service. Bids have been received for the first two privately financed prisons and more than £1 billion of information technology projects are now following or considering the private finance route.

    In higher education, universities now receive approaching a third of their revenue from the private sector and my right hon. Friend the Secretary of State for the Environment announced on 31 October new proposals to make it easier for local authorities to form joint ventures with the private sector.

    New projects are constantly emerging as the initiative breaks new ground. Today, I can announce that we are on course to let contracts in 1995 under the private finance initiative, leading to around £5 billion of capital investment. We said that we could do it, we introduced it and we are doing it.

    Transport

    The growing importance of private finance has helped us to find significant savings for the taxpayer in the transport programme. In recent years, there has been a huge increase in public expenditure on the trunk roads and motorway programme which has risen by one half in real terms in the past 10 years. That was essential to tackle traffic bottlenecks and to reduce costs on British industry seeking to get goods to markets at home and abroad.

    Now that the main need of the economy is control of public spending and borrowing, we cannot carry on pumping in the same amount of taxpayers’ money. We have, therefore, significantly reduced planned public spending on trunk roads and motorways. Even so, public spending on such roads – without taking account of the expected contribution from the private finance initiative – will be considerably higher in real terms than the average level of provision in the 1980s. Rapid progress with private finance of design, build, finance and operate roads will take provision still higher and the first four DBFO schemes will shortly go out to tender.

    Private finance will also now play an increasingly major role in London Underground investment. In particular, I am pleased to report that the private finance competition for the provision of a new Northern line train service has proceeded rapidly. My right honourable Friend the Secretary of State for Transport will be able to announce a decision very soon.

    That, together with future deals, should improve the quality of London Underground investment as well as its quantity. In addition to the contribution from private finance, the plans in the Budget imply total investment in the underground network next financial year of around £1 billion. The Budget also takes account of the key effects expected to arise from rail privatisation, not least the privatisation of Railtrack within the lifetime of this Parliament, as announced by my right hon Friend the Secretary of State for Transport last week.

    As has been the case with other privatisations, rail privatisation will bring benefits to passengers from more efficient management bearing down on costs and being more responsive to passenger needs.

    Running Costs

    Private finance will play an increasingly important role in financing better infrastructure for public services in coming years. I now turn to the need for firm control of the Government’s current, as opposed to their capital, spending.

    One of our key objectives this year has been to intensify the search for savings on administrative and running costs. My right hon Friend the Chief Secretary joined the Treasury team from the Ministry of Defence, where he played last year a lead role in preparing the defence costs study. That experience served him well.

    The success of the defence costs study is just one example – a very successful one – of how key programme objectives can be protected by bearing down on the administrative costs of delivering them. The outcome has been a substantial benefit for the taxpayer and for the front line.

    The defence plans in the Budget fully cover the costs of the important equipment orders that the Secretary of State for Defence announced in his statement to the House in July. Indeed, taking account of the changes in inflation since last year, these plans actually allow a slightly higher real terms level of spending than implied by the plans last Budget, accommodating the costs of military redundancies associated with the defence costs study.

    Improvements in the efficiency of delivering services is a policy that must apply throughout the public sector. The plans in this Budget reflect the results of a rigorous scrutiny of the Government’s own administrative costs. It must be right for modern government to modernise their own management structures and to get their own overhead costs down.

    As last year, we have maintained the policy that the pressure from pay and price increases should be met by greater efficiency or other economies. This has already allowed public services to achieve very reasonable pay settlements that reflect low levels of inflation and allow modest increases in real earnings. It is ridiculous to describe this long overdue and sensible practice as a pay freeze.

    But, in total, the plans in this Budget are for central Government running costs not to rise in cash terms over the four-year period from 1993-94 to 1997-98 taken as a whole. That represents a real-terms reduction in those running costs of more than 10 per cent. in the cost of government. It is consistent with the civil service White Paper expectation that total civil service staff numbers will fall significantly below 500,000 over the next four years to their lowest levels since the war.

    Local Authorities

    It is only right that local government should follow central Government and take a similarly tough approach to containing its costs. The Government’s proposals for local authorities have been set on that basis. The 1995-96 total standard spending in England will be 2.2 per cent. higher than this year, including provision for community care. That is perfectly reasonable after a year in which provision was far better than local authorities had expected or planned for because of the Government’s success in reducing inflation.

    As in central Government, local authorities will need to pursue opportunities for savings rigorously. Local authorities have substantial scope for improvements in efficiency, and for other economies. By that means, and by concentrating on their priority areas, they will be able to protect key services. The Government will use their powers to cap excessive local authority budgets should that prove necessary.

    My right hon Friend the Secretary of State for the Environment will announce the details of the local authority government settlement on Thursday.

    Housing

    We have managed to find savings in housing capital expenditure, in particular that of the Housing Corporation. The Government will comfortably exceed their election manifesto commitment on the provision of new social housing up to 1994-95. The new plans will still allow a substantial social housing programme to continue, assisted by the corporation’s success in levering in private finance.

    Employment

    Against the background of steadily falling unemployment, it has also been possible to make economies in the employment programme while still improving the quality of the programmes that are provided. A major reform of training for unemployed adults, based on payment by results, will seek to ensure that more trainees get jobs when they finish their courses.

    Social Security

    As a result of the announcements in last year’s Budget, we are already down the track of a thoroughgoing reform of the social security benefits system. We intend to ensure that it is better targeted on today’s real needs and we intend to make it simpler and less susceptible to abuse.

    Legislation to reform statutory sick pay and to introduce a new incapacity benefit was enacted in the previous Session. This Session will see the passage of the Jobseeker’s Allowance Bill and a major Pensions Bill to modernise the framework for both state and occupational provision.

    Tomorrow, my right hon. Friend the Secretary of State for Social Security will announce the details of the next phase of this programme of reform. I wish to mention now three of the initiatives that he will announce, from which I expect substantial public spending savings to flow.

    First, there is housing benefit. My right hon. Friend will announce tomorrow a reform of the arrangements through which the general taxpayer subsidises local authorities’ payment of housing benefit to the tenants of private landlords. The effect of this will be that authorities will not be fully reimbursed if they pay housing benefit on rents that are significantly above the average for the area and the type of property. Local authorities will, therefore, scale back the benefit they actually pay in line with the new restriction on central Government subsidy. They will, however, retain discretion and have some funding to pay the full rent in individual circumstances which they consider justify it.

    The previous arrangements meant that neither the landlord nor the tenant usually had any incentive to negotiate a lower rent because housing benefit would usually pay the rent in full – [Interruption.] This has had the inevitable effect, as seems to be acknowledged, of driving up rents and public expenditure – [Interruption.] I see that that is a welcome reform. At the moment, the social security budget sometimes pays the rent in full in cases where the rent is far above the average rent for property of that type in the neighbourhood. In future, people on housing benefit will have an incentive to make the same judgments about what they can afford as people who have to pay all their own rent. The system will no longer be a prey to the unscrupulous landlord. The reform will take effect from October 1995. Existing claimants remaining in the same property where they live now will not be affected.

    My right hon. Friend the Secretary of State for Social Security will be glad to hear the encouraging response from Opposition Members – [Interruption.]

    Let me see how far I can take the Labour party down the process of social security reform. Secondly, my right hon. Friend the Secretary of State for Social Security will announce tomorrow further measures to limit support for mortgage interest through the income support system to constrain the cost to the taxpayer and to minimise the distortion to work incentives.

    Most people are readily able to insure their mortgage interest payments, if they wish, against periods of sickness or unemployment and many people already do so. For new mortgages taken out by people of working age after October 1995, support will not normally be available for the first nine months, although my right hon. Friend will consult on the precise arrangements, including different treatment for circumstances in which insurance might not be available. There will also be some scaling back of support for existing borrowers.

    One reason why insurance has not become more widespread is that the taxpayer has picked up the interest bill too readily in too many cases. This change will give more borrowers an incentive to ensure that the mortgage costs of people who are temporarily unable to keep up with their payments will be met by the borrowers themselves and by lenders, rather than by the taxpayer.

    Thirdly, my right hon. Friend the Secretary of State for Social Security will also announce a major intensification of the war against fraud in the social security system. We are already saving £700 million a year from existing efforts. The further measures on fraud, which include a major project to pay benefits in post offices by electronic means rather than by paper transactions, will, at a cost of £300 million, save another £2 billion over the next three years.

    The Government know that firm control of public spending and reduced public borrowing are essential to sustained recovery, prosperity and jobs. We will also show that strong control of public spending overall can be combined with improvements in key public services selected as Government priorities.

    Education

    The Department for Education provision will increase in real terms by almost 1 per cent. next year. The Government are intent on extending their significant achievements in education, and we have also managed to find savings in parts of the education programme. Almost one in three young people is going to university, compared with one in eight in 1979. That is a remarkable achievement. A period of consolidation to secure quality and standards is now required after a period of very rapid expansion. However, the overall package of student grants and loans will once again increase in line with inflation. There will be continued growth in student numbers in further education, again to record levels. The new plans also allow for further growth in the number of grant-maintained schools and for additional capital spending in our schools.

    Home Office

    The Government continue to attach high priority to spending on law and order. The new plans for the Home Office increase provision for the police by 3 per cent. in 1995-96. Major efficiency improvements from the Sheehy proposals will enable more police officers to be released for front-line duties. The reforms to be implemented next year will give chief constables much greater freedom to manage their own increased resources and to respond more effectively to the public’s priorities.

    Single Regeneration Budget

    As a former Minister with responsibilities for the inner cities, I am pleased to say that within the single regeneration budget we have found extra resources to support new projects in our rundown urban areas and elsewhere. My right hon. Friend the Secretary of State for the Environment will be providing for more projects under the current bidding round and he will be able to conduct a second round of bidding with funds starting in 1996-97. In all, there will be more than £800 million for new regeneration projects over the next three years.

    Health

    That brings me – finally, on public spending – to the Government’s plans for the health service. With inflation so much lower than expected this year than last, it would have been perfectly possible for us to reduce our previous plans for health and still to meet our manifesto commitment to real growth in resources for the national health service each year. Due to the high priority that we give to the national health service, we have decided not to claw back the unexpected provision in this way. Instead, the health service will keep the unplanned bonus that it has had this year from lower inflation. I shall spell out what that means. Next year, spending on the national health service will grow by £1.3 billion. That is 1 per cent. growth in real terms against the per cent. increase that we originally allowed for in last year’s Budget. It will come on top of a real increase of 3 per cent. this year because of the drop of inflation.

    So, in addition to the extra money from the taxpayer, the health service continues to benefit from the improvements in performance flowing from the Government’s reforms. Further improvements in efficiency are expected to release at least £600 million extra for patient care next year. All those savings, including gains from rationalising management and administration costs throughout the Department and throughout the national health service, are ploughed back into patient care. Those extra funds, on top of the extra provision that I have announced, which are achieved from savings coming from a variety of measures, have only one thing in common. All those savings – therefore all the extra funds – have so far been opposed by the Labour party.

    All this – the extra provision and the savings – means that next year we shall all benefit from an even better financed health service, which has seen real increases in spending on it by the taxpayers in every year since the Government took power. It will be delivering even better standards of patient care, with further improvements in patients charter standards, and more progress in reducing waiting times.

    HELPING PEOPLE BACK TO WORK

    At the beginning of this speech I said that the combination of healthy growth and low inflation we are now seeing is virtually unprecedented in Britain’s recent past. Few doubt the strength of the recovery. But everyone in touch with the real world knows that the benefits of recovery have yet to feed through to many people in this country. Unemployment remains far too high.

    Thanks to the labour market and trade union reforms of the 1980s, unemployment did start falling at a much earlier stage of this recovery than it had in recent previous recoveries and, unlike other European countries, we have resisted pressures to add social costs on top of wage costs for our employers.

    Unemployment will, of course, fall further as the economy recovers. But I have long believed, as my panel of independent forecasters points out and as is now widely recognised, that demand expansion on its own is not enough to produce a sufficient fall in unemployment. We have to do more to reduce unemployment in ways which are consistent with sustained growth and low inflation.

    I have been making speeches on this and giving lectures ever since I became Chancellor on the need to ensure that we do not have recovery without jobs. As well as giving speeches, I have already done something about it. In my last Budget, I did three things. I announced measures to make it harder for people who are quite capable of working to stay on benefit without looking for a job. That is at the heart of the job seeker’s allowance. I made it easier for people with children to take jobs, by introducing a child care allowance into family credit. I made it cheaper for employers to give people work, by cutting the lower rates of employers’ national insurance contributions by a full percentage point.

    In this Budget I want to do more on all three fronts. We must get people back into work and out of dependency on benefit. We must reduce – not increase – the cost to employers of employing people who have been out of work. I aim to ensure that we do not have a class of people in this country who are excluded from economic activity.

    Incentives for employers

    The first step is to encourage employers to look more favourably on people who have been out of work for some time. I can announce, therefore, a wholly new incentive to encourage employers to take on more people who have been unemployed for two years or more. In future, employers will get a full national insurance rebate for up to a year after taking on such a person. That will provide employers with an important new reason to give a second chance to someone who has been unemployed for some length of time – [Interruption.] Yes, but the Opposition were very late on the scene on which we have been working for a long time and they have got most of it wrong. I am going to announce a package which will show the Opposition how to do it. This first whole-year national insurance contribution holiday will run from April 1996. More immediately, my right hon. Friend the Secretary of State for Employment intends to develop new pilots under the Workstart scheme. This offers employers a grant to recruit people who have been unemployed for over two years. There will be around 5,000 new job opportunities. Experience with existing pilots that we have been running suggests that the scheme helps to break down the prejudice which can blight the long-term unemployed.

    I know that some employers will still worry that people who have been unemployed for a long time may have lost the habit of working. We introduced the work trials scheme to counter that. It allows unemployed people to try out a new job for three weeks, without losing their benefit. They will keep their benefit entitlement. It costs employers nothing for those three weeks and it lets employers see for themselves whether the people they take on can be relied on to hold down a steady job. The record so far is impressive. A large number of people are kept on at the end of the trial period. So I propose to expand the scheme to provide 150,000 job opportunities over the next three years.

    In addition, I propose a further cut in the lower rates of employers’ national insurance contributions for every employee. From next April, they will come down by another 0.6 per cent. This will reduce the cost to employers of providing lower-paid jobs by another £230 million in 1995-96, on top of the reduction of £940 million carried through from 1994-95. It must make sense to keep on cutting the burden on employers who create jobs and in particular on those employers who provide jobs for less skilled people. The Labour party keeps wanting to go in the opposite direction by increasing the costs on employers with a minimum wage and a social chapter.

    Incentives to look for work

    I need to match these incentives to employers with measures to ensure that people get the rewards to which they are entitled when they move from unemployment into work.

    First, we need to ensure that people are kept in touch with the labour market and do not stay on benefit unnecessarily. The job seeker’s allowance will reinforce the link between claiming benefit and looking for work. It will be supported by an unprecedented range of measures to help the unemployed.

    One of our existing measures, Community Action, was due to finish next year. My right honourable Friend the Secretary of State for Employment has decided to extend the scheme in revised form. It will provide work experience and a route back to jobs for around 40,000 long-term unemployed people each year.

    We introduced Restart when I was Minister of Employment in 1986. That required people who had been on benefit for a long time to come in for an interview and advice to help to get back into work. It gave positive help to many people and got many back into work. It also revealed that some could not be bothered to come for the interview. They lost benefit.

    For young unemployed people, we have been experimenting with similar schemes called Workwise and 1-2-1. We propose to extend them nationwide.

    Helping employees with the transition to work

    But it has to be worth people’s while to take jobs. I also intend to introduce new measures to ensure that people are not deterred by genuine, short- term financial problems when they try to move from unemployment into work.

    Anyone moving from benefit into a low-paid job is likely to be better off, but it may not seem like it to the man or woman concerned. The first thing that happens when a person takes a new job is that income support disappears, and with it all help with the cost of housing and their council tax. In due course, the person in the new job may be entitled to family credit and housing benefit. But at the moment it can be hard to find out how much that will be, or when it will come.

    In the meantime, the person concerned has all the expenses of getting to work – buying clothes or tools, travelling to work, and so on. Time and time again, I have had people tell me that this is a major deterrent to taking a job and that they really cannot afford to take a job because of these gaps in the system. I have a number of measures to help.

    I propose to speed up the payment of family credit, so that anyone who takes a job can be sure of getting the benefit to which they are entitled, and getting it quickly.

    I propose to enable people who take a job to go on getting the same help with their rent and council tax as they had on income support, for their first four weeks in the new job. I propose to speed up the payment thereafter of housing benefit, so they can be quite sure where they stand at the end of the four weeks.

    I propose to exempt from tax the back-to-work bonus which my right honourable Friend the Secretary of State for Social Security announced in October. That will give people who have been unemployed, but have managed to do a bit of part-time work while receiving their benefit, a lump sum when they leave benefit and take a job. I also propose to expand the number of grants available to people who take jobs, to cover their start-up costs. These are known as jobfinder’s grants. I propose to make available around 25,000 grants of an average of £200 for those who have been unemployed for more than two years.

    Family Credit

    Family credit has been an important and effective way of encouraging lone parents and couples with children to take employment. By providing top-up benefit for those in work it makes it worth while to give up unemployment and benefit dependency. At the moment it helps half a million people. Last year, I improved family credit by announcing the new child care allowance which was introduced in October.

    I now intend to give low-paid and unemployed people with families an incentive to take full-time work. The existing structure of family credit strongly favours part-time rather than full-time working. But the majority of the people who have been unemployed long term are people who need to find full-time work.

    I therefore intend to introduce a £10 a week premium for full-time workers on family credit to give a new incentive to take full-time work rather than stay on benefit. This will also give a substantial boost to the incomes of 345,000 low-paid families with children.

    But childless couples and single people account for two thirds of the long-term unemployed. These people, of course, cannot, at present, claim family credit. I would like to examine whether introducing a new in-work benefit for childless people would be effective. This is obviously a very big step and I have agreed with my right honourable Friend the Secretary of State for Social Security that we should try it out on an experimental basis. We intend to test run a new benefit through a pilot scheme covering 20,000 people. If the pilot shows that the benefit helps to get childless couples and single people back into work we will then consider introducing a national scheme.

    I have also been impressed by an imaginative scheme pioneered by the training and enterprise council in Lincolnshire. This helps people build up full-time work by parcelling together a number of part-time jobs. The scheme is known in Lincolnshire as Jobmatch. I propose to extend it to help up to 3,000 people a year.

    Overall, these measures constitute an extremely important and carefully thought-out package of support for unemployed people. It is no longer credible for some people to campaign for reductions in long-term unemployment and to reduce benefit dependency without having effective policies to deal with it. [Hon. Members:– “When?] It comes into effect steadily from this Budget. The details will be announced by my right hon. Friends the Secretaries of State for Employment and for Social Security. There will be a social security statement, in the usual way.

    The days of priming the pump to cut unemployment are long since past. The Government are building reforms on reforms to remove at last the distortions and anomalies from the benefit system which discourage so many unemployed people from taking jobs.

    This package aims to lift people from dependency into work and to smooth the transition from out-of-work benefits to modest in-work benefits. The measures will work because they are carefully put together and they are affordable and because they are being introduced at a time of strong economic recovery based on our sound economic policies so that more jobs are becoming available. They are a set of effective policies to tackle the big problem of structural unemployment which faces the whole western world, and I believe that we are ahead of other countries in tackling it. I am sure that they will eventually gain widespread support – even from those who have no practicable ideas of their own. [Interruption.] Opposition Members – I hear from their interruptions – still do not understand. If we look to the minimum wage, if we look to the social chapter, if we load costs on those employers who might otherwise create low-paid jobs, we will make matters worse. We are giving incentives to create jobs and making the transition from unemployment to work easier. We started work before the Borrie commission. We have come up with better recommendations and the Borrie commission and the Labour party have a long way to go before they even understand how the system works.

    TAX

    Let me turn now to my proposals for taxation. Happily, in this year’s Budget, I have no need to raise revenue overall in order to secure the public finances. The action in last year’s Budget, combined with a firm approach to public spending, will see to that. Nor – as I have already made clear publicly – are significant tax cuts justified this year. But I do have a number of proposals to ensure that we raise the necessary revenue in ways which do least damage to the economy while helping vulnerable groups.

    Anti-avoidance

    I am delighted that there now appears to be a wide political consensus in the House on the need to close loopholes and to prevent the artificial avoidance of taxation. There is, I have to say, in some quarters a tendency to exaggerate the extent of tax avoidance by including proposals, as the hon. Member for Dunfermline, East (Mr. Brown) always does, that would actually impose extra taxes on legitimate business under the guise of a crackdown on so-called loopholes.

    I have said before and demonstrated before that we are no friends to the tax avoidance industry. Last year, I announced a number of measures to close genuine loopholes, raising £2 billion over three years.

    This year, I intend to go further by tackling the artificial avoidance of VAT on property transactions and share issues, by stopping the purchase of companies simply to make use of their surplus management expenses and by preventing tax avoidance through operations with discounted securities.

    In total, the anti-avoidance measures in this Budget will yield an additional £1.5 billion in the next three years. We will continue to close down genuine loopholes wherever we may find them.

    Vehicle Excise Duties and VAT on cars

    I have some major proposals on vehicle excise duty this year. Few things annoy honest motorists more than knowing that many people still drive without a tax disc and waste the time of police and the authorities in trying to track them down.

    Earlier this year my right hon. Friend the former Secretary of State for Transport announced that the Government intended to move to continuous licensing. That means licensing on possession rather than use of a vehicle. We will be issuing a consultation paper setting out how we intend to do this. The move is designed to combat evasion and help fight crime by enabling the police accurately to check the ownership of vehicles.

    I can, however, reassure the House that we will not seek to disadvantage those motorists, including classic car owners, who do not pay vehicle excise duty now because their cars are genuinely off the road.

    I also intend to bring up to date the system of concessions and exemptions from vehicle excise duty. The existing highly complex arrangements go back, in some cases, to before the second world war and have little relevance to the modern world.

    The number of different concessionary classes will be reduced from 132 to nine, a simplified and sensible handful. This will come into effect from 1 July 1995 and will yield about £30 million a year.

    But the House will be pleased to hear that special treatment will still apply to cars for disabled drivers and emergency vehicles. Moreover, I have also decided that accessories for the disabled fitted in company cars will no longer be taxed as a benefit-in-kind from next April.

    I propose to increase the rate of vehicle excise duty for cars – the tax disc – by £5, to £135. But to avoid adding to industry’s costs, lorry duty rates will again remain unchanged.

    I propose to introduce a significant change to one part of VAT relating to cars. Since 1992 taxi and car hire firms, unlike most businesses, have been able to recover the VAT on their cars. In response to industry’s concerns about market distortion, I propose to extend this to cars bought by any business wholly for business use. This will mainly affect leased cars, with consequential changes to their VAT treatment when sold or leased on. The change should be revenue neutral in the long run, but will cost £140 million in the first year.

    Fuel Duties

    In my last Budget, I announced that road fuel duties would increase on average by at least 5 per cent. in real terms in future Budgets. This year, I intend to stick to that commitment. It is an essential part of the plans that I set out last year to deliver healthy public finances as quickly as possible and it forms an important part of the Government’s strategy to return carbon dioxide emissions to their 1990 level in the year 2000. From 6pm tonight petrol taxes will therefore go up by 2p a litre for both leaded and unleaded petrol, taking into account the effect of VAT.

    In recent years there has been a small differential between the duty on diesel and the duty on unleaded petrol. The differential is becoming difficult to justify in economic, health or environmental terms. I therefore propose to tax diesel at the same rate as unleaded petrol. This means an increase of about 3p a litre on diesel. I also propose to increase the duty on gas oil and fuel oil by p a litre, which will raise £70 million a year. I propose, however, to freeze the duty on road fuel gases.

    Tobacco

    I turn next to duties on tobacco. The Government are committed to reducing smoking. I continue to believe that higher tax is the most effective and fair means of doing so.

    Last year I said that I intended to increase tobacco duties by at least 3 per cent. in real terms on average a year. I intend to stick to that commitment today.

    Tax on cigarettes will therefore increase by 10p on a packet of 20 from 6 o’clock tonight. Duty on other tobacco products will go up by a similar proportion.

    Alcohol

    The single European market has brought real benefits to British industry, through an expanded market for business, increased competition, reduced bureaucracy at frontiers and cheaper transport costs. These have all greatly benefited our consumers. But one of the most widely publicised other effects of the single market has been the increase in legitimate cross-border shopping in alcohol and tobacco, and in smuggling.

    Both of these have inevitably meant some loss of duty to the Exchequer, pressures on the British drinks industry and some damage to British business. No Chancellor can remain unmoved in the face of this, but nor can any Chancellor simply adopt popular measures to cut taxes on alcohol which would threaten the Revenue and require taxes on other goods to be raised.

    In the longer term, the solution is for the Government to work with our European partners to bring duties more in line. The forthcoming review of Europe-wide minimum excise duties gives us the opportunity to make a start on that. This year, pending that, I have once again listened to the concerns of the industries. I propose no increase in the duties on beer, table wine and spirits. This will mean that the proportion of the cost of an alcoholic drink represented by tax in this country will continue to fall. Ten years ago 37 per cent. of the price of a pint of beer was tax. Today it is only 30 per cent.

    Betting and gaming duties

    The Government also intend to modernise and deregulate betting and gaming. This process is, in my opinion, welcome and much overdue. The coverage of taxation must also keep up to date with the modern world. I therefore propose to widen the coverage of gaming machine licence duty to cover amusement machines such as arcade video games. It is anomalous that we should tax amusement machines with prizes, but not those without. I am sure that this measure will be welcomed by many parents, although perhaps not by all children.

    Gaming machine licence duty has been increased only once since 1987. I propose to restore its real value to the 1987 level, but at the same time to allow payment by instalments. Those measures will raise about £60 million in a full year.

    In 1991, my right hon. Friend the Member for Kingston upon Thames announced a reduction in pools betting duty of 2 per cent. Since then, this has helped to fund the Foundation for Sport and the Arts. My right hon. Friend the Secretary of State for National Heritage and I have now reviewed the reduction. We have agreed that it should continue for a further five years, provided that the pools companies also continue to fund sport and the arts at their present level. [Hon. Members:– “Hear, hear.”] Many of my hon. Friends appreciate, as I do, that the foundation continues to support a number of worthwhile projects to encourage participation in sport and the arts. I am delighted that the pools companies have generously reaffirmed their commitment.

    Business taxes

    A strong and thriving business community is the only way to ensure a strong and thriving economy. The Government have a record of achievement in developing the tax system in ways which improve competitiveness, sharpen incentives, simplify administration and encourage the small and medium-sized businesses which are so important to the future development of the economy.

    I should like to announce a package of measures today which will add further to the strength of British industry. Decisions on many of the measures that I shall be announcing today have been informed by the industrial finance initiative undertaken last year by my hon. Friend the Minister of State, Treasury and my right hon. Friend the Financial Secretary and his predecessor.

    Corporation tax and capital allowances

    First, I should like to say a few words about corporation tax and capital allowances. We have one of the lowest corporation tax rates in the industrialised world. Low tax rates are good for incentives. They mean that businesses can keep more of their profits to use as they, the businesses, want. Since 1984 we have cut the main corporation tax rate from 52 per cent. to 33 per cent., while scaling back capital allowances to a level broadly matching commercial depreciation.

    I have considered again all the calls for increased allowances to encourage investment. They have a simplistic appeal. But I remain firmly of the opinion that increasing capital allowances would distort investment decisions and would not encourage the high-quality investment needed to improve economic performance. A narrower tax base would jeopardise our ability to maintain the low tax rates which have helped to transform British industry over the last decade. The change from high capital allowances to low rates of corporation tax has been very successful. I propose to maintain that emphasis on low rates for the successful rather than high allowances for all in our system of business taxes. I also have no changes to announce on the rate of advance corporation tax or the value of the tax credit on dividends.

    Business rates

    I would now like to deal with business rates. We are about to implement the first five-yearly review of valuations of properties for rating purposes. Without those five-yearly reviews the rate base would become hopelessly out of date. The property market has changed a lot over the past five years with wide regional variations. [Hon. Members:– “It has gone down.”]

    As a result of the review, many properties in the south of England will begin to see reductions in their rates bills. Some businesses in the midlands, the north, Scotland and Wales will benefit as well, but others will discover that up-to-date valuations will raise their liability.

    I am glad to say that I will be able to continue to find resources to help businesses through this new transition period in the same way as we have been helping business through the transition from the last revaluation. My right hon. Friend the Secretary of State for the Environment and my right hon. Friends the Secretaries of State for Scotland and for Wales will announce details of the scheme later today.

    But I can tell the House now that increases in bills will be limited to 10 per cent. in any one year for large properties, once adjusted for inflation. Small business properties account for three quarters of those receiving protection.

    We have decided to limit real increases for such properties to 7 per cent. This protection will in part be financed by limiting real reductions in rates bills for large properties to 5 per cent. and for small properties to 10 per cent.

    But the revenue from limiting gains is not enough to help those businesses which find themselves worse off as a result of more up-to-date valuations. I have therefore decided to provide assistance of £605 million next year to finance the transitional relief. That is similar to the amount that we are spending on the former transitional relief scheme this year.

    ECGD

    I laid stress at the beginning of my speech on our improved export performance. We need to build on this and not become complacent. Strong export growth will be essential if healthy recovery is to be sustained.

    My right hon. Friend the President of the Board of Trade and I have taken a closer look at the services provided by the Export Credits Guarantee Department. We have agreed that a reduction in premiums of around 10 per cent. on average is possible while still protecting taxpayers’ interests. This will improve our competitiveness, building on the premium reductions in the past two years.

    Furthermore, we have agreed to increase the amount of ECGD cover available to many important developing markets by £300 million for 1997-98. Those measures will provide an added incentive for British exporters to play an even greater role in the most successful and rapidly growing economies in the world.

    Landfill tax

    As I said earlier, one of my main objectives for the tax system is that it should raise revenue in ways which do the least possible damage to the economy. In some cases, taxes do some good, by helping markets work better and by discouraging harmful or wasteful activities.

    Taxes can play an important role in protecting the environment. One major problem is the disposal of waste. I would like to make an announcement today to help tackle the problem.

    My right hon. Friend the Secretary of State for the Environment and I will issue shortly a consultation paper setting out details of a new tax to be collected by Customs and Excise on waste disposed in landfill. We propose that a new landfill tax should come into effect in 1996. It should raise several hundred million pounds a year. But I am determined not to impose additional costs on business overall. I shall therefore be looking at ways to offset the impact of the new tax by making further compensatory reductions in the level of employer national insurance contributions when the new tax is introduced. In brief, I want to raise tax on polluters to make further cuts in the tax on jobs.

    Small Businesses

    I have more measures to help small businesses in particular. The need to focus on smaller firms with growth potential has been an extremely important theme of the industrial finance initiative. It is absolutely essential that we have a healthy and vigorous small firms sector for the future economic well-being of the country and to achieve higher levels of employment.

    One important way in which we can help small businesses is by encouraging the venture capital industry. A flourishing venture capital industry plays a key role in promoting job creation, innovation and growth. The British venture capital industry has been growing in recent years and I am determined that that growth should continue. In my Budget last year, I announced the introduction of the enterprise investment scheme and I announced consultation on a possible new venture capital trust scheme and an extension of capital gains tax reinvestment relief. All three measures were aimed at encouraging equity investment in small companies. I want to build on them today.

    Enterprise Investment Scheme

    The new enterprise investment scheme is now in place, offering tax relief for investment in unquoted trading companies. Over 40 per cent. of the schemes set up so far involve so-called business angels, who want to invest their expertise, as well as their money, in a small, growing business.

    That is a good start, but the scheme has some complex rules and I have decided to simplify them. I am also extending capital gains tax reinvestment relief to the enterprise investment scheme, which should increase greatly its attractiveness.

    Venture Capital Trusts

    I have consulted widely on venture capital trusts and the response has been very positive. I have accepted suggestions for change on some details and I propose to implement the scheme in full. I want to go further by making investment in risk capital even more attractive than I originally contemplated when I announced the consultation period. Investment up to £100,000 a year in new shares in a venture capital trust will offer 20 per cent. up-front income tax relief and capital gains tax reinvestment relief, in addition to tax-free dividends and capital gains. I believe that venture capital trusts will make a successful contribution to filling a gap in our enterprise economy by encouraging more people to become venture capitalists.

    The cost of the new scheme is expected to be £150 million next year, rising to £290 million in 1996-97. Of course, those costs have to be based on an estimate of the take-up, but we expect considerable take-up. It could mean that funds of £2 billion might be raised over the next three years, providing much more investment where it is most needed in our small, growing, technologically advanced and innovative companies.

    My proposals go significantly beyond what I first set out 12 months ago. They now put in place an effective and imaginative set of measures aimed at generating equity investment in dynamic, innovative growing businesses. They should be widely welcomed by everyone who understands how a modern free market economy works and how new jobs are created in the modern world. Unlike some hon Members, I do not describe tax reliefs of this kind to stimulate investment in business and enterprise as tax loopholes, which they are usually identified as by the Opposition.

    Insolvency reform

    During the recent recession businesses, particularly small businesses, were too often being closed down by their creditors and jobs lost before rescue options had been properly explored. Following consultation, my right hon. Friend the President of the Board of Trade will shortly issue a paper setting out the Government’s main conclusions on company rescue procedures in future.

    To give management more time to reorder their affairs, we will introduce a 28-day moratorium binding upon all parties. This will give companies a breathing space to assess rescue prospects and come to an arrangement with creditors. We are also consulting further on a mechanism to help substitute equity for debt of firms in administration or receivership. I hope that those measures will contribute further to the creation of a rescue culture, discouraging the needless and wasteful liquidation of businesses that could become sound.

    Loan guarantee scheme

    The impact of the 1993 changes to the loan guarantee scheme has been encouraging, but its rules are still quite rightly being criticised as too complex. Together with my right hon. Friend the President of the Board of Trade, I intend to review those rules with a view to making the scheme simpler and more attractive.

    Lifting burdens on business

    The tax system not only imposes a financial burden on business that pay tax, but a regulatory burden and an overhead cost as well. I want to reduce those burdens on businesses. Simply running PAYE and national insurance contributions is difficult for many small businesses. From next April, I propose to increase by more than 30 per cent. the threshold for businesses to make quarterly rather than monthly payments to the Inland Revenue.

    That will benefit around 100,000 employers at a one-off one-year cost of £75 million. That means that nearly two thirds of all employers in the country will now be able to make quarterly payments on their PAYE. I also propose to consult on a move towards annual VAT payments for small traders and to further simplification of VAT accounting.

    Furthermore, I intend to improve the administration of the tax system by encouraging closer working between the two revenue departments, the Inland Revenue and Customs and Excise, as well as closer co-operation between the Inland Revenue and the Contributions Agency. This will all be directed at improving the service offered to businesses seeking to comply with their tax obligations.

    I would also like to make some progress towards closer alignment of tax and national insurance. From next April, clearances given by the Inland Revenue concerning non-taxable expenses will also count for national insurance purposes. My right hon. Friend the Secretary of State for Social Security will give details of this and other measures in his statement tomorrow.

    I also intend to raise the registration threshold for VAT to £46,000 tomorrow in line with inflation. This will help a number of the smallest businesses.

    Finally, I turn to self-assessment. I am publishing today for consultation some details of the remaining legislation for self-assessment. The Inland Revenue has been consulting widely on the changes. The response has been positive and it is a worthwhile reform for which to aim. My right hon. Friend the Financial Secretary and I intend to go ahead with our proposals and aim to keep any burden placed on employers as low as possible.

    Taken together, this latest extensive package of tax reliefs and deregulatory measures provide a substantial package of support for the business community. They aim to strengthen British businesses not by intervention, but by easing cashflow problems, cutting back red tape and providing targeted help for small businesses. That is how we maintain our improved business performance, help to sustain the recovery and help to create more jobs.

    SAVINGS

    Higher savings also have an important role to play in helping sustain growth, by providing additional resources for investment.- [Interruption.] I must tell the hon. Member for Bolsover (Mr. Skinner) that the Budget contains extremely serious proposals to help small businesses, to cut unemployment and to produce all the real improvements in the economy that the people of this country want. I have already announced measures to encourage savings into unquoted companies. There are two further measures I would like to announce today.

    PEPS and corporate bonds

    Personal equity plans have been very successful since their introduction in 1986. Over £15 billion has been invested in over 4 million plans to date. They have widened share ownership and played an important role in providing finance to industry. I want to take that success further and in particular to widen the type of finance available to industry through PEPs.

    I propose that, from next year, people will be able to invest through PEPs in a range of corporate bonds, convertibles and preference shares, and not simply equities. This change is expected to cost £10 million in 1995-96 rising to £40 million in 1997-98.

    TESSAs

    When my right hon. Friend the Prime Minister introduced tax exempt special savings accounts – or TESSAs, as they came to be called – it was understood that tax-free interest would be allowed to build up over a five-year period. For some of those accounts, the five-year period will soon be coming to an end.

    I have had to consider whether this tax exemption for savings should be extended. TESSAs have been very popular, allowing many people to catch the savings habit and build a nest egg for their future. Over 4 million people have invested over £20 billion since they were first introduced.

    Given their success and popularity, I have decided that all or part of the capital accumulated in a TESSA at maturity can be reinvested straight away in a new TESSA. Anyone who wants to continue to save tax-free will therefore be able to do so up to an overall limit of £9,000. This measure will cost £150 million in 1996-97.

    Income tax

    Finally, I turn from taxation to income tax.

    The lower, basic and higher rates of income tax will remain unchanged in 1995-96. However, we can at last begin to benefit from our steady return to healthy public finances. This means that I can fully index the personal allowance, the threshold for higher rate tax, and the income limit for the age-related allowance.

    I have been able to provide some additional help in two important areas. First, I want to do a little bit more for pensioners. I propose to increase the age-related personal allowance by more than indexation. The allowances for everyone aged 65 and over will be increased by £430. Nearly 3 million pensioners will gain from this, at a cost of £200 million in a full year.

    Secondly, I also propose to widen the 20p lower band to £3,200. That increase is twice the amount necessary for indexation for inflation. One in five of all taxpayers will now only pay tax at the lowest rate of 20p.

    The tax measures that I am announcing in this Budget – all the tax measures that I have described – reduce revenue by £1 billion in 1995-96, but that is because I have had to provide £605 million, as I have said, for the transitional relief for business rate payers. I have said many times that I would like to go further and that I will in due course go further. Conservative Members are tax cutters by instinct. But I have also made it clear over and over again that tax cuts can come only when we can afford them and when it is in the interests of our industrial economy that we should make them. That means two things. We have to continue to improve further our long-term economic performance. That is why in my Budget today I have introduced numerous measures – boring the hon. Member for Bolsover – to strengthen the economy and make sure that recovery is sustained and that we become a powerful manufacturing and industrial economy. The second requirement is firm control of public spending.

    PUBLIC SPENDING AGGREGATES

    All my efforts to help businesses and help the unemployed will be to no avail if I did not keep a firm grip on public spending. I have already dealt with spending by each Department. But I have not yet described what will happen to public spending overall as a result of our decisions. Last year’s spending round delivered substantial cuts in overall public spending. This year’s has not been easy because of that.

    Public spending control is not only about controlling costs. It is about choice of priorities. That is the language of politics. Within this year’s settlement, my right hon. Friend the Chief Secretary and I have succeeded in producing real increases in resources for priority programmes such as the national health service and the police service. We have also managed to protect the delivery of public services generally by focusing our search for savings on administrative costs.

    We have avoided our tight settlement last year being turned into a wasteful one by ensuring that success in lowering inflation does not simply increase the volume of spending on programmes.

    I am glad to tell the House that that approach has allowed us to make overall savings which are even greater than those achieved last year.

    Last year, we managed to reduce the control total by £8 billion over the three years. This year we have done a bit better – not 10, not 15, not 20, but another £24 billion off the control total over the next three years on top of last year’s reductions.

    Last year we reduced public spending plans so as to reduce general Government expenditure by £15 billion over a three-year period. This year, on top of last year’s reductions, we will reduce general Government expenditure by £28 billion. That is a total reduction in Government expenditure over the four years covered by my two Budgets of £43 billion.

    Those savings have allowed me to reduce my projection for the public sector borrowing requirement. Taking into account the tax and public spending measures, I now expect to be able to reduce borrowing from £30 billion to £21 billion in 1995-96, from the previously forecast £21 billion to £13 billion in 1996-97, and from £12 billion to £5 billion the year after that. This reduced borrowing should provide an added stimulus to business confidence, strengthen the recovery further and give us the healthy public finances that we need to put our economy and our economic policy on course.

    CONCLUSION

    This Budget keeps Britain firmly on track for real economic growth that can last. This Budget concentrates on strengthening British businesses. This Budget will help to create more jobs. And it will lay the foundations for sustained rises in prosperity. I commend it to the House.

  • Mr Major’s Speech during the 1994 Queen’s Speech Debate – 16 November 1994

    Below is the text of Mr Major’s speech during the 1994 Queen’s Speech Debate on 16th November 1994.


    Mr. Tony Blair (Sedgefield): As Members may know, my right hon. Friend the Opposition Chief Whip was taken ill this morning, and before beginning my speech I am pleased to tell the House that his condition is described by the hospital as stable, and not a cause for alarm. I know that we all wish him and Anne well, and we also wish him a speedy return.

    It is the custom of the House that the Leader of the Opposition has the pleasant duty of congratulating the mover and seconder of the Loyal Address, and I am delighted to do so. The hon. Member for Dartford (Mr. Dunn) gave a somewhat unusually combative proposal of the Loyal Address, and at some points I was not entirely sure whether he was moving the Loyal Address or giving an after-dinner speech to his local Conservative association.

    Nevertheless, I hope that I shall not do the hon. Gentleman irrevocable damage if I disclose to the House that, as he will know, I have personal reasons for being extremely grateful to him. When he was an Education Minister, although he may have done many things wrong, he did one thing right: he reversed the planned closure of a vital special needs school in my constituency of Sedgefield, despite the fact that the education experts wanted it closed.

    At the time, I thought that that was merely a one-off act of compassion on the hon. Gentleman’s part, but last year in the House he threw greater light on his decision, when he said that the last thing any Minister should sensibly do is to listen to the educational world for advice. The only advice he could give was to listen to what they say and “then do the opposite”. Given such an attitude, the only surprise is that the hon. Gentleman never made it to the Cabinet. However, I wish him well most sincerely.

    The hon. Member for Aberdeen, South (Mr. Robertson) seconded the motion with great flair, humour and wit, and said that he had the dubious pleasure of being in a House containing no fewer than three other Members who at one time had represented his constituency but had then lost it, only to win again somewhere else. I trust that the hon. Gentleman will understand if I say that, given the size of his majority, I hope that at the next election he will be able to satisfy at least half the requirements of that elite club. Both speeches, the proposing and the seconding of the Loyal Address, were able. I congratulate both hon. Gentlemen.

    It is also the custom at this time to review one or two personal events for the House over the past year, and I hope that I shall be forgiven for saying that the past year has been marked by deep sorrow for my party. Twelve months ago, John Smith gave the kind of spirited, witty and principled speech that earned him respect across the Chamber and throughout the nation. I believe that we united across party lines then, and that we still do so now, in his memory. I pay particular tribute to the life and work of Jo Richardson, who, despite immense physical pain, never wavered in her tireless work for her constituents and for the cause of women everywhere. To those two names must be added the sad loss of colleagues on both sides of the House–James Boyce, Stephen Milligan, Ron Leighton, Bob Cryer and John Blackburn, all of whom served their constituents and their country with dedication, and will be sorely missed.

    Parts of the Queen’s Speech we welcome. Thanks to the efforts of the British and Irish Governments and the constitutional parties in Northern Ireland, there is room for cautious optimism about the future of the Province–more room than at any time, certainly in my generation. The Opposition will continue to support the peace process and to play our part in building a future of conciliation and prosperity. Her Majesty’s Opposition exist not only to oppose Her Majesty’s Government, and we shall be pleased to continue to support the Government in the peace process. Indeed, we shall take an active part in next month’s conference on the economy of Northern Ireland.

    We also rejoice at the defeat of apartheid and the return of South Africa to the Commonwealth. The Opposition, at least, are proud of the part that we played in the battle against the evil of the old regime. I play particular tribute to the steadfast work of my hon. Friend the Member for Aberdeen, North (Mr. Hughes), who has made such an outstanding contribution over the years.

    We also welcome plans to expand the European Union, and look forward to the entry of new members from northern and eastern Europe, and we shall continue to make constructive suggestions for the reform and improvement of that Union and to press for the Government to regain our influence within Europe.

    Mr. Oliver Heald (Hertfordshire, North): Will the right hon. Gentleman give way?

    Mr. Blair: In a moment, if I may. On the detail of the Address, we have long urged legislation on the regulation of pensions, the establishment of an environmental protection agency, a new criminal cases review authority, and rights for disabled people. We shall, however, carefully scrutinise the detail of all those Bills.

    The pensions regulations must be comprehensive and clear. We all know of the scandal of people cheated of their savings by unscrupulous advisers who abused poor regulation. Our people will not be satisfied unless there is proper protection for the hard-working majority who save for their retirement and who should have the absolute right to see the benefits in old age.

    On the environment, we wish the new agency to be able to take action to protect our environment and to have proper powers of enforcement. I welcome the fact that, as I understand it, there will be legislation on the criminal cases review authority. The new system for investigating miscarriages of justice is long overdue. I very much hope that the method of investigation is independent and fair, and can be seen to be fair.

    Disabled people across Britain were greatly angered by the Government’s conduct during the passage of the Civil Rights (Disabled Persons) Bill. We welcome new legislation in the Queen’s Speech, and we look forward to it being implemented properly.

    Millions of people are desperate for changes in the Child Support Agency. Currently, the agency is a complete shambles, which is causing misery to tens of thousands of families. I very much hope that a radical reform of the agency is on the agenda in the coming year.

    Sir Giles Shaw (Pudsey): Will the right hon. Gentleman tell the House whether he supports the Bill on European own resources–yes or no?

    Mr. Blair: I am coming to that very point in a moment. I will then answer the hon. Member for Pudsey (Sir G. Shaw).

    Taken as a whole, the Queen’s Speech expresses the central quandary facing the Conservative party today: whether to praise Thatcherism or to bury it. Four years after the right hon. Lady’s departure, the Conservatives still cannot decide. The result is the hallmark of this Government: dogma tempered only by dithering.

    Nothing could make the point better than the debacle over Post Office privatisation. There are two extraordinary features of it. The first is not that 10 Tory rebels opposed it, but that 340 Tory Members, including the Prime Minister, supported it. One message at least is clear: “If you don’t want the Post Office privatised, don’t vote Tory at the next election.”

    The second extraordinary feature is the manner of decision-making; that is what is most extraordinary. One faction demands privatisation, so the deed is done; it is then the centrepiece of the Queen’s Speech. Then another faction rebels, so the proposal is removed. Then the first faction mounts another rebellion, and Ministers fall over themselves to proclaim their sorrow and anguish at this omission from the Queen’s Speech. Finally, the Government cast around for any hapless part of the public sector to privatise. Air traffic control is floated as a possibility, until even the genius of this Government’s public relations understands that the notion of Group 4 being in charge of air traffic control is not an immediate vote-winner.

    Ultimately, what do the Government privatise? They privatise the Atomic Energy Authority commercial services department. It is alighted on as a victim to be sold off. What does that tell us about this Government? It tells us that they are so riven by faction and buffeted from one day’s headlines to the next that they cannot address the interests of the country, and that they are woefully out of touch with public opinion. The combination of those factors makes them incapable of delivering good government.

    There should be a Bill about the Post Office in the Queen’s Speech–not to privatise it, but to liberate it within the public sector. Such a Bill would pass with virtually unanimous support. Why is it not in the Queen’s Speech? The reason is that, although the Government do not have the courage to privatise the Post Office, their dogma prevents them from adopting the only sensible alternative. The result is bad government.

    Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury): In reviewing my party’s attitude to various issues, would the right hon. Gentleman also review his own party’s attitude to clause 4, and whether his party really–[Interruption.] Does his party really intend to abolish it, or is it just the rhetoric that he opposes?

    Mr. Blair: I did not hear the last part of the question, but I am absolutely delighted that the hon. Gentleman is so interested in clause 4. He will no doubt want to participate in the discussions on the matter in the months ahead.

    Mr. Gary Streeter (Plymouth, Sutton): On the issue of factions, will the right hon. Gentleman tell the House whether he agrees with the 61 members of his own party who signed an early-day motion calling on a future Labour Government to scrap Trident? Does he agree with that–yes or no?

    Mr. Blair: The position of the Labour leadership has been set out very clearly in the national executive statement at conference, and the hon. Gentleman can read it if he is interested.

    Mr. Patrick McLoughlin (Derbyshire, West): Since the right hon. Gentleman commented a little earlier on praising or trying to bury Thatcherism, does he regret voting for the changes in trade union reform which the Government have taken through the House over the past 15 years? If he does, which of the trade union reforms that the Government brought in, despite opposition from the Labour party, would he seek to reverse as a Labour Prime Minister?

    Mr. Blair: I have set out many times our position on trade union legislation, and I have said exactly what parts we will change and what parts we will not change. Since the hon. Gentleman intervened in my speech, perhaps he would answer this question. How did he stand at the previous election on the specific promise that he would not raise tax in this country, since he joined the Government in raising it straight after his election to the House?

    Mr. Charles Hendry (High Peak): In reference to the right hon. Gentleman’s comments on the public sector, does he think it right that inefficiencies in public services should be tolerated at the taxpayers’ expense if they lead to greater employment? Does he agree on that comment with his deputy leader? Will he tell the House if he disagrees?

    Mr. Blair: I am surprised that, after a week in which it has been revealed that a private health institution in Scotland received £30 million of public money, the hon. Gentleman should ask us about the efficiency of public services.

    Hon. Members: More, more.

    Dr. Robert Spink (Castle Point) rose —

    Mr. Blair: I will have to press on, but I shall give way to the hon. Gentleman.

    Dr. Spink: Does the right hon. Gentleman agree with his right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) that the minimum wage would cost tens of thousands of jobs in the country? Will he support the job seeker’s allowance, which will help this Government to get the long-term unemployed back into work?

    Mr. Blair: The hon. Gentleman should be aware of recent evidence, published in the United States, of precisely the opposite effect. Indeed, it is the case that setting a proper floor for wages is a sensible way in which to operate the labour market. Secondly, let me tell the hon. Gentleman that I think that many people in this country see this Government failing to take action in relation to those privatised utilities and the pay increases awarded to their chairmen and directors, and find it quite obnoxious that the Government oppose a decent living and wage for people at the bottom end of the income scale, but do nothing about the abuses at the top.

    I was talking about the conduct of government. We see the same conduct not only in relation to the Post Office but in respect of the quite extraordinary furore which has been whipped up among the Tory party over Europe, with briefings and counter-briefings rolling around the press rooms of Britain today. So desperate are the Government to get their rebels into line that the chairman of the 1922 Committee has been dispatched to tell us that, if the Government are defeated on the Bill about own resources, or “even if there is any amendment to it”, a general election will immediately ensue. [Interruption.] There is at least some support for that proposition from the right hon. Member for Shropshire, North (Mr. Biffen), but that may simply be because he is retiring.

    It has surely come to something when a Government can secure the passage of their own legislative programme only by threatening their own demise. The Government might threaten a general election. I think we can be sure that they do not dare call one. However, what a way to run a party and a Government. That underlines the degree to which all those questions become a matter not of the nation’s interest, but simply a ball played from one part of the Conservative party over to the other and back again.

    I can tell Conservative Members that the country sees the gap between what the Conservative party today represents and what it wants a Government to do, and the country is appalled at how that gap ever widens. That shows that the politics of the 1980s has run its course. The concerns and needs of the British people have changed, and it is the Labour party that speaks for them.

    The British people want an end to the laissez-faire economics and the boom and bust of the past 15 years. They want a new economic approach, based on partnership between the public and private sectors and between management and employees to invest in industry to make our performance more dynamic and to give business and families the stability to plan for the future.

    The British people want strong public services, decent schools and well-run local hospitals, where pupils and patients, not bureaucrats, receive the resources. They do not want them to be sold off or broken up. They want poverty, inequality and mass unemployment to be attacked, not treated as of no consequence. They want safe communities liberated from violence, drugs and gangs of hooligans, where, in place of piecemeal initiatives, there is a comprehensive strategy– [Interruption.]

    Madam Speaker: Order. I believe that the right hon. Member for Sedgefield (Mr. Blair) is not giving way at the moment. Is that correct?

    Mr. Blair: I must make progress.

    Several hon. Members rose —

    Madam Speaker: Order. The right hon. Gentleman has indicated to me that he is not giving way at the moment.

    Mr. Blair: The vast majority of people in this country want safe communities, and they do not believe that the Government are delivering them. Above all else, perhaps, they want to feel that their voice is heard and that political institutions work for them and not for the people in charge. They want real democracy, with power devolved downwards, not an ever-increasing centralised state. The vast majority of people want to feel that they can trust their Government. The truth is that today no one believes a word that the Conservative party says–and no wonder. Let us consider tax, and the promises made at the last election. In March 1992, the Prime Minister said:

    “I have made it clear, we have no plans and no need to extend the scope of VAT.”

    The former Chancellor of the Exchequer said:

    “We will not have to increase taxes. I cannot see any circumstances in which that will be necessary.”

    That was said weeks before the general election. They now say that they did not know how bad the economic situation was.

    One might get away with that if one had been in power for 13 days. However, by the last election, the Government had been in power for 13 years. They knew the truth. Look at how many taxes the Conservatives have introduced. Let us consider the new Tory taxes and what they will mean for the average family: home insurance tax, car insurance tax, airport tax, petrol tax, VAT on fuel and cuts in the married couple’s allowance and cuts in mortgage tax relief. In total this year, they mean £360 on top of the £500 a year that families are already paying extra in tax since the election; 7p on the standard rate of income tax; £860 for the average family. In the light of the gap between what they have promised and what they have done, is it any wonder to them the cynicism and disgust with which their record is viewed by the majority of British people?

    Mr. Norman Lamont (Kingston upon Thames): As the right hon. Gentleman knows, the Government found it necessary to put up taxes in order to reduce borrowing, which was greater than anticipated. The right hon. Gentleman’s party fought the election on putting up taxes not in order to produce sound finances, not in order to reduce borrowing, but in order to spend more money. That was why the right hon. Gentleman wanted to put up taxes. The right hon. Gentleman now tells us that he has changed his party’s policy. Will he tell this House now that the policies of tax on which his party fought the election are wrong?

    Mr. Blair: I will tell the right hon. Gentleman what the difference is. We told the truth at the previous election. [Interruption.] I suppose that the Prime Minister will be relieved that, at least for once, the right hon. Member for Kingston upon Thames (Mr. Lamont) has come in on the Government’s side.

    Mr. Heald: The right hon. Gentleman was asked whether he would support the European own resources Bill. He said that he would answer the question. He has not. Will he answer now?

    Mr. Blair: We will judge that Bill in the light of the principles that we have set out. We have supported the settlement at the Edinburgh summit, but the hon. Gentleman knows that of course we have our differences with the Government over the social chapter. I can tell him, although I was going to deal with it later in my speech, that, in the light of the allegations about fraud and waste in the common agricultural policy, and in the light of the discrepancy between the position set out by the Chancellor last week and the figures given in some newspapers this morning, we will of course press the Government on all those issues.

    Now let me ask the hon. Gentleman, or perhaps the Prime Minister, a question: is it the case that the chairman of the 1922 Committee was speaking on behalf of the Conservative party when he said that the own resources Bill would be treated not as an ordinary piece of legislation but as a motion of confidence in the Government? I have to tell them that, if that is how it is to be treated, life becomes much more difficult, not less difficult, for the Government. The hon. Gentleman will understand that.

    I was about to deal with the Chancellor of the Exchequer’s interview in today’s edition of The Daily Telegraph , which, as ever, is interesting to read. The right hon. and learned Gentleman described himself as “fairly panic-proof”, which is a reassurance to us since he is in charge of the nation’s finances. He went on to say that his policies “have so far delivered very little to Mr. and Mrs. Smith up and down the country.”

    So far–they have been in power for 15 years; how much longer do they want before their policies deliver something? What they have delivered is an election programme secured on one basis, then broken with a series of record-breaking tax rises straight after the election.

    Mr. Michael Fabricant (Mid-Staffordshire): Will the right hon. Gentleman give way?

    Mr. Blair: No. I really must move on.

    The Chancellor of the Exchequer (Mr. Kenneth Clarke): The right hon. Gentleman keeps giving way to interventions, then failing to answer them and returning to his speech. He was asked a moment ago by my right hon. Friend the Member for Kingston (Mr. Lamont) how he now reacted to his election promises of the last election to raise taxation in order to raise public spending. If he now criticises what we are doing, which of the tax increases that he has attacked would he reduce and which spending would he cut–in contrast to the tax increase promises on which he fought the last election?

    Mr. Blair: Last week, we published a comprehensive set of tax reforms to close the tax abuses that the Government have allowed to go on. What is more, we set out the huge windfall profits that have been made by utility companies, and will be made on the sale of the national grid. If the Chancellor of the Exchequer wants to get spending down, there is one good way of doing it: get unemployment down, and let the unemployed get back to work.

    The tax failure of the Government is in the end the product of their economic failure. The mismanagement of this country’s economy over 15 years is a story of incompetence on an epic scale: the two worst recessions in living memory; bankruptcy and insecurity for millions of people; the decimation of large parts of the industrial base. With the boom-bust economics comes the inability to plan or invest for the future.

    It is not even as if the living standards in our country had soared above those in other countries. The opposite is the case. According to the latest Organisation for Economic Co-operation and Development figures for average income compared with that in other countries, Britain is just above Finland–lower than Germany, France and Italy, to be sure, but lower now than Belgium, Iceland and many others.

    Sir Cranley Onslow (Woking): Will the right hon. Gentleman give way?

    Mr. Blair: No, I am sorry.

    Of course, now the economy has reached a different point in the economic cycle. There is recovery and growth, and inflation is low. We welcome that. However, the question is not whether we are at a different point in the economic cycle. The question is whether this burst of growth will be different from the others that have preceded it. This time, the Government say, the long term will come first, which is precisely what they–noticeably the Prime Minister himself–said at the beginning of the 1980s and at the end of the 1980s.

    What is the Government’s over-arching priority now? What is the clamour throughout the Tory party for next year’s Budget? It is for tax cuts, and the bigger the better. Whether they will be given or not will depend not on the state of the economy but on the state of the Tory party.

    Mr. Iain Duncan Smith (Chingford): Will the right hon. Gentleman give way?

    Mr. Blair: The lesson of the past 15 years is that, unless we put the long term first, unless we have an economic policy that is stable and geared to the needs of the real economy, unless we strengthen our industrial base and make the investment in industry and people that we need, the reality is lower prosperity for all of us. Look even now: when we are barely out of recession, interest rates are raised. The chairman of the Conservative party promises that it will be the last such rise in interest rates. There are capacity constraints on output already. There are skill shortages–with 3 million unemployed–in parts of our economy.

    Most galling of all, the Conservative Government uniquely had the one-off, God-given bonus of North sea oil, and squandered it. They had hundreds of billions of pounds’ worth of North sea oil. On top of that, they had the privatisation proceeds. They were used not for investment but merely on current spending. What other country with all those resources would have had such a record of failure as the Conservative party has presided over?

    If reports are true, there are new oil finds in the west of Shetland field. For heaven’s sake, let us not squander that natural advantage as earlier natural advantages were squandered. Let for once the short-term interests of the Conservative party take second place to the long-term interests of the country.

    The same prejudice has led the Government to ignore the danger signs of the tearing of the social fabric of our country. We are as a nation more divided and less equal than at any time this century. Millions of people live on benefit, in poverty and without hope for the future. Of course there is a social and moral case for tackling that inequality, but there is an economic case, too. In parts of our inner cities, a generation of young people grows up in a culture of low employment prospects, poor education opportunities, family instability, drug abuse and crime. With no stake in society, it is hardly surprising when they show little responsibility towards it.

    Mr. Duncan Smith: Will the right hon. Gentleman give way?

    Mr. Blair: The Government have doubled dependency on welfare since 1979–the very Government who pledged to cut that dependency.

    Mr. Duncan Smith rose —

    Madam Speaker: Order. The hon. Member for Chingford (Mr. Duncan Smith) should not persist, as it must be obvious that the right hon. Gentleman will not give way.

    Mr. Blair: After 15 years of Conservative government, tax and spending as a percentage of national income are up and not down. Why? Because we are paying the bills of failure. We are paying for the dole queues, poverty, low pay, homelessness and crime. The Government never learn that, the stronger and more united our society, the less we waste and the more we can invest. That is the difference.

    Good public services are a part of that. A moment ago, the hon. Member for High Peak (Mr. Hendry) asked me about efficient public services. We should look at the national health service. We have been promised even more legislation now to improve

    “the management of the National Health Service”.

    What has happened since the Queen’s Speech 15 years ago, when the Conservatives said that they would do the same? Bureaucracy and administration are up £3 billion a year. There are 20,000 general and senior managers, compared with 500 a few years ago. Some £70 million has been spent on company cars.

    This week, the true Tory philosophy on the health service was revealed by the chairman of an NHS trust–a serving Tory councillor. He said that the duty of doctors is to the balance sheet of their managers, and not to the needs of their patients. We can thank him for his candour, but that is not the national health service that the British people want.

    Of course, we need efficient management, but we do not have that. We have expensive management, which is swallowing millions of pounds, while many people are on waiting lists and are forced to wait in indignity and injured on trolleys in hospitals when they should be getting proper care.

    This week, it was revealed that £30 million was put into the collapsed Health Care International. That must be added to the hundreds of millions of pounds spent on railway privatisation and the poll tax, and the hundreds of millions wasted on the national curriculum. The Government have wasted public money at every turn, and they have wasted it on dogma.

    Last week, one Minister had to admit that he had lost £30 million of public money in four months, while another was found guilty of breaking the law and misusing £240 million in relations with countries overseas. A third–the Home Secretary, no less–was found to have acted unlawfully in respect of his own treatment of the victims of crime.

    The tale of how those victims have been treated is a scandal of arrogant incompetence from first to last. The new tariff system of compensation is manifestly unfair, and it was rejected by all victims’ groups. It has no support anywhere, and when the Government launched a consultation exercise about it, not a single representation was in favour of the Government’s plans. They were warned that it was unlawful–they took not the slightest notice. Meanwhile, the Home Secretary tells the Conservative party conference that he wants to put the victim at the heart of the criminal justice system. It is as rotten a tale of Conservative hypocrisy as is possible to imagine, even from this Government. The fact is that, whether on combating drugs, juvenile offending, illegal firearms, racial violence or the treatment of victims, it is the Opposition who have been standing up for law and order in this House and not the Government.

    The chance of a new start for the Government and the country has been thrown away in the Queen’s Speech. It is no wonder that the public turn away from politics when the Government refuse to hear the voice that they are speaking with. It is the Opposition who will continue to speak up for what the people of this country want–a modern and dynamic economy, action on crime, decent schools for all, hospitals run for patients and unemployment and poverty attacked. The Prime Minister may scorn “the vision thing”. He promises “the action thing”, but where is it? His Government are not dictated by the action thing, but by the dither thing. That is where they are, all the way through from the Child Support Agency to whether Ministers should resign, the channel tunnel and the Post Office. There is a case for action on behalf of the people of Britain, and it will be put by the Opposition. We know what needs to be done–the people of Britain know what needs to be done–because we share the hopes and ambitions of our people. We share their schools and hospitals, their values and their basic decency and we share something more–their shame at what has happened to Britain under the Conservative Government.

    The Queen’s Speech shows a Government who are out of touch and out of steam. At the next election, it will be our pleasure to put them out of office, too.

    The Prime Minister (Mr. John Major): I was sorry to learn earlier that the right hon. Member for Bishop Auckland (Mr. Foster) has been taken ill. I was delighted to hear the right hon. Member for Sedgefield (Mr. Blair) say that the illness does not seem to be serious. I think that I speak for the House in saying that I hope that the right hon. Gentleman will soon be fully recovered and back here carrying out his duties.

    The right hon. Member for Sedgefield mentioned the sad loss of a number of colleagues on both sides of the House and I join him in the tributes that he paid to them. We may dispute and disagree often and violently in the House–sometimes that is our duty and our responsibility–but, whatever the interest or party that we represent, we are all here to serve the public. From time to time, therefore, it is right for us to put aside our party differences and acknowledge the work that is done by our political opponents. I happily do so today, not only on behalf of hon. Friends who are sadly no longer with us but on behalf of Opposition Members who sought to serve their country and their constituents.

    The right hon. Member for Sedgefield had some grave charges to lay before the Government–I shall deal with those that are relevant later and with some other matters that the right hon. Gentleman overlooked–but if he is going to attack the Government he really should get his facts right. If he is going to disparage the Government, he really should try to keep a straight face while he does it. If he smiles when he does so, it will hardly be a surprise to him that the House and the country are unlikely to take him seriously on those issues. If he shows signs of not believing what he says, he cannot be surprised if other people do not believe him either.

    The right hon. Member for Sedgefield was graceful about my hon. Friends and their proposing and seconding of the Gracious Speech. My hon. Friend the Member for Dartford (Mr. Dunn) entered the House on the same day as I did. We knew one another for many years before we came to this place. I know him well and he has always been blessed with the gift of clarity. [Hon. Members:– “Why are you smiling?”] I am not laying charges against my hon. Friend; I am about to praise him. I come here to praise him, not to disparage him. One always knows where one is with my hon. Friend–sometimes that is very good and sometimes it is just very clear.

    In this country, at least, we always know where we are with my hon. Friend, but abroad he has a slightly less certain touch. Seeking tickets while on holiday in Italy, he consulted his Italian phrase book, marched up to the booking clerk and, I am reliably informed, said something quite unspeakable in vile Italian. My informant did not tell me what it was, but I understand that it was emphatically not a request for a day return to Milan.

    In Florida, my hon. Friend visited Seaworld– [Interruption.] Relax. While watching the Walrus of Oz–I do not understand why the right hon. Member for Kingston upon Hull, East (Mr. Prescott) smiles when I mention the Walrus of Oz–my hon. Friend became a volunteer from the audience to play alongside the walrus. The starring piece of his remarkable performance was a passionate embrace with the walrus. That was embarrassing enough for him, but it was made far more embarrassing by the most deadly words that any Member of Parliament can hear on holiday, uttered by a lady who rushed up and said, “Mr. Dunn, I am one of your constituents.” Only time will tell whether that will increase his majority.

    My hon. Friend the Member for Aberdeen, South (Mr. Robertson) entered the House only at the last election. He referred to his first term in this House, which I am sure will be one of many. What he did not mention–we all know that he has a healthy appetite–was his election battle bus, which became notorious in his constituency for being parked outside a fast-food hamburger stop nearly every meal time. Entering with three companions, he ordered four hamburgers. “One each?”, asked the attendant politely. “I don’t know what they’re having”, said my hon. Friend, “but these four are for me.” –Clearly, elections build up the appetite in Aberdeen, but both my hon. Friends added to their growing reputations in their speeches this afternoon. Last year, I placed Northern Ireland at the head of our priorities: self-evidently, it remains at the head of the Government’s priorities. The past year has brought a new atmosphere and measured progress, but there is still a very long way to go before peace is secure and life in Northern Ireland returns to the same gentle tenor that we would expect it to have and would wish to see elsewhere in the United Kingdom.

    Next month, so long as the ceasefire is maintained, we shall open the exploratory dialogue with Sinn Fein and the loyalist political representatives. In those talks, the decommissioning of illegally held weapons will be a vital subject. Last week’s outrage in Newry–the murder of Mr. Kerr–showed how urgent that remains. Gun law has no part in democratic politics and the paramilitaries of both sides must abide by democratic principles if they wish to take part in democratic politics.

    The people of Northern Ireland, too, are impatient for political progress, and I believe that they are right to be. As part of an overall settlement, we shall make proposals for a possible way forward within Northern Ireland, including a locally accountable assembly.

    We have made good progress with the Irish Government on a joint framework document that covers relations between the two Governments and between Northern Ireland and the Republic. I hope that circumstances will allow us to complete the remaining negotiations speedily. The two Governments are seeking joint positions on some difficult issues, including the territorial claim that remains in the Irish constitution.

    Northern Ireland’s future must be resolved freely, and without prejudice or duress, and that was acknowledged in the Downing street declaration. As part of a balanced settlement, requiring change on both sides, the Irish Government agreed that the Republic’s constitution would need to change to reflect fully the principle of consent in Northern Ireland. It is obviously important for Northern Ireland to be recognised as a legitimate part of the United Kingdom while that remains the wish of the greater number of the people of Northern Ireland.

    A more relaxed relationship between Northern Ireland and the Republic is also important. Many people in the north want links with the south. There is already valuable co-operation and we would like to help it to evolve. Closer links would foster reconciliation and benefit business. Organisations in different sectors–tourism being an obvious example–will, in their own interests, wish to build up relationships. In the joint document, we shall suggest a framework for cross-border structures, working on common ground and on a reciprocal basis.

    I know that there are fears about joint authority–not least in the House but also beyond it, and most importantly throughout Northern Ireland–so let me make it clear that joint authority is not under consideration, and has been rejected by both Governments. I emphasise that those will be proposals; they will not be a straitjacket. This is not a London-Dublin deal, worked out and set to be imposed. The proposals will be published for public consultation and put to the democratic political parties in Northern Ireland. When the final outcome of the talks process is known, it will be submitted to the people of Northern Ireland in a referendum.

    The tasks ahead remain formidable, but each and every day without violence is another small victory for Northern Ireland. The benefits of peace which people are now witnessing will be a powerful disincentive to renewed violence.

    I cannot promise that those endeavours will be successful, but I can promise that we shall pursue them, with the hope of reaching a lasting peace. I express my thanks to right hon. and hon. Members, on both sides of the House, who put aside the normal political differences to support the process.

    Before I discuss the contents of the Gracious Speech, I wish to mention our economic prospects, as did the right hon. Member for Sedgefield.

    A year ago, many people had doubts about economic recovery. The hon. Member for Dunfermline, East (Mr. Brown) delved into his stock of gloomy soundbites and forecast “rising unemployment, falling output and shaky prospects for growth.”

    Since then, unemployment has decreased steadily, month by month. Today it fell by more than 45,000, to below 9 per cent. for the first time since December 1991. Throughout the European Union– [Interruption.] — only Portugal and Luxembourg now have less unemployment and, overall, the average is much greater throughout the Union, at 11.5 per cent.

    The right hon. Member for Sedgefield told us that one of the ways ahead was to reduce unemployment, but he would have been more gracious if he had acknowledged that we have reduced unemployment far more successfully than any other large country in western Europe, and that only two small countries have a lower rate.

    Mr. Skinner: Will the right hon. Gentleman give way on that point?

    The Prime Minister: I shall give way later.

    As for growth, output is currently increasing at more than 3.5 per cent., and we are forecast to have the fastest growth among the main economies in the European Union this year and next.

    The problem for the shadow Chancellor of the Exchequer, the hon. Member for Dunfermline, East, is that his every forecast turns out to be wrong–not some of them, but all of them. The laws of statistics and probability are suspended for the hon. Gentleman. If any hon. Members wish to win the lottery that we have established, they should ask the hon. Gentleman for numbers that are certain to lose, and their fortune will be guaranteed.

    I do not wish to be unfair to the hon. Member for Dunfermline, East. He is by no means the only misery merchant on the Opposition Front Bench who is seeking to spread despondency. The hon. Member for Livingston (Mr. Cook), who is enjoying an agreeable chat with the right hon. Member for Derby, South (Mrs. Beckett), was a trainee misery. He spoke of “big concerns” about how long the recovery would last. He did at least have the honesty to admit that there was a recovery. He spoke of

    “big concerns about how long the recovery could be sustained before it led to a balance of payments crisis.”

    As it happens, the trade balance is narrowing as output grows, and the hon. Gentleman was wrong.

    The hon. Gentleman has heavyweight company. The new deputy leader of the Labour party, the right hon. Member for Kingston upon Hull, East (Mr. Prescott), was in the gloom stakes as well.

    [Interruption.]

    Yes, he was. He is smiling now, probably because he knows that I am going to remind him that he said

    “I don’t see much inward investment flooding in, but I see companies flooding out.”

    I do not know what country the right hon. Gentleman was in when he said that, because it certainly does not apply to this country. The only things that are flooding out are exports, at record levels. The right hon. Gentleman also seems to have missed the inward investment. Last year, this country attracted 40 per cent. of the total inward investment from the United States and Japan that was made in the European Union. Black and Decker, for example, moved a production line to Britain from Germany–not even from the United States or Japan. Why? Because, in the words of one of its workers,

    “Industry is flexible and the social chapter isn’t.”

    Where is the Black and Decker factory? In a place called Spennymoor, bang in the middle of the constituency of the right hon. Member for Sedgefield.

    The deputy leader of the Labour party should ask his right hon. Friend whether he has seen any inward investment flooding into this country–or he could ask the hon. Member for Livingston. NEC is investing hundreds of millions of pounds to create hundreds of jobs in the hon. Gentleman’s constituency. I could have mentioned that Samsung is creating more than 3,000 jobs, that Fujitsu is creating 1, 600 or that Asat is creating 1,000. Up and down the land, there has been a vote of confidence from external investors in this country’s future, and in this Government’s management of the economy.

    Mr. George Howarth (Knowsley, North): At the 1992 general election, the Prime Minister and the then Chancellor of the Exchequer made it clear that they could conceive of no circumstances in which they would increase taxes if they won the election, yet afterwards they increased taxes. Can the Prime Minister help the House? At the time of the election, did the Prime Minister and the Chancellor know the true state of public finances and mislead the public, or did they not know the true state of public finances–in which case, why should anyone listen to the Prime Minister’s predictions now?

    The Prime Minister: I think that the hon. Gentleman could have done better than that if he had tried. He may live in his own little dream world, and he may have overlooked the fact that there was a worsening recession not here but elsewhere, which was why, right across Europe, unemployment rose and others ran into the difficulties that we ran into in this country.

    If the hon. Gentleman is concerned about inconsistencies–perhaps in view of what his right hon. Friend the Member for Sedgefield had to say about taxes–perhaps he or his right hon. Friend could tell us why they now propose to introduce a windfall tax, a payroll tax, a health tax, an entertainment tax and a development tax. Perhaps, as they are so concerned about expenditure and taxation, they will tell us which of their spending commitments–to the minimum wage, the emergency employment programme, the new technology trusts or the abolition of compulsory competitive tendering- -they will scrap. For if their oratory is honest now, their policies are not; and if their policies are honest, their oratory is not. The sooner they square that circle, the sooner we will hear little lecturettes from them.

    Up and down the land, there has been a vote of confidence in the British economy from foreign investors. The right hon. Member for Kingston upon Hull, East and the hon. Members for Livingston and for Dunfermline, East say none of that. They can, if they wish, remain the three blind mice on the Labour Front Bench, but foreign investors see what is happening in this country. To quote the right hon. Member for Kingston upon Hull, East, they have been “flooding in”, they are “flooding in” and, while they have a Conservative Government with the policies that we follow, they will continue to “flood in” and to provide jobs in the right hon. Member for Sedgefield’s constituency.

    Mr. Denis MacShane (Rotherham): Is the Prime Minister aware that, for every pound that has come into this country, more than two in the last year, and well over two in the past 15, have left? British Steel is investing £97 million in America, but nothing in this country. What policies does the Prime Minister offer to develop manufacturing based on investment by British firms in their own country?

    The Prime Minister: I am glad that the hon. Gentleman mentioned British Steel. I was in Port Talbot a fortnight ago–one of the most efficient steelworks in the world. It has the longest export order books that it has had for a long time and it is hugely successful. The hon. Gentleman may know nothing about steel making, but I suggest that he goes to Port Talbot to see for himself what I saw–the efficiency of that manufacturing industry in the United Kingdom. If the hon. Gentleman went to the motor show he would see a British motor industry that will soon be a net exporter of cars. If he visited Triumph motorcycles, which was killed by the Labour party, he would see it producing top-of-the-range motor cycles to sell to Germany, Japan, the United States and elsewhere. The Opposition run so well the story about British industry doing badly that they believe it. In reality, British industry is up off the knees on which it found itself when the Labour party was in office. It is now growing, investing, expanding and exporting to each and every part of the world. It is about time that the Labour party stopped knocking British industry whenever it has the chance.

    Mr. Skinner: Earlier, the Prime Minister talked about unemployment coming down. Is he aware that large sections of the British people do not believe his Government and their fiddled statistics? Does he understand that the other day independent figures were compiled on every British coalfield where many of the pits have shut? In Bolsover and north Derbyshire, the Prime Minister’s figures show unemployment at 12.5 per cent., but independent statistics show it to be 23.5 per cent. In Durham, the figure is 33 per cent. and it is the same in Ayrshire. In Wales, the figure is over 30 per cent. The truth is that all this twaddle, which has probably been written by Sarah Hogg, is a stranger to the truth.

    The Prime Minister: The hon. Gentleman is such a believer in conspiracies that he probably does not yet believe that there is really a Wednesday in the week. He should not squeak until he is squoken to.

    Dr. Spink: Will my right hon. Friend explain to me, to the House and to the nation why the Opposition are always running down this nation, running down our industry, our schools and our health service? Why do they not start talking Britain up?

    The Prime Minister: I suspect that there may be millions of people asking the same question over the next two and a half years.

    Dr. John Reid (Motherwell, North) rose —

    The Prime Minister: If the hon. Gentleman will forgive me, I suspect that he or his hon. Friends may want to intervene later. I want to make some progress.

    I want to deal with the legislative programme for next year contained in the Gracious Speech. Over the years, we have introduced many controversial supply side measures, privatisations and deregulations. Time after time the Opposition have opposed them, yet they do not seem to follow that opposition through. They do not commit themselves to reversing those privatisations. We all know why. They know that the privatisations are right, but they want to capitalise on public concerns when the measures are going through the House. If the Labour party’s opposition is genuine, let it commit itself now to reversing all the privatisation measures that we have carried out. If it does not do so, it should keep quiet and realise that those measures have greatly improved the efficiency of British industry in recent years.

    The Opposition will not commit themselves to that because they know that privatisation works. They know also that renationalisation would blow for good and all the belief that this is a new Labour party in any sense. Whatever the balance between public and private sector might be, the Opposition usually, and grudgingly, think that it happens to be right at the time. They do not know whether to go forward or back. They do not say yes and they do not say no. They loathe private ownership, but they dare not reverse it.

    We intend to proceed with privatisation. This year, we shall privatise the Crown Agents. [Hon. Members:– “Oh.”] I am glad to hear support from Opposition Members–I hope that it will be translated into support in the Division Lobby. Crown Agents plays a significant role in delivering our aid programme. We have agreed with its board that the best way of developing its services is in the private sector.

    We shall introduce a Gas Bill to bring genuine competition into the gas industry. Consumers already benefit from a fall, after inflation, of more than 20 per cent. in gas prices and they will reap further benefits. New suppliers will be able to enter the gas supply market, giving customers more choice and better service. Safeguards protecting price, safety, standards and social obligations will remain for as long as they are necessary.

    The Agricultural Tenancies Bill will make it easier for tenants to rent land and to benefit from the improvements that they make to it. Landlords and tenants will gain greater freedom in negotiating the terms of a tenancy, within a framework that protects legitimate interests and that guarantees that tenants are rewarded for any improvements that they may make. That has been agreed by landlords and tenants alike and will open up opportunities for young farmers to take their first step in the industry.

    Mr. William O’Brien (Normanton): The Prime Minister gave a catalogue of successes in industry. Will he comment on how the building industry will prosper in the coming year? There is a need for rented houses and for improvements to houses, yet no reference is made in the Gracious Speech to the building industry. Has he a comment to make on the future of the building industry?

    The Prime Minister: I am not sure what legislation, for that is what the Queen’s Speech deals with, the hon. Gentleman may have in mind for the building industry. The growth in the economy, which we are now seeing, will bring the building industry back to greater health. That is the way in which to bring it back to proper health. We shall introduce the Jobseeker’s Allowance Bill to help more and more unemployed people back into work. The new allowance will replace unemployment benefit and income support and will underline the bargain between job seekers and taxpayers. Job seekers are right to expect benefits but the taxpayer is right to expect a job seeker to seek a job, and the Bill will ensure that that is so.

    Mr. Derek Enright (Hemsworth): Come to my area.

    The Prime Minister: The hon. Gentleman should get his head out of the sand and look at the falling total of unemployed people. The figure has been falling for nearly two years. One day he might acknowledge that this country is doing better than almost any other in western Europe in putting people in work, in keeping people in work and in having the highest level of adult population in work. The Channel Tunnel Rail Link Bill will allow private finance to contribute to the development of one of the most important infrastructure improvements of recent years. Both public and private sectors will have a role to play and the project will be likely to create between 10,000 and 15,000 jobs.

    The Pensions Bill will implement all the main recommendations of the Goode committee. It will offer greater protection for members of occupational pensions schemes and it will implement a common pension age for men and women at 65, which I was interested to note was accepted as reasonable by the Commission on Social Justice.

    Mr. John Prescott (Kingston upon Hull, East): Has the Prime Minister read the report?

    The Prime Minister: I have read the commission’s report. I recommend it to insomniacs. We have a meaty programme of supply side reforms and I look forward to introducing them to the House. We shall also introduce the European Communities (Finance) Bill to give effect to the financial arrangements reached at the Edinburgh summit.

    Mr. D. N. Campbell-Savours (Workington): Will the Prime Minister tell us whether the £250 million predicted increase in the United Kingdom’s contribution includes forecast increases in gross domestic product by the end of the century? Can we have a straight answer to the question?

    The Prime Minister: The straight answer is yes. I hope that that is straight enough for the hon. Gentleman. I must say that, having asked for a straight answer, he looks very discomfited to have actually got one. I suggest that, if he does not want a straight answer, perhaps he should have asked his right hon. Friend the Leader of the Opposition.

    Dr. John Reid (Motherwell, North) rose —

    The Prime Minister: I will make some progress, if the hon. Gentleman will forgive me.

    I am still saying it: consistency is a virtue. Those financial arrangements were warmly welcomed at the time, and for good reason. They safeguarded our rebate–worth £2 billion a year. They produced the smallest-ever increase in own resources, and over a longer period, and they moved this country significantly down the list of net contributors to the European Union budget. The difference that the new arrangements will make, compared with what we would otherwise have paid, is to increase this country’s net contribution to the European Union by £75 million next year, rising to around £250 million in 1999, with the qualification that I conceded a moment ago. My right hon. and learned Friend the Chancellor of the Exchequer has set out the figures clearly to all hon. Members.

    I have seen suggestions that the new arrangements would double our net contributions, which is nonsense and can safely be dismissed out of hand. The outcome of the Edinburgh agreement was reported to the House and strongly supported here. This Bill is necessary to honour that agreement. We shall introduce it early in the Session and take it through speedily.

    No one should doubt the importance of securing the Bill unchanged and early. I know that some hon. Members dislike it, but it is not an optional measure that can be used as a bargaining counter for other European negotiations. It is an international commitment, entered into two years ago with the full support of the Cabinet. No British Government would have credibility in international negotiations if they failed to implement the agreements that they had freely entered into with their partners abroad, so for that reason there is no room for compromise on the Bill. That means that its successful passage in all its essentials is inescapably a matter of confidence, because of the agreements reached with our European partners. I hope that there is no doubt in the House about that.

    Mr. A. J. Beith (Berwick-upon-Tweed): Is the Prime Minister making it clear to the House that, if the Government were to lose any vote on the Bill, he would seek a dissolution and the country would have the opportunity of a general election?

    The Prime Minister: I have just made it perfectly clear that the Bill must be passed in all its essentials to ensure that we honour the obligations that we entered into with our European partners.

    Mr. Tony Marlow (Northampton, North): In the spirit of friendship, may I put it to my right hon. Friend that if the passage of the Bill were made contingent on effective measures and results in combating European fraud he might have a more coherent response?

    The Prime Minister: I made it clear in my speech at Leiden earlier this year that it was important that the whole of the European Union attacked the outrageous problem of fraud that exists in Europe. The figures that we have just seen were produced by the Court of Auditors, which, I remind the House, has its present powers because the British Government in general, and I in particular, demanded them in the Maastricht treaty. I must tell my hon. Friend that I did so because I believe that fraud in the European Union is unforgivable and must be rooted out.

    The British Government have been the leader in the European Union in rooting out fraud. We have less fraud in this country than anywhere else in the European Union, and my right hon. Friends and I intend to press again and again to ensure that the Court of Auditors has the powers necessary to root out fraud across the Community. I shall say something else to my hon. Friend, because I hope that he will back me here, too. In order to do as I have said, it may be necessary for the Court of Auditors to have greater powers to go into each country in the Community, including this country as part of the European Union, to root out fraud. I believe that it should have those powers, and I support them. We shall do all that we can to minimise, and then to eliminate, fraud in the European Union. I can certainly give my hon. Friend that assurance, but he need not tie it to the Bill, for we embarked on that several months ago.

    The House will know that earlier this summer the Government began to consult on a range of proposals to improve the position of disabled people. Following the consultation–

    Mr. Robert N. Wareing (Liverpool, West Derby) rose —

    The Prime Minister: I shall give way to the hon. Gentleman in a moment. Following the consultation, we decided to go further and, contrary to our original intimation to hon. Members, to propose a Government Bill in the Gracious Speech, rather than producing a hand-out private Member’s Bill. We have an excellent record over the years, and a great deal has been achieved.

    Mr. Tom Clarke (Monklands, West) rose —

    The Prime Minister: I have already promised to give way to the hon. Member for Liverpool, West Derby (Mr. Wareing), and I shall do so in a moment. A great deal has been achieved, but we can and should do more. The Bill will follow an exercise that focused not only on what should be done but on how it could be done and how quickly. The Government will announce the details of the Bill shortly. Let me simply say now that it will include a right not to be discriminated against in employment, a right of access to goods and services and the establishment of a national disability council to ensure that the voice of disabled people is heard more clearly within Government.

    Mr. Wareing: The Prime Minister will be aware that in 1983 I introduced a private Member’s Bill to outlaw all discrimination against disabled people, but that it was outrageously attacked by the Government and Conservative Members were dragooned into the Division Lobby to oppose it. The same thing happened to the Bill recently introduced by my hon. Friend the Member for Kingswood (Mr. Berry). I was told at the time that education and persuasion represented the way forward.

    The Queen’s Speech says only that the Government will introduce a Bill to “tackle” discrimination. It is not enough simply to select employment and one or two other aspects. Will the Prime Minister give an undertaking that the legislation will make it illegal to discriminate against disabled people, as it is to discriminate against people on the grounds of race, sex or religion?

    The Prime Minister: I have set out what will be in the Bill, and the hon. Gentleman will have the chance to read it as soon as it is published. The Minister for Social Security and Disabled People will make the details clear.

    Mr. Tom Clarke: Will the Prime Minister give way?

    The Prime Minister: I am replying to the hon. Member for Liverpool, West Derby. If the hon. Member for Monklands, West (Mr. Clarke) will do me the courtesy of listening, I shall contemplate giving way to him when I have finished.

    I have set out the details of what will be in the Bill, and I advise the hon. Member for West Derby to wait until he sees those details, which will be debated fully in the House and in Committee.

    Mr. Tom Clarke: Is the Prime Minister aware that nothing that he has said corresponds with the measures in the Bill that my hon. Friend the Member for Kingswood sought to introduce, which was disgracefully talked out by Conservative Members? As a former Whip, and as a former Minister responsible for disabled people, will he discourage The Guardian from saying that simply because the Government have introduced a Bill nobody else can introduce a Bill on the same subject? Does the right hon. Gentleman accept that if my hon. Friend or any other hon. Member introduces such a Bill, he should discourage the Government Whips from talking it out and denying the rights of 6.5 million disabled people and their carers?

    The Prime Minister: I have limited influence over The Guardian, as recent events have shown; the hon. Gentleman must take up his complaints about The Guardian with that newspaper. As for the position of disabled people, he, too, would be wiser to wait and read the Bill before making judgments on it.

    The remainder of the legislative programme will honour a number of important commitments that we have given. The Criminal Justice (Scotland) Bill will be another important step in the Government’s battle against crime.

    Dr. Norman A. Godman (Greenock and Port Glasgow) rose —

    The Prime Minister: I shall make some progress now; I know that many hon. Members wish to speak.

    Dr. Godman: Will the Prime Minister give way?

    The Prime Minister: Not on this point. Like the Criminal Justice and Public Order Act 1994, the Criminal Justice (Scotland) Bill will crack down on those who offend on bail, increase the courts’ powers to confiscate the assets of crime and streamline the operation of the courts.

    The Environment Bill will set up an environment protection agency and a Scottish environment protection agency. I suspect that that will be widely welcomed in the House and elsewhere.

    The Health Service Bill will take forward our programme of reform by streamlining the national health service management structure. The right hon. Member for Sedgefield spoke about expenditure in the national health service on administration. I look, therefore, for his support for the abolition of one entire tier of the management structure in the regional health authorities. They will be abolished while the district health authorities and family health authorities will be merged. We shall judge whether the right hon. Gentleman’s words are matched by his actions in the Division Lobby as we seek to cut administrative expenditure.

    We will introduce a Bill to provide for the supervision of those discharged under the Mental Health Act 1983. This is to ensure greater security for the community and better welfare for those recovering from mental illness. Many hon. Members will be aware of the problems that have arisen in that area. I believe that the Bill will be warmly welcomed and I am grateful for the intimations from the Opposition that they will help to speed the Bill through to law. There are three important additional measures that we intend to introduce under the general heading of law reform. The Criminal Appeals Bill follows the Government’s acceptance of the recommendation of the Royal Commission on criminal justice that a new body is needed to consider possible cases of miscarriage of justice. The new body will be independent of both Government and the courts and it will be able to review wrongful convictions.

    The Children (Scotland) Bill will ensure a comprehensive reform of child care in Scotland. It follows the reports of the inquiries into the Orkney and Fife incidents, and the White Paper of my right hon. Friend the Secretary of State for Scotland, “Scotland’s Children: Proposals for Child Care Policy and Law”, published last year.

    Dr. Godman: Will the Prime Minister give way?

    The Prime Minister: If the hon. Gentleman will forgive me, I shall tell him bluntly that I shall not give way to him on this occasion. The Bill’s welfare measures include the introduction of more flexible arrangements for local authorities to care for children in need and the introduction of more stringent criteria for taking children into care.

    We shall also introduce a Medical Act (Amendment) Bill to introduce new procedures to enable the General Medical Council to deal with the very small minority of doctors whose performance is found to be seriously deficient.

    Those are measures of reform which, I believe, will command widespread support in the House. I am encouraged by the overt support already given to these Bills across the House and I trust that we shall be able to agree speedily on their handling. Those are some of the things that are important across the House.

    The right hon. Member for Sedgefield spoke of many things, but we did not hear a great deal about practical issues from him. We have heard a great deal from the right hon. Gentleman about new Labour, although no one seems quite sure what that means. We are now getting some clues. I was especially interested in the way in which the right hon. Gentleman allocated his shadow Cabinet portfolios.

    Whom did the right hon. Member for Sedgefield choose as his shadow Foreign Secretary–Britain’s ambassador abroad? He picked the hon. Member for Livingston– [Hon. Members:– “Hear, hear.”] I agree: it is a choice entirely appropriate for the Labour party. Surely the hon. Member for Livingston is not the man who, as the cold war was heating up, “pleaded with” and “begged”–his words–the Labour conference to vote for unilateral nuclear disarmament. Surely this is not the same man who spent much of his political life equivocating over whether Britain should be in the European Union. Apparently, the answer is yes. There is not much new there.

    The hon. Member for Livingston is not the only clue–

    Mr. Campbell-Savours: Tired old arguments.

    The Prime Minister: They are tired old arguments, I know, but they are the best that the Labour party has got.

    The hon. Member for Livingston is not the only clue; there are other square pegs in round holes. Let us take the shadow defence team. What do they have in common? The answer is consistency. They are consistently against Britain’s nuclear defences. The hon. Member for South Shields (Dr. Clark), the man to whom the Leader of the Opposition would entrust Britain’s nuclear defences, is a member of parliamentary CND. Indeed, he is not alone. I have a list, which my hon. Friends may care to hear. It includes the right hon. Member for Derby, South and the hon. Member for Holborn and St. Pancras (Mr. Dobson)– [Hon. Members:– “More.”] There are lots more Opposition Members who are against our nuclear capacity. I am just telling the hon. Member for Workington (Mr. Campbell-Savours) who they are. The list includes the hon. Members for Peckham (Ms Harman), for Oldham, West (Mr. Meacher), for Islington, South and Finsbury (Mr. Smith), for Edinburgh, East (Dr. Strang), for Blackburn (Mr. Straw) and, of course, the right hon. Member for Sedgefield. All that gives a new meaning to being brothers in arms. They would scrap our nuclear weapons.

    It is another clue– [Hon. Members:– “You have missed one out.”] I missed one out. I apologise to the hon. Gentleman. I am not sure who the hon. Gentleman is, but someone will tell me. It shows that they are not only against Britain’s nuclear capacity but are proud to be against Britain’s nuclear capacity and would scrap it. Why did we hear so much about Rosyth from Opposition Front-Bench spokesmen if that was the case?

    Mr. Campbell-Savours: Yesterday’s arguments.

    The Prime Minister: The hon. Gentleman says that they are yesterday’s arguments. They do not care about Rosyth now. The hon. Gentleman should keep quiet. He is digging himself a bigger hole by the minute.

    Another clue to Labour’s new team is the right hon. Member for Sedgefield’s choice for his shadow Treasury team–the team responsible for setting and collecting taxes.

    Dr. Reid: He said something about taxes.

    The Prime Minister: I shall say something on taxes in which the hon. Gentleman will be interested. Only a fortnight ago, the hon. Member for Bristol, South (Ms Primarolo) was talking about the importance of collecting tax–absolutely right, vitally responsible. But, some small thing nagged away at my memory. Was not it the hon. Lady who supported a campaign urging people not to pay their community charge? So there we have it–new Labour. The person that the right hon. Gentleman has put in charge of collecting tax was part of the campaign inciting people to break the law and refuse to pay their tax. So, there is not very much new about Labour there either. Over the past four years, I have consistently pursued a number of long-term objectives.

    Mr. Campbell-Savours: Tell us then.

    The Prime Minister: I am about to. They include low inflation. For the first time, we may be in a position where we have broken the inflationary psychology that has damaged this country time and again since the war. We have pursued objectives of supply side reform for lasting growth, a better quality of life for all our citizens, a higher standard of public service and a lasting peace in Northern Ireland. They remain at the centre of my objectives for this year and for the future. The programme outlined in the Gracious Speech will take those objectives forward and I warmly commend it to the House.

  • Mr Major’s Speech at Lord Mayor’s Banquet – 14 November 1994

    Below is the text of Mr Major’s speech at the Lord Mayor’s Banquet in London, held on 14th November 1994.


    PRIME MINISTER:

    It is now some 80 years since the then Foreign Secretary, Sir Edward Grey, looked out from his office across St James’s Park and wrote these famous words in his diary: “The lamps are going out all over Europe. We shall not see them lit again in our lifetimes”.

    He was right. The War brought horrors no-one imagined; and changes which have shaped our century. It led to economic crisis, to dictatorship in many countries, and finally to a tense peace in an armed and divided Europe.

    And yet, as our century draws towards its close, these changes are being reversed. The lights have come on again all across Europe.

    As they have done so, they have illuminated some dark corners of the Cold War. Ethnic tensions, seen at their worst in the country that used to be called Yugoslavia.

    But overwhelmingly the ledger is favourable. East/West relations are no longer conducted through the balance of nuclear terror.

    Europe has become, not two blocs, but a single Continent.

    The Soviet Empire has gone, ancient states have reappeared, subject nations have gained freedom.

    In South Africa, apartheid has gone and majority rule has been established.

    In the troubled Middle East a settlement of the Arab/Israeli conflict seems at last genuinely at hand.

    All around the world, democratic multi-party states are appearing in countries which previously only knew despotism and one party rule.

    In our own kingdom the guns are silent in Northern Ireland. The talks which once seemed impossible may now start within a few weeks, and the demand for peace is deafening.

    Two months ago, as I watched the last of our troops leave Berlin after fifty years, I said “We have before us possibilities of peace, freedom and friendship that we have never had before”. If we are wise, Europe can enjoy a new Age of Reason.

    Lord Mayor, problems that seemed likely to be with us for ever are being solved. We have good cause for hope and optimism.

    The world economy is recovering. Our markets in Europe are growing. At home we have the possibility – probability – that we may at last have broken the inflationary psychology that time and time again has dragged down our prospects and held back our living standards.

    You might be forgiven for thinking this must be an illusion. This is not the way people think. This is not the message we hear daily. But perhaps we are too ready to believe the worst of ourselves, of each other, of our institutions.

    I believe we need to overcome that. Let us by all means judge ourselves sternly. But let us do so with balance and perspective.

    Nolan

    Recently, a series of events have cast doubt over standards in public life. The attention given to them must have led people to wonder whether those in public life are there only to serve their own interests.

    I don’t believe they are.

    But we do need to re-assure people that public life is not self serving.

    The committee chaired by Lord Nolan will help with this.

    If the rules governing conduct in public life are vague or unsatisfactory, Nolan will clarify them. But his task is not just to meet immediate questions. It is to act as a running authority of reference – almost, you might say, an ethical workshop called in to do running repairs.

    Parliament

    We need the best people to serve in our institutions. In my own trade, in Parliament, I shrink from the notion of the wholly professional politician, whose expertise is honed only to the pursuit of power, preference and political ideology.

    We would not benefit from a monastic Commons, a chamber of high minds, a conventicle of saints, grateful that they are not like other men and women, 650 lives devoted to jumping ever and again over the hurdles and fences of standing and select committee and the chamber. That wouldn’t be a real Commons: it would be a sort of Bore of the Year show.

    We politicians are in this world and we must know how this world works. The solicitor, the accountant, the shopkeeper, the trade unionist certainly, the farmer, the stockbroker, the journalist comes equipped with that knowledge.

    Why on earth hang it up like the boots of a retired sportsman?

    Consistent with the priority of Parliamentary duties, it must be right for MPs to have other interests, but parliament should not be, as frankly it sometimes has been, a way to other jobs. The Commons is an assembly, a forum, above all, a legislature. It needs all trades, but it should not be a hiring fair.

    Standards

    Our standards are stricter today. Some nostalgics may doubt that. If they do, I invite them to look at history. Can you imagine the current coverage if the Prime Minister of the day disappeared for hours, toured Soho, and returned to Downing Street with a galaxy of ladies and held an impromptu prayer meeting in the front hall of Number 10? In Gladstone’s days, people knew nothing about such activities. They would now!

    We no longer live nowadays, thank goodness, in a “deference society”, where you are respected for who you are, not what you are. I welcome that. But let’s not swing too far in the other direction.

    The freedom to comment, to attack, to condemn, to expose public institutions and public figures, is very great. In a free society such as ours it is very important. But such power should only be used with responsibility.

    Most people in public life are there because they want to do something for others. What we must be concerned about is that their motives are not so denigrated; that they are not so unreasonably subjected to scrutiny and pressure that their successors will not come forward. We must ensure that we do not reach a situation where people are not prepared to serve the public good because the price of doing so is so high.

    Public Sector

    We not only need the right people in public service.

    We also need to improve the accountability of public service.

    It is damaging if there appears to be some kind of inside track – a gulf between those who know how to play the system and others who do not. My sympathy is with those who sit on the outside track.

    That is why, when I became Prime Minister, I brought in the Citizen’s Charter – to give power and, as far as possible, choice to the people who use public services. They pay for them with their taxes and they are entitled to the same courtesy and service they would expect if they were cash-on-the-nail private customers.

    That is why we are telling people what they should expect from public service and then giving them the information to judge whether they are receiving it.

    This new accountability, new openness, in public service shows up deficiencies more readily. This is uncomfortable but it is right.

    Government has been too secret too long. That is why we launched a code of practice on access to Government information, with statutory access rights to personal records and health and safety information. That is why I published “Questions of Procedure for Ministers” and the membership and terms of reference of Cabinet Committees. And that is why I have opened up greater access to public records.

    I am sure this is right and we will continue with it.

    Business

    Business, too – like public service – is now held up to greater public scrutiny. British capitalism has become capitalism with a conscience. For some, it always has been, but now it is for most. Businesses up and down the country recognise much wider responsibilities than to make profits for shareholders.

    To the Cadburys and Frys we add the Sainsburys, the Clores and the thousands of corporate business donors in Charities Aid Foundation reports. Round the country – including here in the City – we see businesses involved in the local community, in crime prevention schemes, helping young people in inner cities, improving the environment and much more besides.

    But there is more that business can do to further improve its image.

    There is no doubting the resentment that large and often unjustified pay rises can cause. So I welcome what Sir Bryan Nicholson, the President of the CBI, had to say about the need for responsibility in setting the pay of company executives.

    The power is there to control this. I hope it will be used.

    Economy

    My Lord Mayor, right across the economy the reality is turning out to be the opposite of what so many pundits predicted.

    We were told when the recovery came, we’d see a widening trade gap. Wrong, the trade gap has been shrinking.

    We were told manufacturing investment was a thing of the past. Wrong, manufacturing investment is growing healthily.

    We were told we couldn’t break out of the inflationary stop-go cycle. Wrong, inflation and pay settlements are at their lowest level for a generation.

    We are hugely competitive. And with the markets for our goods moving from recession to growth, the export outlook has rarely been rosier.

    We’re exporting nearly 40 per cent more telecoms equipment, nearly 40 per cent more microchips. British Steel, an industrial basket-case in the early 1980s is now one of the most efficient steel producers in the world.

    Nor is it all that long ago that the British motor industry seemed to be in terminal decay. We heard more of strikes than successes. Now it is set to become a net exporter of cars. And Triumph Motorcycles – that illustrious name, dead in the water in the ’70s – is now exporting top of the range British motorcycles once more to Japan, Germany and Italy.

    The people who say we can’t make things are the people who are out of touch. They should get in their British car, on their British motorbike, on their British bicycle, and go and see for themselves how British industry is making more and selling more, all round the world.

    Day by day we see the evidence. Low inflation, falling unemployment, rising investment, increasing competitiveness, more modern and efficient management. This is the reality of the changing economic and industrial face of Britain today.

    Northern Ireland

    My Lord Mayor, on this occasion a year ago I said that we had a better opportunity for peace in Northern Ireland than for years. One month later, we launched the Downing Street Declaration. Since then, the opportunity for peace has begun to turn into reality.

    The reality of border crossings reopening; fewer troops on the streets; turnover in High Streets rising sharply; people going out at night rather than staying at home.

    Few people would have forecast all this a year ago. Yet, today, hope is abroad, and any group that imperils progress will not carry hearts and minds in Northern Ireland.

    The deplorable murder of a Newry postal worker, Mr Frank Kerr, last week has shown what risks still abound. Revulsion and anger at this murder reinforces the need to deal with the weapons held by both Republican and Loyalist paramilitaries.

    That is one of the purposes of the exploratory dialogue which we are ready to begin with Sinn Fein before the end of the year.

    Tonight, I can tell you that we have decided also to hold exploratory talks with Loyalist political representatives. I hope that these talks too will open before the end of December. The purpose in both cases is the same: to draw them into democratic politics and out of violence.

    The Downing Street Declaration laid out a level playing field for the politics of Northern Ireland. Sinn Fein and the Loyalists can take advantage of this. They can assert their point of view freely and fairly.

    But they must accept democratic practice. Illegal weapons and explosives must be taken out of commission. There must be an end to intimidation and punishment beatings. Racketeering and criminality must end as well. These are the essential conditions for democratic legitimacy.

    In the months ahead, attention will focus on political developments. But peace will also unlock an economic transformation: the jobs, the companies, the investment that Northern Ireland needs.

    So, my Lord Mayor, in a month’s time, we shall be holding an international investment conference in Northern Ireland.

    It will be the largest that Northern Ireland has ever seen.

    We intend to make sure that investors around the world know about the new opportunities that are now opening up. To give just one example, new air routes are opening up. Two new routes from Belfast have started since the ceasefire, and two more are under trial – one from the City Airport to Londonderry. People are already coming into Northern Ireland. Hotel bookings are up, and enquiries to the Tourist Board rose by nearly 100% in October.

    Such economic growth can help cut off the oxygen of terrorism.

    My Lord Mayor, I am delighted that you have accepted my invitation to this Conference. The City has itself suffered grievously from the hatred unleashed in Northern Ireland. It can now play a part in ending this for good.

    Peroration

    My Lord Mayor, it’s been quite a day. Breakfast at the Tower and dinner in the Guildhall.

    And as I got up to launch the new National Lottery, the first fare paying passengers were boarding the new Eurostar train service to Paris and Brussels through the Channel Tunnel.

    Both projects have long histories. We have had previous failed attempts at building a Channel Tunnel. And we have had previous National Lotteries – in one of which Treasury officials walked off with the prize money.

    But today, both projects have been brought to fruition.

    We should be more self-confident as a nation – in what we have achieved and will achieve: more confident in our institutions: in our way of life; and in our capacity to win in this fiercely competitive world.

    Let us concentrate on the things that really matter. Build up the present renaissance of our industry. Capitalise on this the finest financial centre in the world. And exploit the great economic opportunities before us.

    My Lord Mayor, today our future is in our hands. I am reminded of those lines of Wordsworth’s:

    “Enough if something from our hands have power to live, and act, and serve the future hour.”

    The Channel Tunnel; the National Lottery; the opening up of Government; the economic transformation in Britain; the end of violence in Northern Ireland; the hopeful sight of a New Age of Reason. All these will serve not just this passing hour, but lay down lasting foundations for the long-term strength of our country.

    My Lord Mayor, I believe in this country’s future. It is a time for hope, and a time for confidence. Let us show those qualities and there will be few limits to what this country can achieve.