The Rt. Hon. Sir John Major KG CH

Tag: ERM

  • Mr Major’s Commons Statement on the Economy – 9 June 1993

    Below is the text of Mr Major’s statement to the House of Commons on 9th June 1993 in the Economic Debate.

    PRIME MINISTER:

    The Prime Minister (Mr. John Major) : I beg to move, to leave out from House’ to the end of the Question and to add instead thereof : welcomes the widespread indications of economic recovery in the United Kingdom at a time when many other major economies are in deepening recession ; recognises that the interests of industry are at the heart of the Government’s policy and acknowledges the comprehensive programme of training and employment opportunities for unemployed people that the Government has put in place; welcomes the Government’s commitment to its Manifesto pledges including its commitment to improving the efficiency and effectiveness of public services through the Citizen’s Charter ; deplores the scare-mongering stories about public spending peddled by the Opposition ; and applauds the Government for its determination to maintain low inflation, sound public finances and firm control over total public expenditure upon which a sustainable economic recovery depends.’. As the right hon. and learned Member for Monklands, East (Mr. Smith) sits down, I have little doubt what is in his mind : “That’ll keep John Edmonds quiet for a week or so.”

    Before I turn to the substance of the debate, I wish to say a word or two to my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) regarding his remarks at the commencement of today’s debate. In his speech, my right hon. Friend spoke of a number of matters of very great importance, including the case that we have discussed on many occasions over the past two years for an independent central bank.

    I share my right hon. Friend’s loathing of inflation. That is an issue that we discussed frequently. We both saw the case for an independent central bank, able to take decisions on the implementation of monetary policy. There is a genuine case for that. I do not dissent from my right hon. Friend’s remarks about it. The very real concern that I have always faced is one that I believe is spread widely across the House : the need for accountability to Parliament for decisions on monetary policy matters. Were a way to be found to get the benefits of an independent central bank without the loss of parliamentary accountability, my views would be very close to those of my right hon. Friend, but I have to say to my right hon. Friend–I believe, from our many discussions, that it is a view he shares– that what is more important than the institutional arrangements is the underlying policy that is actually being followed. On that, I do not believe that an independent central bank would have brought down inflation any more rapidly than we have been able to achieve.That is something for which I am happy to pay tribute to my right hon. Friend.

    Also, I entirely share my right hon. Friend’s vision of the economic goals of this Government and of the difficult path that we have had to follow to achieve and maintain low inflation and restore sustainable growth and employment. My right hon. Friend and I– [Interruption.]

    Madam Speaker : Order. The House must settle down. Hon. Members do not have to listen, but whoever is speaking has to be heard. There is a great distinction between those two statements. The Prime Minister.

    The Prime Minister : My right hon. Friend and I faced crises both before and after September last year. We worked together towards objectives that we shared, and we were always agreed as to our main goals : low inflation, sustainable economic growth, an increase in prosperity for all our people as medium and long-term objectives. I believe that history will look favourably on my right hon. Friend’s economic and financial skills, but a strong Government need political skills as well– [Interruption.] –when leading a democratic society and, in particular, when handling a lively House of Commons with a small majority.

    Dealing with the problems of a small majority is a fundamental fact of democracy that no one dare or should even attempt to overlook. However, as we have shown in the battle over inflation and in our pursuit of European policy, against great difficulties in this House, we were not prepared in the Government to allow short-term difficulties to deflect us from what were the right long-term policies for this country. That was the position, and it is the position.

    I am grateful to my right hon. Friend for his support and help throughout the past two and half difficult years. I acknowledge the difficulties that he has faced and the courage with which he has faced those difficulties, and I accept the support that he has offered to the Government for the future. I welcome the opportunity to debate economic policies at a time when output is up, exports are up, productivity is up, confidence is up and, as announced today, when business starts are up.

    The right hon. and learned Member for Monklands, East has just made the speech that we expected of him. At the end of it, we are no better informed about his economic policies than we were at the beginning of it–or even about whether he has any economic policies or whether he has progressed beyond the sound bites that so frequently construct them. We do know something about the right hon. and learned Gentleman. We know that he is the man who announced the biggest tax increase in peacetime history, just before the general election. He is the man who said confidence would carry on falling, just before the CBI announced the highest level of confidence in 10 years, and he is the man who calls for a debate on the economy just as the economy is recovering. I hope that, with timing like that, the right hon. and learned Gentleman never takes up boxing, because it would be very painful. Many things can be said about him, but “floats like a butterfly, stings like a bee” is clearly not among them.

    What does seem right about the right hon. and learned Gentleman was said by the right hon. Member for Chesterfield (Mr. Benn). I remind the right hon. and learned Gentleman what his right hon. Friend said about him : “I do not think that Members of Labour’s Front Bench would have even two ideas about what to do with the economy if they came to power a series of sound bites glued together and called an economic policy is not an economic policy.”–[ Official Report, 20 May 1993; Vol. 225, c. 420.] That remains as true at the end of the right hon. and learned Gentleman’s speech as it was before.

    Today’s debate goes right to the heart of the fundamental divide between the Conservative party and the Labour party. The Labour party stands for higher public spending, higher taxation and more state interference in business and industry. We stand for controlling public spending, bringing direct taxation down where we can and getting the state off the backs of businesses and individuals. Let me deal with one matter that was fundamental to the right hon. and learned Gentleman’s speech. Let me turn immediately and clearly to social policy. I did not come into politics to dismantle the welfare state. I have no intention of doing so and neither does my party. At the moment, in different parts of the country there are many vulnerable people who are worried. They are worried because the Opposition systematically, day after day, leak after leak, sound bite after sound bite, have sought to frighten them. The Opposition have peddled scare after scare–

    Several hon. Members rose —

    The Prime Minister : I will give way later. The Opposition have peddled the man to spread scare stories; surely not a man to condone scare stories, so let me be charitable to him. Perhaps he did not know–had no idea–when the hon. Member for Livingston (Mr. Cook) swore that we would privatise the national health service, when the right hon. and learned Gentleman must have known that that was untrue. He could not have known about that, because he is an honourable man.

    What did the hon. Member for Holborn and St. Pancras (Mr. Dobson) say? He said that the Government were “threatening to cut pensions and benefits for the worse off.” In the autumn statement 13 days later, pensions and benefits rose. I am sure that the right hon. and learned Gentleman did not know what his hon. Friend would say, because he is an honourable man and would not have sanctioned it.

    It was the right hon. and learned Gentleman’s party that repeatedly claimed that trust hospitals were leaving the health service. They were not : the Labour party knew that they were not, yet it needlessly scared sick people for a vote or two, time after time. The right hon. and learned Gentleman could not have authorised that, because he is an honourable man–or so I had thought. But then I discovered what he had to say : “What’s going on will lead to the privatisation of the NHS.” That was flatly untrue, of course, and another scare. I wonder who could have spread it? The right hon. and learned Gentleman spread it. In the Labour party the scares come from the top and behind that moral righteousness is someone who has no scruples whatever.

    The right hon. and learned Gentleman claims that the Conservative party won the election by telling untruths. Let me remind him about that election. It was his party that published 10 patient case histories and had to withdraw them when it turned out that it had made them up. It was his party that made up untruths about a sick little girl and spread them across the country. That is the party that dares to talk to us about standards. There is a word for that, but it is not parliamentary.

    Let me turn to the subject of public spending. The Government know that, if the economy is to grow, the tax man cannot take more of the proceeds than the country can afford. In the Conservative party, we understand that people want more money in their own pockets and do not want the Government to spend their money for them. Of course, in the recession, spending had to increase. I do not apologise for that increase in spending–it was necessary in the recession and it was necessary to protect the vulnerable. I saw no support from Labour Members for any expenditure reductions throughout the recession and every support for dramatic increases week after week from every Member of the Opposition parties.

    Mr. Calum Macdonald (Western Isles) : Will the Prime Minister give way?

    The Prime Minister : Later. During that recession, not only did expenditure necessarily rise but income necessarily fell and that added to the borrowing requirement. Even though a great deal of that will reverse as growth returns, it is going to take time. That is why we have embarked on the public spending review. Governments have to take difficult decisions. We have to face structural increases in public spending, as any Government would. There are demographic changes, changes in student numbers and more elderly people, especially the very old. As we address those problems, the Opposition gaily spread mischief–a little fib here, a little scare there–yet as it does so it is carrying out a review into social expenditure. It does not have the courage to do it directly ; it has farmed it out to the commission on social policy. The only form of contracting out that the Labour party approves of is contracting out difficult decisions to other people.

    The right hon. and learned Gentleman cannot run away from what he said : “We” –that is, the Labour party– “should be prepared to re-examine everything. I have not ruled anything out”. That is its position on social policy and Labour Members nod in agreement. Daily, the Labour party invites us to rule things out, while it examines everything–pensions, child benefit and every other aspect of social policy.

    How responsible the right hon. and learned Gentleman is. I suppose that that comment shows that he wants to grapple with real problems, but when he faces other audiences, he wants to rule everything out. Which is the real right hon. and learned Gentleman? The gritty, determined facer of problems who wants to examine everything where nothing is ruled out, or the wriggler, twisting and turning, saying one thing to one audience and another thing to another audience?

    Mr. John Garrett (Norwich, South) : Could the Prime Minister, First Lord of the Treasury, tell us what he was doing during the long period of recession, which has caused so much misery throughout the country? Was he looking the other way? Was he train spotting? Was he walking into cupboards? Has there ever been a more wimpish approach to the problems that face this country than that which he has shown?

    The Prime Minister : I shall tell the hon. Gentleman directly : we have been presiding over a policy that brought inflation down to 1.3 per cent. and interest rates down to 6 per cent. so that this country is now poised for the largest growth in the European Community this year, next year and probably for the years beyond that. We have been taking the long- term view, not the short-term, option. That is what we have been doing–I am grateful to the hon. Gentleman for giving me the opportunity to point that out–while he has opposed every policy that has brought down inflation and interest rates.

    The Opposition will be glad to know that our review of public spending will be careful and thorough. There will be two criteria : are any changes fair, and are vulnerable people protected? When the answer is no, we shall not make the changes. When the answer is yes, we shall set out to the House the implications of those changes. There are no soft options. The Government’s duty is to examine them all and pick the right ones. We know that we need to reduce public borrowing, which is why, in the last Budget, we decided that some increase in revenue was necessary.

    We decided to introduce value added tax on fuel and power, not least because it would help meet our Rio commitments, commitments that the Opposition urged us to extend. We had every reason to expect cross-party support. The Liberal Democrats had stated in their green paper : “Liberal Democrats advocate as a first priority the imposition of a tax on energy The UK is unusual amongst EC members in not applying even standard rates of VAT on domestic fuels we would press forward by ending the anomalous zero rate of VAT on fuel”. Where were those men of principle in the Division Lobbies after the Budget?

    What did the Labour party say? It said : “Zero rating on items such as food, fares, books and children’s clothing should remain as an essential part of the VAT system.” That was quite clear. It continued : “We will also use the tax system, as well as regulation, to help protect the environment.” That can mean only one thing. In the list of zero-rated items, there is no reference to zero rating for domestic fuel. The Opposition intended to put it up, and they know it. If they did not, will they tell me now why it was not in their list of zero-rated items? The right hon. and learned Member for Monklands, East does not answer–no doubt, as a QC, he believes in the right to silence for an accused.

    When we introduced VAT on fuel and power, we made it clear that there would be extra help for less well-off pensioners and others on low incomes. I am glad to repeat that commitment. In recent months, the right hon. and learned Gentleman has made a great deal of the VAT increase, as have his hon. Friends.

    Ms Harriet Harman (Peckham) : So have the voters.

    The Prime Minister : So did the voters, says the right hon. Lady. What the right hon. and learned Gentleman did not mention is that he was the Energy Minister who let electricity prices rise. What was the increase–5 per cent., 10 per cent., 15 per cent.? No, it was 30 per cent. over and above inflation.What did the right hon. and learned Gentleman do to help the less well-off? I shall tell the House what he did–absolutely nothing. The position is clear. The right hon. and learned Gentleman cares about pensioners when he is in opposition–how he cares about pensioners in opposition–but in government he disregards them absolutely. One may think that that was a single lapse but, in case anybody thinks that that is so, let me say that the right hon. and learned Gentleman was a member of the Government who twice held back the Christmas bonus and cut capital spending on the health service. That is his record, and he should be ashamed of it.

    There is another case where the right hon. and learned Gentleman’s actions do not match his words. Today, he again attacked our borrowing levels, but his election promises would have put up borrowing way above the present level. He is still at it. “Let’s spend £6 billion of capital receipts,” says the right hon. and learned Gentleman. “Let’s spend an extra £1.5 billion on public sector pay.” The shadow Chancellor says, “Let’s renegotiate our rebate and pay more to the European Community.”

    Is there any area of Government spending that the Opposition are prepared to cut? Perhaps the shadow Chancellor can tell us. Perhaps we could have another sound bite to tell us where he would find the necessary savings. Or perhaps the deputy leader of the Labour party can tell us; after all, she came into government to implement the cuts in education that her hon. Friend the Member for Eccles (Miss Lestor) refused to make.

    Mr. Geoffrey Dickens (Littleborough and Saddleworth) : Will my right hon. Friend explain why, if the Opposition are sincerely worried about the disadvantaged people of this country, they demand more and more overseas aid, day in, day out? [Interruption.]

    Madam Speaker : Order. We all like a little bit of fun and hilarity, but we also want to hear the Prime Minister.

    The Prime Minister : The fundamental point about overseas aid is that, in order to sustain it as the Government have done, one needs to pursue the right economic policies, as we have also done. I am glad that the motion mentions manifesto promises–glad, but a little surprised because the right hon. and learned Gentleman has scrapped all his election promises. We stand by our manifesto policies. We promised action on trade unions, housing, lotteries, railways, education and asylum, and we have kept our promises. Bills on each of those matters have already passed through the House. We promised to uprate pensions and benefits, and we have done so. We promised to maintain child benefit, and we have done so. We promised to increase real resources for the health service, and we have done so; year on year, spending is at record levels. They are the promises we made, and we have kept each one.

    Mr. John Fraser (Norwood) : When the Prime Minister went on his trip down memory lane to Brixton and other ethnic areas, did he tell the people that he was going to take away the right of appeal for visitors?

    The Prime Minister : The hon. Gentleman knows as well as any hon. Member that the great improvement in race relations in this country is directly related to the firm but fair immigration policies pursued by this Government. I am surprised to hear him venture down that track, in view of his record of favouring good race relations. We promised to deliver low inflation, and we have delivered on that promise. We promised to resume economic growth, and it is now resuming. Inflation, at 1.3 per cent., is at the lowest level for 30 years. Interest rates, at 6 per cent., are the lowest in the Community. There are now too many signs of recovery for even the Opposition to ignore them. Manufacturing output has increased for months in succession and unemployment has fallen three months in a row. It is too high–I share that view–but it is moving in the right direction, and sooner than most people expected.

    It is certainly sooner than the hon. Member for Dunfermline, East (Mr. Brown) expected, because, after the Budget, he said : “I make one Budget forecast–that, after the Budget, unemployment will rise this month, next month and for months afterwards”.–[ Official Report, 17 March 1993 ; Vol. 221, c. 289.] One day later, unemployment fell. The next month, it fell again, and the next month, it fell again. Another sound bite is needed, I think. The recession has been damaging, and recovery has not come easily, but it is now under way– [Interruption.]

    Madam Speaker : Order. Hon. Members must come to order. The bawling and shouting coming from the Back Benches this afternoon is utterly disgraceful. [Interruption.] I know who the Members responsible are, and I need no one to point them out for me.

    The Prime Minister : Some time ago, the right hon. and learned Member for Monklands, East admitted : “we change our policies as we move towards a different election, we’d be a very foolish Party if we went into an election in 1995-96 with exactly the same policies”. That is certainly true. But whose policies were they? They were the right hon. and learned Gentleman’s. He was the undisputed author of Labour’s defeat. He was the man who drew up the disastrous shadow Budget. Hon. Members may remember the hype, the fake presentation, as if it were a real Budget, and the responsible tone–the right hon. and learned Gentleman even posed for photographs outside the Treasury. Lots of passers-by do that, but they never get into the Treasury. The right hon. and learned Gentleman talks of broken promises, as does the shadow Chancellor, the hon. Member for Dunfermline, East. That is a good sound bite, but for the wrong party. The Labour party has broken every promise that it made about future policy at the election. Every one has gone to the social justice commission. The right hon. and learned Gentleman said : “We must be prepared to examine in an open-minded way some of the fundamental features of our approach. What is the right balance between universal and selective benefits”.

    It was not Milton Friedman who said that, nor my right hon. Friend the Chief Secretary, nor even Lord Desai–no doubt he would have been sacked if he had said it. The right hon. and learned Member for Monklands, East himself said it. Yet time after time he accuses us of examining aspects of public expenditure that any responsible Government would need to examine. He is the man who said that his planned increases in pensions and child benefits were essential, and that his tax proposals were fair, reasonable and popular. They have been so popular that he has dropped them all. So much for his promises. I would rather listen to the late Robert Maxwell on pension probity than to the right hon. and learned Gentleman.

    I know that the exchange rate mechanism and economic and monetary union are matters of some importance to hon. Members on both sides of the House. Since we left the ERM, there has been substantial debate about monetary policy and the possibility of economic and monetary union. In the negotiations at Maastricht I sought and secured an opt-out on the single currency because I was sceptical of its economic impact across Europe and its artificial deadlines, and because I believed that such a decision was for the House to make. Since then, economic developments in the European Community have strengthened the reasons for caution that I set out. The European Community economies have diverged rather than converged. As we come out of recession, our main partners are heading into a recession. Some of our European partners remain keen on early monetary union, although many of their central banks are less keen. Even the keenest must now see the difficulties. The criteria for monetary union will simply not be met. When I was negotiating at Maastricht, the idea of a monetary union in 1997 looked ambitious, perhaps even a little dubious. I have to tell the House that it looks wholly unrealistic today.

    The economies of Europe are not remotely ready for one currency throughout the 12, soon to be 16, countries, and I believe that they will not be ready –if they ever will be–for many years. That is not an anti-European view; I simply do not believe that the economic circumstances will be right, and if they are not right the damage that proceeding would cause the Community would be profound, and I should not wish to see it occur. If some of our partners decided to go ahead prematurely, that would be an economic mistake. I do not believe that we should go with them.

    We have sought reform of the exchange rate mechanism. I make no secret of the fact that I prefer stable exchange rates, and so does industry. But I cannot accept that the present operation of the ERM is satisfactory. Sterling was forced out, in the circumstances described by my right hon. Friend the Member for Kingston upon Thames, but so was the lira. The franc, the peseta, the escudo, the punt and others have at different times been put under great pressure. Certainly, I could not recommend that sterling return at present. We should need greater convergence between the monetary policies appropriate for all the Community economies, and we should need to be satisfied that the system would be operated to the benefit of all its members.

    In January, I made it clear that those circumstances would not apply this year. I now doubt whether they will apply for some years ahead–possibly they will not apply in this Parliament.

    Sir Peter Tapsell (East Lindsey) : There will be a widespread welcome throughout the party for what my right hon. Friend has just said to the House, and there will be great support for the policies that he has enunciated throughout his speech.

    The Prime Minister : I am grateful to my hon. Friend, and delighted to have a party at ease with itself. It is clear that the Labour party has no policies at all, and certainly no economic policies. When it had policies, they lost it the election. As the hon. Member for Brent, East (Mr. Livingstone) put it–rather cruelly, I thought–the right hon. and learned Member for Monklands, East “bears the primary responsibility for tax and economic policies that lost Labour the election.”

    And now Labour has none. That is not my view alone. It is clearly shared by Mr. Edmonds of the GMB, the union that sponsors the Leader of the Opposition–or at least, it sponsored him until last Sunday. I am not sure whether things have changed since then. Mr. Edmonds says that Labour has an identity problem and asks whether the voters “know what Labour stands for”. He says that Labour must shake itself out of its lethargy. He asks : “Where was the Labour movement” during the past few months? He may well ask.

    The Labour leadership cannot have been examining economic policy, because the shadow Chancellor would not recognise economic policy if it gripped him by the windpipe. The Labour leadership may have been absorbed in its falling membership, or it may have been trying to fight off the defeat of the right hon. and learned Gentleman’s party reforms. There is one area of total agreement between the right hon. and learned Gentleman and myself : he wants one man, one vote–a novel concept for Labour. He is right about that, and he has my support. Unfortunately, he does not have Mr John Edmonds’ support. Mr. Edmonds wants one member, one vote, so long as he can be the member and he, and nobody else, can exercise the vote.

    So long as the Labour party remains subordinate to the trade unions in policy, a paid for and wholly owned subsidiary of the trade unions, Labour Members will sit on that side of the Chamber. I shall tell the right hon. and learned Member for Monklands, East why he and his party fail to convince even the leader of the union that sponsors him. It is because Labour is a party without policies and without principles that it will remain, in the short and the long term, a party without power.

  • Mr Major’s Joint Doorstep Interview with M Balladur – 28 May 1993

    Below is the text of Mr Major’s joint doorstep interview with the French Prime Minister, M Balladur, held in Paris on Friday 28th May 1993.

    M. BALLADUR:

    [Spoke in French]

    PRIME MINISTER:

    Prime Minister, I would simply wish to echo what you have said over the last few moments. We have had the opportunity over the last couple of hours of covering a very wide range of matters, bilateral matters, some quite detailed matters, some matters with a very long term concern indeed. We had the opportunity of looking in particular at the Copenhagen summit, not very far away now, and what we might seek to achieve there. We have looked at problems we wish to address together like subsidiarity. We discussed the desirability of a GATT settlement and some of the difficulties that have arisen there, and we looked of course at the problems there have been in Bosnia upon which our two governments have taken a very similar view from the beginning and in which of course both of our governments have committed quite substantial numbers of troops.

    That is by no means an inclusive list of the matters we discussed. A good part of our discussion were not matters requiring immediate decisions today, they were looking at problems and difficulties and opportunities that lie on the horizon both in the short and the long term and deciding how we might work jointly to seek to address those particular problems.

    I think the Prime Minister might agree with me in saying that the relationship and the extent of bilateral cooperation that exists at the moment between the United Kingdom and France is as good, if not better, as it has been for many years and I personally am delighted about that and very pleased to have had the opportunity of continuing our discussions this morning.

    QUESTION:

    Have your talks touched upon the question of the Exchange Rate Mechanism and whether by appointing a pro-European Chancellor that improves the chances of Britain re-entering the ERM?

    PRIME MINISTER:

    We did discuss the monetary affairs across Europe this morning, yes we did discuss that for a while. The government’s position on the Exchange Rate Mechanism was set out some time ago by Norman Lamont, that remains the position. The circumstances for Britain to re-enter the Exchange Rate Mechanism do not exist at the moment, they do not exist in terms of the relationship between British and German monetary policy and are unlikely to do so in the near future. That point was made quite clear by Norman Lamont, it has been made clear in the past by Ken Clarke and others, and it is the government’s collective position.

    QUESTION:

    If the policy has not changed, why has the Chancellor?

    PRIME MINISTER:

    I have a full press conference this afternoon and I will address domestic issues on that occasion, not now.

    QUESTION:

    [Inaudible but about the social chapter]

    PRIME MINISTER:

    I argued against the social chapter in the Maastricht Treaty not just on behalf of my country but on behalf of all the European countries. And I did so for reasons that are as relevant today, if not more relevant, than the reasons when I discussed them in Maastricht. Firstly I believe that some of the provisions of that chapter would destroy jobs and not create them, and we had then, as we have now, a very high level of unemployment across the whole of Europe; and secondly, because we cannot just look at the situation within Europe, Europe has to compete with the United States, with Japan and with the Pacific countries. If Europe has costs upon their employers and consequently therefore costs upon the products that they produce, they will render themselves; less competitive with Japan, the United States and the Pacific Basin, and that will cost further jobs in Europe. And it was upon those bases that I argued against the social chapter. We have differing views in the European Community about this and I respect the views of my European partners, but those are the views I held then and hold now.

    QUESTION:

    [Inaudible but about the situation in the former Yugoslavia]

    PRIME MINISTER:

    I read when I flew in yesterday evening the remarks by M. Juppe on the question of former Yugoslavia and I endorse exactly what he said, the position and concerns that we have expressed in the United Kingdom are very closely mirrored in France and the Prime Minister and I hold very similar views about them.

    QUESTION:

    On Bosnia have you, the French and the rest of the Western allies come to the conclusion that the Serbs have won the war and if you have not come to that conclusion what are you going to do to roll back their lands gained by force?

    PRIME MINISTER:

    We have made it clear right from the start that we do not accept Serbian gains by force, that was made clear by the Foreign Ministers again just a few days ago, we do not accept Serbian gains by force. But you have to address the question that M. Juppe put yesterday: are you prepared to put 200,000 troops into Bosnia in order to force them back by force of arms? And we know the answer to that, people are not prepared to do that, but we will maintain sanctions, we will maintain diplomatic pressure and we will not accept the land gained by force.

    M. BALLADUR:

    [Spoke in French]

    QUESTION:

    [In French]

    M. BALLADUR:

    [Spoke in French]

    QUESTION:

    Could you spell out what you hope to achieve at the Copenhagen summit and what your discussions this morning touched on about that matter?

    PRIME MINISTER:

    I can spell out some of those things, certainly. We will clearly want to discuss the particular economic problems that exist within the European Community, the problems of unemployment in particular at the Copenhagen summit, that would be our wish and I think it will be the wish of all our partners as well. We will want to look in some detail at how we carry forward the proposals on subsidiarity, work is proceeding on that at present, we would like to see that work carried forward. We will certainly wish to carry forward the discussions on enlargement of the Community and precisely what that may mean. Those are some of the detailed matters, by no means all, but they are some of the detailed matters we discussed this morning.

    QUESTION:

    Can I ask you what assurances you were able to give M. Balladur about the future economic policy of Britain, whether there would be any change and how it will affect the preparations for Copenhagen?

    PRIME MINISTER:

    I set out our economic policy about the Exchange Rate Mechanism, which I assume is what you have in mind, a few moments ago, it has not changed in those few moments, it is as it was and as it will remain.

    QUESTION:

    And has it changed since 24 hours ago?

    PRIME MINISTER:

    I just said no.

    QUESTION:

    With a new Chancellor can the British expect accelerated interest rate cuts?

    PRIME MINISTER:

    No British Prime Minister or Chancellor discusses interest rate policy and monetary policy on occasions like this and I have no intention of starting now. As ever, we will take the right judgments on the basis of what is necessary for the British economy in terms of the inflation prognosis, that is what we have done in the past under previous Chancellors, it is what we are doing now, it is what we will do in the future.

    M. BALLADUR:

    [In French]

    QUESTION:

    We have witnessed some gradual changes in the British position on the Uruguay Round in the last few weeks, could we have your comments on the style and substance of these moves?

    PRIME MINISTER:

    I welcomed what was agreed the other day in the Agriculture meeting, we have to see what happens when we come to the further meeting at the beginning of June, but I have nothing further to say about the Uruguay Round as a whole, I hope we will be able to reach a satisfactory agreement on the Uruguay Round, I think that is in everyone’s interest and I think that is generally agreed.

  • Mr Major’s Comments on the Social Chapter and the ERM – 26 May 1993

    Below is the text of Mr Major’s comments on the Social Chapter and the ERM, made in London on 26th May 1993.

    QUESTION:

    [The Prime Minister was asked if it was the situation that he disliked the ERM, the Social Chapter and wanted a Europe a la Carte?]

    PRIME MINISTER:

    No it is not, but neither are we in favour of a prescribed Europe a la Carte, prescribed from the centre. Can I take those three issues separately. Why do I oppose the social chapter? It sounds very friendly, does it not, the social chapter? If you called it what it really is – an employment destruction chapter – I do not think it would have the same support across Europe and yet that is what I believe the social chapter to be. There is a second reason. Europe does not just compete within its own boundaries, Europe as a whole has to compete with Japan, with the United States and with the Pacific Basic countries, that is very tough competition. If we pile extra costs on our employers so that we pile extra costs on their products so that they can make a profit, we will make Europe uncompetitive. If we make Europe uncompetitive we will damage the whole of Europe – that is my argument against the social chapter, it is damaging in a highly competitive world to the competitiveness of Europe and that damage will cost us jobs. we have in the European Community nearly 13 million European adult citizens without work, that is far too many, it is not sensible to add to that by imposing at this moment fresh costs on employers that will cost us jobs. That is why I oppose it, I think it is wrong.

    On the Exchange Rate Mechanism, I entered the Exchange Rate Mechanism because I have a passionate dislike of inflation, inflation wrecks jobs, wrecks countries, wrecks lives, I loathe it. We left the Exchange Rate Mechanism through force majeure, it was not a matter of choice, the market overwhelmed us and we left. It might have overwhelmed the Franc if it had been a reserve currency with as many non-resident holders of the Franc as there are non-resident holders of sterling, all able to sell in a market panic. The Franc thankfully did not face that problem and I am pleased about that, but we did and we had to leave. To say that there are no difficulties with the Exchange Rate Mechanism is really to fly in the face of logic, it seems to me. Sterling was tossed out of it, in Spain, in Portugal, in Italy there have been very real problems. One of the problems was that the Exchange Rate Mechanism, which was a flexible instrument, became a very rigid instrument as countries moved towards a single currency, it was too rigid and it broke in our hands and I think we have to look at the way in which it works before I could take sterling back into the Mechanism.

  • Mr Major’s Comments on the Maastricht Treaty (III) – 19 May 1993

    Below is the text of Mr Major’s comments on the Maastricht Treaty, made during an interview held on 19th May 1993.

    QUESTION:

    [Mr Major was asked whether the Maastricht Treaty would progress quickly following the Danish referendum result].

    PRIME MINISTER:

    I am certainly pleased the Danes have cleared that uncertainty up, it has been a very debilitating, very difficult period both in Denmark, right across the Community, and certainly in the United Kingdom as well. We have the third reading of the bill in the Commons on Thursday, I hope and expect it will be passed then. The bill will then move to the House of Lords and thereafter we will be able to have Royal Assent and ratify the bill.

    QUESTION:

    [Mr Major was asked if he could get the bill through Parliament given the divisions in the Conservative Party and whether he would agree to the social chapter].

    PRIME MINISTER:

    It is a very decisive issue, Europe, it has been a very divisive issue in this country ever since we first joined it, and that remains the case. To take the particular points you raised, the social chapter firstly. I was speaking last night to a large number of employers at the CBI, they are absolutely clear that without the social chapter we are in a much better position. People think the social chapter offers all sorts of social benefits. I think it really more aptly ought to be called an employment destructive chapter, and that is emphatically not what we want in the United Kingdom, I want to put people back to work, not raise impediments to them getting work, and I believe that is what the social chapter would do.

    QUESTION:

    [Mr Major was asked about Edward Heath supporting the social chapter].

    PRIME MINISTER:

    Ted is a very enthusiastic supporter of European development, I do not believe the social chapter is in our interests, I do believe it is very much in the British interest, in the British national interest, our own cold, hard self-interest to be right at the centre of the European Community. And I do not just say that for idealistic reasons. The European Community is where our exports go to, it is where most of our jobs over the last 10 years effectively were created from, because of our growth in trade where was a huge growth of small businesses and firms. We need that growth in trade, we need those jobs. I know of no-one, no-one, who has a practical alternative to Britain being at the centre of Europe using her influence. There are only three alternatives really: leave the European Community, hardly anyone is proposing that; stay in it without influence and be dragged along by the French and Germans, that is not attractive; or get in the middle of the Community, form alliances with our partners, different alliances on different issues, and try and wield real British influence in the European Community, and that is where I stand.

    QUESTION:

    [Mr Major was asked if there would be increasing pressure on Britain to rejoin the ERM and join the social chapter and whether he would fight or give in].

    PRIME MINISTER:

    I do not think it is quite as straightforward as that either way. For every member of the Community, throughout the lifetime of the Community, there have been pressures. When you have 12 nations, soon to be 16, working together always there are going to be pressures and difficulties. In order to win your way in the Community you need alliances, you need to be taken seriously, you certainly do not want to be sidelined with the rest of the Community ganging up on you, as has happened so often to this country in the past.

    What we are seeing at the moment is a fairly dramatic move towards the sort of European Community that we in Britain have always wanted and feel comfortable with, a wider Community, because of the agreements at Edinburgh the EFTAN nations will soon be joining. They will firstly be net contributors to the budget, which will save us money, and secondly they will be free traders. We have different governments across Europe, more inclined to the British point of view. We are at the moment in a better position than we have been, I believe, at any stage in our membership to start influencing the Community to go in the direction that we the British would like to see it moving.

  • Mr Major’s Comments on the Maastricht Treaty (II) – 19 May 1993

    Below is the text of Mr Major’s comments on the Maastricht Treaty, made during an interview held on 19th May 1993.

    QUESTION:

    [Mr Major was asked about the divisions in the Conservative Party over Europe].

    PRIME MINISTER:

    It is a very serious difference of view in the Conservative Party over Europe. There is absolutely no doubt about that, but I understand why that should be. This is a gut issue for the Tory Party; it runs very deep amongst people; they take a view very sharply one side or very sharply the other. They are operating from conviction. I can’t stop people operating from conviction in politics nor indeed would I wish to do so, but I think we have to proceed with the Bill. When we have concluded it, there is life after Maastricht, we will return to the other issues.

    QUESTION:

    [Mr Major was asked what he could do about backbenchers who knew they wouldn’t be promoted so may as well rebel].

    PRIME MINISTER:

    We’ve had rebellions before and I dare say from time to time we’ll have rebellions again, but one thing I’ve learned even in the two-and-a-half years I’ve been Prime Minister is that the people who are rebelling against a particular policy one week may well be your strongest supporter on another issue a week or so later. I think people are clearly distressed. I would much rather we hadn’t had this great disagreement in the Conservative Party but we have a disagreement of people with convictions that differ but we will get through that. We will conclude the Bill and then we will turn on to other issues where those disagreements won’t arise.

    QUESTION:

    [Mr Major was asked if Britain would rejoin the ERM].

    PRIME MINISTER:

    I don’t think that is imminent, no, for reasons we have set out in the past. I think we would need the economies to be much closer together than they are at the moment. Some of the major economies in Europe are at present going in different directions. That is not a Clementine to rejoin the Exchange Rate Mechanism so I don’t think that is imminent. It will be some while before we consider it.

    QUESTION:

    [Mr Major was asked that if the ERM was a pre-cursor to a single currency, whether it would be necessary for Britain to join again].

    PRIME MINISTER:

    Yes, well you say that of course when you are referring to the movement towards Economic and Monetary Union, but I think the changes that we have seen in European economies over the last two years rather bear out the reservations that I expressed at Maastricht, before Maastricht and subsequent to Maastricht. In order for Economic and Monetary Union, a single currency, to work you would need convergence of the European economies; they would need to come together. I know of no-one who thinks they have come together in recent years, quite the reverse in fact; they have moved further apart. Although the time-scale may lay on the table for Economic and Monetary Union, I very much doubt that it is realistic.

  • PMQT – 13 May 1993

    Below is the text of Prime Minister’s Question Time from 13th May 1993.

    PRIME MINISTER:

     

    Engagements

    Q1. Mr. Congdon : To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

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

    Mr. Congdon : Does my right hon. Friend agree that the levels of compensation paid out under the citizen’s charter demonstrate its effectiveness? Does he further agree that the moves to agency status and contracting out are the best way of achieving value for money? Does he also agree that it is not surprising that all those measures have been resisted by the Labour party?

    The Prime Minister : As to the last part of my hon. Friend’s question, I am unsurprised.

    Paying compensation is popular with those who use public services. I also believe that it is right that compensation should be paid when service is bad. It provides a satisfactory discipline on the public services. As regards contracting out, I certainly agree with my hon. Friend. It has brought great benefits both to those who use public services and, critically, to those who pay for public services.

    Mr. John Smith : Since the opposition of the whole teaching profession to the imposition of tests this year has been reinforced by the overwhelming vote by members of the National Union of Teachers in favour of a boycott, will the Prime Minister now do the sensible thing and suspend compulsory tests this year?

    The Prime Minister : I was very sad this morning to see the result of the vote by the National Union of Teachers, which was the only teacher association not to welcome the statement of my right hon. Friend the Secretary of State for Education on Tuesday. A lot of people will be asking whether that union really supports the principle of regular testing in our schools or whether another agenda concerns it. I very much trust that the NUT will reflect on what my right hon. Friend said.

    Mr. Smith : As the Secretary of State for Education was forced to concede that there were flaws in the tests, which is why he climbed down about next year, why on earth is the Prime Minister forcing children to take the tests this year?

    The Prime Minister : What should be called off are the unprofessional and utterly futile boycott threats. Teachers should do what the majority of parents want–co-operate in helping to make the tests work this year and in future years.

    On the second point of the right hon. and learned Gentleman’s question, he will recall that he has asked me that before. Ron Dearing has made it absolutely clear that he needs the experience of this year’s tests to redesign them satisfactorily for the future.

    Mr. Smith : As there is overwhelming opposition to compulsory tests this year, from parents as well as teachers and governors, why does the Prime Minister not show a glimmer of common sense and end the farce now? If he is not listening to parents and teachers, whom is he listening to? Does he not understand that to be so foolishly stubborn is a sign of weakness and not of strength?

    The Prime Minister : It is common sense to proceed with tests so that we can correct them and get them right in the future. Testing in schools is vital to measure the progress of the pupils concerned. The Opposition may wriggle, but that happens to be the reality. I hope that even, at this late stage, teachers will realise the importance to pupils of having these tests, the importance to the reform of testing of having those tests and the importance to the dignity of the profession of teaching in not proceeding with industrial action at the expense of schools.

    Mr. Gorst : Is my right hon. Friend aware that since the Conservative Government came to office in 1979 membership of trade unions has fallen by 28 per cent? Will my right hon. Friend say whether he believes this is due to their being a growing anachronism, badly led, or merely because of their limpet-like, hand-in-glove connection with the Labour party?

    The Prime Minister : I am certainly not inclined to disagree with any of my hon. Friend’s points. Trade union membership does continue to decline and is substantially lower than it was a decade or so ago. I notice that many of the unions still sponsor right hon. and hon. Members on the Labour Front Bench and resist suggestions that they should abandon the out- dated block vote in favour of one member, one vote. It is a case of he who pays the piper calls the tune, and on this, too, the right hon. and learned Member for Monklands, East (Mr. Smith) is wriggling.

     

    Q2. Mr. Burden : To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

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

    Mr. Burden : The Prime Minister will probably have heard that his right hon. Friend the Chancellor has said that he regrets “that inflation got out of control at the end of the 1980s.” Would the Prime Minister care to enlighten the House as to what jobs he was doing at the end of the 1980s?

    The Prime Minister : If the hon. Gentleman had cared to research very carefully, he would have known that we have made it clear on a number of occasions that after the 1987 stock exchange crash we reduced interest rates faster than, with hindsight, we thought was correct, and that contributed to inflation. The hon. Gentleman will also know that, at that time, the right hon. and learned Member for Monklands, East and the right hon. Member for Berwick-upon-Tweed (Mr. Beith) both invited us to cut interest rates further and faster and that that would have put inflation up even more. The hon. Gentleman should do his research more accurately.

     

    Q3. Mr. Jessel : To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

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

    Mr. Jessel : As the economy and business confidence have, under the Conservative Government, begun to improve–especially since Britain left the exchange rate mechanism–will my right hon. Friend give further support to business confidence by making it clear that the United Kingdom will not return to fixed exchange rates?

    The Prime Minister : As my right hon. Friend the Chancellor has said, and as I made clear earlier this year, we will not consider rejoining the ERM before important conditions have been met, in particular the requirement that German and United Kingdom monetary policies must be much more closely aligned before we can begin to consider whether it would be appropriate for Britain to rejoin. Clearly those conditions are unlikely to be satisfied soon.

     

    Q4. Mr. Barnes : To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

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

    Mr. Barnes : Some people still believe in the ultimate objective of a multi-ethnic democratic society, with full minority rights, for the former Yugoslavia. Included among them are many of the people of Yugoslavia who bravely stand out against violence and intimidation. Why do we not listen to some of their ideas for the extension of safe havens and United Nations border controls? Is the right hon. Gentleman aware that not everyone in Yugoslavia is a supporter of paramilitarism and war lords?

    The Prime Minister : We have indicated on a number of occasions in the House the way in which we think it is right for us to proceed at the moment. We have made that clear and we have said that we believe that it is right to continue to pursue a political settlement, without which no settlement can stick in the long term even though perhaps for a short while it might be held. We have made it clear that we believe that it is right to proceed with sanctions, and we have not ruled out the use of force, should that prove necessary, in selected circumstances.

     

    Q5. Mr. Alan Howarth : To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

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

    Mr. Howarth : Does my right hon. Friend agree that as economic growth strengthens and as our improved competitiveness, particularly in manufacturing, makes its impact, that will increasingly be appreciated by the voters, who will also note the nature of the Opposition parties–one inextricably tied to the big unions and big bureaucracy and the other without roots and no more than the scavengers of British politics?

    The Prime Minister : Things have certainly been difficult for many companies and people throughout the recession. I understand that and have acknowledged it on a number of occasions. I believe that as recovery comes through, many of those people will see that it would not have come through unless we had taken the right decisions to get inflation down and keep it down for the future.

    We can now see that manufacturing output is turning up, that manufacturing productivity is at record levels, that exports of manufactures are at record levels and that, according to the Confederation of British Industry, optimism in manufacturing industry has reached a 10-year high. They are very welcome signs. We are clearly coming out of recession in the right circumstances for sustained growth over a long period.

    Mr. Nicholas Brown : When the right hon. Gentleman took the decision to withhold the helicopter carrier order from Swan Hunter Shipbuilders, he will have known that he was bringing shipbuilding on Tyneside to an end, so he will not be surprised to learn that at 1 o’clock today Swan Hunter called in the receivers and 6,000 people are now to lose their jobs on Tyneside. Will the Prime Minister help my constituents by telling them where they will find alternative work?

    The Prime Minister : I think the hon. Gentleman knows that, of the two tenders submitted, that submitted by VSEL at Barrow was many tens of millions of pounds below the tender submitted by Swan Hunter. I understand the difficulties faced by Swan Hunter and, because I know of those difficulties, I agreed with my right hon. and learned Friend the Secretary of State for Defence to bring forward that tender earlier than we would otherwise have done to see whether Swan Hunter could satisfactorily win the tender in open competition. I regret that it did not, but I am not in a position to reject a tender many tens of millions of pounds below that of the alternative tender. The answer to the substantive second part of the hon. Gentleman’s supplementary question is that it is precisely because we are concerned about the employment prospects on Tyneside that we yesterday announced a range of measures to help, including a new enterprise zone, a new English Estates development in conjunction with the city council and the development corporation, more services from the Tyneside training and enterprise council and employment services, confirmation that Newcastle and South Tyneside will remain a development area, and extra resources for the Tyne and Wear development corporation for industrial sites.

    I invite Opposition Members who scoffed when I mentioned the enterprise zone to look at other parts of the country that have faced similar difficulties in the past to see how effective that has been. They might, for example, recall the great difficulties at Shotton 10 years ago. If they go back to Shotton today, they will find a modern estate with high-paid, permanent, high-tech, secure jobs for just as many people as once worked in the steel industry there.

     

    Q6. Mr. Ancram : To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

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

    Mr. Ancram : Does my right hon. Friend agree that as well as the optimism to which he referred in yesterday’s CBI survey, there are also real indications of growth and increased investment in most of the regions of the United Kingdom, including the south-west? Given that after three hard years of recession most people in my constituency, and elsewhere, want to see real, tangible proof of recovery, as well as promises of recovery, does my right hon. Friend welcome the report as a true indication of recovery which even Opposition Members cannot deny?

    The Prime Minister : Yes, I do welcome the report and I hope that that encouraging trend will continue in the months ahead. It is encouraging that businesses right across the country themselves expect to grow strongly in the months immediately ahead of us–in the south-west, certainly, but also in the south-east, the midlands and right across the land. What we in the House all want, I think, without exception, is to see that growth translated into jobs and into money in the family pay packet.

     

    Q7. Mr. Malcolm Bruce : To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

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

    Mr. Bruce : Does the Prime Minister accept that the campaign by his right hon. Friend the Secretary of State for Social Security to transfer payments from post offices to banks is totally inimical to the interests of those who live in rural communities? Will he ask the Secretary of State to call off that campaign? Does he further recognise that the privatisation of the Post Office will damage rural post offices and delivery services? Rather than postpone privatisation, will he now abandon it?

    The Prime Minister : As I indicated to my hon. Friend the Member for Rochford (Dr. Clark) last week, I believe, we have made no such proposals. Our policy is to encourage people to receive benefits via their accounts while maintaining a viable network of post office outlets.

  • PMQT Written Answers – 30 April 1993

    Below is the text of the written answers relating to Prime Minister’s Question Time from 30th April 1993.

    PRIME MINISTER:

     

    Exchange Rate Mechanism

    Mr. Austin Mitchell : To ask the Prime Minister what research studies he has commissioned into how fault lines in the ERM can be corrected; and what action he has initiated since September 1992 to correct them.

    The Prime Minister : The European Council in Birmingham endorsed the view of Economic and Finance Ministers that the financial turbulence of last September called for reflection and analysis in the light of developments in capital markets and in the European and world monetary systems. This work is currently being carried forward.

     

    Jabal Hamrayn, Iraq

    Mr. Llew Smith : To ask the Prime Minister what information Her Majesty’s Government have concerning military activities at the Jabal Hamrayn site in Iraq.

    The Prime Minister : Jabal Hamrin was the site where Iraq built one of its “superguns”. The gun was destroyed under United Nations supervision in 1991. There is currently no military activity at the site.

     

    Equal Opportunities

    Mr. Janner : To ask the Prime Minister how many and what percentage of officers in each grade from 1 to 7 and overall in the Cabinet Office are (a) women, (b) from ethnic minorities and (c) disabled people.

    The Prime Minister [pursuant to his reply 29 March 1993, column 45] : I regret that some of the figures quoted have been found to be incorrect. The correct information is as follows.

    The figures for women employed in the Cabinet Office, including its executive agencies, are as follows :

    Grade (and equivalents) |Women |Total |Per cent. Women

    ——————————————————————————–

    1 |0 |3 |0

    2 |2 |17 |12

    3 |2 |24 |8

    4 |0 |3 |0

    5 |16 |62 |26

    6 |21 |64 |33

    7 |61 |265 |23

    Overall |1,287 |2,495 |52

    The ethnic monitoring programme was carried out on a voluntary basis and did not extend to the Cabinet Office’s agencies. Of those who responded, 62 people chose to register as non-white. One of these is at grade 7 level.

    The Cabinet Office’s figures on staff with disabilities include only those who have chosen to register as disabled. Twenty-eight people are so registered. None is at grade 7 or above. The Cabinet Office employs other staff with disabilities who have chosen not to register.

  • PMQT Written Answers – 10 December 1992

    Below is the text of the written answers relating to Prime Minister’s Question Time from 10th December 1992.

    PRIME MINISTER:

     

    Energy Policies

    Mr. Llew Smith : To ask the Prime Minister what progress has been made in the development of (a) coal policy, (b) renewable energy policy, (c) nuclear research and development policy and (d) energy conservation policy in the European Community during the United Kingdom presidency of the European Council.

    The Prime Minister : The Energy Council discussed European coal issues on 30 November, during which the Commission presented its new proposals on subsidies for coal mines. The Council agreed on the text of a decision intended to foster the development of new and renewable energy sources. The Council noted the progress officials had made in discussing a proposed directive designed to increase energy efficiency in buildings, industry and road vehicles. The Council had earlier adopted a directive on energy labelling of appliances. Progress on nuclear R and D was satisfactory.

     

    Exchange Rate Mechanism

    Mr. Llew Smith : To ask the Prime Minister what progress has been made in consolidation of the exchange rate mechanism during the United Kingdom presidency of the European Council.

    The Prime Minister : Following the severe financial turbulence which affected a number of ERM currencies in the autumn, I called the European Council in Birmingham on 16 October. This decided that the mechanism should be analysed in the light of developments in capital markets and in the European and world monetary systems. The work was remitted to ECOFIN. Further strains have recently confirmed the need for this work.

     

    Sees and Titles

    Mr. Peter Bottomley : To ask the Prime Minister;

    (1) pursuant to his answer to the hon. Member for Eltham of 18 May, Official Report, column 5, whether the consultation of Church authorities includes the Catholic Bishops Conference of England and Wales;

    (2) what changes he proposes to official recognition of territorial sees of the Roman Catholic Church in Scotland or, in so far as restrictions apply, in Northern Ireland;

    (3) when he expects to propose changes to official recognition of territorial sees and titles of the Roman Catholic Church in England and Wales.

    The Prime Minister : Consultations with Church authorities and others about the official recognition of Roman Catholic territorial designations within the United Kingdom are making good progress but have not yet been completed. We shall be seeking the views of the relevant Roman Catholic authorities as part of that consultation.

     

    President de Klerk

    Mr. Redmond : To ask the Prime Minister if he will place in the Library the documents he received from President de Klerk during the President’s recent visit to the United Kingdom.

    The Prime Minister : No, as the correspondence involves matters of national security.

     

    Civil List

    Mr. Alan Williams : To ask the Prime Minister what is the time-lag between the annual payments into the civil list and the reinvestment of specified annuities to the Consolidated Fund.

    The Prime Minister : If the right hon. Member is referring to Her Majesty’s reimbursement of the Consolidated Fund for the section 3 annuities, refunds are normally made each November, for payments made during the course of the calendar year. The timing follows that of the first voluntary reimbursement by Her Majesty in November 1975.

    Mr. Alan Williams : To ask the Prime Minister if interest on the early-years surpluses on the civil list under the current 10-year agreement is retained within the civil list.

    The Prime Minister : Yes. Any surplus at the end of the 10-year period would be carried forward and taken account of in the settlement for the next period.

    Mr. Alan Williams : To ask the Prime Minister what investments the royal trustees consider appropriate for the early-year surpluses on the civil list.

    The Prime Minister : The surpluses are prudently invested in the United Kingdom from within a range approved by the royal trustees.

     

    Correspondence

    Mr. Winnick : To ask the Prime Minister what is the policy adopted by Ministers if hon. and right hon. Members request that replies to letters concerning constituents abroad come from Ministers and not from chief executives or departmental heads of agencies.

    The Prime Minister : The Government’s policy on dealing with letters from hon. and right hon. Members on agency matters was most recently set out in the Government’s reply to the Treasury and Civil Service Committee’s 1990 report on the next steps initiative, Cm 1263, which said :

    “It is for Ministers responsible for particular Agencies to respond in the way they consider most helpful and appropriate to inquiries raised by Members. Ministers will normally ask the Chief Executive to reply to letters which concern day-to-day operational matters delegated to the Agency.”

    The fact that a Member’s inquiry was made on behalf of a constituent who lived abroad would not in itself provide a reason to change this approach.

     

    Alois Brunner

    Mr. Winnick : To ask the Prime Minister if he will discuss with his counterparts in the European Council a joint approach to the Syrian Government in support of Germany’s request for the extradition of Alois Brunner for Nazi war crimes against humanity.

    The Prime Minister : The case of Alois Brunner is not on the agenda for the European Council. Member states are aware of the continuing strength of feeling behind calls for his extradition. Most recently, Germany has made clear to Syria its own and wider European concerns on this matter.

  • Mr Major’s Speech to the Lord Mayor’s Banquet – 16 November 1992

    Below is the text of Mr Major’s speech in London to the Lord Mayor’s Banquet, held on 16 November 1992.

    PRIME MINISTER:

    My Lord Mayor, My late Lord Mayor, Your Grace, Your Excellencies, My Lords, Aldermen, Sheriffs, Ladies and Gentlemen.

    May I begin by thanking you for the toast this evening and congratulating you on your election. Let me give you a message of good cheer. I hope the six months after your election are less eventful than the six months after mine. And may I say, on behalf of all of us here, how glad we are to see the Lady Mayoress at your side tonight, and how much we admire her courage after her recent accident.

    It is a time-honoured tradition to speak to this audience about foreign affairs. I can imagine how much you are looking forward to a detailed exposition of Title 6, Article KI, Clause 2, Line 3 of the Maastricht Treaty.

    But tonight I would like to break with tradition. I will talk about the international situation for a while, but primarily I intend to talk about confidence. About recovery. About the future of our country. About how to generate growth and bring lasting jobs and prosperity.

    It is fitting to do so here – surrounded by so many who have a leading role in commerce, in industry, in the media, in the professions. All have a vital part to play in building up our confidence in our country and our future.

    It is only three years ago that Western leaders spoke with euphoria of a “New World Order”. They looked forward to a new age of prosperous, stable democracies.

    The Cold War has gone. The Soviet Empire has gone. The Berlin Wall has gone. But so have their simple certainties. The collapse of the Communist system has left a vacuum and it will take time for freedom and the market to fill it. Throughout history, such circumstances have been fertile breeding ground for extremism and unrest. We must work to ensure the late twentieth century is an exception. But the genie is out of the bottle, and that narrow line between patriotism and nationalism is in danger of being overstepped in many countries.

    So there is great hope – but greater uncertainty. And we are living through a fundamental reappraisal of how the West should respond in difficult economic circumstances.

    Britain is in a unique position to influence that response. As a permanent member of the Security Council, as a member of NATO, the CSCE, the Commonwealth and the European Community, we are at the centre of the overlapping groups of nations which seek to order the world’s affairs. Our role as a leading power in Europe has brought added value to our relationship with the United States.

    And let me pay tribute here to President George Bush. There are many dangers in today’s world. But the world is safer today than when George Bush first took office four years ago, and much of that is due to his leadership and his values. As we congratulate President-elect Clinton, let us not forget our old friend George Bush, and say to him: you have been a true friend to our country and you will always be an honoured guest here.

    As we look at our overseas responsibilities we know we have a special responsibility for Hong Kong. There is no one better than Chris Patten to lead Hong Kong through to 1997 with energy, skill and wisdom. I hope the Chinese Government will look at his proposals for Hong Kong, not with suspicion, for which there is no cause, but in the spirit that we and he intend. “One country, two systems”, was what Deng Xiaoping promised. Our proposals are entirely consistent with that philosophy. They do not threaten China. They do benefit Hong Kong. And we want a happy, prosperous and confident Hong Kong to be our enduring legacy to China after 1997.

    There are few greater human tragedies than in Yugoslavia. Over recent months Britain has led the international community in a search for a peaceful settlement and in efforts to bring humanitarian relief to those in need. We have sent trucks, mechanics, winter shelter, medicines, food and clothing. And our RAF pilots have led the repeated air lifts into Sarajevo with great courage and tenacity for many months. In August we mobilised the world community on behalf of peace in Yugoslavia. We have sent British troops – the Cheshire Regiment – to help deliver humanitarian aid in difficult and dangerous circumstances. We owe that help to the innocent victims of the conflict. We owe it also to ourselves, for if the conflict spreads it could spread far beyond the borders of the former Yugoslavia itself.

    It is a moot point whether the Yugoslav war would have begun if the Soviet Empire had not collapsed. But it is in our long-term interests that a new democratic Russia emerges confident and free. Last week President Yeltsin visited London and agreed a Treaty of Friendship and five other agreements. It was the first such Treaty between our countries since George III and Catherine the Great.

    President Yeltsin sees clearly that Russia’s future can only lie in democracy and a free market. There are powerful forces ranged against him. No one alive in Russia today knows first-hand what a modern market economy is. The Russian people are being asked to make enormous short-term sacrifices for the longer term gain.

    The route mapped out for them by Boris Yeltsin is a hard one, but it is the only one. The alternative would be to turn the clock back to the grisly apparatus of repression. Back to the old structures which once supported the Soviet State and have now gone, and – hopefully – gone for good. I hope that for their own sake as well as for ours, the Russian people will follow the lead that President Yeltsin has set them. It will not be easy. We cannot bear their sacrifice for them. But we can help them. Support them. Encourage them. And so we shall. Because we have the chance in our generation to fashion a new Europe from West to East. One where inter-locking trade interests enable future generations to live in greater security than we have known before. There is no greater prize than that.

    Of course the Russians and others are struggling to reform against a uniquely difficult background of world recession. In America – as in Britain – consumers and businessmen have been battling to reduce their burden of debt, built up in the boom years of the late 1980s and impeding recovery today.

    In Japan, growth is stalling. In Germany, people are facing what Chancellor Kohl recently called the “hour of truth”. In Italy, the Government has had to take drastic measures to restrain the growth in public debt. In France, unemployment exceeds 3 million and yet their real interest rates are nearly twice as high as ours.

    There is evidence of an instinct that is dangerously strong in times of economic difficulty: to look inwards, put up the shutters and slam the door on the free trade that has brought prosperity to the post-war world.

    My Lord Mayor, you referred to the GATT round. I agree with you. It is vital we get an early and comprehensive settlement. It is not tolerable for the world to fail to agree. We cannot let a handful of oil seeds or a sack of grain get in the way of the boost such a settlement would give to the world economy. At a conservative estimate, it would add nearly 200 billion dollars to world output. Two hundred billion dollars of prosperity, income and jobs.

    Nor is an agreement merely an economic necessity. It is a moral imperative. Because it is not only the businessmen of Europe and America who stand to gain from the successful completion of the Uruguay round. Developing countries in the third world, aspiring market economies in eastern Europe: both need the opportunity to sell, so they can earn their way to the prosperity we tell them will follow from economic reform.

    We, too, stand to gain enormously from a successful outcome. The stakes are high. Of all the successive rounds of negotiations to liberalise world trade that have lubricated post-war economic growth, this is the most ambitious. It needed to be, because trade today takes new forms, susceptible to new and less visible barriers. Of course, the old battle against tariffs is not over. British manufacturers still face some swingeing imposts, not least in the United States, where a successful Uruguay round will open up new opportunities to our textile, chemical and ceramic industries.

    As the City well knows, British financial services meet more subtle but no less damaging national restrictions. Our “intellectual property” – books, cassettes, discs, software – is still counterfeited in many countries. Our foreign investments are hampered by some countries’ dog-in-the-manger restrictions on the repatriation of profits. All these trade barriers and abuses are being tackled in the Uruguay round that now hangs in the balance.

    What is true for Britain is true for Europe. The European Commission has suggested that the Community could quadruple its exports of services with an agreement. European industries have much to gain from success. That is why, during our Presidency of the Community, I have put Britain’s weight behind the effort to secure agreement; supported the Commission’s negotiators; constantly warned our partners of the danger of delay. We have lost no opportunity of pressing for a settlement.

    But, even as President of the Community, Britain is now able to conduct the negotiations. That is the duty of the Commission. Responsibility for trade matters cannot be escaped or buried behind newer preoccupations. Brussels must not fail in this fundamental duty. Britain will give every support to a settlement. Nothing would break the clouds of world recession more surely than the boost to confidence of a successful Uruguay round.

    The GATT settlement is a vital complement to the opportunity opening before Britain in the single European market. 1993 will see the culmination of a European effort in which Britain has taken the leading part. It is a clear example of the cold, hard common sense and commercial self-interest that lies behind our decision to be part of Europe.

    Well over half of all our trade is with the European Community. Inward investment flows here to take advantage of British skills and a flexible British labour market – and Britain’s opportunity to sell into the biggest free trade area in the world. We have the lion’s share of inward investment into the Community; but we get it because we are in the Community.

    The single market in Europe is an opportunity for which Britain is uniquely well placed. We have now put in place the policies and the measures. We must now ensure Britain takes full advantage to advance the recovery we all want to see. As more and more people – businessmen, consumers, house-buyers, investors – start to look forward with more confidence to what the future offers, that will itself provide the engine for recovery.

    Our economic policy objective has always been the same: sustainable non-inflationary growth.

    The essential precondition – lower inflation – is now clearly in place. When I became Chancellor three years ago inflation was rising towards 11 per cent and many feared it would rise still further. Interest rates were 15 per cent and seemed stuck there. How easy it is now to forget the perils of that position. That was why we joined the ERM. For two years that policy succeeded beyond all expectations: inflation fell to under 4 per cent, and interest rates fell from 15 per cent to 10 per cent.

    Our commitment to maintain low inflation remains as strong as ever. Inflation ravages peoples’ savings. And if people cannot be confident even in the value of money, how can they be confident about their economic future? But we now face a world where the inflationary pressures are weak. And that has given us the opportunity to loosen monetary policy and create a more competitive environment for business and industry.

    Since we left the ERM, we have reduced interest rates by a further 3 per cent. Down to 7 per cent, the lowest in the European Community. Down by 8 per cent over the last two years. Down to the lowest level for nearly 15 years.

    This should provide a huge boost to industry. The cut last week will take a further £1 billion off industry’s interest costs – provided it is passed on to borrowers, to small businesses as well as large, as I trust it will be. This brings the total saving to industry to over £10 billion a year. And low interest rates also provide additional spending power for consumers: £145 a month off repayments on an average mortgage.

    In addition, we now have an exchange rate that is fiercely competitive. Not just in export markets but here at home too. And the Government is determined that that competitive advantage should not be frittered away by higher inflation.

    It was against this background that Norman Lamont presented his Autumn Statement last Thursday. And what he set out to do was to demonstrate how the Government’s commitment to industry is right at the heart of our policies. To demonstrate that not just by words, but by decisions. Decisions to give priority to industry in the Government’s spending plans and in our tax policies.

    Support for industry is not – indeed could not be – our only priority. I believe that people right across the country share my view that the poorest and neediest members of society must be protected. So we honoured all our commitments to uprate pensions and other benefits, in spite of the heavy financial cost.

    But this does mean we have to look for some sacrifice by those in work. We cannot turn our back on our responsibilities to those who are not. That is why we have decided to restrict pay settlements in the public sector to a maximum of 1.5 per cent next year. I know that is tough for some. I do not like doing it but I believe it is necessary. I am asking for sacrifices by those in work to help get others back into work. And I believe there is an instinct for fairness in the British character that will understand that and accept it.

    Ministers and MPs should make their contribution too. There will be no increase at all in Ministers’ pay next year and we shall introduce a Resolution in the Commons to provide for no increase in Members’ pay either.

    Salaries in the private sector are for the private sector to determine. But it would be wrong of me not to use this gathering tonight to say very frankly that costs must be controlled everywhere, not just on the shop floor but in the boardroom too. We have set a lead in the public sector. I hope we will see that mirrored throughout the private sector.

    In his Autumn Statement, the Chancellor announced a wide range of measures to help business. We listened to what industry was saying. Industry can only succeed if it is able to adapt to changing circumstances. And Government must be ready to do so too.

    So, for example, Norman Lamont announced huge changes to the rules on private finance for capital projects, giving new encouragement to joint ventures between the public and the private sector. Joint ventures that should help to bring forward infrastructure projects in Scotland, in the Midlands, in the South East, in London, and indeed right across the United Kingdom. Lord Mayor, I welcome your theme of “the City and industry in partnership”. But we should go further: my theme is “the City, industry and the Government in partnership”.

    It was essential that, in settling public expenditure, the Government did not spend more than could be afforded. Industry would not have thanked us for that, if the result had been higher taxes. So it was vital to stick to the remit set down by Cabinet in July. The Autumn Statement did just that.

    It required some tough decisions. But we had to give priority to capital spending and to the needs of industry. So we have provided for the Jubilee Line extension to go ahead, and for British Rail to invest £1 billion next year. We have protected the roads programme – and lower tender prices should permit nearly twice as many new roads projects to be started next year. And there will be record capital spending in the health service.

    Norman Lamont also announced extra help for the housing market and the construction industry. £750 million to buy up empty properties that are overhanging the housing market. And a relaxation of the rules on local authorities’ receipts, to stimulate an extra £1.75 billion of capital spending.

    He also increased ECGD cover for exporters by £700 million, to ensure that they really can take advantage of the competitive opportunities now open to them.

    On the tax side, he announced an increase in first year allowances for investment by industry. And the complete abolition of the car tax. These are measures that industry had been seeking. Measures that will help generate confidence and underpin the economy.

    Lord Mayor, we need to build up our manufacturing base to meet the demands of today’s markets. I do not regard manufacturing industry as a marginal add-on optional extra – it is fundamental to our future prosperity. That does not mean supporting industries whose markets have been irretrievably lost – lost because developing countries now manufacture for themselves what they once imported from us.

    What it does mean is to provide the sort of environment that encourages modern, well-equipped British industry to compete with the best in the world. Our supply side reforms continue to transform industrial relations and strip away many of the inefficiencies that had dogged British industry. We now have an industry that can compete with the best – and beat it.

    My Lord Mayor, I do not have too many prejudices. But let me share with you one that I do have. I am sick and tired of hearing people talk down our country and play down our achievements.

    Modesty may be an attractive quality. But as a nation we carry it too far. Too often we slip from healthy self-deprecation into an unhealthy, self-denigration. I know of no country more tolerant, more free, more open. Too often the Britain I read about is not the Britain I see when I travel around the country. Too often the views and opinions I hear quoted are not the views and opinions I hear direct from the lips of ordinary Britons.

    So let us have confidence in our skills, our design, our ingenuity and – yes, our achievements.

    – With low inflation;

    – With the lowest interest rates in the European Community;

    – With a very competitive exchange rate;

    – With the Single Market on our doorstep;

    – With a GATT deal tantalisingly close,

    There is a great opportunity for British business.

    The Government has listened to what industry has been saying. It has introduced the policies and the measures that industry has been seeking. So let us capitalise on our assets. Throughout this country there is a deep sense of national pride. An overwhelming desire to pull together and work together. We have done it often enough before in our history. Now, in order to recreate confidence and lift us back into growth and recovery we must do it again, in a true partnership for prosperity.

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

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

    PRIME MINISTER:

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

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

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

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

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

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

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

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

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

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

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

     

    QUESTIONS AND ANSWERS

    QUESTION (ELEANOR GOODMAN – Channel 4 News):

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

    PRIME MINISTER:

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

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

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

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

    QUESTION (Peter Riddell – THE TIMES):

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

    PRIME MINISTER:

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

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

    QUESTION:

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

    PRIME MINISTER:

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

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

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

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

    QUESTION:

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

    PRIME MINISTER:

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

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

    QUESTION (Dan Revive, CBS News):

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

    PRIME MINISTER:

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

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

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

    QUESTION (Chris Moncrieff, PA):

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

    PRIME MINISTER:

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

    QUESTION (Alistair Campbell, Daily Mirror):

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

    PRIME MINISTER:

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

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

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

    QUESTION (French Tribune):

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

    PRIME MINISTER:

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

    QUESTION (David Langstone):

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

    PRIME MINISTER:

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

    QUESTION:

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

    PRIME MINISTER:

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

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