Tag: Pensions

  • 1997 Conservative Party Manifesto – 2 April 1997

    Below is the text of the 1997 Conservative Party manifesto.


    Foreword

    The Conservative administrations elected since 1979 are among the most successful in British peacetime history. A country once the sick man of Europe has become its most successful economy. A country once brought to its knees by over-mighty trade unions now has industrial peace. Abroad, the cold war has been won; at home, the rule of law has been restored. The enterprising virtues of the British people have been liberated from the dead hand of the state. There can be no doubt that we have created a better Britain.

    Why, then, do we still need a Conservative Government? Because resting on what we have achieved is not enough. To stand still is to fall back. Our goal must be for Britain to be the best place in the world to live.

    We live in a tougher, more uncertain world. A fast-moving global free market is emerging. New economic powers are rising in the East. Family life and social attitudes are changing. Europe is adjusting to the end of communism. The European social model is failing. The nation state is under threat. We must respond to these challenges.

    We have turned around our economic fortunes. We have fewer people out of work and more in work than any other major European economy. British people now have the opportunity of a prosperous future. But that prosperity cannot be taken for granted. We have to compete to win. That means a constant fight to keep tight control over public spending and enable Britain to remain the lowest taxed major economy in Europe. It means a continuing fight to keep burdens off business, maintaining our opt-out of the European Social Chapter. If we relax for one moment, our hard won success will slip away again.

    We have strengthened choice and personal ownership for families, and rolled back the state from areas where it was interfering unnecessarily in our lives. But we now have the opportunity to achieve a massive expansion in wealth and ownership so that more families can enjoy the self-respect and independence that comes with being self-sufficient from the state. Our far-reaching proposals for personal pension funds are central to achieving this – so too are our plans to increase support for the family in our tax system. Our aim is to spread opportunity for all to succeed, whoever they are and wherever they come from, provided they are prepared to work hard. To turn the “have nots” into the “haves”. To support the family in providing security and stability.

    We have modernised and reformed many of the areas where the state still has a vital role. But we now have to build on these reforms to deliver even better services. We must continue providing the resources to invest in our modernised health service. We can now provide parents with a hard-edged guarantee of standards in schools. We need also to widen choice in areas where state bureaucracy has constrained it.

    We have pioneered new ways of building partnerships that engage the private sector in areas previously dependent on the public purse. We now need to capture private sector investment on a massive scale to regenerate our cities, transform our crumbling local authority housing estates and modernise other public assets.

    The only way to secure this future of opportunity is to stick with the Conservative programme of continuing reform. Now would be the worst possible moment to abandon the pathway to prosperity on which we are set. We must keep up the momentum.

    At the same time we must maintain the security that a stable nation provides in an uncertain, fast-changing world. We must protect our constitution and unity as a nation from those who threaten it with unnecessary and dangerous change. And we must stand up for our interests in shaping a free-market Europe of sovereign nation states.

    There is, of course, an alternative on offer: to load costs on business while calling it “stakeholding”; to increase the role of the state, while calling it “the community”; to succumb to a centralised Europe while calling it “not being isolated”; to break up our country while calling it “devolution”.

    To risk this alternative would be a disaster for our country. We have come a very long way. We must be sure that we do not throw away what we have gained, or lose the opportunities we have earned.

    Our Record

    The UK is on course to grow faster than both France and Germany for the sixth successive year in 1998 – a post-war record.

    Inflation has now been below 4% for well over 4 years, the longest period of low inflation for almost half a century.

    Mortgage rates are at their lowest levels for 30 years.

    Unemployment has fallen to its lowest level for 6 years. We now have a lower unemployment rate than any other major European economy. Youth unemployment in Britain has fallen to less than 15% whereas by contrast, in France it has risen to 27% and in Italy to 33%.

    A higher proportion of our people are in work than in any other major European economy – 68% against a Continental average of 57%.

    The UK is the favourite location for inward investment into Europe, attracting around one third of inward investment into the European Union.

    We have the lowest tax burden of any major European economy, with the government taking almost 8% less of national income than the European average.

    Public borrowing has averaged 3.4% of GDP since 1919 compared with 6.8% (and a peak of 9.5%) under the last Labour Government. Our level of public debt is now one of the lowest in the European Union – whereas it was one of the highest in 1979.

    In 1994 the UK lost 300,000 working days through strikes, the lowest figure ever recorded; in 1979 the figure was 29,500,000: nearly 100 times that figure.

    Britain ranks fifth in the world in international trade, and exports more per head than America or Japan. Exports account for 28% of GDP as against 9% for Japan, 11 % for USA and 24% for Germany and France. Britain’s current account is broadly in balance, reflecting our increased competitiveness and improved trading.

    1. Doubling Living Standards

    The free market is winning the battle of ideas the world over. From Russia to Vietnam, from China to Romania, people are realising that the socialist model has failed. This is not just an economic triumph. It is a triumph for human freedom. Britain helped to secure it. We should take pride in it.

    The spread of the free market heralds a new age of global competition. That means new markets for British goods and services, but new competitors for British companies as well.

    If we try to protect ourselves from these challenges with more regulations, public subsidies and a cosy dependence on government then Britain will fail. But if we boldly embrace these new opportunities by pushing forward the economic revolution we began in 1979, then we will enter the next millennium with boundless prospects for growth and prosperity.

    That choice – between stagnation and dynamism – is the choice which faces Britain at this election. It is a stark choice between the British way – of trusting the people and unleashing enterprise – and the failing social model, practised on the continent, which the Labour Party wants to impose on us here under the guise of “stakeholding”.

    Hard economic evidence shows how great is the divide between these two strategies. Britain is now in its fifth year of growing faster than France or Germany. Unemployment in Britain has fallen to less than two million, while it rises across Europe. Britain attracts nearly forty per cent of all the American and Japanese investment in Europe. Our aim now is to safeguard these achievements and build on them, so Britain becomes the unrivalled Enterprise Centre of Europe.

    A Low Tax Economy

    For enterprise to flourish, the state must get out of the way of the wealth creators. We are the only party that can cut taxes because we are the only party which is serious about controlling public spending. The choice between the two economic philosophies is clean In the years before 1979, public spending in Britain kept pace with the average for Europe as a whole. Since then, it has continued rising on the continent, while we have restrained public spending here. Now, public spending takes about 40% of our national income as against an average of 50% on the continent. We have broken free from a trend in which the rest of Europe is still trapped.

    Conservative government will keep public spending under tight control and ensure that it grows by less than the economy as a whole over the economic cycle. At the same time we will continue to spend more on the services which matter most to people – hospitals, schools and the police.

    Over the next parliament, we will achieve our goal for the government to spend less than 40% of our national income.

    That means we can reduce the amount government borrows too, and meet our aim of moving towards a balanced budget in the medium term. Our plans show how we can virtually eliminate public borrowing by the year 2000.

    Thanks to our success in controlling public spending, Britain is now Europe’s low tax economy. This is one of the reasons why we are becoming the Enterprise Centre of Europe.

    Our aim is to ensure Britain keeps the lowest tax burden of any major European economy.

    In the election manifesto of 1992, we promised that “We will make further progress towards a basic income tax rate of 20p”. Since then, we have cut the basic rate of income tax from 25p to 23p, and extended the 20p band so that over a quarter of all taxpayers now only pay income tax at the 20p rate. Achieving our public expenditure goals will mean we can sustain permanently low tax levels.

    Over the next parliament, our aim will be to achieve our target of a 20p basic rate of income tax, while maintaining a maximum tax rate of no more than 40p.

    Stable Prices

    Inflation has to be kept firmly under control for an economy to thrive. Britain is now enjoying the longest period of stable prices for almost fifty years. We are on target to reach our goal of 2½% inflation this year.

    Low inflation has delivered lower interest rates whilst preserving the value of people’s savings. Homeowners are now enjoying mortgage rates at the lowest levels for 30 years.

    It has taken tough decisions to break free from our reputation as a high inflation economy. No Conservative government will jeopardise this achievement.

    During the next parliament, we will maintain an inflation target of 2½% or less.

    Rising Living Standards

    The only secure base for rising living standards is a strongly growing economy, low levels of public spending and taxation, and stable prices. That is exactly what Britain is achieving. People are reaping the rewards of their hard work as their take home pay increases. Between 1974 and 1979, the take home pay for a family on average earnings rose, in real terms, by just £1 a week in today’s prices. Since 1979 it has increased by £100 a week; this year alone it will increase by £7 a week.

    The goal which we set ourselves in 1995 is to double living standards over 25 years.

    We are on course to achieve our goal.

    2. Jobs and Business

    Our priority is to create jobs. This is not just an economic priority, but also a social and moral one. Jobs and enterprise are the best ways of tackling poverty and deprivation.

    Britain is succeeding. 900,000 jobs have been created over the past 4 years. By contrast the European social model is stifling job creation on the continent by imposing regulations and burdens on business. In the United Kingdom unemployment is much lower than in the rest of Europe and falling whereas in Germany, France, and Italy it has risen to its highest level for a generation. This is no accident. It is because we have pursued very different policies from those on the Continent.

    Curbing the power of trade unions, opening up markets and cutting red tape, have given us a low strike, low cost economy: and as a result Britain is the number one location for foreign investment in Europe.

    Never have such policies been so important. For the first time this century we face a world full of capitalist competition. The only way Britain will be able to compete and win in world markets is by sticking to the Conservative policies that are delivering success. We can earn prosperity as one of the world’s most successful global trading nations. We should not risk this progress by adopting the very policies that have made the continent uncompetitive and have increased unemployment in Europe by 4.5 million over the past 5 years.

    Small Businesses – Britain’s Risk-takers

    Governments do not create jobs. Businesses do. The source of tomorrow’s jobs will be small businesses, the seedcorn of Britain’s prosperity. Over the last 15 years, small businesses have created over 2 million jobs. By the year 2000, over half the workforce should be working in companies which employ fewer than 50 people. Back in 1979 only a third of the workforce did.

    Entrepreneurs often risk everything when they set up their own business. We have already helped them: raising the VAT threshold, cutting employer’s national insurance contributions, simplifying audit requirements and much more besides. Now we intend to go further, tackling the remaining problems they face.

    High taxes and rates deter enterprise. Our low tax structure has been crucial to our industrial revival. We already have the lowest corporation tax of any major industrialised country. As we want small businesses to flourish, we will go even further.

    We will cut the small companies rate of corporation tax in line with personal taxation as we move towards a 20p basic rate

    Investment and enterprise are deterred if the taxman takes too much of the capital that is built up by a successful business. Capital is ever more mobile, flying around the world to places where the tax on it is low: Britain must be one of those places.

    We will continue to reduce the burden of capital gains tax and inheritance tax as it is prudent to do so.

    One of the heaviest burdens small businesses face is business rates. At the moment, this bears more heavily upon small businesses than large ones.

    In the next parliament, we will reform business rates to reduce the cost that falls upon small businesses.

    No businessman has time to fill out reams of forms. We will continue to simplify the administration of NICs and PAYE for small firms, allowing them to concentrate on satisfying customers not bureaucrats. We are also tackling a problem that hits small businesses particularly hard – the late payment of bills. On top of our programme to ensure government departments and local authorities pay on time we have legislated to require companies to publish their payment policy and to report their record on how quickly they pay their bills to small businesses.

    We have already abolished over a thousand regulations. New regulations must only be introduced if it is clear that their benefits exceed their costs and they do not place an undue burden on a small firm.

    We will introduce “sunset” requirements into new regulations whenever appropriate so that they are automatically reviewed or dropped after a specific period.

    Many businessmen suffer regulatory burdens imposed by local government and quangos.

    We will therefore insist that the whole of the public sector adopts the same stringent rules that we require of central government in justifying the benefits of new regulations against their costs.

    Reducing the Burden on Companies

    Jobs depend on British firms winning orders: the difference between success or failure can be wafer-thin. Any extra burden on business will destroy jobs.

    Britain is enjoying more jobs and record investment, thanks to the competitive edge we have over other European countries. We are a low cost economy But that does not mean we are a low pay economy. Our competitive advantage comes from the lower costs facing our businesses. It can be measured by the social costs an employer has to pay on top of every £100 of wages: in Germany it is £31, in France £41, but in Britain, it is only £15.

    Many countries in Europe have tried to cocoon themselves from global competition behind layers of red tape and regulation – such as the Social Chapter and a national minimum wage. This provides a false sense of security, playing a cruel trick on working people. It also excludes the unemployed from work. As companies in the rest of Europe have grown more uncompetitive, employers have found it too expensive to employ new workers, investment has gone elsewhere, and the dole queues have lengthened. The European social model is not social and not a model for us to follow. But if Britain signed up to the Social Chapter it would be used to impose that model on us – destroying British jobs.

    No Conservative government will sign up to the Social Chapter or introduce a national minimum wage We will insist at the Intergovernmental Conference in Amsterdam that our opt-out is honoured and that Britain is exempted from the Working Time Directive: if old agreements are broken, we do not see how new ones can be made

    We will resist the imposition of other social burdens on the work place through a new European employment chapter.

    Welfare into Work

    Although governments cannot create jobs, they can help people train and find work. We now have in place a battery of schemes working with Training and Enterprise Councils to provide targeted help and training, including remedial education in literacy and numeracy. We are also developing new incentives, alongside Family Credit, to help people move off benefit into work.

    We will always help those in genuine need: in return, the unemployed have a responsibility to look for work and accept a reasonable offer That belief underpins our new Jobseeker’s Allowance which ensures that no-one can refuse reasonable work opportunities and remain on benefit.

    As unemployment falls, we want to focus on those who have been unemployed for some time. At present, Project Work is helping 100,000 people who have been unemployed for more than 2 years in cities around Britain. They are first given help in finding a job – which includes giving employers incentives to take them on. Those who do not find jobs are then required to work for a specific period on a community project. This helps them regain work habits and ensures they are available for work.

    As Project Work succeeds and demonstrates that its costs can be met by the savings from getting people into work, we will extend the programme to cover the long-term unemployed nationwide

    We will also develop an innovative “Britain Works” scheme which uses the experience and ingenuity of private and voluntary sectors to get people off welfare into work.

    Britain has one of the most mobile economies in Europe. People move on, and up, into better paid jobs more easily than on the continent.

    The Information Society

    Britain is at the forefront of creating tomorrow’s information society Already we have exposed domestic telecommunications to competition and stimulated investment in cable and satellite entertainment systems. And by opening up international telecommunications we will continue to encourage companies worldwide to base their global operations here. We will make sure that the digital revolution comes to Britain first.

    We are launching an ambitious programme with industry to spread “IT for All”, giving every adult the opportunity to try out and learn about new IT services. We will work with industry to ensure that all schools are connected to the information superhighway.

    We will use the Millennium Lottery Fund to transform the computer facilities and information links available in schools, libraries, museums, voluntary organisations and other public places after the turn of the century.

    This will give the public much wider access to information services in the years ahead. We will also take advantage of information technology to transform the way government provides services to the public.

    We will keep Britain in the vanguard of new mobile service development – including mobile telephone and information services – by introducing a pricing system for the radio spectrum to achieve more efficient allocation of radio frequencies.

    We will maintain a strong, free and competitive broadcasting and press environment at both national and local level, while continuing to be vigilant in monitoring whether action is needed to curb breaches of standards, and prevent unacceptable press intrusion.

    Science

    British science enjoys a worldwide reputation for excellence and cost-effectiveness, which makes Britain an attractive base for many domestic and overseas companies. We will continue to invest in science and target funds at basic research, which would not otherwise be funded by industry. At the same time we will provide an enterprising environment which encourages firms to invest with confidence in applied science.

    2020 Vision

    There is no part of the globe which has not been reached by British enterprise and British culture. We have always looked out beyond these shores, beyond this continent. Our language, our heritage of international trading links, our foreign investments – second only to America’s – are historic strengths which mean we are ideally placed to seize the opportunities of the global economy.

    Thanks to Conservative policies of liberalisation and privatisation we are strong in industries of the future such as telecommunications, financial services, and information technology. These are the industries that will benefit from opening up trade around the world. We will push for completion of the European Single Market and continue to pursue the objective of transatlantic free trade against the background of world trade liberalisation.

    Our aim is nothing less than tariff free trade across the globe by the year 2020.

    Free competition is important for free markets. Companies should not make agreements that restrict competition and hence result in poor value for consumers. We have set out proposals to give companies greater protection against price fixing, dumping, and other restrictive practices by larger competitors.

    We will introduce a Competition Bill to take forward these proposals in the first session of the next parliament

    We are committed to pushing forward our competitiveness agenda which is making Britain the Enterprise Centre of Europe.

    Opportunity and Ownership for Individuals and Families

    Our Record – Opportunity

    The right to buy has allowed 1.5 million council tenants to become homeowners. There are over 4 million more homeowners today than in 1979.

    The Government has spent £6 billion through housing associations to provide homes for rent. Between 1992 and 1995 housing associations provided 178,000 new lettings – 25,000 more than promised in the 1992 Manifesto.

    There are now around 10 million private shareholders, up from about 3 million at the time of the last Labour government. 2.5 million people now have tax free savings in PEP accounts, and 4.5 million in TESSAs.

    Since 1979, the success of private pension provision has raised the average income of pensioners by 60% more than inflation. Almost 90% of recently retired pensioners now have incomes over and above state benefits.

    Savings in private pension funds have increased to £650 billion –more than 4 times the level in 1979. Their value is greater than the pension funds in all other EU countries added together.

    Over the period 1979 to 1995, education spending per pupil rose from £515 to £1,890 – an increase in real terms of 48%. Real spending on books and equipment per pupil rose 56%. Teachers’ real pay rose 57%: from £270 per week in 1979 to £420 in 1995.

    In 1979, 40% of three and four year olds attended nursery school; in 1995 the figure was 59%. Our nursery vouchers now give this opportunity to every child.

    The proportion of sixteen year olds staying on in full-time education rose from 4 out of 10 in 1979 to 7 out of 10 in 1995.

    Almost 1 in 3 young people now go on to university, compared with 1 in 8 in 1979.

    The proportion of adults with no academic qualifications has halved since 1979 and the proportion of adults with a degree or equivalent has more than doubled rising from 5% to 12%.

    3. Choice and Security for Families

    The family is the most important institution in our lives. It offers security and stability in a fast-changing world. But the family is undermined if governments take decisions which families ought to take for themselves. Self-reliance underpins freedom and choice.

    Families are stronger if they have the money to look after themselves: that is why we are shifting power and wealth back to working families and away from the state. We have already achieved much – the average family’s disposable income has gone up by 40% since 1979. But we want to go further. The next Conservative government intends to reform the tax system so that it gives substantially more help to families.

    We also want to encourage people to save so they have the security and self-respect that comes from being able to rely on their own resources rather than immediately turning to the state. We have already made much progress here too with widening ownership of homes, pensions, and the new PEPs and TESSAs. We now propose further radical measures for more saving for retirement.

    Families and Tax

    We believe families should be left with as much of their own money as possible. They know better than politicians how to spend it. We have already cut the basic rate of income tax from 33p to 23p, and our aim is to get it down to 20p, benefitting 18 million taxpayers. We intend to do even more to help families in particular

    At the moment, if one spouse does not take paid work in order to look after children or dependent relatives, they not only give up earnings but may also be unable to benefit from their personal tax allowance. Yet this is the time at which their income is often most stretched.

    We believe our tax system should recognise and support the crucial role of families in their caring responsibilities. We will give them that support.

    We will give priority to future reductions in personal taxation that help families looking after dependent children or relatives by allowing one partner’s unused personal allowance to be transferred to a working spouse where they have these responsibilities.

    This will provide a targeted reduction in the tax bill to those families who need it most. Around 2 million one-taxpayer couples with dependent children, or looking after elderly relatives and others needing care, would gain up to £17.50 a week – around £900 a year

    Family Savings

    In the old days people just depended on the weekly pay packet or money from the state. But no job can be secure and the state cannot provide for every eventuality. It is ownership which brings true security and genuine independence from the state. That is why Conservatives have long dreamed of a property-owning democracy. Now we are delivering it in practice. Home ownership is up by 4.7 million. 10 million people own a direct personal stake in our economy. 16 million are gaining shares in their building societies thanks to our deregulation of them. We intend to carry forward our vision of a people’s share. This is a significant increase in personal security. It is the Conservative vision of security through personal savings – not a socialist vision of security through the state.

    We want people to enjoy Britain’s success – especially by owning shares in the companies for which they work. We have already introduced a number of schemes to encourage employee share ownership. To encourage a further expansion of worker shares, our new Share Match Scheme will allow employees to be rewarded with additional free shares if they acquire a stake in their company.

    Our goal is that by 2000, more than half of the employees of Britain’s larger companies will own shares in those companies.

    Four and a half million people now benefit from tax free TESSAs and 2.5 million from PEP schemes to encourage the accumulation of long term saving. We will continue to build on this success by exploring ways in which existing tax exemptions for savings can be developed – allowing individuals to secure their future and protect their families against unexpected contingencies.

    We will continue to raise the threshold for inheritance tax as it is prudent to do so.

    People are not just saving for themselves but for their children and grand-children. These savings should not be penalised by the tax system.

    For many people their biggest asset is their pension. Thanks to the steps we have already taken to encourage occupational and personal pensions, we now have £650 billion invested in private pensions – more than the rest of the European Union put together We now plan to build further on this achievement.

    We will make it easier for small employers to set up personal pension plans for groups of employees.

    We will create more flexibility for people who save in personal pension plans to continue investing in those schemes if they subsequently move to jobs with company pension schemes.

    We will also create flexibility for employees with savings in Additional Voluntary Contributions (AVC) schemes to take part of that pension earlier or later than their main company pension.

    But we believe the time has now come to plan for another important step in improving Britain’s pension provision. Britain is already much better placed than many other countries to afford state pensions in the future, but we want even more people to be able to look forward to properly funded pension that grows with the economy and is free from dependence on taxes paid by future generations. We now propose a practical way of achieving a gradual transformation of the state pension scheme.

    At the start of the next parliament we will set out proposals to provide all young people entering the workforce with a personal pension fund paid for through a rebate on their national insurance contributions. At retirement they would be entitled to the full pension earned by this accumulated investment. This could give them a pension significantly higher than they would currently receive from the state. But they will be guaranteed a pension at least equal to the current bask state pension, increased in line with inflation.

    This will be one of the most significant improvements in the state pension system since it was introduced.

    Older people currently in the workforce would be unaffected – they will continue to contribute as now and receive the normal state pension when they retire.

    This policy would come into effect early in the new millennium. Gradual phasing in of the new system over 40 years will make the impact on public finances affordable. Even at its peak, the net revenue forgone will be only a fraction of the savings from the recent Pensions Act. And eventually, the new policy will produce massive public expenditure savings.

    This far-sighted idea is in the best Conservative tradition. The growing wealth of the nation will provide for the next generation through private funding, underpinned by a state guarantee. British people will be able to look forward to retirement with even greater confidence. And our young people will have a pensions opportunity unrivalled in the world.

    Support for Families

    Conservatives believe that a healthy society encourages people to accept responsibility for their own lives. A heavy-handed and intrusive state can do enormous damage.

    Some families need help to cope with their responsibilities. For them, Social Services play a vital role. They help with children where parental care has failed. They deliver an ever wider range of services to people with learning difficulties or who are mentally ill. Our community care reforms have given them a central role ensuring that elderly people get care of the highest quality: and in their own homes where possible. We need to ensure that role is properly fulfilled.

    Early in the next Parliament we will introduce a Social Services Reform Bill which will create a new statutory framework for social services. The Bill will provide for greater openness and accountability in social services.

    We will provide new guidance to ensure social workers properly reflect the values of the community – focusing their efforts on those families who most need support, and minimising unnecessary interference. Social workers working with children will receive special training to cope with the often heart-rending cases they face.

    We will raise standards through a new regulatory framework which will apply the same standards in both the public and private sector.

    We will also remove the power of local authorities to operate care homes where this is in the best interests of the people for whom they are responsible.

    We believe that families who use social services should be able to exercise choice wherever practicable. We have given cash payments to disabled people to purchase the services they need directly.

    We also want new ways of reinforcing individual choice where possible. We will therefore ensure no barriers stand in the way of local authorities wanting to issue their users with vouchers to buy certain services.

    We will review the direct payment scheme, and provided it has been cost effective, we will extend it to other users of social services.

    Above all, we want to help families to help themselves. Caring for older – or disabled – relatives is one of the most natural human instincts. We recognise the crucial and often demanding role carers play, and will help them more.

    We will introduce a Respite Care Programme. This will enable family members with heavy responsibilities caring for a relative to take a much needed break. We will also offer more practical advice for carers who want to go back to paid work.

    But in some cases, elderly people need more care than their friends or relatives can provide. Financing long term care worries many families. We will create an imaginative, fair partnership between individuals and the public sector to resolve this problem.

    In the first session of the next Parliament we will implement our partnership scheme for long term care, making it easier for people to afford the cost of care in old age without giving up their lifetime savings.

    Good preparation for marriage can be an important aid to a successful family, while timely help in meeting difficulties can often avoid family breakdown. These are matters for voluntary effort, not the state, but we will continue to support such effort.

    We need to make sure efforts to help struggling families does not turn into unnecessary meddling.

    When the state goes too far, it is often the children who suffer They become victims of the worst sort of political correctness.

    We will introduce legislation to remove unnecessary barriers to adoption and introduce new rules to make adoption from abroad more straightforward.

    We will also monitor the workings of the Children Act, and act if necessary to ensure it maintains a proper balance between the rights of children and the responsibilities of adults.

    Social Services departments are now the fourth arm of the welfare state. Most people will need them at some point in their lives. We will ensure that the Conservative revolution in public services now reaches Social Services.

    Disabled People

    We have quadrupled real spending on long term sick and disabled people since 1979, to £22 billion.

    We have introduced the Disability Discrimination Act. This is the first legislation of its kind anywhere in Europe and it provides positive proof of our commitment to disabled people. We will monitor it to ensure it continues to meet its objectives.

    We are also providing a continuing fund to enable the most severely disabled people to stay in their own homes.

    Security in Retirement

    Pensioners continue to make a positive contribution to society in retirement. They give more of their time in charitable work than any other age group. They lift some of the pressures on their own families. They help keep our nation’s history and traditions alive.

    They have paid their National Insurance contributions and taxes and rightly expect us to continue to protect the value of the basic state pension against price rises. We will do so. We will also ensure that less well off pensioners continue to get extra help on top of the basic pension.

    At the same time as protecting the state pension, our encouragement of private pensions is already transforming the living standards of pensioners. The average net income of pensioners has risen by 60% since 1979. This has been achieved by our encouragement of saving for retirement.

    The tax system must help pensioners who have saved. Our new lower 20p rate on income from savings directly helps 1.7 million pensioners and the special age allowances raise the point at which pensioners start to pay income tax.

    A Better Social Security System

    People in need can rely on our continuing support. To ensure that taxpayers are

    willing to go on paying for that support, we have shaped a social security system we can afford, taking a steadily declining share of our national income. We are doing this by focusing benefits on those most in need, helping people off welfare and into work, and curbing welfare fraud. These policies are underpinned by our measures to help families help themselves.

    Social Security must be there to help families, pensioners and people in need. We will protect the value of Child Benefit and Family Credit which help with the cost of bringing up children. This is our Family Benefits Guarantee.

    We will bring the structure of benefits for lone parents into line with that for two-parent families. We will continue to help lone parents obtain maintenance, and assist with childcare in work: both these measures help lone parents obtain work. We will pilot our “Parent Plus” Scheme that gives special help to lone parents who want to work, and extend it if it proves successful.

    Social Security fraud must be stamped out.

    We will intensify our current initiatives of inspections and checks, including more home visits, to crack down further on benefit cheats. We will introduce benefit cards across the country. We will establish a Benefit Fraud inspectorate to monitor local authorities’ performance. We will also improve the sharing of information between government departments to catch more fraudulent claims.

    To ensure as much of the Social Security budget as possible goes into benefits, we will continue to improve the efficiency of administration, using the best mix of public and private sector operations.

    Housing

    Owning one’s own home is an aim shared by millions of people. Over the last 18 years, the number of homeowners has increased by 4.7 million – including 1.7 million who have bought their home under the right to buy scheme. Over the next 10 years, we expect to see another one and a half million people buying their own homes – some 3,000 every week. To meet that demand, we will continue to allow local authority and housing association tenants to buy their homes, or move to houses which they buy.

    We will also carry through our draft Bill, creating the option for those buying flats to choose a new form of commonhold ownership.

    For those who wish to rent their home, we are encouraging a thriving private rental market, building on the success of housing investment trusts and protecting assured tenancies.

    Easier renting will help us meet our target of reducing the proportion of empty homes below 3%. The number of empty houses has fallen in each of the last 3 years. But nothing is more frustrating for people who need social housing, than the sight of a suitable property owned by the public sector boarded up and empty. We will stop that.

    Public landlords will have to sell houses which are available for occupation yet have been left empty without a good reason for more than 12 months.

    Housing associations and housing companies will continue to receive help in building new homes, and we will encourage more public-private partnerships. Together, these policies will help meet the demand for new public housing and make sure that there are decent homes for those in need.

    Opportunities for Women

    Women are succeeding in Britain. More women have jobs in Britain than in almost any other European country. Women have a better education, more financial independence and more opportunities than at any other time in Britain’s history.

    This success reflects the efforts and determination of many women. Government’s role has been simpler – to level up the playing field, whether in education, where girls are now doing better than boys, or in the workplace, where opportunities for women are the best in Europe.

    But we know our job is not yet done. Some women still face barriers to doing well. Some still do not have the financial security they deserve. And crime, and the fear of crime, often affect women more than men.

    We will ensure women have equal opportunities in education and the workplace. This can best be achieved by keeping our economy buoyant and our labour markets flexible. And our proposals to bring crime rates down further will help women especially.

    But many women – and some men – face a particular problem: how to juggle job and family. For those who need or want to work, we will seek further ways to minimise the barriers to affordable, high quality childcare. For those who wish to be full-time parents, our proposals to enable them to transfer their unused personal allowance to their spouse will be worth up to an extra £17.50 a week.

    We also want to give women more financial independence, particularly when they retire. We propose, as explained elsewhere, to improve flexibility in saving for retirement and to allow courts to split pensions on divorce.

    Looking Outwards

    The spread of share ownership, the transformation of pension provision, and the sale of council houses are revolutionising our nation. Personal prosperity and property ownership are not selfish or inward-looking.

    People who are secure at home can look out for others in their community. Over two thirds of adults engage in some form of voluntary activity. By the end of 1997 all young people aged between 15 and 25 who want to volunteer will be helped to find an opportunity to do so.

    We will make it easier for those receiving incapacity benefit to volunteer by removing the 16 hour weekly limit on their voluntary work.

    We will encourage voluntary work by others living on benefit while continuing to insist that those who are capable of work should actively seek employment. We will also develop accreditation for voluntary work to encourage employers to see it as preparation for a paid job.

    It is wrong to imagine that compassion must be nationalised and that we can only help our fellow man through state action.

    4. Education and Opportunity

    All children dream of what they might do when they grow up. Our task is to help them turn those dreams into reality whatever their background may be. It is an exciting world, full of new opportunities for inquiring minds: it should be open to every child. Their future – and Britain’s prosperity – depends on the quality of their education.

    Our Education Guarantee

    A good education is the birthright of every child. Literacy is the building block of all future learning: English is the global language of commerce and, much more, a thing of beauty. Without basic science and mathematics, the modern world is incomprehensible. Every child therefore must be taught to read, write and add up from an early age.

    Years of mistaken, progressive education in the 1960s and 1970s denied these precious skills to too many children. We have worked ceaselessly since 1979 to put that right. Our decision to test children and publish the results has allowed standards to be measured and exposed. We have reformed the curriculum, toughened inspections, and given more information and power to parents. Our many excellent teachers now know what is expected of them, and already standards in schools are rising. But they are still not good enough. We must do more.

    Building on what we have done, we can now offer a new pledge to parents – a guarantee of education standards.

    First, we will set national targets for school performance that reflect our objective of ensuring that Britain is in the top league of international standards across the whole spectrum of education.

    Second, we will require every school to plan how to improve its performance, and to set targets which relate to similar schools and national standards.

    Third, we will give all parents full information on the performance of their child’s school

    Fourth, to underwrite our pledge, we will ensure action is taken to bring any under-performing school up to the mark.

    We will meet this pledge by using the full set of levers for improved standards that we have put in place.

    We are revising and simplifying the National Curriculum in primary schools to emphasise high standards in the basic skills.

    Parents and teachers must have an overview of not just how much a child has learnt while at school, but how the school performs against others. Poor schooling must not be protected by a veil of secrecy. Parent power is a vital force for higher standards.

    Regular tests and exams are essential if teachers are to discover how much their pupils have learnt, and parents are to know how much progress their children are making against national standards. That is why children are already being tested at 7, 11 and 14.

    We will publish all school test results, including the results of tests of 7 and 14 year olds.

    We propose also to assess every child at five.

    This will give teachers and parents a benchmark against which they can measure future progress. To give a better measure of pupil’s performance, marks out of 100 will be made available to parents as well as the broad-brush levels.

    We will also introduce a new test for 14 year old children that covers the whole National Curriculum – assessing progress before they choose subjects for GCSE.

    Tests and exams need to be rigorous and demanding. We will insist that they establish children’s command of spelling, punctuation, and grammar in English tests. Children will sit arithmetic tests without calculators. We will not allow such extensive use of open books in tests and in GCSE exams. We will establish an English Language GCSE. We will continue to uphold the gold standard of A-levels, and ensure that the great classics of our literature are studied at A-level. At the same time students should have the chance to study more subjects in the sixth form.

    Rigorous tests show how individual children and schools are performing and expose schools that are not giving children the education they deserve. To underwrite our guarantee, we will then take action to improve standards. We cannot tolerate schools that fail their pupils.

    By this summer every secondary school in the country will have been inspected by independent inspectors, and by summer 1998, every primary school will have been inspected as well. We have the power to take over failing schools directly and close them if necessary We will now go further and require every school to set, and publish, regular targets, and plans for improving their academic results. Independent inspectors will monitor the results of weaker schools and their plans for improvement at regular intervals.

    Sometimes, though, schools are failing because the local education authority which runs them is failing. The authorities with the worst GCSE results and the worst results at Key Stage 2 (11 year olds) are run by Labour. Those children need our help.

    We will allow for on independent inspection of education authorities and intervene directly to raise standards where education authorities are letting children down.

    Failing authorities will be required to set out their plans to raise standards, and work with education teams – directed by independent inspectors – to implement those plans.

    The vast majority of teachers do an outstanding job. They have played a key part in implementing the reforms that we have introduced. A few, though, let their pupils down.

    We will establish a more rigorous and effective system of appraising teachers, which reflects how well their pupils perform in tests and exams: this will identify which teachers need more help and, where necessary, which teachers need to be replaced.

    Many feel that the professional standing of teachers would be strengthened by the creation of a single body which could speak with authority on professional standards. We will consult with teachers and other interested parties about the possible role of such a body.

    The school should be a place of stability and stimulation for children, especially if they come from a hostile or turbulent environment. To improve standards in future our new teacher training curriculum will stress traditional teaching methods –including whole class teaching and learning to read by the sounds of letters. We will also encourage more teachers to enter the profession through practical training schemes focused on classroom experience such as the Graduate Teacher Scheme. A child is likely to learn more in a well-ordered school. Teachers must have the powers they need to maintain discipline. We will give teachers greater power to set detentions, to exclude disruptive pupils and to use reasonable physical restraint where necessary.

    Schools also have an important role to play in spiritual and moral education. We will take steps to ensure that every school fulfils its role of providing religious education and collective worship.

    Choice and Diversity

    When we came to power in 1979 the school system was totally dominated by one type of school – the monolithic comprehensive. The system failed our children. It treated every child the same. It told parents where to send their children. It did not give schools the freedom to run their own affairs.

    Since 1979 we have created a rich diversity of schools, to serve the varied talents of all children and give parents choice within that diversity, because we believe that parents know what is best for their children.

    That is why we – and only we – are committed to giving the parent of every four year old child a voucher for nursery education so they can choose the pre-school education they want for their child, whether in a play-group, a reception class, or a nursery school in the private or state sector.

    We will give more talented children, from less well-off backgrounds, the opportunity to go to fee-paying schools by expanding the Assisted Places Scheme to cover all ages of compulsory education, in line with our current spending plans. We propose to develop it further into a wider scholarship scheme covering additional educational opportunities. The freedoms and status of fee-paying schools will be protected.

    Grant-maintained schools have been popular with parents across the country –whatever their politics. We will encourage more schools to become grant-maintained and will allow new grant-maintained schools to be set up where there is sufficient local demand. We will give all grant-maintained schools greater freedoms to expand and to select their pupils.

    Grant-maintained schools are leading the way. Local authority schools are also benefitting from our policy of local management of schools. Our ultimate objective is that all schools should take full responsibility for the management of their own affairs. In the next parliament we will take another step towards giving them that freedom.

    We will extend the benefits of greater self-governance to all LEA schools. We will require local authorities to delegate more of schools’ budgets to the schools themselves. We will give them more freedom over the employment of their staff and over admissions. And, where they want it, we will allow them to take over ownership of their assets, so they can make best use of the resources.

    Local authorities will continue to be responsible for their schools’ standards. They will provide funds, and compete with other organisations to provide services to schools. We would expect the increased responsibility of head-teachers, and their role in achieving efficiency-savings, to be recognised by their pay review body.

    Schools are stronger and more effective where head-teachers and governors can shape their own distinctive character Sometimes that means developing a speciality in some subjects. Sometimes it means selecting children by their aptitudes: where parents want this we should not stand in their way. Special abilities should be recognised and encouraged.

    We will continue to encourage the establishment of more specialist schools in technology, arts, languages and sport. We aim to help one in five schools become specialist schools by 2001.

    We will allow all schools to select some of their pupils.

    We will help schools to became grammar schools in every major town where parents want that choke.

    The high standards, real choice and genuine diversity which we have introduced will produce the best results for all our children.

    Lifetime Learning

    Lifetime learning is a reality in Britain today. Over a half of all students in universities, and seventy per cent of those in further education colleges, are adults who have returned to education later in life. We will continue to create new opportunities for more people to participate.

    There has been a revolution in further and higher education. Three and a half million people are in further education –up from just half a million in 1979. The number of young people going to university has risen from one in eight to one in three over the same period.

    We will ensure consistently high standards and will consult on the development of higher education when we receive the results of the Dearing Review. We have world class research in British universities which we will continue to support.

    Every young person should have the opportunity to continue in education or training.

    We will give students between 14 and 21 a learning credit which will enable them to choose suitable education or training leading to recognised qualifications up to A levels or their equivalents.

    We will also introduce National Traineeships and encourage employers to offer more work-based Modern Apprenticeships to young people. Objective external assessments of a proper syllabus will be made a part of all National Vocational Qualifications.

    We will continue to support the network of Training and Enterprise Councils, which have created a valuable partnership between business and government. We will encourage more employers to become involved in “Investors in People”, with the public sector matching the performance of the private sector.

    Competitive markets demand high skills. If Britain is to win, we need to encourage learning and give people the opportunity to go where their interests and inquiring minds take them.

    World Class Health and Public Services

    Our Record – Health and Public Services

    Government spending has concentrated on priorities, not wasteful bureaucracy and overmanning. Despite tough overall public spending plans, real spending on the NHS has risen nearly 75% since 1979 , on schools by 50% and on the police by more than 100%.

    The Health Service is treating over 1 million more patients each year than before our reforms.

    The number of people waiting over 12 months for hospital treatment has fallen from over 200,000 in 1990 to 22,000 last year. The average wait has fallen from nearly 9 months to 4 months.

    The Government has set up the Citizen’s Charter to provide first class public services for all citizens. Nearly 650 organisations have received a Charter Mark for meeting demanding standards of performance, customer satisfaction and value for money.

    There are now 55,000 more nurses and midwives and 22,500 more doctors and dentists than in 1979. For every senior NHS manager, 77 people are providing direct patient care.

    Nurses average earnings have grown 70% in real terms: from £68 a week in 1979 to £325 in 1995. Doctor’s pay has risen by a third. Under Labour both were cut.

    Infant mortality has fallen from 13.2 to 6.2 per thousand over the last 18 years.

    Deaths through road accidents are now the lowest since records began in 1926. Since 1979 road deaths and serious casualties have fallen by 43% despite an 85% increase in motor traffic.

    The government has invested record amounts on transport – more than £26 billion since 1979 in investment on motorways and trunk roads; £16 billion in investment on railways; and £8 billion in investment on London Transport.

    Privatisation is delivering better services at lower costs. BT’s main prices are down by more than 40% in real terms. Average household bills for gas and electricity have also fallen in real terms since 1990.

    5. Security in Health

    We have been the guardians of the NHS for most of its life, improving its services and securing its funding. The benefits can be seen in our rising standards of health. 1993 was for example the first year in which no child in this country died of measles. Between 1979 and 1995 life expectancy at birth in England has increased from 70.4 years to 74.3 years for men and from 76.4 years to 79.6 years for women. We are getting healthier and we are better looked after when we are sick.

    Growing Resources for a Modern Health Service

    This progress has been possible because we have increased spending since 1979 by nearly 75% more than inflation, to almost £43 billion. And we are not stopping there. The next Conservative Government will honour a firm guarantee to the NHS.

    We will continue, year by year; to increase the real resources committed to the NHS, so NHS spending will continue to share in a growing economy

    Under Labour there have been years when resources for the NHS actually shrank – something that would be inconceivable with the Conservatives.

    Money is only really a means to an end: better patient care. Now we are treating 9.2 million hospital in-patients and day cases as against 6.9 million in 1992 and 5.1 million in 1979.

    Investing in Skilled Staff

    We are committed to expanding the medical staff of the NHS. We shall therefore increase medical school intakes to 5,000 a year by the year 2000 and are ahead of schedule in reaching the target.

    Good nursing is the bedrock of the NHS. In particular we will increase the number of nurses with specialist qualifications in paediatric intensive care,emergency care, and cancer care. The number of nurses qualifying each year will increase by 2,500 within the next 5 years as we continue to expand Project 2000 training.

    Higher Standards of Service

    We are tackling the problem of long waiting times which can cause so much worry; distress, and pain. We have set tough targets under the Patient’s Charter and as a result average waiting times for in-patient hospital treatments have fallen from more than 6 months 5 years ago to 4 months last year.

    Patients no longer put up with being kept in ignorance. They want to know more.

    We will publish more information on how successfully hospitals are treating patients so that they and their GPs can make more informed choices between services in different hospitals and help stimulate better performance

    Better Primary Care

    Our vision of the NHS is one in which hospitals and family doctors gain greater power to run their own affairs. That is why we will continue to encourage the spread of fundholding among GPs. Labour by contrast would destroy the new freedoms that fundholding doctors enjoy by imposing a new layer of bureaucracy on top of them.

    However, we do not want the benefits of better healthcare to be confined to patients of GP fundholders. Our proposals to shift more healthcare towards family doctors are open to all

    We shall implement the new Primary Care Act which will enable all family doctors to provide a broader range of patient services within their surgeries. This will include (“super surgeries” and practice-based cottage hospitals that can offer faster and more local treatment.

    We expect to see the number of nurses working in GP practices continue to grow, as will the number of GPs.

    We will extend nationwide our plans to enable more nurses to prescribe a wider range of drugs for patients, recognising their contribution to primary care.

    Mental Health

    The last decade has also seen major changes in the care of mentally ill people. We will continue to develop a full range of services – including 24-hour nursed hostels and secure units – that can care for them in a way which is most appropriate to them and the interests of the wider community.

    We will not close any long-stay mental hospitals unless it can be shown that adequate care services exist in the community.

    We will strengthen co-operation between health and social services in the delivery of mental health services. Our recent Green Paper showed how this can be done. And we will monitor the progress of Health Authorities in developing proper mental health care plans.

    Health of the Nation

    A modern health service is not just about treating illness, it is also about keeping people healthy. This is why we launched the Health of the Nation strategy in 1992 – the first time England has had a strategy for health. Its aim is to reduce illness and premature death by identifying common causes of ill health, like excessive smoking and obesity. Different groups in and outside the health service then work together to tackle the problems.

    We are already seeing progress. Between 1990 and 1994, deaths from coronary heart disease among the over-65s, the suicide rate, and the number of teenage pregnancies fell substantially And last year we announced that environmental targets would be added to Health of the Nation.

    Improved general health means fewer people requiring attention in hospitals and GP surgeries – and more resources available for patients who need them. Our Health of the Nation strategy is a vital part of our vision for creating a health service fit for the 21st Century.

    A Modern Health Service

    Healthcare is changing fast. Modern technology is constantly increasing the range of treatments which are available. Conservatives believe that the benefits of these advances should be made available to patients on the basis of their clinical need, without regard to their ability to pay.

    Furthermore we also believe that the NHS must have access to sufficient resources to allow it to invest in the facilities required to deliver up-to-date healthcare. Since 1979 capital investment in the NHS has proceeded at an unprecedented rate. In the future we believe these requirements will be best met in a partnership with the private sector which allows the private sector to improve the facilities in which NHS healthcare is delivered.

    We will promote the Private Finance Initiative which will unleash a new flow of investment funds into the modernisation of the NHS.

    The NHS is a British success story. It commands universal support in Britain. It is widely admired all over the world. Conservatives are proud of the part we are playing in improving the NHS still further.

    6. Better Public Services

    The public sector is being transformed the world over. Britain is in the vanguard. Everyone else wants to learn from our vision of a smaller state doing fewer things and doing them better.

    Old style public services were centrally planned with little information or choice for the public who used the service. Our reforms have made these services more responsive to the public by breaking up cumbersome bureaucratic structures and shifting power to small responsive local institutions and the people who work in them. The schools, hospitals and police have all been transformed in this way. We support the people who do, not the people who plan.

    In order to get better standards we are liberating services from centralised control over capital. We will push forward our Private Finance Initiative to break down these old barriers.

    We have made public services genuinely accountable, with useful information and real choices for the people who use them. We set tough standards and they will get tougher. The Citizen’s Charter has raised standards of customer service. When these high standards are reached we recognise and reward excellence through our Charter Mark initiative. There are now 647 Chartermarks and we will aim for more than 2000 Chartermarks by the year 2000.

    We will require all government agencies to apply for Chartermarks.

    The days of the bureaucratic paperchase are behind us. The future is “government direct”. We will harness the latest information technology to place the public sector directly at the service of the citizen. People will be able to use simple computer terminals to enter information directly. This will transform time-consuming transactions like completing a tax return or registering a new business.

    Privatisation and Competition

    In 20 years, privatisation has gone from the dream of a few Conservative visionaries to the big idea which is transforming decaying public sector industries in almost every country in the world. Britain has led the way with this new industrial revolution: we can be proud of what we have achieved.

    In 1979 the Government inherited a range of businesses which had come into the public sector for different reasons. Many were known for their poor standards of service, and most were making large losses.

    Over the past eighteen years that situation has changed substantially. Privatisation has enhanced productivity, improved customer services, raised safety and environmental standards and substantially reduced prices.

    Telephone, gas and electricity bills to the customer have fallen as never before. Telephone waiting lists are unknown, and water, gas and electricity disconnections have fallen dramatically. Nearly £40 billion in private sector funding has been committed to a major investment programme to meet higher quality water standards. We can now look forward to water prices falling over the years ahead.

    Service standards have improved substantially. Before privatisation published service standards did not exist. Now industry regulators monitor legal requirements to provide quality services in a competitive environment. Refunds may be made when performance standards are not met.

    Privatisation has benefitted – and will continue to benefit – consumers, shareholders, employees, and taxpayers. In 1979 the then-nationalised industries required a £50 million per week subsidy from the taxpayer In 1996 those now privatised companies paid taxes of £60 million per week.

    We will ensure private ownership, competition and regulation continue to deliver lower prices and better services for consumers.

    We will extend competition for domestic gas users, and introduce competition in the water industry, starting with large users.

    The Post Office occupies an important part in national life. It comprises Counter Services, the Royal Mail and Parcelforce. The network of sub-post offices is vital and most are already run as private businesses. The Royal Mail provides a universal service at a standard price in every part of the United Kingdom. No one can imagine a stamp that does not bear the Queen’s head. These characteristics must continue, but reforms are needed to allow the services to develop. The Royal Mail must face up to the challenges and opportunities that are arising from increasing competition and the international liberalisation of services.

    We will guarantee to preserve the national identity, universal service and distinctive characteristics of the Royal Mail, while considering options – including different forms of privatisation – to introduce private capital and management skills into its operations.

    We will transfer Parcelforce to the private sector whilst ensuring that every Post Office in the land continues to provide a full parcel service at an economical price

    Privatisation works. We will therefore continue to pass government activities into private ownership where this can bring benefits to consumers and taxpayers.

    Local Government

    We are developing a new vision for local government.

    We believe local government should take a lead in the planning and development of their communities. To achieve that, we have encouraged them to work in partnership with central government, with private enterprise, and other organisations in their community. The impact of local government is multiplied when they work in this way.

    To encourage this partnership, we have developed the new approach of Challenge Funding. We set up a fund to meet a particular objective and then invite competing bids for the money. Those who form effective partnerships are far more likely to win those bids. The Single Regeneration Budget Fund, for example, has stimulated many working partnerships that are bringing new life to their communities.

    We will push Challenge Funding further to reward effective local government.

    This innovation has the potential to transform the financing of the public sector.

    In addition, we are encouraging higher standards and more cost-effective provision of local services. Local authorities can enable things to happen rather than necessarily running them themselves. They must look after the interests of users of their services – and that is often best done by being a purchaser, not an employer.

    Standards of service are rising in many local authorities. There are, however, still great disparities between the best and worst performers, as the Audit Commission shows in their thought-provoking reports.

    We will keep up the pressure for higher standards and improved value for money by insisting on compulsory competitive tendering.

    The development of Challenge Funding and the shift in the role of local authorities from direct employers to purchasers of services will transform local authorities over the coming years. In the meantime we will, for so long as is necessary, retain the power to cap local authorities to protect taxpayers.

    Strikes in Essential Services

    Industrial relations in this country have been transformed. In so far as there is a still a problem it is concentrated in a few essential services where the public has no easy alternative and strikers are able to impose massive costs and inconvenience out of all proportion to the issues at stake. We will protect ordinary members of the public from this abuse of power.

    We will legislate to remove legal immunity from industrial action which has disproportionate or excessive effect Members of the public and employers will be able to seek injunctions to prevent industrial action in these circumstances. Any strike action will also have to be approved by a majority of all members eligible to vote and ballots will have to be repeated at regular intervals if negotiations are extended.

    Transport

    Our railways are already improving now they have been liberated into the private sector Passenger numbers are up: more people are using the railways every day. Investment is up: Railtrack plans to spend £4 million each day on improving stations and maintaining and renewing the network. The new train operators are committed to investing £1.5 billion in new and refurbished rolling stock. And key fares are set to fall in real terms for the first time in a generation, with guaranteed price controls keeping fare increases below the level of inflation until at least 2003. We intend to build on this growing success story to create a thriving railway network for the new century.

    We will complete the successful transfer of British Rail into the commercial sector

    We now want to draw in private investment to modernise London Underground and improve services to passengers.

    We will bring forward plans to privatise London Underground. Proceeds from privatisation will be recycled in order to modernise the network within 5 years – creating an underground system to serve the capital in the 21st Century. We will regulate fares so they rise by no more than inflation for at least 4 years after privatisation. We will also protect services – including the Travel Card and concessionary fares.

    After completing the modernisation of the network, the majority of the remaining surplus from privatisation will be channelled into additional support for transport investment in London and elsewhere in the country.

    We will continue to encourage public transport. In particular, we will use the existing funding for local authorities to promote developments which make it easier to interchange between bus and rail.

    We recognise the needs of road users, and will continue to work with the private sector to sustain our road building and maintenance programme. Already under the Private Finance Initiative the private sector is contributing some £1 billion to investment in roads and achieving significant savings in construction costs. We will also tackle road congestion by introducing new regional traffic control centres, by extending the use of variable speed limits, and by ensuring that local authorities have the necessary powers to act. We will promote a cleaner environment by supporting a Europe-wide reduction in vehicle emissions, and encouraging the manufacture of more fuel-efficient vehicles.

    We will continue to build on our record of improving safety on roll-on roll-off ferries and cargo ships through higher standards of survivability and the measures in the Merchant Shipping Act.

    We will continue to make it easier for people to travel by air Already over the last 5 years opening up the market in Europe has led to more services and lower fares. We will build on that success in negotiations with the United States and other countries. We will also continue to encourage the development of regional airports offering new direct services to the rest of the world in the same way that we have already opened up new regional links with Europe and the United States. We will privatise the National Air Traffic Service because it will be run better in the private sector.

    Competition and enterprise are the best way to improve our transport system.

    A Safe and Civil Society

    Our Record – A Safe and Civil Society

    Spending on the police has doubled since 1979 after allowing for inflation. There are now about 16,000 more police officers than when we took office. 2,360 more constables have been recruited since the last election and the Government is giving Chief Officers the resources to recruit 5,000 police constables over the 3 years to 1999.

    Recorded crime has dropped in each of the last 4 years. It is now over 10% down on 1992 levels – more than half a million fewer offences – the biggest drop since records were first kept.

    There are now 153,000 Neighbourhood Watch schemes in England and Wales – 38,000 more than in 1992 – covering 5.5 million homes. We have helped fund over 4,000 closed circuit TV schemes over the last 2 years for additional security.

    Our national DNA database – the first in the world – now has over 112,000 samples on it. 3,300 matches have so far been made between suspects and crime stains.

    The Government has increased the maximum penalty for taking a gun to a crime and for attempted rape to life imprisonment. Since 1985 the average sentence for violence against the person has risen by a third and for sexual offences by nearly 40%.

    The number of cars stolen has fallen by nearly 20% in the last four years – that is about 100,000 fewer cars stolen.

    We have built 22 new prisons since 1980. Slopping out has ended. No prisoners now sleep three to a cell designed for one. Prison escapes have fallen by 80% since the last election.

    Mandatory drug testing has been introduced throughout the Prison Service. Home leave has been cut back – down by half in two years.

    We have made witness intimidation a crime. 500 people were charged with that offence in 1995 alone.

    We have stepped up the fight against drugs and organised crime, giving the Security Service powers to support the police and Customs and Excise in tracking down the serious criminals.

    7. Law, Order and Security

    People have a right to sleep safely in their homes and walk safely on the streets. Governments have a duty to maintain that security.

    Our reforms are aimed at ensuring that crime does not pay. And they are working – the pessimists and the scoffers are wrong. Recorded crime has fallen every year for the last 4 years. It is now 10% lower than it was in 1992. That is over half a million fewer crimes – the biggest drop since records were first kept in the middle of the 19th century.

    But crime is still too high. We must do more. Our aim is to keep crime falling over the lifetime of the next parliament. This is what we will do.

    Safer Communities

    Anti-social behaviour and petty crime disrupt communities and spread human misery. The police are rightly now vigorously tackling problems such as graffiti vandalism and drunkenness. Where such behaviour goes unchecked more serious crimes will follow.

    We will support chief constables who develop local schemes to crack down on petty crime and improve public order.

    Closed circuit television has proved enormously successful in increasing public safety.

    We will fulfil the Prime Minister’s pledge to support the installation of 10,000 CCTV cameras in town centres and public places in the 3 years to 1999. We will provide £75 million over the lifetime of the next parliament to continue extending CCTV to town centres, villages and housing estates up and down the country that want to bid for support.

    We will also continue to take other steps to improve the safety of our streets and communities. In this parliament we have given the police power to seize alcohol from under-18s caught drinking in public. The police have been given the power to stop and search in a specified area for up to 48 hours if they reasonably believe people to be carrying knives.

    Identity Cards can also make a contribution to safer communities.

    We will introduce a voluntary identity card scheme based on the new photographic driving licence it will, for example, enable retailers to identify youngsters trying to buy alcohol and cigarettes or rent classified videos when they are under age.

    Tackling Juvenile Crime

    A fifth of all crime is committed by under-18s. We are encouraging schools to reduce truancy through the publication of league tables and by supporting local projects to tackle the problem. We are developing a network of local teams to identify children who are at risk of turning to crime and to take early steps to address the factors which put them at risk.

    We will encourage these local child crime teams to refer children from primary school age upwards who are at risk of, or who are actually, offending to programmes to tackle their behaviour and fully involve their parents.

    The courts would be able to impose an order – a Parental Control Order – on the parents of children whom they believed could keep control of their children but were refusing to do so.

    Courts will be given the power to attach conditions to Parental Control Orders. Conditions might include a requirement to keep their children in at night, taking their children to and from school, attending a drug rehabilitation clinic or going to sessions to improve their skills as parents. Parents who breached these conditions – in defiance of the court – would face a range of possible sanctions.

    Appearing before a youth court should be a daunting experience for the juvenile concerned. All too often it is not. At the moment about a third of all juveniles appearing before the youth courts are discharged without any punishment at all This sends all the wrong signals to youngsters – particularly first time offenders – who then feel they can get away with crime.

    We will give the courts the power to impose speedy sanctions on youngsters, involving wherever possible an element of reparation to the victim. The probation service – rather than social services – will be responsible for enforcing community punishments for under-16s.

    Persistent juvenile offenders need to be properly punished. We are piloting a tough new regime, with a heavy emphasis on discipline, at a young offenders institution and at the military prison in Colchester In 1994 we doubled the maximum sentence for 15-17 year olds to 2 years detention in a young offenders institution. We have given the courts the freedom to allow the publication of the names of convicted juveniles. We will give the courts the power to detain persistent 12-14 year old offenders in secure training centres once the places become available.

    We have given the courts the power to impose electronically monitored curfews on 10 to 15 year old offenders. We will introduce pilots to test their effectiveness. If successful we will consider extending them nationwide.

    Catching, Convicting and Punishing

    We back the police every inch of the way. There are now about 16,000 more police officers – and over 18,000 more civilians helping them – than when we took office. We are providing chief constables with the resources to recruit 5,000 extra police constables in the three years to 1999.

    We support police initiatives to target the hard core of persistent criminals. Intelligence is crucial for this.

    We will establish a national crime squad to provide on improved nationally coordinated approach to organised crime.

    Once caught, criminals must be convicted and then properly punished. The public needs to be protected. We have reformed the right to silence, despite opposition from Labour. The number of suspects refusing to answer police questions has nearly halved as a result.

    We have piloted curfew orders for adult offenders. They have been shown to keep criminals indoors – curbing their freedom as a punishment – and keeping them out of trouble in the meantime.

    We will extend electronically monitored curfew orders nationwide for those aged 16 and over.

    Persistent offenders account for a high proportion of all crime. Prison works – not only as a deterrent, but in keeping these criminals off the street. Those sent to prison are less likely to re-offend on release than those given a community punishment. We will provide another 8,500 prison places by the year 2000.

    We will introduce minimum sentences for violent and persistent criminals to help protect the public more effectively, reversing Labour’s wrecking amendments to our tough Crime Bill.

    Anyone convicted of a second serious sexual or violent crime, like rape or armed robbery, will get an automatic life sentence.

    Persistent house burglars and dealers in hard drugs will receive mandatory minimum prison sentences of 3 and 7 years respectively.

    We will restore honesty in sentencing by abolishing automatic early release.

    Support for Victims

    Concern for the victim must be at the heart of our entire approach to the criminal justice system. We will continue to give strong backing to Victim Support.

    We will give courts in all cases the discretion to allow witnesses to give evidence anonymously if they believe them to be at risk from reprisal.

    We will also take action to allow a judge to stop a defendant from personally questioning the victim in rape cases and other cases where the victim is particularly vulnerable.

    Conservatives are on the side of the victims not the criminal.

    Strengthening the Fight Against City Crime

    Crime that takes place through manipulation of financial accounts and markets is as serious as crime on the street.

    The City’s unchallenged position as Europe’s most dynamic and successful financial centre owes a great deal to its reputation for honesty and fair dealing. We will help ensure that this reputation is maintained.

    We will bring forward in the next parliament a package of measures designed to modernise the current systems for dealing with City fraud.

    This will include legislation to allow the Inland Revenue to pass confidential information to the police, the Serious Fraud Office and the financial regulators to assist in the investigation of cases involving serious financial fraud. We will also remove the remaining legal obstacles to the controlled exchange of confidential information between the police and the regulators in this kind of case.

    Faster Justice

    Justice delayed is justice denied. It is wrong that people who are innocent should face an excessive wait before the start of their trial. The guilty must be held to account for their actions promptly. And victims should be given the chance to draw a line under their experience as quickly as possible. We are determined to speed up justice without diminishing the genuine rights of every citizen to a fair trial.

    Last October the government set up a review of delays in the criminal justice system. It made a series of detailed recommendations. We see merit in those recommendations and will seek the views of interested parties. We believe that taken together they could dramatically speed up the prosecution process, bringing the guilty to justice and acquitting the innocent more quickly.

    All defendants would appear in court the next working day after they were charged. At least half of them would be convicted the next day compared with just 3 per cent at the moment. And the time taken to bring juveniles to court would be cut from 10 weeks to a matter of days.

    Civil Justice

    The civil justice system of this country is a vital part of its competitive economy and has a high international reputation. The commercial courts attract substantial litigation from all over the world, generating significant foreign earnings. We will work to maintain the high standing of these courts.

    We have greatly improved the service the civil courts provide for the aggrieved citizen. The simple procedure for small claims has been extended to claims up to £3,000. For large claims the county court now provides an efficient local service with specialised courts in many locations around the country leaving the High Court to deal with the more complex and difficult issues.

    We will push ahead with the major reforms now under way which will greatly speed up the process and improve the delivery of justice without imposing additional burdens on the taxpayer.

    The Legal Profession

    We will ensure that the framework in which the legal profession operates is responsive to the changing needs of our people and is one in which unjustified restrictions have no place. We have, for example, given most solicitors rights of audience in the higher courts under appropriate conditions.

    Legal Aid

    People are rightly concerned about the rising costs of legal aid. We have taken many steps to control the burden and to deny access to legal aid to the “apparently wealthy” – those who qualified technically, but whose lifestyles suggested they should not.

    But more is required:

    We will change the structure of legal aid to ensure that it, like other vital public services, functions within defined cash limits.

    This will enable us to identify priorities and serve them much more efficiently than the present system.

    Drugs

    Drugs are a menace to the very fabric of our society They ruin the lives of addicts and their families. They can destroy whole neighbourhoods. The promising youth of today can too easily become the sad dropouts of tomorrow turning to crime and violence.

    The Conservative Government has a comprehensive strategy, launched in 1995, committed to fighting drugs in communities and in schools. It is tough on criminals and vigilant at our ports. It is respected throughout the world. We spend over £500m every year in tackling all aspects of drug problems.

    We will continue the fight against drugs through a coordinated approach: being tough on pushers; reducing demand by educating young people; tackling drug abuse at local level through Drug Action Teams; saying “No” to legalising drugs; and working with international agencies and foreign governments to resist the menace spreading.

    This pernicious evil has to be fought by all of us.

    A Confident, United and Sovereign Nation

    Our Record – The Nation

    Many of our old cities have been rejuvenated through a partnership of public and private investment.

    The area of green belt has doubled since 1979.

    Water and air quality in the UK have improved significantly.

    We are one of only a few nations on course to meet our commitment to return emissions of all greenhouse gases to 1990 levels by 2000.

    The Lottery has been established as the most successful in the world – raising £3 billion for good causes in a little over 2 years.

    More support is now given to arts and heritage than at any time in our nation’s history. We now provide nearly 20% more for the arts than the last Labour Government, over and above inflation.

    British talent was this year nominated for 30 Oscars. British music is again receiving international acclaim. The industry is worth £2.5 billion, more than shipbuilding or electric components: one in 5 CDs and records sold anywhere has a British connection.

    There is record investment in our sports facilities. Already the Lottery has provided £480 million for sport, including the planned British Academy of Sport, English National Stadium and, for the first time, direct funding for British athletes.

    We have continued to stand up for British interests in Europe, protecting our opt-out from the Social Chapter, maintaining our border controls, and preserving our budget rebate – worth £18 billion since it was introduced.

    We have the most professional armed forces in the world. We have modernised our nuclear deterrent by replacing Polaris with Trident.

    8. The Best Place in the World to Live

    Britain is admired the world oven Every year, millions of tourists travel here to enjoy our heritage and culture, our cities and countryside, our way of life. Our nation’s history is an anchor in a sea of change. We need to protect, cherish and build upon what is great about our country so our children grow up in a better Britain. We also must make sure that everyone, wherever they live, has the support of a strong, tolerant and civilised community.

    Our aim is for this generation and future generations to take pride in Britain as the best place in the world to live.

    Britain’s Cities

    London is one of the world’s greatest cities. It is livelier than even Our vision of its future is set out in a separate manifesto.

    Many of our cities have undergone a complete transformation over the last decade. We have promoted partnerships –through schemes such as Urban Development Corporations, the Single Regeneration Budget and City Pride – to attract private enterprise and investment back to inner-cities. These initiatives are bringing hope, opportunity and prosperity to what were once wastelands of urban decline.

    As the country thrives and becomes more prosperous, one of our central tasks is to apply the same approach in transforming the legacy of soulless, decaying public housing estates. They are places that suffer from the very worst kind of poverty – poverty of aspiration.

    We have already made a start – spending more than £2bn over the last 10 years on improving 500 of the worst estates. And we have shown how it is possible to tackle the economic and social problems alongside new investment in buildings – where possible, bringing in a greater mix of public tenants and private housing to recreate a more balanced community. Now we will extend this approach, focusing the Single Regeneration Budget to launch a combined attack on crime, unemployment and under-achievement, and developing the government’s partnership with the private sector to help fund the massive investment that will be required.

    Over the next decade, we aim to raise some £25bn of new private investment in housing estates by encouraging tenants in more than half of the remaining public sector housing stock to opt for transferring their homes to new landlords. These transfers will only occur where tenants choose this mute to improve theft estates.

    We will use this approach to regenerate the worst housing estates and transform the lives of those who live in them –targeting support for programmes to improve education standards, employment and crime prevention alongside new private sector investment.

    As well as this attack on poor housing, we will continue to help the homeless. We will carry through our planned extension of the Rough Sleeper Initiative from London to other big cities.

    We will provide sufficient hostel places to ensure that no-one need sleep out on the streets.

    Rural Communities

    Britain is blessed with some of the most beautiful countryside in Europe.

    We need to protect the best of the countryside whilst ensuring good jobs and living conditions for people who live there.

    We have to strike a balance: our rural communities must not become rural museums, but remain vibrant places to live and work. We will make sure government departments work together to ensure that balance is kept.

    We will continue to protect the green belt from development, making sure that derelict and under-used urban land is developed in preference to greenfield sites.

    We will use the planning system to ensure that more new homes are built on reclaimed sites in our towns and cities. We will aim for more than 60 per cent of all new homes to be built on derelict sites.

    This will reduce the pressure to build in our countryside and expand choice where it is needed most.

    We will support our rural communities, by giving special rate support to small village shops and post offices. The planning system can do more to help too.

    We will introduce a new Rural Business Use Class to encourage job creation in the countryside.

    We will increase support for schemes which promote care for the countryside – like Countryside Stewardship.

    We believe participation in traditional country pursuits, including fishing, is a matter for individuals. A Conservative Government will not introduce legislation that interferes with the rights of people to take part in these activities.

    We will also encourage managed public access to private land – in agreement with farmers and landowners – but strongly resist a general right to roam, which would damage the countryside and violate the right to private property.

    We aim to double Britain’s forest cover over the next fifty years. We will continue to encourage tree planting by targeting grants, encouraging investment in wood processing, and using new freedoms with the reform of the Common Agricultural Policy.

    Agriculture and Fisheries

    We will continue to provide robust support to the British beef industry through the BSE crisis until its long term strength is restored. We will vigorously pursue the eradication of BSE in the United Kingdom, as we have been doing successfully for the last eight years. We will spare no efforts in our fight against the unwarranted ban on British beef exports.

    Public health and food safety have been the government’s top priorities throughout the BSE crisis.

    We will tighten up control over food safety by appointing a powerful and independent Chief Food Safety Adviser and Food Safety Council to advise government

    We will continue to push for fundamental reform of the Common Agricultural Policy, moving away from production support to measures that will give our farmers the opportunity to compete while safeguarding the rural environment. We will ensure that no change to the Common Agricultural Policy unfairly disadvantages British farmers.

    Fishing is a vital industry in many parts of coastal Britain. We will continue our fight to secure a prosperous long term future for the industry and sustainable management of our fish stocks.

    We will insist at the IGC and elsewhere on measures to stop quota hopping and prevent the vessels of other countries from using UK fishing quotas.

    The integrity of our 6 and 12 mile fishing limits is not negotiable. We reject any idea of a single European fishing fleet.

    We believe that fishermen should have more say in decisions affecting their industry We will press the European Commission to establish regional committees to give fishermen a direct influence in fishing policy. We will use these committees to develop new ways of managing quotas and regulating fisheries which are more sensitive to the industry’s needs.

    Animal Welfare

    A civilised society respects animals. Britain will continue to take the lead in improving standards of animal welfare in Europe. In 1995 we secured a major breakthrough in the treatment of animals in transport; in 1996 we won victory in our campaign to ban veal crates throughout the EU. We are determined that standards should continue to rise and that all EU countries should have to meet them.

    We will seek to ensure that all European countries have to raise animal welfare standards.

    We are not going to take any risks with rabies. There may however be ways other than quarantine which maintain or increase protection for public health, while improving the welfare of pets and reducing the costs to travellers.

    We will publish a Green Paper on rabies protection, setting out all the options including the existing controls, early in the new parliament.

    Britain’s Environment Britain has an enviable track record in protecting our environment. Our rivers, beaches and water are cleaner and we are using our energy more efficiently. We are leading the world in reducing the level of the “greenhouse gases” that cause global warming and pressing for policies that will enable the world to sustain development without long-term damage to the environment. Our Green Manifesto is published separately.

    We have clear objectives to build on this record. We will set tough, but affordable targets, with published environmental strategies to improve air quality and banish city smog – with tighter standards on vehicle emissions and pollution crackdowns around the country We aim for sustained improvements in water quality, at a pace which industry and consumers can afford. We will develop labelling of products that gives consumers information to show the environmental impact of how they were made.

    In addition, we will continue to use the tax system and other incentives to encourage the use of vehicles and fuel which do not pollute the environment. And we will continue to explore policies based on the principle of polluter pays: those who contaminate land, pollute the environment or produce harmful waste should be made responsible for their actions and pay for the consequences.

    Britain – A Tolerant Country

    Tolerance, civility and respect have always been hallmarks of our nation. It is thanks to them that we have an excellent record in race relations.

    Everybody, regardless of colour or creed, has the right to go about his or her life free from the threat of intimidation. We are taking tough action to tackle harassment. Under proposals in the Protection from Harassment Act 1997, it will be a crime to behave in a way which causes someone else to be harassed. The maximum penalty will be 6 months in prison.

    Firm, but fair, immigration controls underpin good race relations. We will ensure that, while genuine asylum seekers are treated sympathetically, people do not abuse these provisions to avoid normal immigration controls.

    A World Leader In Sports, Arts and Culture

    Britain is enjoying a cultural renaissance. British music, films, television, fashion, art and food are winning plaudits the world oven They add excitement, fun and enjoyment to our lives. Our success brings pride to everyone.

    The National Lottery, which John Major set up, will pump billions of pounds into Britain’s good causes. Its proceeds will weave a new, rich thread of opportunity and charity into the tapestry of British life. In addition to benefitting major national institutions, about half of the awards are for amounts under £25,000 – benefitting local communities up and down the country. We will encourage new ways of distributing awards to support the performing arts – through support for amateur productions and community events, providing more musical instruments, and helping productions tour round the country.

    The National Lottery will also help us train and promote British sporting talent. The English National Stadium and British Academy of Sport, funded by the Lottery, will be new focal points for sporting events and excellence. We will encourage more young people to play sport by ensuring every school plays a minimum level of sport, including competitive sports, and developing a network of Sporting Ambassadors – sporting celebrities who will visit schools to inspire young people. We will also encourage the Sports Council to use Lottery money to employ over 1000 additional community sports coaches to assist in schools.

    We will encourage the use of Lottery money to train young athletes and artists, with revenue funding for bursaries, concessionary tickets to professional performances and support for young people’s organisations and productions.

    The development of young talent is important in all fields.

    The Lottery will also fund our Millennium celebrations. They will be inspirational as well as enjoyable. We want these be a showcase of British excellence. Britain will be able to look back on past achievements with pride, and look forward with confidence.

    9. Europe and the World

    Britain is a world leader as well as a European nation. Our economic strength, our history and our language make us a global trading nation with links right around the world. Only the United Kingdom is a member of the European Union, the United Nations Security Council, the Commonwealth, NATO and the Group of Seven leading industrial nations. In the Gulf, Bosnia, Cyprus and Northern Iraq, John Major has shown how our nation can contribute to world peace.

    We will continue to work with international partners to secure peace and stability in areas of tension such as former Yugoslavia; in Kashmir; in Cyprus; and in the Middle East. We will promote reform of the United Nations to make it a more effective organisation for securing international stability. Britain will continue to deploy our outstanding Armed Forces as peacekeepers under the United Nations. And we will support the aspirations of the Poles, Czechs, Hungarians and others to join the European Union and NATO.

    After the transfer of Hong Kong, we will work under the terms of the Joint Declaration to help sustain the prosperity and way of life of the people of Hong Kong and build on the substantial British interests that will remain.

    We will continue to support the Commonwealth, our unique global network, to encourage the spread of democracy; as set out in the Harare Declaration. We will focus our aid programme to encourage sustainable development in countries that are growing towards self sufficiency under democratic government. We have taken the lead in alleviating the burden of debt for the world’s poorest countries. We also have significant flows of private investment to developing economies. We are more than achieving the long term UN target of 1% of GDP for the transfer of wealth to less developed countries. We will continue to maintain a significant bilateral and multilateral aid programme reflecting the aspiration of meeting the UN’s target of 0.7% of GDP for aid as a long-term objective.

    We will also continue to provide leadership in Europe and internationally on environmental issues, building on the Rio Conference to encourage sustainable development – meeting our commitment to reduce Carbon Dioxide (CO2) emissions by 10% on 1990 levels by 2010 to prevent climate change. The Prime Minister has committed himself to attending the next UN Environmental Conference in June.

    Britain and the European Union

    We believe that in an uncertain, competitive world, the nation state is a rock of security. A nation’s common heritage, culture, values and outlook are a precious source of stability. Nationhood gives people a sense of belonging.

    The government has a positive vision for the European Union as a partnership of nations. We want to be in Europe but not run by Europe. We have much to gain from our membership of the European Union –in trade, in co-operation between governments, and in preserving European peace. We benefit from the huge trade opportunities that have opened up since Britain led the way in developing Europe’s single market. We want to see the rest of Europe follow the same deregulated, enterprise policies that have transformed our economic prospects in Britain.

    However, in June, the nations of the European Union will gather in Amsterdam to negotiate possible amendments to the Treaty of Rome. It is a moment of truth, setting the direction in which the European Union will go. It will also be crucial in ensuring that we have a relationship with the rest of Europe with which we can be comfortable.

    A Conservative Government will seek a partnership of nation states. Some others would like to build a federal Europe. A British Conservative Government will not allow Britain to be part of a federal European state.

    The diversity of Europe’s nations is its strength. As more nations join the European Union, it needs to become flexible not more rigid We must also ensure that any developments which only include some members do not work to the disadvantage of others.

    Our priorities for Europe’s development will be enlargement of the Community, completion of the single market, reform of the European Court of Justice, and further strengthening of the role of national parliaments. We will seek more co-operation between national governments on areas of common interest – defence, foreign policy and the fight against international crime and drugs. We also believe the European Union itself should do less, but do it better. So we have proposed incorporating the principle of subsidiarity – that the European Union should only do that which cannot be done by member states acting alone – into the Treaty. This is how we are approaching the Inter-Governmental Conference.

    We will argue for a flexible Europe which fully accommodates the interests and aspirations of all its member states and where any new proposals have to be open to all and agreed by all. We will not accept other changes to the Treaty that would further centralise decision-making, reduce national sovereignty, or remove our right to permanent opt-outs.

    We will retain Britain’s veto and oppose further extension of qualified majority voting in order to ensure we can prevent policies that would be harmful to the national interest. We will defend the rights of national parliaments and oppose more powers being given to the European Parliament at the expense of national parliaments.

    We will take whatever steps are necessary to keep our frontier controls. We will resist attempts to change the inter-governmental nature of co-operation in justice and home affairs. We will not accept the development of new legal rights that extend the concept of European citizenship.

    Britain’s rebate has so far saved British taxpayers £18bn and we will protect it.

    One of the greatest challenges Europe faces is to cut unemployment and make its businesses competitive. Here Britain is leading the way. We will continue to argue for deregulation and lower costs on Europe’s businesses, the policies that have helped give Britain one of the strongest economies in Europe. We will not put that achievement at risk by signing up to the Social Chapter, which would open the door to imposing the high costs of the European social model on British business. Once Britain accepted the Social Chapter we could not stop many of these damaging policies being imposed on us by qualified majority voting.

    We will insist that any new Treaty recognises that our opt-out from the Social Chapter enables Britain to be exempt from the Working Time Directive, and prevents any abuse of our opt-out. And we will not accept a new employment chapter in any revised Treaty, which would expose British businesses to new costs.

    We made it clear in the previous chapter that we will continue to work for further reform of the Common Agricultural Policy and the lifting of the worldwide ban on British beef and will insist on measures to stop quota hopping by foreign fishing vessels.

    Protecting Britain’s interests demands tough, experienced negotiation. John Major has proved he has these qualities – including the resolve to say no when necessary even if that means being isolated. Labour have said they would never let Britain be isolated in Europe: they would damage Britain’s success by undermining our veto, signing up to the Social Chapter and following in others’ footsteps – even where they lead in the wrong direction. They support policies that would fragment the United Kingdom’s influence within a Europe of Regions. The Liberal Democrats welcome the end of the nation state. Only the Conservatives can be trusted to stand up for Britain in Europe: our national interest must be protected.

    A Single Currency: Our Referendum Guarantee

    The creation of a European single currency would be of enormous significance for all European states whether they are members or not. We must take account of all the consequences for Britain of such a major development of policy.

    John Major secured for us at Maastricht an opt-out from the commitment to enter a single currency. It is only because of this opt-out that we have the right to negotiate and then decide whether it is in Britain’s interest to join.

    It is in our national interest to take part in the negotiations. Not to do so would be an abdication of responsibility. A single currency would affect us whether we were in or out. We need to participate in discussions in order to ensure the rules are not fixed against our interests. The national interest is not served by exercising our option – one way or the other – before we have to.

    For a single currency to come into effect, European economies will have to meet crucial criteria. On the information currently available, we believe that it is very unlikely that there will be sufficient convergence of economic conditions across Europe for a single currency to proceed safely on the target date of January 1st 1999. We will not include legislation on the single currency in the first Queen’s Speech. If it cannot proceed safely, we believe it would be better for Europe to delay any introduction of a single currency rather than rush ahead to meet an artificial timetable. We will argue this case in the negotiations that lie ahead.

    We believe it is in our national interest to keep our options open to take a decision on a single currency when all the facts are before us. If a single currency is created, without sustainable convergence, a British Conservative government will not be part of it.

    If, during the course of the next parliament, a Conservative government were to conclude that it was in our national interest to join a single currency, we have given a guarantee that no such decision would be implemented unless the British people gave their express approval in a referendum.

    Defence in an Unstable World

    The old rivalries of the Cold War have been replaced by new tensions. Britain must be able to react rapidly to protect our security and interests around the globe.

    Our armed forces are the most professional in the world. We have cut unnecessary bureaucracy and increased efficiency, and directed money to support our Services in the frontline. We have made the changes necessary to adapt our Services to the threats which we might now face. We have set out defence plans based on stable levels of funding. There is no need for a defence review, which would raise fear and uncertainty about the future.

    We will continue to ensure the Services have the modern weapons they need to guarantee their superiority against potential aggressors. We will make sure we can conduct military operations throughout the world, and develop our capability to deploy the three services together and rapidly, including the ability to transport heavy equipment into an operational zone. We will take part in ballistic missile defence research so we can decide whether we should procure any such system for the United Kingdom.

    We will continue to target our efforts on recruiting for the armed forces. We will set up an Army Foundation College, which will provide 1,300 places for 16 and 17 year olds who want to join the Army. We will also enable the reserve forces to play a more active role in operations. We appreciate the enormous value of cadet forces, and our current plans include resources to encourage their further development.

    We will continue to support Britain’s defence industry, and we will work with companies to identify the technologies of the future.

    NATO will remain the cornerstone of our security. We will resist attempts to bring the Western European Union under the control of the European Union, and ensure that defence policy remains a matter for sovereign nations.

    10. The Constitution

    Alone in Europe, the history of the United Kingdom has been one of stability and security; We owe much of that to the strength and stability of our constitution – the institutions, laws and traditions that bind us together as a nation.

    Our constitution has been stable, but not static. It has been woven over the centuries – the product of hundreds of years of knowledge, experience and history.

    Radical changes that alter the whole character of our constitutional balance could unravel what generations of our predecessors have created. To preserve that stability in future – and the freedoms and rights of our citizens – we need to continue a process of evolution, not revolution.

    Conservatives embrace evolutionary change that solves real problems and improves the way our constitution works. In recent years we have opened up government, devolved power and accountability, and introduced reforms to make parliament work more effectively. It is that evolutionary process that we are committed to continue.

    Open, Accountable Government

    In recent years we have taken significant steps to open up government to public scrutiny, and give individuals more information to hold government and public services to account.

    We have introduced a code on access to government information, policed by the Ombudsman. We have published information on the workings of government previously held secret –including the composition of cabinet committees, and the structure of the security and intelligence services. We have introduced a new civil service code, and reformed the process for public appointments. We are pledged to legislate on the commitments in our 1993 White Paper on Open Government, including a statutory right of access by citizens to personal records held about them by the government and other public authorities. And we have set up the Nolan Committee and have implemented its proposals to ensure that the highest standards are maintained in public life.

    But our reforms go even wider than that. We have transferred power from central bureaucracies to local organisations such as school governors and hospital trusts. We have introduced the Citizen’s Charter We have also required them to publish information on their performance – information which enables the local community to keep a check on standards and apply pressure where needed. Wherever possible, we are widening competition and choice in public services. We showed in Chapter 6 how we wished to push this agenda forward.

    Regional government would be a dangerously centralising measure – taking power away from elected local authorities. We wish to go in the opposite direction, shifting power to the local neighbourhood – for example, by giving more power to parish councils.

    Parliament

    Parliament – alongside the Crown and our legal system – is one of the three key institutions that uphold our constitution. The supremacy of parliament is fundamental to our democracy, and the guarantee of our freedoms. The last 17 years have seen many changes to strengthen parliament and make it more effective – the flourishing of select committees, new procedures to scrutinise European legislation, reform of parliament’s working day, and a budget that brings together tax and spending.

    We have therefore already done much to improve the way parliament works and will do more. We have accepted the proposal from the Public Service Select Committee and put before the House of Commons a clear new statement of the principles underlying ministerial accountability to parliament.

    All these developments have made parliament open to the citizen, and the government more accountable. In the next session of parliament we will continue this careful reform.

    To give parliament more time to consider legislation thoroughly we will extend the Queen’s Speech to cover not only legislation for the immediate year but also provisional plans for legislation in the year after that

    This will mean that more draft bills will be subject to public scrutiny before they reach the floor of the House of Commons. It will give select committees more time to take evidence and report. And this should also mean better legislation.

    We do not believe there is a case for more radical reform that would undermine the House of Commons. A new Bill of Rights, for example, would risk transferring power away from parliament to legal courts – undermining the democratic supremacy of parliament as representatives of the people. Whilst this may be a necessary check in other countries which depend upon more formalised written constitutions, we do not believe it is appropriate to the UK.

    Nor do we favour changes in the system of voting in parliamentary elections that would break the link between an individual member of parliament and his constituents. A system of proportional representation would be more likely to produce unstable, coalition governments that are unable to provide effective leadership – with crucial decisions being dependent on compromise deals hammered out behind closed doors. This is not the British way.

    We have demonstrated we are not against change where it is practical and beneficial. But fundamental changes which have not been fully thought through – such as opposition proposals on the House of Lords – would be extremely damaging. We will oppose change for change’s sake.

    The Union

    The Union between Scotland, Wales, Northern Ireland and England underpins our nation’s stability. The Conservative commitment to the United Kingdom does not mean ignoring the distinctive individuality of the different nations. On the contrary, we have gone further in recognising that diversity than any previous government. We are publishing separate manifestos for Wales and Scotland.

    While preserving the role of parliament at the centre of the Union, we have given new powers to the Scottish Grand Committee and Welsh Grand Committee – enabling Scottish and Welsh MPs to call Ministers to account and debate legislation which affects those countries – something that would be impossible with separate Assemblies. For the first time, Welsh members of parliament can ask their questions to Ministers in Welsh in Wales. Most recently we have similarly extended the basic powers of the Northern Ireland Grand Committee.

    We believe this is the right way to go. By contrast, the development of new assemblies in Scotland and Wales would create strains which could well pull apart the Union. That would create a new layer of government which would be hungry for power. It would risk rivalry and conflict between these parliaments or assemblies and the parliament at Westminster. And it would raise serious questions about whether the representation of Scottish and Welsh MPs at Westminster – and their role in matters affecting English affairs – could remain unchanged.

    Nor do we believe it would be in the interests of the Scottish or Welsh people. A Scottish tax-raising parliament, for example, could well affect the choice of where new investment locates in the United Kingdom.

    In a world where people want security, nothing would be more dangerous than to unravel a constitution that binds our nation together and the institutions that bring us stability. We will continue to fight for the strength and diversity that benefits all of us as a proud union of nations.

    Northern Ireland

    While we cherish the Union and Northern Ireland’s place within it, we recognise that there exist within the Province special circumstances which require further action to be taken.

    After a quarter of a century we wish to see the unique and originally temporary system of direct rule ended and a successful restoration of local accountable democracy achieved. We want to see this brought about in a form which carries the broadest agreement possible. And we want to see the rights, traditions and interests of all parts of the community recognised within any such agreement.

    We will accordingly continue to pursue a policy of dialogue and negotiation with and between the democratic Northern Ireland parties. We will continue to underpin such negotiations with the guarantee that the constitutional position of Northern Ireland cannot and will not be changed without the broad consent of the people of Northern Ireland. At the same time we will continue to take whatever security measures are required to protect the people of Northern Ireland from those who seek to achieve their political goals by violent means.

    We seek peace. But we will never be swayed by terrorist violence nor will we ever compromise our principles with those who seek to overthrow the rule of law by force.

    A Choice of Two Futures

    At this election the British people face a stark choice. A choice of two futures.

    They can elect to continue down the road of success and achievement. An opportunity that has been hard won by the efforts and sacrifices of the British people. An opportunity that has only come about because successive Conservative governments have been determined to face up to the long term problems facing Britain, and take the tough steps needed to arrest our slow decline.

    Or they can elect to take a huge risk with that future – the future of themselves, their children, their nation – by handing over the government of the country to politicians who have fought, opposed and denigrated every step that has been taken to restore Britain’s economic health and standing in the world. Politicians whose own declared policies would burden the United Kingdom with new spending and taxation, new regulations, and new threats to the stability and sovereignty of the nation itself.

    You can only be sure with the Conservatives.

    Our Vision for Britain:

    25 Pledges for the Nation

    The Enterprise Centre of Europe

    TAX AND SPENDING. keep tight control of public spending priorities, aiming for our target of a 20p basic rate of income tax over the next parliament.

    PRICES AND MORTGAGES. Stick to the policies which have delivered the lowest inflation levels and mortgage rates for a generation, meeting our inflation target of 2½ % or less.

    JOBS. Protect jobs by keeping Britain out of the European Social Chapter; build on our record of falling unemployment; and help get the long term unemployed back to work – including by requiring those on benefit for some time to undertake work experience on a community project.

    ENTERPRISE. Support growth and investment by keeping Britain the lowest tax major economy in Europe. pursuing Britain’s global trade opportunities. and curbing unnecessary regulations.

    SMALL BUSINESS. Reform business rates to help small businesses.

    THE FUTURE. Keep Britain ahead in the technologies of the future, encouraging new entertainment and information services and using the Millennium Lottery Fund to give people access to new computers and information links in schools, libraries, and other public places.

    Opportunity and Ownership for Individuals and Families

    HELP FOR FAMILIES. Give priority to reducing tax bills for families looking after dependent children or relatives by allowing one partner’s unused personal allowance to be transferred to a working spouse where they have these responsibilities.

    HELP FOR CARERS. Help family members with heavy responsibilities caring for a relative to take a much needed break through a new Respite Care Programme.

    OWNERSHIP. Encourage schemes that help employees build a shareholding in the company they work for, alongside tax benefits for other savings schemes.

    PENSIONS. Transform pensions by providing all young people entering the workforce with a personal pension fund paid for by a rebate on their national insurance contributions, while maintaining a state pension guarantee.

    CARE IN OLD AGE. Make it easier for people to afford the cost of care in old age without giving up their house and savings.

    SCHOOL STANDARDS. Guarantee school standards by intervening directly to raise standards where schools or local education authorities are letting children down.

    SCHOOL CHOICE. Widen choice and diversity in schools, with more freedom for schools to develop their own character, more specialist schools, and a grammar school in every town where parents want that choice. We will also maintain our nursery voucher scheme offering a choice of places for parents of all 4 year olds.

    World Class Health and Public Services

    NHS FUNDING PLEDGE. Continue, year by year, to increase the real resources committed to the NHS, so NHS spending will continue to share in a growing economy.

    FAMILY DOCTORS. Enable all family doctors to provide a wider range of services in their surgeries and in practice-based cottage hospitals – offering faster and more local treatment.

    CITIZEN’S CHARTER. Continue to improve the standards and value for money of Britain’s public services, giving those who use them more information and, where possible, wider choice.

    ESSENTIAL SERVICES. Introduce measures to protect the public against strikes that cause excessive disruption to essential services.

    A Safe and Civil Society

    PUBLIC SAFETY. Support local police schemes to crack down on petty crime, and continue our funding for the installation of TV security cameras in town centres and public places that want them throughout the next parliament.

    JUVENILE CRIME. Give the courts power to impose speedy sanctions on youngsters, including an element of reparation to the victim; and continue our war against drugs.

    PERSISTENT CRIMINALS. Ensure persistent house burglars and dealers in hard drugs receive mandatory minimum prison sentences.

    A Confident, United and Sovereign Nation

    QUALITY OF LIFE. Continue the renaissance of our towns and cities, in particular harnessing private capital to regenerate the worst public housing estates; continue to protect our countryside and heritage; and use the National Lottery to help promote British sports, arts and culture.

    THE ENVIRONMENT. Maintain our international leadership role in protecting the environment, and continue improving air and water quality at home alongside effective conservation of our wildlife.

    THE NATION. Maintain the unity of the United Kingdom and preserve the stability of the Nation through an evolutionary – rather than revolutionary – approach to constitutional change.

    EUROPE. Seek a partnership of nation states in Europe, and not allow Britain to be part of a federal European state.

    THE POUND. Guarantee that Britain will not join a single currency in the next parliament unless the British people give their express approval in a referendum.

  • Mr Major’s Speech to Central Council in Bath – 15 March 1997

    Below is the text of Mr Major’s speech to Conservative Central Council, held in Bath on Saturday 15th March 1997.


    PRIME MINISTER:

    Today, I’m going to set out what I believe.

    And why you can only be sure with the Conservatives.

    We’ll win because our policies work. And Labour’s don’t.

    Because we say what we believe in. And Labour don’t.

    Because we’re proud of our record. And they’re trying to hide their past.

    That’s why Labour make such a performance of saying that they’ve changed.

    Mr Chairman, who were the leading lights of the Labour Party when the Blairs, the Cooks and the Browns joined it?

    I’ll tell you. The Kinnocks, the Benns, the Foots, the Healeys.

    Now they’re non-persons.

    They’re not talked of – except in private, where Mr Cook says Mr Foot is the best Prime Minister we never had.

    in public he supports Mr Blair – just – but in private he says something else.

    New Labour in a nutshell.

    But our real opponent is much more formidable than Labour.

    We’re fighting the argument that “it’s time for a change.”

    Economic change

    Time for a change?

    Odd, isn’t it – in 1979 Britain was near bankrupt, scorned, a great nation on the slide. Our country really did need change then.

    Why? Because in that harsh, unforgettable winter, Britain was governed by Labour.

    This spring, children born that winter will be voting for the first time.

    In their short lifetime, an old, decaying – some said dying – nation has been rejuvenated, restored, revived.

    Those young people won’t know it. Far too many others out there seem to be forgetting it.

    But Britain has changed – from being a European basket case to an international role model.

    People once talked of the British disease. Now they’re copying the British solution.

    The once sick man of Europe is setting the pace.

    So, when you hear siren voices wailing ‘It’s time for a change’ – fix them in the eyes and challenge this nonsense:

    ‘A change to what?’

    Is the nation moaning, out there “Low inflation. Who needs it? Let prices rip”?

    Are they frantic at the lowest basic rate of tax for sixty years? “I can’t bear it. Let’s put a penny on income tax again”?

    Do they despair as unemployment falls, month after month? “How boring. Why can’t we lose jobs like France and Germany”?

    Do they weep that we’re number one in Europe for inward investment? “Forget it – we don’t want foreign money here. Let’s have that Social Chapter, load costs on those companies and drive the new jobs away”?

    Mr Chairman, you know they don’t. No sensible person is asking for that.

    So, I say to the “time for a change” merchants: “Find me a better country in the world in which to live”.

    If you can – well, bye, bye, we’ll miss you.

    If you can’t, pipe down – and let us get on with the job of building the well-being of our nation to a level it has never known before.

    A Smaller, But Better State

    Mr Chairman, my Conservatism is first about helping more people realise their own private hopes and personal ambitions.

    And second about removing the avoidable fears that blight too many lives.

    Over the years Government after Government has wanted to do this.

    Now we have the prize we’ve all been seeking – the strongest, most stable economy that Britain has seen since way before the war.

    So now, we can really make progress.

    My aim is to make the state smaller, but better.

    That’s why our target is a 20 pence basic rate of tax – and for state spending to fall below 40 per cent of the nation’s wealth.

    Working two days a week for the state – surely that’s enough for all of us?

    I believe that if things can be done better in the private sector, they should be.

    But I also believe some things should always be done in the public sector.

    And if so, they must be done well.

    Over the years we’ve reined back the size of the state. Steel coal, gas, electricity, water, airways – all once leeched on the state for subsidy.

    Now they’re in the private sector, yielding taxes for schools, hospitals, police.

    It’s a remarkable record – a smaller state, lower income tax and better services.

    And there’s further to go.

    The Next Conservative Government

    Mr Chairman, in the last few days some interviewers have asked me: “It’s been a tough few years, Prime Minister. Why do you want to go on?”

    I’ll tell you.

    Because I dream of a people’s Britain, in which all the people – not only the confident and well to do – can make their own choices and mould their own lives.

    I believe that’s their right. Their right – to choose, to save, to spend, to know that they own.

    I want to see everyone have these opportunities.

    To see the have-nots become the haves.

    That’s why we started the sale of council houses.

    Why we’ve sold shares and spread savings.

    And it’s why we’re going to provide secure pensions for everyone.

    Because the Conservatism I’m talking about isn’t just for the lucky, the fortunate, the able, the self-confident.

    It’s for everyone.

    For those for whom life is a struggle.

    For those who don’t have the best education.

    Don’t have a decent home.

    Don’t live in a safe neighbourhood.

    Don’t have a job.

    I should know. I come from them. I care for them. And I long to see them have their fair share of the good things of life.

    Opportunity for all: the next Conservative Government is for them, as much as for anyone else.

    We’ll make sure that those who don’t have, do have.

    People’s Pensions

    Mr Chairman, as Britain grows wealthier, we must see to it that more of what the State spends goes where the taxpayer would like it to go.

    I believe in the Welfare State – and the security and comfort it offers the British people. I’m determined it will be there for our children and grandchildren.

    But we can only guarantee its future if it remains affordable.

    We have set out recently big ideas to do just that.

    Today’s pensions, for example, rely on each younger generation being able to pay for the old.

    As more people live longer, can we be sure that would always be possible?

    It’s a giant of uncertainty that no truly caring government could ignore. A giant that the next Conservative government will begin to slay.

    We aim to build on what William Beveridge intended.

    To build up – over time – a secure pension scheme for all.

    But we’ll go one better.

    Ours won’t be a state pension – though it will have a state guarantee.

    It will be a People’s Pension, owned by everyone – personally. It will be theirs – by right.

    It will be funded by real investments – not unwritten promises and rising tax.

    It will guarantee the new generation – our children and grandchildren – not just the basic state pension, but their own personal pool of savings.

    By the time they retire, someone on average earnings should have built up £130,000 of savings. Enough to provide a pension of £175 a week.

    It’s a long-term plan – a true Conservative idea – one that will give our children a security and independence that previous generations could only dream of.

    Protecting Savings

    Often true security and peace of mind come from savings.

    People save for security. For comfort in retirement. Against a rainy day. To ensure the dignity of self-provision.

    They worry about the cost of care if they grow infirm when they are elderly.

    And they despair when their savings are eaten up to pay for care.

    This week we announced a plan to tackle this problem.

    We will lessen the worries so many people have about the cost of nursing home care.

    It’s quite simple. A partnership.

    We intend to help people who plan ahead and take out insurance against long-term care.

    In return, for every £1 they spend, we’ll disregard an extra £1.50 of their assets and protect them from being used to pay for care.

    This will mean people can protect more of their savings for themselves and their families.

    Too many people who have prudently saved still find their money stripped from them by the accident of illness in old age. This will protect them.

    It’s the second great aim for the next Conservative Government – to banish the fear of losing their lifetime’s assets to pay for care in illness.

    I believe in the cascade of wealth between the generations. So we’ll help build it up. Help protect it – and, as we can afford it, steadily reduce the burden of tax upon it.

    A Modern National Health Service

    Over the last generations we’ve seen the greatest leap forward in the health of the nation that we’ve ever known.

    People are living better and living longer.

    That’s good.

    But, as more and more people live longer and longer, the demands on our doctors and hospitals must grew.

    And that means constant investment in new science and new treatments in the National Health Service.

    If you spend all your time worrying what will happen when you lose your health, you’ve no time left to enjoy it.

    So here’s a pledge to fight the third great fear – the fear of disease.

    It’s a pledge that no other party has matched.

    A pledge for you to take to the doorsteps, to the millions of families who treasure the peace of mind the National Health Service gives.

    We will continue to improve the Health Service year on year.

    We’ll plough savings back into health care year on year.

    And the next Conservative Government will provide more money for the NHS, over and above inflation, year on year on year, for the next five years.

    It’s why prosperity matters.

    Because growing national wealth will mean better National Health.

    Our aim is to make good health more infectious than disease.

    As far as the NHS is concerned, if you’re ill we’ll make it better.

    A Guarantee of Standards

    Mr Chairman, Britain will live or die by whether British workers can think better and work faster than our competitors. The prizes of the next century will go to countries with the best educated workforce.

    That means we need the best education for every child, in every class, in every school.

    We’ve come a long way – but not far enough to meet tomorrow’s challenges or parents’ wishes.

    Parents deserve more choice. We’ll give it to them.

    No ‘ifs’. No ‘buts’. No small print or sly evasions.

    More grant-maintained schools, more specialist schools, more grammar schools.

    If that’s what they want, that is what we – and we alone – guarantee they can have.

    Choice is crucial – but it’s no use if it’s a choice between two bad schools.

    Children have only one chance at education. Many schools are good. Exam results impressive. But it’s not universal.

    I’m not prepared to stand by and see children let down by bad schools and bad councils.

    That’s why we’ve put in place our reforms. A national curriculum. Local management. Tests. Tables. And inspections. We had to fight for them all – against bitter hostility from Labour.

    Our reforms have shone a spotlight on the dark corners of the education system. Exposed failing schools and the failing education authorities that run them.

    As a result, in our Manifesto, we can now do what no previous government has ever dared to do before.

    We can offer parents a guarantee of education standards.

    Where we need to, we’ll take action to turn failing schools around.

    And where whole education authorities are failing, – and, sadly, some are – we’ll send in professional teams to sort them out.

    Councils like Islington, Hackney, Haringey – the real Labour heartlands – have failed and failed and failed.

    They have betrayed generations of children.

    Time after time tests and tables show Labour councils to be the bleakest areas of the education landscape.

    And the Leader of the Labour Party has the gall to say that education is his passion. “Education. Education. Education.”

    But what has he ever done about those deplorable Labour councils?

    Nothing. Nothing. Nothing.

    Nothing – but turn the car key and drive away to another borough and another school.

    Towards a GM school that Tory policies made possible – and which his policies would destroy.

    I don’t believe children are less clever in some areas. I believe they’re let down in some areas.

    I come from local government but I have no brief for it when it fails. So I offer this warning.

    We will not follow Mr Blair and Ms Harman as – head aloof – they pass by on the other side.

    We will go into those education authorities. We will examine them. And where they are failing, we will take their powers from them – in the interests of our children.

    The Inner Cities

    Our Conservatism must be for everyone – whoever they are, wherever they live.

    We want to spread the prosperity of the suburbs into our inner cities.

    Already we’ve transformed the face of many cities.

    But we must do far, far more.

    We’re going to tackle the problem of inner city deprivation more imaginatively than any Government before.

    We’ll bring to every tenant the choice of freedom from shoddy council control – for a fresh start with a better landlord.

    We’ll build a new partnership between public and private sector.

    Where tenants agree, we’ll bring in private capital to improve their lives on a scale never seen.

    To transform housing; improve schools; fight crime.

    Dignity, security, prosperity must walk down every street in the land.

    And that must include the inner cities.

    Grown up Government: Preparing for the Future – Now

    Mr Chairman, in the first years of this century Winston Churchill and Lloyd George laid the foundations of the Welfare State.

    The wartime and post-war governments, drawing on the work of William Beveridge, brought in state provision on a huge scale. It was right for its time. And, for a long time, it has served us well.

    But now we are on the threshold of a new century. Right across the world – even in the richest nations – people are looking forward and saying that the State cannot shoulder all the burden -and for ever.

    Some things, like the free National Health Service, is a principle we must never change.

    But, I believe it is time for the third great move forward in public welfare.

    To bolster social security with personal and family security.

    To build alongside State provision growing private wealth.

    To replace the insecurity of dependence for many with the security of independence for all.

    I have laid some of those ideas before you today.

    This is a bold vision – a grand ambition. It is what I have always longed to do.

    When it’s accomplished – and the next generations have the savings and security that we are preparing for them – then I believe people will look back and say: “How lucky we are that governments then looked forward – not twenty minutes or twenty days, but twenty, forty, sixty years.”

    Mr Chairman, government is a grown-up business.

    It’s not about clutching for the advantage of the hour.

    It’s about working for the advantage of future generations some of us may never even know.

    And to do that, whatever may be the short-term reaction – from the unthinking, the uncomprehending, the sheer opportunist.

    Doing the right thing, at the right time, for the ends we know to be right.

    Labour

    Our record is in the book, our policies are on the table, our principles are clear.

    So when people go into the polling booth, and put a cross in the box beside the Conservative candidate, they’ll know what it stands for.

    You can only be sure with the Conservatives.

    But before they mark that X, I’d like them to think carefully – very carefully indeed.

    That X will decide the fate of Britain for the next five years.

    But they could mark X somewhere else.

    X for the unknown quantity.

    An X that might stand for … well, just about anything.

    Imagine waking up the morning if the X files stacked up for Labour.

    It would be like waking up on an aeroplane that’s taxiing for take-off. What would the new captain say?

    “Welcome on board. Before we take-off, I’d just like you to welcome your crew.

    You probably remember the last crew from the same training school crash-landed. So did the one before. Indeed, everyone before. But don’t worry, we’re new.

    In fact, we’re so new none of us have flown before, except on a television simulator.

    During the flight, our bar steward, John Prescott, will be coming through the cabin, offering a selection of goods, all of which cost more tax.

    I can’t tell you yet what altitude we’re flying at. Or what speed. Or what direction. But I’m hoping a focus group will tell me shortly.

    Our destination – is unknown. But I can tell you the flight time will be about five years.

    In the meantime, please ensure your seat-belt is securely fastened.”

    Please ensure your seat-belt is securely fastened. That’s surely true. You would certainly need it.

    Imagine.

    Trade union bosses licking their lips, their lunch boxes packed with their sandwiches and pay demands.

    Businessmen reassessing their options, thinking how many they’d have to sack once Labour signed the Social Chapter.

    Currency markets holding their breath, remembering how the last Labour government bankrupted Britain.

    Scottish Nationalists preparing to say ‘Whatever Mr Blair offers, it’s not enough’.

    And the European Federalists, rubbing their hands with glee at the thought of a Britain that will never be isolated in Europe, no matter what they proposed.

    If Mr Blair ever walked in through the most famous door in the world, half the hopes of Britain would disappear out the back.

    It’s taken 18 years of sound government and sheer hard work by the British people to get us here.

    We must not throw it away. Throw it away with the wrong economic policy.

    No, Mr Chairman.

    It’s not time for a change.

    And it would not be safe to change.

    Not safe to change economic management.

    Not safe to adopt reckless and opportunistic commitments to constitutional change.

    Not safe to toe the line in Europe and wreck our competitiveness.

    I’ll tell you what it is time for.

    It’s time for the clear-headed.

    Time for the far-sighted.

    Time for the experienced.

    Time to be sure.

    It’s time for us.

    That’s why we’ll win.

  • PMQT – 6 March 1997

    Below is the text of Prime Minister’s Question Time from 6th March 1997.


    PRIME MINISTER:

     

    Engagements

    Q1. Mr. Simon Coombs: To ask the Prime Minister if he will list his official engagements for Thursday 6 March.

    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. Coombs: Can my right hon. Friend confirm that the “basic pensions plus” proposals announced yesterday not only guarantee the value of the state pension, but offer the prospect of a much improved pension with a value of as much as £175 per week to a person on average earnings? Does that not contrast starkly with the Labour party’s plan to cut the value of the state pension by £20 per week?

    The Prime Minister: I entirely agree with my hon. Friend about the impact of the proposals that I announced with my right hon. Friend the Secretary of State for Social Security yesterday. Those proposals will guarantee that everyone, whether in the new scheme or out of it, will continue to receive at least the basic state pension, increasing in line with inflation. I think that the response that we have heard from some quarters–including some, although not all, Labour Members–shows that those people do not understand what is proposed. [Interruption.] A moment ago, the hon. Member for Newcastle-under-Lyme (Mrs. Golding) asked, “What is this point about £20 being cut off the state pension under Labour’s plans?” Perhaps she should consult the hon. Member for Peckham (Ms Harman), who said in a letter to my right hon. Friend the Secretary of State for Social Security that she anticipated a lower level of basic state pension, to compensate for reducing the retirement age to 60. That cut, unless there is more expenditure–which the shadow Chancellor says that he would not allow–would be the equivalent of £20 per week.

    Mrs. Golding indicated dissent.

    The Prime Minister: There is no point in the hon. Lady shaking her head. That is what her hon. Friend has in mind.

    Mr. Blair: May I put to the Prime Minister two specific questions arising from the report by Mr. Bill Swann on hygiene in abattoirs? First, why was that report not published on 31 March 1996, as Mr. Swann was told that it would be? Secondly, why did Ministers not see the report and act on it?

    The Prime Minister: I think that the right hon. Gentleman’s questions, as he will discover when he hears the statement a little later, are based–[Interruption.] I am assuming that, in view of the right hon. Gentleman’s interest, he will be here for the statement; I am making an assumption. The right hon. Gentleman’s questions are based on what he supposes is in a report which, I believe, he has not read.

    There is no suggestion of the report being suppressed. It was produced by officials. It was drawn up by the Meat Hygiene Service. It was very widely circulated. It was circulated around the trade and elsewhere. [Interruption.] I am sorry that somebody did not receive it. Ministers did not receive it–that is true. It was a working document. [Interruption.] This is exactly the point. The report was drawn up for the Meat Hygiene Service as part of its work to ensure the highest standards of hygiene in slaughterhouses. It is a routine report, of which there are many, not normally shown to Ministers and not shown to Ministers on this occasion, but circulated to the people who had an operational need to know about it.

    Mr. Blair: That is the most extraordinary explanation. This is Mr. Swann’s report. I have read it. It is 54 pages long and contains 81 recommendations. May I point out to the Prime Minister that on page 19 the report states that there is a serious concern about contamination, that the contamination may lead to the spread of the E. coli organism and that action should be taken immediately? If the Prime Minister says that the report was not shown to Ministers, I ask him why not. With 54 pages and 81 recommendations, it was sufficiently serious, was it not? Does he not think in retrospect that, given the seriousness of the report, it would have been better if it had been shown to Ministers so that it could have been acted on in the interests of the public?

    The Prime Minister: The point that the Labour leader perhaps genuinely does not understand–[Interruption.] I have got beyond page 81–a very quick read this morning. I think that the right hon. Gentleman may genuinely not understand, so I shall make the point again. The report was a working document, drawn up for the Meat Hygiene Service and circulated to its staff. The Meat Hygiene Service is implementing the recommendations in the report, as the right hon. Gentleman noted.

    This is the way in which such matters have been handled for a very long time–[Interruption.] I say to the right hon. Gentleman that there are huge numbers of such working documents every year. If they all came to Ministers for Ministers to read every one, nothing else would be done. The right hon. Gentleman has been in opposition so long that he does not understand that. The report was circulated to the people who needed to take action and I am advised by those people that they have implemented the action.

    Mr. Blair: Whether the report should be shown to Ministers must depend on its seriousness. If it is serious, it should be shown to Ministers. May I point out to the Prime Minister that Mr. Swann was told that it would be published precisely because it dealt with serious issues?

    The Prime Minister’s latest explanation is that the recommendations have been implemented. May I quote to him what Mr. Swann said this morning on the radio? He was asked whether everything that he had recommended had been carried out: answer–no. He was then asked whether some of the recommendations that had not been carried out were important for hygiene and safety: answer–yes.

    This is a serious report which reveals serious problems of contamination. We know about the problems with E. coli, but the report was not even shown to Professor Pennington, who is in charge of the E. coli administration. When will someone in the Government take responsibility for the proper and competent administration of our affairs?

    The Prime Minister: When will the right hon. Gentleman realise that when he behaves in this fashion, what he does–[Interruption.] I am sorry to say that it is true: he exaggerates problems that exist before he has heard the statement, irrespective of the interests of the meat industry, in exactly the way in which the Opposition have behaved on previous occasions. I have to say to the right hon. Gentleman that that, in advance of the statement, is the height of irresponsibility.

    I repeat for the right hon. Gentleman that the report was provided for the Meat Hygiene Service, which was established to improve safety for the consumer and opposed by the Labour party when we established it. Yet again, the right hon. Gentleman is trying to stir up public concerns that are being dealt with by a public watchdog which he and his colleagues opposed when it was established. His party has stood in the way of every change made to improve hygiene standards. That is absolutely true. If the Opposition had had their way, responsibility for slaughterhouse hygiene would still be in the hands of 300 local councils applying the rules in 300 different ways. The hygiene service is raising standards, and the right hon. Gentleman is raising scares.

     

    Q2. Mr. Jacques Arnold: To ask the Prime Minister if he will list his official engagements for Thursday 6 March.

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

    Mr. Arnold: Has my right hon. Friend noticed the knowledgeable speech given in the House of Lords yesterday in which it was said that our economy is doing rather well, particularly in comparison to the last 18 years–[Interruption.]–and even more so in comparison to the economies of Europe? That speech was by the noble Lord Barnett, the last Chief Secretary to the Treasury in a Labour Government. Did my right hon. Friend note that Lord Barnett said quite clearly that taxes may be increased without increasing the rates? What is more, he said that he expected any future Labour Government to do just that.

    The Prime Minister: The noble Lord Barnett, being a life peer and therefore not threatened by the plans of the Leader of the Opposition and the Labour party, has clearly let the cat out of the bag as to what he thinks about Labour’s spending plans. As a former Chief Secretary, he knows that they do not add up and that there is a £12 billion black hole in the middle of Labour’s plans. He knows that the Labour party cannot sign up to Budget book figures and then disown the policies that would achieve those figures unless it plans to put up taxes, cut expenditure or find some other way of dealing with the great black hole in its plans. It is not, as the shadow Chancellor likes to imply, a Tory scare: we now know the truth as a result of what the last Labour Chief Secretary to the Treasury has said.

     

    Q3. Mr. Callaghan: To ask the Prime Minister if he will list his official engagements for Thursday 6 March.

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

    Mr. Callaghan: Is the Prime Minister aware of the crisis in the hospitals in the north area of Manchester since four out of five hospitals were closed by the Government? Is he aware that since Christmas the North Manchester General hospital has accepted only accident and emergency cases, and that two weeks ago eight people remained on trolleys for 23 hours because there were no beds available for them in that hospital or in any other hospital in the region? Is that not a national disgrace and a scandal, and what does the Prime Minister intend to do about it?

    The Prime Minister: One thing that I am doing to improve the quality of the health service is promising to provide extra resources for each year of the next Parliament, as we have done for the past 18 years. I notice that there is no comparable pledge from the Labour party. Year after year, we have dramatically increased the resources made available to the health service. We operate policies such as compulsory tendering, which brings more money into the health service, and we have abolished a whole tier of regional government in order to provide extra money for the health service. All those policies were opposed by the Labour party, which will not provide extra resources for the health service.

    Mrs. Currie: Did the Prime Minister see today the launch of Europe 97 by the all-party European Movement? Will he join me in welcoming this important effort–which has the backing of the unions, major industries, the Confederation of British Industry and the European Commission–to put the facts about Europe and the benefit of our membership of the European Union to the people of this country rather than the fictions about its dangers?

    The Prime Minister: I have not yet seen the document to which my hon. Friend refers, but I will certainly obtain a copy and look forward to reading it. It is important that the important debate on Europe is conducted on the basis of facts, not fiction, and that people fully understand precisely the implications of policies followed across Europe in each individual country and by the Commission and, of course, in our own country.

     

    Lockerbie

    Q4. Mr. Dalyell: To ask the Prime Minister if he will discuss with President Clinton the relevance to the Lockerbie inquiry of the publication of the report by the United States Inspector General into laboratory practices and alleged misconduct in explosives-related and other cases.

    The Prime Minister: I understand that the report has not been published. As the Minister of State, Foreign and Commonwealth office, my right hon. Friend the Member for Richmond and Barnes (Mr. Hanley), made clear on 28 February, we understand that there is nothing to suggest that the report will reflect in any way on the Lockerbie case, but if anything relevant emerged from it, the Government would evaluate the implications carefully.

    Mr. Dalyell: Against the background set out in that Adjournment debate, have the Government asked the Americans how it is that their forensic expert, James Thurman, has been found to have fabricated forensic evidence? If the Prime Minister asked the Americans, what did they say?

    The Prime Minister: Yes, we have made inquiries about that, as the hon. Gentleman may have anticipated. The United States authorities have confirmed that the Federal Bureau of Investigation has transferred Mr. Thurman to other duties while the activities of the FBI laboratories are investigated. However, we are further advised that the case against the two Libyans does not depend in any respect on any evidence that Mr. Thurman may give.

     

    Engagements

    Q5. Dr. Michael Clark: To ask the Prime Minister if he will list his official engagements for Thursday 6 March.

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

    Dr. Clark: Is my right hon. Friend aware that my constituency has the highest number of home owners in the country, at a fraction under 90 per cent.? As we now have low inflation, low interest rates and very attractive mortgage rates, what advice would he give–as we approach a general election–to my constituents and to home owners throughout the country?

    The Prime Minister: As my hon. Friend says, we have stable prices, low mortgage rates and a rapidly improving economic situation that is unmatched anywhere in Europe. The advice that my hon. Friend should give to his constituents is to stick to the policies that have created that and not put it at risk by following policies adopted on the continent which have led to a quite different outcome.

  • Mr Major’s Press Conference on Pension Plans – 5 March 1997

    Below is the text of Mr Major’s joint press conference with the Secretary of State for Social Services, Peter Lilley, held in London on Wednesday 5th March 1997. The press conference was on the subject of the pension plans that the Government was planning.


    PRIME MINISTER:

    Good Morning. I daresay earlier this morning many of you will have heard speculation about what Peter and I are going to announce. If I could just say at the outset, a great deal of that speculation, as you will see, is very wide of the mark. What Peter and I will present this morning are plans for a very fundamental improvement in our provisions for future pensions.

    And the plans have a very long term horizon indeed, they will take effect over a generation and what you will see this morning reflects the outcome of a great deal of detailed work over a very long period. And for that reason the press conference this morning will take a somewhat different form from normal. In a few moments I will ask Peter to take you in detail through a presentation of how our plans will work. But before I ask him to do that I would just like to set them in a more general context.

    We have pursued for quite a few years a strong and consistent policy of encouraging personal ownership by individuals and by families, and we have done that for sound reasons. We believe ownership of savings and assets gives people independence and it gives them security. It enables them to provide themselves for themselves and for their family, and with that self-reliance comes self-respect and a greater freedom of choice.

    Over the last 18 years, for example, we have made huge progress in encouraging home ownership. The proportion of home owners across the UK has risen from around 54 percent in 1979 to 67 percent today. We have pursued the same path by encouraging long term savings through the introduction of schemes like TESSAs and Personal Equity Plans. Two and a half million people are now owners of Personal Equity Plans and there are four and a half million owners of Tax Exempt Special Savings Accounts.

    We have also encouraged wider share ownership, not least through privatisations but in other ways as well of course. And many of you will have been present a week or so ago when I announced a further development of our policy for employee share ownership, and of course with the distribution of shares from converting building societies this spring, share ownership also will get another massive boost.

    But apart from that, some of our most fundamental reforms have been in pension provision. In the mid-1980s when I was a Junior Social Security Minister, I helped Norman Fowler and Tony Newton create a massive expansion of private pensions by allowing people rebates of national insurance contributions to invest themselves in a personal pension scheme.

    In 1979, funds invested in occupational and personal pensions amounted, in today’s money, to. around 132 billion, that is 25 percent of GDP. Today that investment amounts to 650 billion pounds, 95 percent of GDP, an investment that underwrites pension security for people in the future.

    We have continued to build on those pension reforms in the 1990s. For example, the Pensions Act in 1995 fulfilled our manifesto commitment to make personal pensions attractive to people across the age range by introducing age related rebates of national insurance contributions. And just a few weeks ago I announced further measures to facilitate group personal pensions and to give greater flexibility to people with personal pensions who join occupational schemes.

    At the moment, 70 percent of people retiring do so with an occupational or a personal pension in addition to the state retirement pension. And the steps we have taken already will ensure that the proportion of people retiring with funded pensions will continue to grow. If we took no further steps whatsoever, we would expect approaching 90 percent of people to retire with additional pension income by 2025.

    So that is the background building up to the changes that I will set out in broad outline and that Peter will then set out in detail in the next few minutes. Because we have now reached the point where we can go a good deal further. Now that funded second pensions are established, are growing and are secure, the time is right to start progress towards a secure proper funding of the basic state pension as well. My intention is to ensure that all of the younger generation can look forward to the benefits and security of a pension fund, built up in their own name. The proposals that we are proposing today will do that, and it will do that by enabling every young person to accumulate an investment fund that could yield considerably more than their basic state pension entitlement. And the proposals amount to the most fundamental enhancement to the state pension scheme since it was first introduced.

    At the heart of our proposals is a scheme called Basic Pension Plus. Firstly, to remove fears and misunderstandings, let me make this point clear. The state will continue to guarantee that everyone will receive at least their basic state pension, as now, uprated to take account of inflation, let me make that basic point straight away so that no fears and misunderstandings can arise. And let me also make it clear that the entitlement of the current working generation to the basic pension, and to SERPS, the Earnings Related Pension Supplement, will remain the same. This package is about increasing security in retirement and not threatening existing security in retirement.

    What we propose is that the younger generation will have a part of their national insurance contribution contributed into a pension fund in their name, a pension fund that they choose to invest the money on their behalf and that will build up to an asset that they will own. When they retire, they will receive the full benefit from this fund. Assuming reasonable investment growth, the pension they receive from it, even on the minimum contribution, could be considerably more than the current state pension entitlement, and Peter will give you further details of that shortly. But the state will top up the income where it proves necessary, should it prove necessary, to guarantee the basic state pension entitlement uprated for inflation.

    And as Peter will also explain in a minute, there will be a further rebate to enable those earning more to provide a second earnings related pension on top of the basic pension. Gradually, across a generation, this scheme will enable us to switch the financing of our state pensions to savings and investment, funded from reductions in national insurance contributions, rather than by current taxes and charges at the time the pensions are paid. Not only will that benefit the next generation of pensioners, but it will mean that in due course, by the middle of the next century, we will be gradually removing most of the 50 billion pounds costs of pensions that would otherwise be borne by the current taxpayers of that time.

    The United Kingdom is already better placed than any other major European economy to fund its future pension liabilities. What we are announcing today, when it is put into place, will put us another huge step ahead, enabling us to sustain a healthy low tax economy for the future.

    It is a reform that reflects the best traditions of the philosophy this government has followed; it is dealing with the long term issues in a far sighted way; it is reinforcing the security and independence of individuals and families by building up their own assets and their own resources; it will provide funds for investment in the economy; it is prudent with the public finances and it safeguards people’s expectations. It is a reform that will mean that the British people will be able to look forward to retirement with even greater confidence in future and it offers for our young people a pensions opportunity that quite literally will be unrivalled anywhere else in the world.

    That is the outline of what we are seeking to do with these plans. I will now invite Peter to present to you those plans in detail so that you can see how they will work, what they will cost, what they will mean and remove any other fears and uncertainties people may have, and then we will take your questions.

    MR LILLEY:

    Good Morning. Thank you, Prime Minister. I want to outline a plan which over a generation will bring about the biggest extension of personal ownership since the spread of home ownership. It will ensure every young person builds up their own pension fund; it will guarantee them at least as good a pension as the present basic state pension, fully protected against inflation; it will on top of that give them a chance to share in economic growth; it will harness the power of investment to help the less well off; it will massively boost the flow of funds, strengthening our economy; and it will ultimately reduce the burden of public expenditure by some 40 billion pounds a year. The plan is the next step in my programme of step-by-step reforms of social security and it is essential if we are to tackle one of the biggest issues facing all modern governments, how to ensure decent pensions for an ageing population.

    When the welfare state began, there were 5 working people contributing to support one pensioner. By the year 2030, for every 5 working people there will be 3 pensioners, there will be more pensioners to support.

    I have been struck by how concerned many young people are about whether the state will be able to provide them with pensions in the future. Indeed a recent Mori survey showed that more young people expect to win the national lottery jackpot than believe they will ever get an adequate state pension.

    We must set people’s fears at rest, not with empty promises but concrete action to ensure the investments are here to pay for pensions without a crippling burden of tax. This country is already more successful than most similar countries in building up funds for the future. Because we have persuaded two-thirds of working people to opt out of State Earnings Related Pension Scheme, we have built up 650 billion pounds to pay for future pensions. That is not just more than any other country in Europe, it is more than all the other countries in the European Union put together.

    But even in the United Kingdom, state pension provision still exceeds private provision. And the problem with state schemes is that they are pay as you go, nothing is saved or invested for the future. People may think that their national insurance contributions are being saved in funds to pay for their pensions; in fact what they put in goes straight out to the taxman, nothing is actually saved for the future. Yet we make companies build up investments so that they can meet their pension promises.

    I believe it is now time to underpin state pensions with savings and investment and that is what we intend to do. But not by the state building up huge investment funds, but by enabling the rising generation to use part of their national insurance contributions to build up their own funds sufficient to pay their basic pension and more. In addition to the value of their contributions over their working lives, their funds will grow as the value of their investment grows.

    So the plan has three key elements. First, the personal fund. Everyone in the new generation will have their own pension fund to finance their basic pension and more. They will choose an approved firm to manage it. They will own their own fund and any amount not used to pay for their pension can be passed on to their heirs. The second element is the rebate. They will receive a rebate from their national insurance contributions. Over their working lives it will be sufficient to build up a fund big enough to pay their basic pension. The government Actuary calculates that 9 pounds a week will be needed, so people will receive a rebate of 9 pounds a week, rising in line with inflation, paid into their fund. And the third element is the basic pension guarantee. The state will guarantee that everyone will receive a pension at least equal to their basic state pension, increased at least in line with inflation.

    We have called the scheme Basic Pension Plus, because it is the basic pension, plus a fund, plus a rebate, plus a state guarantee. Each fund should grow to provide the basic pension. If for any reason a person’s fund is insufficient, the state will top up the pension it provides, so they will get their basic pension, everyone will be protected by the basic pension guarantee. No-one will do less well than under the present state scheme, and everyone stands to do better if, as we hope, the economy and their investments do well. If the return is 1 percent higher than they are assumed then the Government Actuary assumes they will get a pension nearly 30 percent above the basic pension. If the yield is 2 percent higher, the pension will be over 70 percent better.

    In the 1980s Norman Fowler and John Major paved the way for more funded provision by allowing people to opt out of a State Earnings Related Pension Scheme into their own funded personal pension. Two-thirds of those eligible now opt for private schemes, but a third do not, mainly because their SERPS rebate would be too small to make it worthwhile setting up a personal fund. However, that problem won’t exist for people with a Basic Pension Plus fund. So everyone in the new generation will also be contracted out of SERPS. In addition to their 9 pounds a week rebate to fund their basic pension, employees will receive a rebate worth 5 percent of their earnings on which they pay national insurance. That will fund an earnings related second pension.

    So a person on average wages will build up a fund which should be worth 130,000 pounds when they retire. That is sufficient to provide a pension of 175 pounds a week at today’s prices. And that is based on making the minimum contributions over most of a working life. But once everyone in work has their own fund, they and their employers will be able and encouraged to save more in their fund.

    The new system will spread the benefits of investment to low earners and maintain help for the least well off. First, even low earners whose national insurance contributions are less than 9 pounds a week will receive .a full 9 pounds to pay into their pension fund. Second, people who are unemployed, sick or disabled, carers and some others, will receive credits, as now, towards their basic pension guarantee. And third, income support and other benefits will be available, as now, for those unable to build up adequate pensions.

    We will phase in the new system of funded pensions gradually over a generation. Existing pensioners will not be affected by the new scheme and will continue to receive their state pensions rising at least in line with inflation. Likewise, the current working generation will continue to build entitlements to the basic state pension and be free to remain in or opt out of SERPS during the rest of their working lives.

    The new Basic Pension Plus system will apply to the rising generation, all young people newly entering work, plus those aged up to their early 20s. They will receive rebates to build up their pension funds over their working lives. So it will take a generation to replace the present system. That means the impact on public revenues of the rebates needed to fund investment will grow very gradually over 40 years.

    In addition, we could halve that impact by reversing the timing of tax relief on pensions for the new generation. Under the current system, contributions to pension funds attract tax relief, but pension income is taxable. That system will continue for the present generation. For the new generation, covered by Basic Pension Plus, I propose that pension contributions, including voluntary pension savings, be paid from net income and all pension income will be entirely tax free.

    As far as the saver is concerned, the next tax treatment is equivalent to the old one, except for the lump sum, if the saver’S tax rate is the same in work and retirement. But for pension providers it should be possible to make the new PEP-style tax treatment far simpler and less onerous than the current regime.

    To ensure that we do seize this opportunity for simplification, while protecting the immense contribution made by occupational and other schemes, I am inviting pension providers to join the working party which will draw up the detailed proposals to go in the Green Paper.

    We are also determined to develop a simple but effective regulatory regime. The past abuse of mis-selling personal pensions to those who didn’t need them cannot recur under this proposal since everyone will need and get a Basic Pension Plus fund. But effective regulation will stop other problems, reduce costs, keep charges down, stop artificial inducements to switch between schemes and prevent over-risky investments being made to exploit the pensions guarantee. All that is explained in a technical note which you will be given later.

    This proposed change in tax timing, combined with the gradual phasing in of the new system, will make the impact on public finances quite manageable. The net value of extra investment will amount to only about 160 million pounds a year and eventually it will produce massive savings in public expenditure reaching 40 billion pounds a year. At its peak, the net revenue foregone will be less than the peak costs of SERPS rebates which we have already taken in our stride. It will be a fraction of the savings resulting from the recent Pension Act, which will ease the burden of state pensions by some 13 billion pounds a year. And the extra rebates are small relative to normal growth of tax revenues.

    Moreover, if the huge extra funds available for investment generated by the scheme, boost economic growth by just one-twentieth of one percent, the scheme will be entirely self-financing, although we have not taken account of this in costing the scheme.

    All of us remaining in the present scheme stand to benefit from the extra investment in any jobs and growth it generates. Those who retire just ahead of the generation with Basic Pension Plus will know the state can better afford to look after them in old age as the cost of younger pensioners is lifted from the taxpayer.

    To summarise, Basic Pension Plus will come in gradually over a generation. Everyone covered by the new system will have their own pension fund. They will receive a rebate of 9 pounds a week to fund their basic pension. They will be guaranteed to receive at least their basic state pension, protected against inflation. Employees will be opted out of SERPS and get a second rebate worth 5 percent of their earnings to fund their second earnings related pension. Because everyone will have a fund, they will be able and encouraged to save more on top. Anyone on average earnings paying in just the minimum contributions should accumulate a fund worth 130,000 pounds by retirement, paying a pension of 175 pounds a week in today’s money. Everyone stands to benefit from good economic and investment growth. An extra 1 percent investment yield would generate a pension 30 percent higher. The economy will be strengthened by a massive increase in long term investment funds. Ultimately the taxpayer and the economy will be relieved of the largest single item of public expenditure, some 40 billion pounds a year.

    In short, British people can look forward to secure pensions, high investment and low tax.

    PRIME MINISTER:

    I think, as you can see from that, a huge amount of work has gone into this over many months, predominantly by Peter and I congratulate him for that. Colleagues have been examining this for some weeks now and I am delighted we are now in a position to announce it.

    Can I just say it is complex, there are many detailed questions that arise. We can provide you, there is a technical paper you can have, Oliver Heald will be available for those who wish to ask more detailed questions later and we will take some of the questions now. It is, I think, a revolution for the new generation in terms of pensions and probably one of the farthest sighted reforms produced by any government for a very long time, indeed.

    As Peter said, we will be producing a Green Paper and consulting upon it and that will all take place before we finally commit ourselves to the detail of legislation which is going to be well into the next Parliament, probably even at the back end of the next Parliament by the time all the remaining work needs to be done.

    QUESTIONS AND ANSWERS:

    QUESTION (John Sergeant, BBC):

    If it is going to be a fundamental reform, isn’t it a good idea to have as much cross-party support as possible for it, and is therefore this a good moment in what is effectively the middle of an election campaign to introduce a plan which will inevitably mean the other parties will disagree more than they will agree. And having said that, do you think it is a vote winner?

    PRIME MINISTER:

    This has been under consideration for a long time, as I indicated a moment ago. And as to your point about cross-party support and support beyond it, that is precisely why we are not saying we are introducing it straight away, it is precisely why we have announced it now. We will have a Green Paper, there will be a lot of consultation and clearly we will wish to take as many people with us in this as we possibly can. But it has been worked out, it is ready to be announced, it seems to me rather unwise not to announce something that is worked out because you know sometimes these things leak in a rather unsatisfactory way. So I think it is better to be frank about what we propose, indicate we are going to consult and I would very much like to think we can bring other people with us. I think the idea of building up a personal pension pot, personal assets, that can be passed on to heirs after basic pension requirements have been met, is one that I think most people would find very attractive. But it is not going to be rushed into, there is going to be widespread consultation.

    QUESTION:

    But is it a vote winner?

    PRIME MINISTER:

    Well it has been designed to deal with the problems of public expenditure in the medium and long term. It is a very long term policy, but it isn’t a vote winner in the sense that we are saying to people in this election here you are, here is a new goody, because the people who are going to benefit from this in most cases will either only just be of voting age or not actually be of voting age. So it isn’t a short vote winner, it is the right thing to do for the economy, it is the right thing to do for pensions and it is the right thing that a far-sighted government should do, but it is not a short term scheme at all.

    QUESTION (Peter Riddell):

    You are going to increase enormously the assets in pension funds [indistinct] altering their structure, to say you have a personal asset is different from a [indistinct].

    MR LILLEY:

    We will be operating so that it can run alongside occupational pensions which have been very effective and very valuable, and I think it can operate also for those with personal pensions. So it will be different from personal pensions as we have known it in that it will be a lot lower cost and universally available. So I don’t quite see what you mean by different, did you actually mean that the individual should have the right to pick and choose his shares within it rather than choose a manager?

    PETER RIDDELL:

    It will increase vastly the amount of funds controlled, what is now a relatively small number of funds managed by management companies, the power you actually give to them over the economy is very significant indeed, and whether there has to be a change in the structure of those, whether to increase their power or not. just wonder whether you have given any thought to that?

    MR LILLEY:

    We will certainly be consulting widely with the industry and want them to take an active part in helping us draw up the detailed Green Paper which this will need before we move to actual legislation.

    PRIME MINISTER:

    We have thought of that, we have thought of a range of other things. And you actually put your finger on precisely why it is right to take this over the long term and right to consult on it. Peter mentioned in his presentation a few moments ago of course the particular problems there have been in the past with some people mis-selling on personal pensions. Over the last 10 years or so we have learnt a huge amount. I quoted the figures that have been built up in personal pension funds as a percentage of GDP over the last few years, so we know a huge amount more about how to do it and where the wrinkles are than ever we did before.

    And this growth of future investment doesn’t suddenly appear overnight, Peter, it actually builds up substantially over the years. Peter quoted the figure of a net cost of 160 million a year, so it builds up over quite a time. There isn’t suddenly going to be a flood to create the problem you fear and we are consulting with the industry and with others about how to cope with the increased investment funds that will be available.

    QUESTION (Michael Brunson, ITN):

    How are you going to counter the argument that what you are doing, however good the reason is for you, is in effect privatising the pension, something that Mr Lilley said in the House that he would not do, but which your political opponents were making a good deal of. And secondly, will you condemn unreservedly the totality of David Evans’ remarks?

    PRIME MINISTER:

    On the second point, yes. On the first point, we are not privatising the pension, we are personalising the pension. When you privatise something, you sell a state asset and it then goes entirely into private ownership. What we have made perfectly clear this morning is there is going to be a state guarantee of the basic pension, uprated in the future. So it is not a question of privatising, we are not privatising the pension, we are personalising it.

    MR LILLEY:

    That is absolutely right. Privatising is a term that applies to assets, pensions are an obligation and the state stands foursquare behind its obligation to see decent pensions for people. We are doing three other things, we are not privatising, we are investing to make sure that that pension is more secure, we are personalising those investments by giving people a personal fund and a rebate to build up those investments, and we are guaranteeing that they will get at least what they get under the present system and in all likelihood substantially more.

    PRIME MINISTER:

    We are guaranteeing in essence, and underwriting, the basic state pension and putting future governments in a position where they will never face the problem that they will be unable to meet their pension obligations. Now that is the real point. I can’t remember the figures, Peter will, as to how many people were in work for every person in retirement in 1950, but that proportion is shrinking and by 2020 or so there will only be about 1.6 people in work for every pensioner. Now that is a problem that wise governments address now, and that is what we are seeking to do, so that we can offer the state pension guarantee that otherwise might have been put at risk at a later stage.

    QUESTION (Robin Oakley):

    While you are talking of this basic pension guarantee, would this be the right stage, if you are really going to protect the worse off in society, to restore the link with earnings rather than merely with prices? And further to John Sergeant’s question earlier, since this is such a long term investment for the future of the country, would it not be wise to invite Labour and other parties to be involved, as pension providers are to be, in any advisory group that is now setting up the scheme for the future?

    PRIME MINISTER:

    The Green Paper on consultation will accept from any, and we will accept advice and comment from anyone. There is no question of us saying to the other political parties that we don’t want to hear your views on it, we will want to hear their views on it, of course we will. Upon the first point that you raised, everybody would like to be in an economic position to increase the basic state pension, but it is in order to put ourselves in that position for future generations that we are going down this particular route, resources, to go back to earnings, are not something that any political party sadly thinks exist at the moment. But in order to ensure that better pension provision is available for everybody in the future, we need to look today to ensure that for the future, and that is precisely what we are doing.

    MR LILLEY:

    And it does, for the first time, mean that people, even people just on the basic pension, can look to share in economic and investment growth because they will have that upside potential if their funds do well. And there is an earnings link in the second rebate, linked to their earnings, which means an increasing share of their future pension provision will be related to their earnings during their working life. So we are doing it in a prudent and affordable way. I think everybody realises that if one simply went to uprating pensions with no funds to provide for them in line with earnings, the state would have been in a much worse position to provide proper pensions in future and ultimately would probably have defaulted on its promise.

    QUESTION (Trevor Kavanagh, The Sun):

    Do you envisage these compulsory PEPS, which is basically what they are, being extended eventually to other areas of welfare such as unemployment and sickness benefit? And in view of the problems in Europe over pension funding and the possibility of a single currency, have you cleared it with the European Commission?

    PRIME MINISTER:

    The answer to the second question is no and we don’t need to.

    QUESTION:

    But what about the possibility of a single taxation and a single welfare policy which is being envisaged over there?

    PRIME MINISTER:

    There is nothing that is being envisaged that would impact in that way upon our domestic pensions provision, and neither is there any possibility of this country being put in a position where it would have to pick up the pension liabilities of other countries because we have provided for our pensions and they haven’t provided for theirs. I know there is a great deal of worry about that and I am grateful to you for putting the question to me so I can dismiss that as a possibility. On your first point, whether we were thinking of extending this to other areas, we haven’t considered that at all, no. This is a free-standing reform dealing particularly with ensuring we can meet the pension requirements of future generations and meet it more generously than any government has been able to meet previous generations’ demand for good pensions, and it is solely in that context that we have produced this.

    QUESTION (George Jones, Telegraph):

    You have made a great deal of the guarantee that you are going to give that everybody will get the basic state pension, but as Mr Lilley pointed out, people could have 130,000 pounds in these funds. Will there be a guarantee that whatever happens to a financial institution, you could look at Barings, something like that, that money will be protected and they will get that? At the moment there are limits on the amount of investor compensation, have you thought about guaranteeing that sum, because people will have now their retirement funds compulsorily effectively put into a private scheme?

    MR LILLEY:

    The basic pension will have the guarantee that we talked about. We of course strengthened the regulation of occupational pensions through the reforms I introduced in the Pensions Act 1995 and that particularly dealt with the threat which had been posed by Robert Maxwell to such funds, the only socialist that ever took private pensions at all seriously, and we believe that we have now created a much stronger regime to protect those investments than existed in the past and obviously that provides the framework in which additional investments over and above that to fund the basic pension will be made.

    QUESTION:

    But if the fund collapses you only get back the basic state pension?

    MR LILLEY:

    There is also a compensation mechanism for existing funds that people have, we have got 600 billion pounds already invested, this is an issue that already arises, and we have created a whole structure of regulation with, as a final long stop, the possibility of a compensation fund to bail out funds which were for any reason subject to a predator like Robert Maxwell or otherwise went belly-up. So that already exists.

    QUESTION (Elinor Goodman, Channel 4 News):

    You are presenting it as an extension of a choice of ownership, but to what extent would an individual have any say over what happened to their pension pot and are you sure that people actually want any more responsibility, isn’t this going to make people rather nervous, they don’t know anything about these kind of things and they are going to feel somehow more insecure?

    MR LILLEY:

    They will know that they are at least as secure at present, and indeed more so because the government’s promise will be backed up by the investments to meet it. I agree with you that most people will not want to do the detailed management of an investment scheme and that will be handled by an approved manager, companies who wish to manage these funds will have to be approved by the Personal Investment Authority as meeting all the criteria necessary, and we don’t envisage individuals managing their own funds.

    QUESTION:

    The Personal Investment Authority always warn us that the value of investments can go down as well as up. You say this should eventually save 40 billion pounds for the Treasury and it will build up a little treasure chest for every individual of around 130,000 pounds, a one percent increase in growth in the economy will add an extra 30 percent. On what is the basic figure predicated then, how well does the economy have to perform in order for these figures to work?

    MR LILLEY:

    The Government Actuary makes cautious assumptions about the future yield of investments. When I tell you that the assumption he uses here and has been using, lies behind all the opting out contributions of SERPS, was 5 percent below the average yield throughout the lifetime of this government, so when I gave examples of it being 1 or 2 percent better, actually it has been S percent better over the lifetime of this government but I am not an insurance salesman so I don’t forecast that happening in the future because we can’t guarantee that this government will necessarily be here for the next 44 years, though I hope it will be for a large part of it. But in terms of the downside, of course there can be individual funds which will call upon the guarantee, and that will be an expenditure on the state. But clearly at present the state meets 100 percent of the cost of all basic pensions, this will be meeting part of the cost of some pensions where the fund fell short.

    PRIME MINISTER:

    So to the extent that the state had a cost, it would diminish the 40 billion savings rather than create a new cost that wouldn’t otherwise exist, so that is the point you are getting at, isn’t it?

    QUESTION:

    It is indeed, and I appreciate that on the other hand these must be predicated on some particular figure of annual growth in the economy and I wonder what that figure is.

    MR LILLEY:

    It is predicated on the Government Actuary’s assumption on the yield on investments which is 4.25 percent, 4.25 percent more than inflation and the average yield since 1980 of pension funds in this country has been 9.6 percent.

    PRIME MINISTER:

    So in short, with a small ‘c’, it has been predicated on the Actuary’s very conservative assessment, historically based on what he thinks funds will achieve.

  • Mr Major’s Statement on Basic Pension Plus – 5 March 1997

    Below is the text of Mr Major’s statement on Basic Pension Plus, made at Downing Street on Wednesday 5th March 1997.


    PRIME MINISTER:

    For years we have pursued a strong and consistent policy of encouraging personal ownership by individuals and families.

    We believe ownership of savings and assets gives people independence and security. It enables them to provide for themselves and their family. With that self-reliance comes self-respect, and greater freedom of choice.

    Over the last eighteen years we have made huge progress in encouraging home ownership. The proportion of home owners across the UK has risen from 54% in 1979 to 67% today.

    We have encouraged long-term savings through the introduction of TESSAs and PEPs. 2.5 million people are now owners of PEPs, and 4.5 million holders of TESSA accounts.

    We have also encouraged wider share ownership, not least through privatisations. I announced a further development of our policy for employee share ownership a few weeks ago. And with the distribution of shares from converting building societies this spring, share ownership will get another massive boost.

    But some of our most fundamental reforms have been in pension provision. In the mid 80s, when I was a Social Security Minister, I helped Norman Fowler create a massive expansion of private pensions, by allowing people rebates of national insurance contributions to invest in a personal pension scheme.

    In 1979, funds invested in occupational and personal pensions amounted to 132 billion pounds in today’s money – 25% of GDP. Today that investment amounts to 650 billion pounds, or 95% of GDP – investment that underwrites the pensions of tomorrow.

    We have continued to build on those achievements in the 90s. For example, the Pensions Act 1995 fulfilled our manifesto commitment to make personal pensions attractive to people across the age-range, by introducing age-related rebates of national insurance contributions.

    Just a few weeks ago, I announced further measures to facilitate group personal pensions, and to give greater flexibility for people with personal pensions who join occupational schemes.

    Already, 70% of people retiring do so with an occupational or personal pension in addition to their state pension.

    These steps alone will ensure that the proportion of people retiring with funded pensions will continue to grow. If we took no further steps we would expect approaching 90% of people to retire with additional pension income by 2025.

    But we have now reached the point where we can go further. Now that funded second pensions are established, growing and secure, the time is right to start progress towards a proper, secure funding of the basic state pension too. My aim is to ensure that all of the younger generation can look forward to the benefits and security of a pension fund built up in their own name.

    The proposals we are announcing today will do that, by enabling every young person to accumulate an investment fund that could yield considerably more than their basic state pension entitlement.

    They amount to the most fundamental enhancement of the state pension scheme since it was introduced.

    At the heart of our proposals is a scheme called Basic Pension Plus.

    Firstly, to remove fears and misunderstandings, let me make clear that the state will continue to guarantee that everyone will receive at least their basic state pension, uprated at least for inflation as now. Let me also make clear that the entitlement of the current working generation to the basic pension and SERPS will remain the same. The package is about increasing security in retirement, not threatening it.

    What we propose is that the younger generation will have part of their national insurance contribution contributed into a pension fund in their name. A pension fund that they choose, to invest the money on their behalf. This will build up an asset they will own.

    When they retire they will receive the full benefit from this fund. Assuming reasonable investment growth, the pension they receive from it – even on the minimum contribution – could be considerably more than the current state pension entitlement. But the state will top-up the income where necessary to guarantee the basic state pension entitlement.

    And as Peter will explain in a minute, there will be a further rebate to enable those earning more to provide a second earnings related pension on top of the basic pension.

    Gradually, across a generation, this scheme will enable us to switch the financing of our state pensions to savings and investment funded from reductions in NICS rather than taxes and charges. Not only will that benefit the next generation of pensioners, but it will mean that – by the middle of the next century – we will be gradually removing most of the £50 billion cost of pensions that would otherwise be borne by the current taxpayers of that time.

    The UK is already better placed than any other major European economy to fund its future pension liabilities. This will put us another huge step ahead – enabling us to sustain a healthy, low tax economy for the future.

    It is a reform that reflects the best traditions of this Government’s philosophy. It is dealing with the long-term issues in a far-sighted way. It is reinforcing the security and independence of individuals and families by building up their own assets and resources. It will provide funds for investment in the economy It is prudent with the public finances. And it safeguards peoples’ expectations.

    This reform will mean British people will be able to look forward to retirement with even greater confidence. It offers our young people a pensions opportunity unrivalled in the world.

  • PMQT – 11 February 1997

    Below is the text of Prime Minister’s Question Time from 11th February 1997.


    PRIME MINISTER:

     

    Engagements

    Q1. Mr. Livingstone: To ask the Prime Minister if he will list his official engagements for Tuesday 11 February.

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

    Mr. Livingstone: Has the Prime Minister seen a copy of the letter of the Secretary of State for Defence to me, in which he admits that bacteriological warfare experiments took place on the civilian populations of London and the south coast between 1964 and 1977? Will he agree to establish an independent inquiry to see whether there was any harmful effect from those tests, as some doctors currently believe, and to report on why the then Secretary of State for Defence, Lord Healey, was not informed that the tests were taking place?

    The Prime Minister: The direct answer is that I have not seen the hon. Gentleman’s letter to my right hon. Friend. I understand that the events to which the hon. Gentleman refers took place in 1966, so either the documents would have been released under the 30-year rule, or they would not be available under the general rule that papers are not available to a successor Government.

     

    Q2. Mr. Gallie: To ask the Prime Minister if he will list his official engagements for Tuesday 11 February.

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

    Mr. Gallie: Is my right hon. Friend aware of the importance of defence-related jobs in my Ayr constituency? Is he aware that the Nimrod 2000 programme will provide many jobs, as does the small boat maintenance and construction work at Ailsa Perth and Troon? How would those jobs stand up if we reduced our defence expenditure to the European average?

    The Prime Minister: My hon. Friend is right. I see no need for a further defence review, as promised by Labour. After “Front Line First”, the only possible reason for a defence review would be further reductions in defence expenditure. I can see no other reason. The hon. Member for South Shields (Dr. Clark) has rather honestly said that a Labour review would have “painful consequences”. Where those painful consequences would fall–whether on Nimrod, Eurofighter, Merlin or Phoenix–and where the job losses would be, I cannot say, but I noticed that, in the article by the leader of the Labour party in The Daily Telegraph, there was not a single assurance about any of those contracts.

    Mr. Blair: Now that the Prime Minister has disowned the Health Secretary as his constitutional spokesman, can he tell us why he appointed him as such in the first place? Rather than rampaging through the responsibilities of other Cabinet Ministers, would it not be better if the Health Secretary addressed himself to the huge and manifest crisis in the national health service?

    The Prime Minister: If the right hon. Gentleman wishes to talk about the role of Health Secretaries and devolution, will he tell the House whether he supports the view of the shadow Health Secretary, who said:

    “Once we have a Scottish Parliament handling health affairs in Scotland, it is not possible for me to continue as Minister of Health administering health in England”?

    Is that the Leader of the Opposition’s view? If so, will he make it clear to the people of Scotland, so that they may understand what his devolution proposals mean?

    Mr. Blair: I have made it clear to the Prime Minister on many occasions that, if he wants to give one of his Question Times to me, I shall be delighted to accept it.

    If he cannot answer that question about the health service, perhaps he will answer another one. Is it correct that this afternoon the Health Secretary will back down on the proposal to hire out general practitioners to supermarkets and drug companies? If he does so, the move will be warmly welcomed by people who do not want to see their GPs go the way of dentists, with higher and rising charges.

    The Prime Minister: If the right hon. Gentleman waits, he will find out what my right hon. Friend will say about primary health care. It is about a better way of delivering national health services under national health service rules in order to best meet the needs and the preferences of national health service patients. That is what has activated us to make all health reforms and what continues to activate us, as my right hon. Friend will make clear this afternoon.

    Mr. Blair: If the Prime Minister is in any doubt about the state of the national health service, let him cast his eye over the “Winter Crisis Update” issued by the British Medical Association last week. It details cancelled operations, rising waiting lists and bed and nurse shortages the length and breadth of the country. Is it not true that the Health Secretary and other Ministers are more interested in fighting the next Tory leadership election than in doing their jobs properly for the country? The tragedy for the country is that the Prime Minister stands by and lets them.

    The Prime Minister: The right hon. Gentleman has carefully manoeuvred to his prepared soundbite, but I shall answer the substance of his question. Yet again, he uses the national health service as a football without acknowledging the fact that national health service hospitals are now dealing with 10 million in-patients a year, 3.5 million day cases a year and 14 million out-patients a year–that is 75,000 patients every single day of the year. If the right hon. Gentleman thinks that there is a crisis, I remind him that, under this Government, general and acute patient activity has increased by 80 per cent. while, under the last Labour Government, it did not increase but fell by 7 per cent.

     

    Q3. Mr. Dykes: To ask the Prime Minister if he will list his official engagements for Tuesday 11 February.

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

    Mr. Dykes: Did my right hon. Friend notice that last week’s Times-Dillon Anne Frank Memorial Forum was accompanied by demonstrations by neo-Nazi groups, who paraded up and down denying that the second world war holocaust took place? Allowing for natural Home Office hesitation about an effective future text but bearing in mind that other countries have such legislation, may I wish my right hon. Friend well on his visit to the Board of Deputies of British Jews tomorrow and ask him to re-examine the issue and discuss it with the Home Secretary? May I remind him that all-party legislation on the subject was successfully launched in the House recently?

    The Prime Minister: I think that everyone deplores the sentiments expressed by those who deny the holocaust. It undoubtedly occurred–it is a matter of absolute historical fact–and I can understand the hurt, the offence and the distress of those who suffered or whose families suffered at that time. It might be right to introduce a specific offence, and of course I shall discuss the matter again with my right hon. and learned Friend the Home Secretary.

    However, I am dubious about the practical effect of doing so, and I put several points to the House. First, there is a danger that the amount of holocaust denial material that is likely to stir racial hatred might increase if it were subjected to the sort of publicity that would follow such an approach. At present, that material is subject to prosecution under public order law–and rightly so. Furthermore, I understand that there is no unanimous view about the matter within the Jewish community. Before I reach a conclusive view, I would want to take account of the views of those who are most deeply concerned about the matter.

    Mr. Simpson: In respect of the Government’s decision on the royal yacht, does the Prime Minister agree with the former Prime Minister, the Father of the House, that the conduct of the Secretary of State for Defence was not honourable? Would it not be better for the Prime Minister to admit to Britain’s probably best-known sailor that, yet again, he has been hoist by his own Portillo?

    The Prime Minister: The decision on a royal yacht was not made just by my right hon. Friend the Secretary of State for Defence; it was a Cabinet decision on what I regard as an important national asset that plays an important role in winning business for Britain abroad. I believe that the project is an investment in our nation’s future, and that it is entirely appropriate that it should be met out of public funds. I look forward to the support that there will be when the yacht is built in a British shipyard, sustaining British jobs.

     

    Q4. Mr. Devlin: To ask the Prime Minister if he will list his official engagements for Tuesday 11 February.

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

    Mr. Devlin: Will by right hon. Friend confirm that, since 1979, average pensioner incomes have improved by 50 per cent. over and above inflation? Will he also confirm that 90 per cent. of today’s pensioners reaching retirement age have an income in addition to their state pension? Does he think that that will be a comfort to the hon. Member for Bolsover (Mr. Skinner) on his 65th birthday today?

    The Prime Minister: I should like to wish the hon. Member for Bolsover (Mr. Skinner) a very happy birthday. [Hon. Members: “Hear, hear.”] That is warmly echoed by my hon. Friends. Wrong though the hon. Gentleman has been on almost every issue during his long parliamentary career–in a minute, he is going to say that he is not 65 and I am fiddling the figures–I hope that he smiles before he is 66.

    Mr. Skinner: Perhaps the Prime Minister would now deal with the real issues in Britain today. He has been in power since 1990. He has doubled the national debt, and the public sector borrowing requirement is now more than £25 billion. He is the Prime Minister who came from the belly of the banking establishment, even though he only swept the floors at Standard Chartered. He is the Prime Minister who, on Black Wednesday, 16 September 1992, along with his right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), who was the Chancellor of the Exchequer at the time, lost this country £10 billion in an afternoon–and never went near a betting shop.

    The Prime Minister: The hon. Gentleman is becoming quite curmudgeonly in his retirement. The fact is that we have the lowest debt ratio of any of the larger economies in Europe. It is far lower than in 1979. [Interruption.] “Doubled it,” shout the Opposition. If we had continued their policy, it would have more than quadrupled.

     

    Q5. Mr. Whittingdale: To ask the Prime Minister if he will list his official engagements for Tuesday 11 February.

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

    Mr. Whittingdale: Can my right hon. Friend confirm that his Government are committed to the preservation of grammar schools? Is he aware that Liberal-Labour-controlled Essex county council has withdrawn free transport to such schools, thus denying thousands of parents the opportunity to send their children to some of the finest grammar schools in the country? Does he agree that, if we want to know how Labour would behave in government, we need only look at Labour in local government?

    The Prime Minister: My hon. Friend’s last remarks were undoubtedly true. He echoes a point made by the leader of the Labour party himself in the past; he also highlights another example of Lib-Lab unity in opposing parental choice.

    The vindictive decision–for there is no other way to describe it–should not surprise us. Labour has opposed grant-maintained schools, testing, performance tables and grammar schools. The hon. Member for Dewsbury (Mrs. Taylor) regards test results and the like as a “fanatical doctrine”: I gather that she once said that. So much for the fiction that the Labour party supports either grant-maintained schools or grammar schools. My hon. Friend has highlighted what we knew already–that Labour cares little about the wishes of parents, except when they are parents themselves.

  • PMQT – 10 December 1996

    Below is the text of Prime Minister’s Question Time from 10th December 1996.


    PRIME MINISTER:

     

    Engagements

    Q1. Mr. Kirkwood: To ask the Prime Minister if he will list his official engagements for Tuesday 10 December.

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

    Mr. Kirkwood: In spite of commendable resolution at the weekend, is it not clear to everyone that attempting to run a minority Government, with a party in open revolt, makes it impossible to secure a deal that is in the long-term interests of the United Kingdom, at Amsterdam, Dublin or anywhere else? If, as the Prime Minister suggested on Sunday, he is motivated by the national interest, will he operate on that basis and call for an early Dissolution of Parliament, so that we can have an early general election?

    The Prime Minister: The hon. Gentleman will be unsurprised to hear that I will pick the election date in my own time and not at his behest.

    On the discussions in Europe, I set out the Government’s position with great clarity. There are a number of extremely difficult questions to face in the intergovernmental conference over the next few months; on some issues, we have allies in Europe and, on others, we do not, but in each instance we have set out our position and we propose to stick with it.

    Mr. Alison: Is my right hon. Friend aware of how greatly the public at large, especially parents, will welcome the Government’s decision to press the broadcasting authorities to curb television violence? Does he agree that, if there is even slight evidence that increased screen violence is linked, via imitation or disinhibition, to increased crime, the benefit of the doubt must be given to the potential victims of such crime and no reasonable remedies must be discounted?

    The Prime Minister: I believe that my right hon. Friend has spoken for parents throughout the country. There is a difficult balance to keep in ensuring that we have free and open media and that they maintain the standards that are appropriate for society generally and for children. My right hon. Friend the Secretary of State for National Heritage has today agreed a plan of action with the chairmen of the BBC, the Independent Television Commission and the Broadcasting Standards Council, and we look forward to its being carried out.

    Mr. Blair: Does the Prime Minister agree with Sir Leon Brittan, who said this morning that Conservative party divisions were weakening Britain’s negotiating position in Europe?

    The Prime Minister: There are two things that really damage the national interest in negotiating in Europe. The right hon. Gentleman is perfectly right to say that, when the House of Commons is not united on any issue, that weakens any Government’s position in international negotiations. That is certainly true; but what also undermines our national interest and our negotiating position in Europe is the fact that many of the socialist Governments in Europe expect, were there to be a Labour Government, a very easy ride and a distinct change of policy. They believe that a Labour Government would make changes and surrender positions to which this Government have held–positions which, if surrendered, would be damaging to the United Kingdom.

    Mr. Blair: May I suggest to the Prime Minister that, after his interview on Sunday, much of which I would agree with, there is less clear water between him, his deputy, one half of the Cabinet and the Opposition than between him and most of his Back Benchers? If he is not prepared to agree with Sir Leon Brittan, does he stand by his own comments at the weekend that the Conservative divisions were “self-evidently” damaging to Britain’s interests?

    The Prime Minister: I made that perfectly clear at the weekend. The right hon. Gentleman knows that. I have also made it clear that the Government have set out a position that we believe to be in the national interest. The national interest is going to come before the party interest. There is no doubt about that, and I made that absolutely clear again. I repeat to the right hon. Gentleman that what also damages the national interest is the belief among our partners in Europe that many of the positions that we hold would be surrendered by an alternative Government.

    Mr. Blair: I welcome the fact that the Prime Minister has admitted that these Conservative divisions damage the country’s interest. [Interruption.] “It is obvious,” shouts a voice from the Back Benches. It is obvious, except to the Conservative party. Is the Prime Minister aware that Lord Blake has said in the past few hours that he has never seen the Conservative party in such disarray in 14 general elections? Is he aware that, this lunchtime, the hon. Member for Harlow (Mr. Hayes) referred to the hon. Member for Billericay (Mrs. Gorman) as “politically insane”? Some might say that he is a good judge of such matters. If all that is the case, does not the Prime Minister agree with the vast majority of people who say that, if the Conservatives cannot be trusted to run themselves, why should they be trusted to run this country?

    The Prime Minister: The right hon. Gentleman knows full well that he has precisely the same divisions on his own Back Benches. I look at the hon. Members for Newham, South (Mr. Spearing) and for Bolsover (Mr. Skinner) and I ask whether they share the same position on European matters as the right hon. Gentleman. But I shall tell him about unity: we are united in our opposition to a centralist, federalist Europe as much as Labour is united in favour of a federal Europe. We are standing up for Britain’s interests in Europe; the Labour party is determined to stand up for Brussels’ interests in Britain.

    Mr. Nigel Evans: My right hon. Friend knows, because he has visited it, that Ribble valley is a beautiful part of the United Kingdom that attracts many thousands of tourists every year. Many hundreds of jobs are involved in the tourism industry there; many of them are in small businesses, such as bed and breakfast, small restaurants and cafeterias. What does he believe would be the impact of the introduction of a minimum wage and the social chapter and of caving in to every rule and regulation from Brussels on small businesses in Ribble valley?

    The Prime Minister: There is no doubt about the impact. Small businesses would suffer greatly were those policies to be imposed on them. Not only would existing small businesses suffer greatly but jobs would be lost. Not only would present jobs be lost but the future construction of small businesses would be inhibited and future jobs that would otherwise be created would not be created.

     

    Q2. Mr. Denham: To ask the Prime Minister if he will list his official engagements for Tuesday 10 December.

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

    Mr. Denham: Will the Prime Minister confirm that the changes taking place in the administration of war pensions include the end to automatic reviews of entitlement, an end to reminders to submit claim forms and a requirement to provide independent evidence before a review can take place? Most important, will he confirm that civil servants estimate that, over and above any administrative savings, 16,000 war pensioners will lose out as a result of those changes?

    The Prime Minister: Last week, the Leader of the Opposition made a number of charges about war pensions which he now knows to be incorrect. He may not have known it last week when he said it in the House, but he now knows that it was incorrect and I hope that he will correct it. A few hours ago, the hon. Member for Peckham (Ms Harman) made charges about war pensions, which she now knows were incorrect. She was told, in the past half-hour in the House by my right hon. Friend the Secretary of State for Social Security, that they were incorrect. The fact is that some of the changes made last week extend benefits rather than reduce them. Some claimants will get more. No claimants will lose.

    The hon. Member for Southampton, Itchen (Mr. Denham) will know of the letters written by the British Limbless Ex-Service Men’s Association and the Royal British Legion which made it clear that the publicity last week and the activities of the Labour party totally misrepresented the Government’s policy and what the Government had done on the issue. I hope that the hon. Gentleman is not in the same business.

    Sir Teddy Taylor: Will the Prime Minister confirm full and continuing support for grammar schools, which provide unique opportunities for children from low-income homes to achieve educational excellence? Will he resist in all ways something that is worrying us in Southend, where a quarter of all our children attend such grammar schools–abolition of selection tests, which would be a recipe for the destruction of these excellent schools?

    The Prime Minister: I can confirm that. As my hon. Friend will know, there are proposals before the House to allow a limited amount of selection in schools of all sorts in the state sector. What we seek to do in the education sector is provide a degree of diversity that matches the diversity of the children. A single, regimented, rigid system does not enable the diversity of education that our children need to have provided. My right hon. Friend the Secretary of State for Education and Employment is presenting a Bill to the House that will extend diversity and prevent the problem set out by my hon. Friend.

     

    Q3. Dr. Lynne Jones: To ask the Prime Minister if he will list his official engagements for Tuesday 10 December.

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

    Dr. Jones: Surely the Prime Minister must now accept that the civil war in his party makes it impossible for his Government to have any clear authority in negotiations in Dublin or anywhere else. Would he take seriously any other European Government who were in the same shambles as his own? The last time this happened, the Prime Minister resigned as party leader. Now that it has happened again, will he, in the interest of the country, resign as Prime Minister and call a general election?

    The Prime Minister: The simple answer is no.

    As for divisions, if the hon. Lady is so concerned about them, perhaps she might have a word with the 50 or so of her colleagues who have made it perfectly clear that they are wholly opposed to a single currency. On one day, we have 50 of them saying that they are opposed to a single currency and others, led by the hon. Member for North Durham (Mr. Radice), writing to The Independent saying that they are in favour of it. The hon. Lady had better realise that the splits in the Opposition are seismic.

    Mrs. Gorman: Has my right hon. Friend had time to read the MORI poll published in The Sun newspaper yesterday, which was, in part, conducted in my constituency and which showed that 68 per cent. of respondents felt that they did not wish to be in a single currency and wished to keep the pound; and that almost 50 per cent. said that they would rather not be in the European Union at all? Is he aware of other polls that reflect similar sentiments? Does he not think that the honest way to clear the air would be to have a referendum and ask the people of Britain which way they would like our country to go in future?

    The Prime Minister: We made it clear last April that, if the Government decided that we would enter into a single currency, there would be a referendum on the specific question whether we should go into a single currency. That has been settled policy since last April and I hope that my hon. Friend will support that policy.

    What we need in this country is a rational debate on the issue of Europe, so that–not only on the issue of a single currency, but on all the other important issues that lie ahead of us in the intergovernmental conference–people have a reasoned debate and are then able to make reasoned judgments on the basis of facts, and not scares.

  • PMQT – 5 December 1996

    Below is the text of Prime Minister’s Question Time from 5th December 1996.


    PRIME MINISTER:

     

    EU Unemployment

    Q1. Sir Teddy Taylor: To ask the Prime Minister if he will raise at the next meeting of the European Council the level of unemployment in the EU.

    The Prime Minister (Mr. John Major): Yes, I expect to do so as part of the discussion on the intergovernmental conference.

    Sir Teddy Taylor: As unemployment in the rest of the European Union has risen by 5 million in five years, which means 3,000 individual human tragedies every day, and as Britain alone has falling unemployment, partly because of our exclusion from the exchange rate mechanism, does the Prime Minister appreciate why a growing percentage of people in Britain consider the European Union a rather inadequate organisation? In the light of those alarming figures, is he willing to consider the possibility of letting the people of Britain have a say in their future? Can he at least guarantee that, in any referendum on the European currency, the decision will be taken before sterling is linked in any way to the euro?

    The Prime Minister: As my hon. Friend says, unemployment is falling consistently across the United Kingdom, and is either rising or static in the rest of the European Union.

    On my Friend’s main point, we have made a firm commitment to hold a referendum if the next Conservative Government recommend that Britain should join a single European currency in the next Parliament. I confirm to my hon. Friend that, if such a referendum were held, it would of course be held before sterling was linked in any way with any putative European currency. As my right hon. and learned Friend the Chancellor and I have often made clear, we do not intend to rejoin the so-called ERM mark 2, and would not wish to institute any policy of shadowing the euro.

     

    Engagements

    Q2. Mr. Beith: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.

    The Prime Minister: 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. Beith: Is the Prime Minister seriously pressing ahead with Budget measures that would deprive between 7,000 and 10,000 ex-service people of their entitlement to war pensions, and cost thousands more their entitlement to benefit paid for deafness resulting from war service? It is only a few weeks since we saw disabled war pensioners determined to march, limp or be pushed in wheelchairs past the Cenotaph. Surely the Prime Minister has not forgotten them now.

    The Prime Minister: Of course not. I fear that the right hon. Gentleman has been misled by reports in The Guardian and by the conflation of two separate and distinct matters. The first involves proposals to simplify about 19 complex measures. No pensioner will lose money as a result of that. The second concerns new independent medical advice on pensions paid for loss of hearing. The purpose of that independent advice is to determine what disabilities have been caused, so that people can be compensated accordingly. Those changes were–[Interruption.] That independent medical advice is the normal way of dealing with these matters. It has invariably been accepted. It usually puts up entitlements–that has always been the case in the past. I know of no circumstance when it has not been accepted. It was discussed this morning with the Central Advisory Committee on War Pensions, which will now consider the details.

    Sir Rhodes Boyson: Is my right hon. Friend aware that there is great rejoicing today in the knowledge that A-level standards will be retained and strengthened? Does he agree that that is one of many reforms introduced by the Government for the benefit of British education?

    The Prime Minister: My right hon. Friend speaks for many people, including many millions of parents. Standards are at the heart of the Government’s policies on education and will remain so. Our national qualifications must remain at the highest standard, and A-levels are central to that.

    Mr. Blair: May I return the Prime Minister to the subject of war pensions? Future pensioners will lose as a result of the changes. Those changes to war pensions were described in the Government press release on Budget day as proposals

    “to simplify policy and procedures”,

    whereas they actually mean £50 million-worth of cuts. Does the Prime Minister accept that that was inaccurate and misleading, and will he apologise to the British people for that deception?

    The Prime Minister: I am afraid that the right hon. Gentleman is just plain wrong. If the House will permit me to repeat what I said to the right hon. Member for Berwick-upon-Tweed (Mr. Beith), I shall take the Labour leader through it gently, so that he understands. Two issues have been run together in a simplistic and misleading way by The Guardian. If the right hon. Gentleman relies on The Guardian for his information, that explains why he is so often inaccurate in his questions.

    The first issue involves proposals to simplify complex measures. No pensioner will lose money as a result of that. The second is the way in which we have always dealt with independent medical advice concerning pensions. [Interruption.] Hon. Members shout. After some months, we have just accepted independent advice on emphysema, having been pressed to do so by the Opposition. We did so willingly. That is what we always do with independent medical advice and what we have done on this occasion. The purpose of the independent advice that we have always sought is to determine what disablements have been caused, so that people can be compensated accordingly. That is happening on this occasion–nothing different, no change. We are following the normal practice for dealing with these matters.

    Mr. Blair: Let me deal with each part in turn, so that the Prime Minister can answer each part. The first involves hearing disability. The Prime Minister says that the changes were made on independent medical advice. If the reason for the changes was independent medical advice, why were all his Social Security Ministers opposed to them, which they were, and why did not the Budget press release mention the fact that the changes reduced expenditure by £35 million?

    The second part involves the other changes that the Prime Minister mentioned. He says that they are merely a simplification. Are they on the basis of medical advice? Is that why widows’ rent allowances are to be abolished for new cases? The Prime Minister shakes his head. Is that happening or not? Not issuing reminders to return claim forms–is that happening or not? Ceasing to issue copies of decisions to third parties–is that happening or not? Is the instruction “Do not direct appellant to Royal British Legion as their representative” correct or not? Instead of patronising comments about how we do not understand, will the Prime Minister deal, first, with the matter of medical advice and his Social Security Ministers and, secondly, with each of the points that I have made?

    The Prime Minister: As I told the right hon. Gentleman a moment ago, he has completely misunderstood what has happened. He has not seen the full range of correspondence, and as usual–despite his piety about a leak a week or so ago–he relies on leaked correspondence. If he had seen the correspondence, he would not have misunderstood the matter in the way he just has.

    I repeat: the right hon. Gentleman has got it wrong, and I hope that he will not pursue it. We are trying to simply the procedures, as that is the right thing to do in the interests of the taxpayer, as well as of the applicants and the recipients of benefits. If the right hon. Gentleman does not want to simplify procedures across government, no wonder he envisages expenditure rising under a Labour Government.

    Mr. Blair: If the right hon. Gentleman is unable to answer the specific points that were put to him, he will stand condemned out of his own mouth. I must ask him why–[Hon. Members: “Question”]. This is a question–“why” is normally the start of a question. Why, if it is all just administrative procedures, does one Minister talk about a storm that is about to break about the Government’s head?

    The Prime Minister indicated dissent.

    Mr. Blair: The Prime Minister shakes his head. A Minister said that. Why do the Government talk of “sweeteners”? They talk of these things because they know that they have been caught doing something shabby and mean-minded. If he cannot be trusted with British war pensioners, why should he be trusted at all?

    The Prime Minister: As is typical, the right hon. Gentleman has quoted out of context and wrongly, and he has drawn the wrong conclusion from what he has said. One day, he might find out what he is talking about before he starts to talk about it.

    Mr. Charles Wardle: My right hon. Friend knows that, when he vetoes the Commission’s new proposals on borders–as Conservative Members know he will–the European Parliament has said that it will renew its action in the European Court. My right hon. Friend’s own advisers say that the court will rule our borders unlawful, as the treaty now stands. Will he therefore explain to the House the contradiction, in that he says that our borders are not negotiable but his Ministers say that we will not break European law?

    The Prime Minister: We have made it clear to our European partners on innumerable occasions that we will not accept any form of treaty change that alters the sanctity of British borders. Treaty change will need to be by unanimity, and we will not give our consent to it. There should be no doubt among any of our European partners that we are not prepared to accept any change whatsoever to the present system of safeguarding Britain’s borders and, hence, our immigration controls.

     

    Q3. Mr. McAvoy: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.

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

    Mr. McAvoy: Is the Prime Minister aware that his absent Chancellor of the Exchequer has been briefing journalists on the Prime Minister’s failed attempt to change Government policy on Europe? Does he agree with the Chancellor, who has described the Prime Minister’s failed attempt as a boomerang wrapped in high explosive which has blown up in the Prime Minister’s face?

    The Prime Minister: The hon. Gentleman may know that I have a statement in my hand that denies the report to which he refers.

    Mr. Dover: Following the excellent Budget speech by the Chancellor last week, my right hon. Friend will have heard stupid statements from the Labour party about a lower basic rate of tax than 20p and lifting the ceiling for the 40 per cent. tax rate. Will not these unfounded pledges or promises–call them what you will–only give rise to higher taxation–

    Madam Speaker: Order. I remind the hon. Gentleman that the Prime Minister answers questions, not about the Opposition but on behalf of the Government. Perhaps the Prime Minister might turn the question around and attempt to answer it.

    The Prime Minister: It is certainly–[Interruption.] It is nice to welcome back the deputy leader of the Labour party. I thought that he was in Scotland answering focus groups.

    It is certainly the case that, in order to contain public expenditure and hold down taxation, many extremely difficult decisions have to be taken. We have taken those decisions and I acknowledge the difficulty of doing so.

    Mr. Faulds: Out of order.

    Madam Speaker: Order. The Prime Minister.

    The Prime Minister: Thank you, Madam Speaker.

    I think that the whole country understands the unlikelihood of any alternative Government taking such decisions.

     

    Q4. Mr. Skinner: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.

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

    Mr. Skinner: Can the Prime Minister tell us where he has hidden those economic jewels that he referred to in a speech last week? I went to the Treasury chest to find them and I found a big IOU that said that the country owed a £380 billion national debt which had doubled since the Prime Minister took office. There was another IOU showing a £19.5 billion public sector borrowing requirement shortfall.

    Then I met a bloke on the street with his head down. I said, “Are you looking for these economic jewels too?” He said, “No, I’m looking for work.” In my opinion, the Government sold off the economic jewels along with all the silver that they sold off the other years.

    The Prime Minister: I hope that, when the hon. Gentleman was in the Treasury basement the other day, he did not leave a match behind him.

    As for our economic jewels, I invite the hon. Gentleman to find any other country with unemployment falling like ours, tax rates and growth at our level, growing exports, a narrowing trade gap and economic prospects as good as ours. He cannot do it, because there is not one. The chap he found looking for work would be joined by many others looking for work if the policies that the hon. Gentleman advocates were ever put into effect.

  • Text of the 1996 Budget – 26 November 1996

    Below is the text of the 1996 Budget, held on 26th November 1996 and presented in the House of Commons by the Chancellor of the Exchequer, Kenneth Clarke.


    Budget Statement

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

    The Chancellor of the Exchequer (Mr. Kenneth Clarke): Contrary to popular belief, I always look at the mirror in the morning. I am reasonably well prepared for this occasion and I am about to deliver the real Budget statement. I think this is positively my last appearance in the House in a speaking capacity this week, or so at the moment I expect it to be.

    The British economy is today prosperous and successful. This Budget is going to make it even more prosperous and an even bigger success over the coming years.

    When I presented my first Budget in 1993, it was against a very different economic background from today. Although the recovery had begun then, consumer confidence had not yet returned. Growth was not yet firmly established. Further firm action was needed on the public finances, and our critics, in 1993, were peddling doom and gloom about the British economy. The recovery is now in its fifth year. Consumer confidence has returned and we are achieving something unprecedented for a generation in this country – growth with low inflation and without a widening trade gap. But one thing has not changed in 1996 – our critics are still peddling doom and gloom. With all their predictions of impending disaster, it is obvious that there is probably more than one Cassandra lurking in the Labour party.

    In my first two Budgets I curbed the growth of public spending and took firm decisions on tax, which have brought borrowing down by almost a half since 1993. Last year, in my third Budget, I was able to return to cutting tax while spending more on the public services which the people I know care about most – health, schools and the police – and keeping borrowing on a firm downward path.

    This year, I am presenting a Budget which builds on the last three. This Budget reduces public spending plans further, while providing more money for priority services. It makes responsible progress on our tax-cutting agenda, while getting borrowing down faster. This is not a reckless Budget on either tax or spending. In the run-up to Christmas I am not going to play Santa Claus, but this year I do not have to play Scrooge either.

    I have one overriding aim, which is the lasting health of the British economy. [Hon. Members: “And winning the election.”] The lasting health of the British economy might win elections, that is true, but my first aim is the lasting health of the British economy. We are securing that by creating the best conditions for British businesses and British men and women to earn a living. All my Budgets and all my policies have been designed to set this country on course to be the strongest industrial economy in western Europe in years to come.

    ECONOMY

    The British economy is in its fifth successive year of steady, healthy economic growth, with falling unemployment and low inflation. These are the best circumstances we have faced for a generation and that is the only sensible background to debate in this House. It is a Rolls-Royce recovery and it is built to last.

    The International Monetary Fund and the Organisation for Economic Co-operation and Development confidently expect the United Kingdom to be the fastest growing major European economy again next year. By next year we will have grown faster than either France or Germany for five years in succession for the first time in half a century.

    This time – unlike so many previous recoveries that many of us remember – healthy growth has been accompanied by the best inflation performance for nearly 50 years and restrained growth of earnings has been good news for jobs. The British labour market has become our flexible friend. Employment began to rise sooner and unemployment began to fall sooner than in the previous recovery. Growth creates jobs quicker, as long as we retain a flexible labour market.

    The OECD has praised us for having one of the least regulated labour markets in the industrialised world. High social overheads, minimum wages and unnecessary legislation do not protect workers – they cost jobs. Unemployment is still rising in France and unemployment is still rising in Germany. It has fallen sharply here, to its lowest level for over five and a half years.

    In the bad old days, recoveries were derailed by balance of payments crises. In this recovery, the current account has actually improved, despite the slowdown in our main European markets. In fact we now have a current account broadly in balance, which is our best overall trading performance for nearly 10 years.

    Economic policy

    Mr. Deputy Speaker, I want to ask the British people this question: in the years ahead do we seriously want to be prosperous in this country? I think that we do. That is why I am setting out an economic policy aimed at the next five years, not just the next five months. I am setting out an economic policy that will go on delivering our enviable combination of rising prosperity, low inflation and more jobs. That is my purpose in this Budget. This Budget secures a prosperous future for all sections of our people and their families.

    The last thing that the British economy needs now is a change of direction. We need at least another five years of this Government’s continuous vigilance on inflation. We need more of this Government’s determination to get government borrowing down. We need another five years of this Government’s commitment to raise the wealth-creating potential of the British economy, by improving incentives, reducing the role of the state and creating a climate for enterprise.

    Growth

    Let me begin by turning to my forecast for growth. I expect the British economy to grow by 2.5 per cent. this year and 3.5 per cent. next year – and there are few serious commentators who would disagree with me. I hear mutterings from the shadow Chancellor; there are few serious commentators who would disagree with me.

    By keeping a close eye on the prospects for inflation up to two years out, and by taking sensible early action if and when necessary, I intend to ensure that healthy growth continues without inflationary pressures emerging. That is what I have always promised–no return to boom and bust.

    Consumer spending

    I expect consumers’ expenditure to continue to be the main engine of growth next year. The real value of take-home pay is growing strongly.

    The housing market recovery is now firmly established. I hope that negative equity can soon be consigned to the economic history books.

    People are feeling the improvement in their family finances. Consumer confidence is at its highest levels for more than eight years.

    I expect consumer spending to grow by 3 per cent. in 1996 as a whole. But it has been strengthening through the year. So I expect stronger growth to continue, with consumers’ expenditure rising by more than 4 per cent. next year.

    Investment

    But this recovery is not just about a more confident consumer. Businesses are optimistic too. The climate for business is excellent. Strong demand at home and a recovery in our key export markets present British industry and commerce with tremendous opportunities.

    Interest rates and tax rates remain low, and profitability is high. The result has been business investment growth of 6 per cent. so far this year. I expect business investment to continue to grow strongly – by almost 10 per cent. next year.

    These excellent conditions for business are not lost on overseas companies looking to invest for the future inside the European market. Let us never forget the most valuable practical endorsement that we get for our sound economic policies.

    The United Kingdom remains the No. 1 destination for inward investment into the European Union. Keeping our enterprise economy on course at the heart of Europe will keep us in pole position.

    Exports

    Exports have grown by almost 20 per cent. over the past two years – an impressive performance in the face of weak demand in our key European markets. The achievement is down to our strong cost-conscious British exporters. They will benefit further next year as the tentative recovery on the continent becomes more established. I expect export volumes to rise by more than 7 per cent. this year and by 6 per cent. next year.

    The current account has been close to balance during the last two and a half years, thanks to strong growth in exports and income from our investments overseas. I expect the current account to remain broadly in balance this year and next.

    Jobs

    As I said earlier, I am glad to say that our thriving economy is creating jobs. Employment in the United Kingdom has risen by more than 0.75 million real jobs since the recovery began. Unemployment has fallen by almost a million from its peak. It will soon drop through the 2 million mark. But that is still too high. I want it to go on falling and I expect it to go on falling.

    I hope that during the debate the shadow Chancellor will say that he forecasts that unemployment will now rise, month after month. That seemed to help our performance in the labour market the last time he said it.

    Inflation

    We are on course to get underlying inflation down to our target of 2.5 per cent. or less, and to keep it there. In October underlying inflation rose to just over 3 per cent. This should not have surprised anybody who looked at last year’s statistics. It is a temporary and inevitable reflection of the exceptional falls in the price level 12 months before.

    Let me give the House my concrete reasons for being so confident about low inflation. Apart from oil prices, which have risen sharply, commodity prices are steady and are not putting upward pressure on inflation. Earnings growth remains sensible and modest. Producer price inflation – a good indicator of what is in the pipeline for retail price inflation – is at it lowest levels in this country since the 1960s. Producer input prices are actually lower than they were a year ago.

    Any risk to this recovery from inflationary pressures re-emerging remains a good way off. But as I have demonstrated again and again, when I see any risks, I will act. I will continue to stay ahead of the game on monetary policy. Eddie will keep me steady and I intend to continue to be canny.

    I expect underlying inflation to meet our target of 2½ per cent. or less. I will ensure that we go on meeting that target for the foreseeable future.

    PSBR

    We have made good progress in reducing public sector borrowing, but it has not been as fast as I expected. The Budget therefore targets public sector borrowing again. The general public may ask why I concentrate on public sector borrowing in the way that I do. [Interruption.] It is suggested that I do so because I am a Tory. That is a good reason for concentrating on public sector borrowing as I do.

    One reason why I continue to concentrate so heavily on public borrowing in setting policy is that money spent paying the interest on our debt is, in my opinion, money that I would prefer to spend on public services and the reduction of taxation.

    We are making good progress on bringing down borrowing, but lower than expected tax revenues mean that it has not fallen as fast as I expected in the last Budget. This is not bad news for everyone. People are no doubt quite glad not to be paying as much tax as I expected. But as I am the Chancellor, I strongly prefer to keep any tax cuts under my own control.

    The causes of these shortfalls in our forecasts of tax revenue – primarily on VAT, but also on direct taxes – cannot wholly be explained by any experts inside or outside the Revenue Departments. But there does seem to be an increasing tendency to exploit loopholes and use special reliefs in an artificial way to reduce tax bills. Those sort of tax cuts are unacceptable. On that, I seem to have agreement. If they are not tackled every year in the Budget, they mean that a few people pay less tax, but the rest must pay more.

    In this Budget I will propose a number of measures to stem tax leakage, to protect the ordinary tax payer and to make sure we get the right tax from the right people. When I reduce tax, I want to do so in a way that is fair for all businesses and fair for all hard-working British men and women.

    Government borrowing has been steadily coming down for three years. This Budget will ensure that Government borrowing keeps coming down. I expect the public sector borrowing requirement to be £26.5 billion this year. That will mean it has halved as a share of GDP over the past three years. I expect it to come down to £19 billion next year and to be broadly in balance by 1999-2000.

    That pattern of declining borrowing is very much better than the one I had to put in my summer economic forecast last July. Since I produced the summer forecast, which was debated in the House last summer, I have reduced my expectations for next year by £4 billion.

    A large part of that improvement is the result of the measures that I am taking in this Budget. This Budget tightens fiscal policy. The reason why I am tightening fiscal policy now is to reduce the risk of having to tighten monetary policy excessively as I set policy to hit my inflation target.

    My decisions are always taken solely in British interests to benefit the British economy. But my decisions in this Budget also mean that, by happy coincidence, we will meet the Maastricht debt and deficit criteria in 1997, and we will do even better than that in the medium term. [Interruption.] I do not need any assistance from nationalists. It is a happy coincidence for everyone because those criteria make sound economic sense, as we all agree, with or without a single currency.

    Our option whether to join or stay out of a single currency, based on British national interest, remains a genuine choice. We will qualify, but we will choose in the next Parliament when the time comes.

    This Government is the champion of sound public finances, of limited government and of low taxation. Our combination of low taxation, low public spending and low debt is the best in Europe. We intend to stay in that enviable position. We can do that only if we continue to bear down on public spending.

    Public Spending

    In the 1980s, across the rest of Europe, the modern state remorselessly took an ever greater share of almost every nation’s wealth. We in Britain held the line. The proportion of GDP going into Government spending in the United Kingdom is now 8 per cent. lower than the average in the rest of the European Union. If our spending had risen to continental levels we would now have to raise nearly £2,300 a year more in tax from every British household.

    I have set a target of 40 per cent. or below for the share of national income that goes on public spending. Making progress towards that desirable target means tough decisions on public spending every year, but this year we have had to cope with the costs of BSE, and with larger than expected increases in the costs of social security, as more and more elderly and disabled people receive benefits to which they are entitled.

    Against that background, we had to keep the rest of public spending within the tightest possible limits, in order for us to spend more on the public services that people really care about: education, combating crime and our national health service. This country has been well served by my right hon. Friend the Chief Secretary who has successfully tackled that problem. Despite all the difficulties, we have been able to reduce public spending plans over the next three years by a further £7 billion in this Budget. Public spending next year will be more than £24 billion lower than was projected when I became Chancellor – a reduction of 7 per cent.

    We have been able to reduce spending plans because we have lower inflation, falling unemployment, a continuing campaign for efficiency in the public sector, sensible policy priorities and a Government capable of taking decisions about those priorities. On top of that, the Government’s relentless drive against fraud and the abuse of tax and benefits will be stepped up another gear.

    Next year, we will meet our target of 40 per cent. for the share of national income that goes on public spending. In last year’s Budget I said that I would make 40 per cent. in 1997-98. This year’s Budget secures that important goal. So long as we keep – as the next Conservative Government will keep – the growth in public spending down below the growth in the economy, we will go below that.

    Education

    Education is the key to the future of any prosperous and civilised society. It helps to determine how well the economy performs in the long run. It also helps to determine the sort of citizens that we have and the sort of society that we have. The Government are committed to raising standards in education.

    As a result of last year’s Budget, £878 million extra was provided for schools this year. We are giving schools priority again in this Budget. Planned expenditure on schools will rise by another £830 million next year. A large proportion of that money – £633 million, an increase of 3.6 per cent. – will be channelled through the local authorities. I see the hon. Member for Sheffield, Brightside (Mr. Blunkett) shaking his head. Perhaps the money did not reach his schools; I am not as familiar with Sheffield as he is.

    Judging by last year’s experience, some local authorities are reluctant to pass on the increases in their standard spending assessment to their schools, preferring to spend the money on other areas. It is no good local authorities campaigning for more spending on education in the autumn and then spending their money on other things in the spring. Parents will want to make sure that their local authorities spend money on the things that they want for their children: good teachers and better equipped schools. I hope that the hon. Member for Brightside makes the same efforts to ensure that Sheffield passes the money on, if it did not last year.

    A good school has a value far beyond its buildings; but the quality of school buildings in which our children are taught is still very important. We have a long way to go in the post-war era to get up to the standards that we require. We will be providing an extra £50 million on top of the previously planned provision for more capital investment to improve the fabric of our schools.

    By setting high standards for schools and increasing choice for parents, this Government are delivering better trained and better qualified young people. Almost one in three young people now goes on to university, compared with one in eight in 1979. And our universities and colleges maintain some of the highest standards in the world despite the pressure on their unit costs that this unprecedented explosion of opportunity for young people has produced.

    But I recognise this pressure – I have heard about these pressures – and I also realise that our universities and colleges make an important contribution to the economy.

    My Budget therefore includes £280 million to boost further and higher education over the next two years. This includes an extra £20 million next year for science equipment. We want to ensure that the British science research base remains the best in the world, which it certainly is at the moment.

    As my right hon. Friend the Secretary of State for Education and Employment announced in September, the Government are planning a substantial sale of student loans debt. It makes no sense for the Government to keep a huge portfolio of loans on their books when the private sector could manage it more effectively and is better placed to cope with the risk. I emphasise that the sale will have no effect on the terms on which students can get loans.

    The substantial reduction in the figures for education that Members will find published in the new spending plans is more than accounted for by the sale of this debt. As I have just described, we will actually spend more on the things that really matter – educating our children and young people.

    Combating Crime

    This Government believe that effective law and order are an essential part of making Britain a nation at ease with itself. A good quality police service and an effective system of criminal justice are very high on the list of this Government’s priorities.

    When it comes to spending on law and order this Government have a record as long as your arm. [Interruption.] Spending more money on a much better police service and a much better criminal justice system – I plead guilty as charged, if that is indeed the charge against the Government. Spending on law and order has already doubled in real terms since 1979.

    Provision for combating crime – police and prisons – will now rise by another £450 million next year. Our plans provide for 2,000 more police constables by the end of next year. We are well on course to meet the Prime Minister’s pledge for 5,000 more constables.

    Health

    Our British national health service, with treatment free at the point of delivery, is the envy of the world. It is the best system of health care that I have ever encountered. In every modern civilised society the demand for better health care, for new techniques to save lives and improve our quality of life grows constantly and remorselessly. This Government completely understand that. That is why we have increased spending by some 75 per cent. in real terms since 1979.

    That is why the Prime Minister has pledged on our behalf more resources for the national health service in real terms every year, throughout the next Parliament – a pledge which, to my continual mystification, the right hon. Member for Sedgefield (Mr. Blair) has not yet brought himself to match.

    We are also spending that money better. We have reformed the NHS so it is much better managed and much more efficient. It is no good opposing these improvements, because when waste is reduced, more can be directed to higher quality patient care. This means that patients get more treatment and care out of every extra pound that we spend.

    For next year, we will increase current spending on patient services in the NHS by £1.6 billion, or 2.9 per cent. in real terms. The real increase in current spending for hospitals next year over and above inflation will be 3 per cent.

    On top of this, private finance initiative investment will play an increasingly important role in providing new health care facilities. The PFI contract for the Norfolk and Norwich hospital scheme, worth close to £200 million, was signed yesterday, and others will follow. [Hon. Members: “Oh.”] I am grateful to my right hon. Friend the Secretary of State for Health for not signing it tomorrow, but I do not think that he had the Budget in mind. There are many in the pipeline–[Hon. Members: “Oh.”] He had the people of Norfolk and Norwich in mind and the efficacy and investment in our national health service. PFI investment in the NHS will reach some £900 million over the next three years on top of the increased public spending I am announcing. I think that the Labour party has at last belatedly become converted to that source of investment in our great national health service.

    The NHS will continue to grow and continue to improve. We are totally committed to the national health service as a public service providing high quality up-to-date treatment, free at the point of delivery.

    By our decisions on public spending, we prove that the NHS remains at the top of the Government’s priorities. The NHS has been safe in our hands, it is safe in our hands and it will always be safe in our hands.

    OTHER PROGRAMMES

    This year’s spending round was as tight as any that I can remember – I keep describing it as eye-wateringly tight – but we never lost sight of our objective, which is to sustain and improve the key public services that the British public care about: education, combating crime and our national health service. In part we have achieved that by increasing efficiency within the priority services, but inevitably we have also had to find savings in other programmes. [Hon. Members: “Whisky.”] You will find out in a minute.

    Falling unemployment and lower inflation has helped to reduce the social security and employment programmes. We are also continuing to transfer activities to the private sector where this is more efficient as it is for student loans. We have refocused the housing programme to encourage the use of private finance and the transfer of the local authority housing stock to the private sector. We are stepping up our programmes against fraud. We are continuing our remorseless squeeze on the costs of bureaucracy itself. And we have looked in every department for ways of achieving our objectives more economically. With efficiency savings, most departments will be able to deliver their programmes next year, but with less public money in real terms.

    Private Finance Initiative

    People pay their taxes in order to get good quality public services, not to accumulate state-owned buildings. This simple truth has led to the development of the private finance initiative.

    The PFI helps to square the circle of sound public finances and growing demand for better and more modern public services by tapping the expertise and the resources of the private sector.

    A year ago we had agreed £1.5 billion worth of deals – now we have agreed £7 billion, and we are on course to double that by March 1999. Time and again the taxpayer is getting better value for money, through new road schemes, new prison services, and information technology projects. And reforms to local government rules are bringing the PFI into new areas, notably schools.

    London is currently experiencing a transport investment boom under the PFI: the channel tunnel rail link, Thameslink 2000, the Docklands light railway extension, and the A40 and A13 improvements. This is in addition to conventional public and private capital spending on the Jubilee line extension, the Heathrow express and the new A12-M11 Hackney link. Investment in London Transport is now running at 50 per cent. in real terms above the average for the 1980s. London will soon become one of the biggest construction sites in the country. As a defiantly provincial Nottingham man, I can only say that I hope that London will be even nicer when it is finished.

    Adding traditional capital spending to PFI investment, publicly sponsored capital spending in the United Kingdom in the next three years will be substantially higher in real terms than it was in the 1980s.

    Social Security

    One third of all public spending goes on social security. Our social security system is there to provide an income when people cannot earn because of sickness, disability, unemployment, caring for relatives or old age. People on the left and the right of politics continue to search for a radically different and better way of meeting those needs in our wealthy nation. I have studied many of their proposals closely and so far, I am afraid, nobody has yet come up with anything remotely sensible or practicable.

    Until people come up with a radical alternative, if they ever do, our welfare safety net must remain affordable. We must not allow the welfare state to damage the incentives of individuals or businesses in the private sector, because it is the wealth-creating enterprise economy that sustains our entire social security system.

    In the post-war period social security has grown in real terms by around 5 per cent. each year. In recent Budgets we have taken action to bring that growth under control. We now expect future growth of 1.5 per cent. a year – well below the growth of the economy.

    Year after year, this Government have also vigorously attacked fraud and reformed benefits to target them on those in genuine need. The measures that I now propose in this Budget intensify those efforts yet again.

    We plan a further move to align the benefits paid to lone parents and couples with children, because both care for children. From April 1998, new awards of family premium and child benefit will be the same in value for lone parents as for couples. We are introducing a number of measures on housing benefit and council tax benefit to ensure that those on benefits do not have a more comfortable life style than some of those who are supporting themselves on modest incomes. The contrary would be unfair and unwise. Full details will be made available later today by my right hon. Friend the Secretary of State for Social Security who, with your permission, Mr. Deputy Speaker, will speak later in the Budget debate.

    In my Budget two years ago, I announced a whole package of measures to help the unemployed get back to work – from improvements to the family credit system to national insurance holidays for employers taking on long-term unemployed people. Those are contributing to the steadily improving jobs position.

    In this Budget I am providing another £100 million worth of new money for new measures mainly targeted on people who have been unemployed for two years or more. First, they will be required to attend a compulsory programme of interviews with the Employment Service to give them a helping hand to compete in our ever improving market for jobs.

    We are expanding Project Work pilots to a further 28 areas. That will create up to 100,000 new opportunities, on a programme with a good track record for getting long-term unemployed people back to work. The pilots have been successful.

    I can also announce pilots for a new scheme called Contract for Work. Private contractors will help people to find work. Those firms will be paid by results. As with Project Work, if the scheme works better than the existing approach, we will expand it. We have drawn on some American experience. We will adapt it to Britain and, if it works, we will widen its application. We must tackle the problem.

    Dependency on welfare impoverishes us all. The welfare system should provide a safety net. It must provide the support that a caring society wants to give to our less fortunate fellow citizens. But the welfare system must never be allowed to become a way of life. We do not want our social security system to be undermined by resentment.

    We have to take these careful measures. We must move people from dependency to responsibility for themselves and their families, because we are serious about protecting those in genuine need and we want to go on delivering that protection for the future.

    Spend to Save

    We want to combine a strong, affordable welfare system with a successful low-tax economy. That means that when we spend money on social security, it must go only to those who need it. It also means that when we levy taxes, we must make sure that they are paid and not evaded by those who ought to pay them.

    As part of our continuing fight against tax and benefit fraud and tax loopholes, I am introducing a package of measures called “spend to save”. That involves the planned spending of money, carefully targeted to save much more money for the general public, and to raise revenue. There will be more money next year to clamp down on benefit fraud. There will be more visits and checks on benefit claimants in high-risk groups, and the information that we already have on benefit claimants will be used more effectively to catch cheats.

    Inland Revenue tax experts will be redeployed to investigate even more rigorously how some big, sophisticated companies seem to pay so little tax. They will make sure that companies are paying what they owe, and what we intended they should owe. In short, we intend to do more about companies being “economical with their tax”.

    There will be more resources in the Revenue and Customs to stem the growth of the shadow economy. Tax cheats put law-abiding small entrepreneurs out of business, and we all lose from that. There will be more Customs and Excise officers to tackle value added tax and other tax abuse, including yet more to target the smuggling of alcohol and tobacco.

    The “spend to save” package will cost £800 million over the next three years to secure, in a well-planned and measured way, revenue and expenditure savings of well over eight times that amount – £6.7 billion. These measures are additional to the effective steps that we have taken previously.

    Running Costs

    “Spend to save” protects the ordinary taxpayer and the people in genuine need of benefits. It is certainly not about more bureaucracy or more red tape.

    We remain a Government committed to deregulation, and we are committed to a more efficient civil service. We have cut overall central Government Departments’ running costs by 8 per cent. in real terms since the start of this Parliament and we are going to reduce them by a further 7 per cent. by the end of the decade. Civil service numbers are already below half a million, and we expect this fall to continue.

    TAXATION

    The first duty of Government is to make sure that people can live their lives as they want and that businesses can flourish. People must have the opportunity of a good quality job to go to, a good standard of living, good schools and hospitals, and safe streets to live in. It is only when those essentials are secure and only when the Government have made sure that they are not borrowing more than they should, that a responsible Government can start to think about tax cuts.

    Last year I cut taxes paid by the ordinary family and this year I am able to cut a little more. I think that the message I have repeated over recent months has now been understood. If there are to be tax cuts, in my opinion they must be for keeps. That means that they must be backed not only by sound spending decisions but by a sound fiscal judgment.

    Consumer spending is strong and inflation remains in check. But a fiscal stimulus to the economy at this stage could be just as damaging as letting go of monetary policy. So, in setting my Budget, I have struck a careful balance.

    I want to cut taxes, but first I have to continue my drive to secure the tax yield. I want to make sure that the tax due is turned into tax paid. The balance of the tax burden must be distributed sensibly and fairly and it must not distort decisions or competition.

    I am introducing a number of measures which will help us to achieve this. I am plugging some loopholes to raise revenue, I am ending some tax reliefs that have done their job to raise revenue and I am adjusting some indirect tax rates.

    Securing the Tax Base

    Even though VAT revenues have revived in recent months, they are still coming in significantly below what was expected last year. This Budget includes a crackdown on some of the rather ingenious wheezes that have sprung up to get around paying VAT. The measures I am announcing will raise £0.75 billion in revenue next year, but they also protect a further £1.5 billion a year of existing revenue from further attack from ingenious accountants, acting lawfully and acting to take our revenue.

    Customs will restrict access to special VAT schemes for retailers. We will also tighten up the rules of VAT relief schemes for bad debts and the option to tax commercial property to prevent widespread abuse of these reliefs. I also propose to take steps against retailers who reduce their VAT bills when selling insurance with their products.

    We have already announced a three-year limit on repayments of VAT claims. This was a sensible precautionary measure in the national interest – not just that of the Exchequer. Recent high-profile court cases have revealed the potential exposure of the Exchequer to enormous claims for tax going back to when VAT was first introduced. No responsible Government could leave the Exchequer and, ultimately, all taxpayers exposed in that way. Government needs to strike a balance between what is fair to the individual taxpayer, and what is fair to the whole body of other taxpayers. The three-year cap that I have announced strikes that balance.

    But one feature that attracted particular criticism from not only accountants and their clients but others was that Customs and Excise retains the right to claim underpaid tax going back six years. That argument was rather disingenuous, because Customs and Excise does not claim underpaid tax on unexpected changes to the interpretation of the law when they go against taxpayers. However, Government must not only be fair – it must be seen to be fair. I have, therefore, decided that Customs’ right to claim underpaid tax, in cases where no fraud or malpractice is involved, should be restricted to three years as well.

    I will be releasing today details of a package of measures to stamp out tax abuse in a number of areas, including leasing transactions, the abuse of foreign tax credit rules and paying employees in their own company’s shares. I am sure that they will be accepted by the House and others as necessary and sensible measures to stem the growing loss of tax revenues, and thereby to protect the ordinary tax payer. I will not tolerate tax abuse. A number of those measures are being introduced – subject to the Finance Bill becoming law – with effect from today.

    Special tax reliefs can be a powerful tool. They can play an important pump-priming role, and encourage companies and individuals to change their behaviour in a way that benefits the wider economy. But by their very nature, they need to be used very selectively. We owe it to the ordinary taxpayer to keep each and every special tax relief under constant review to determine whether it is still justified, or whether it has now served its useful purpose.

    Profit-related Pay

    The tax relief that the Government introduced in 1987 to promote profit-related pay schemes has been a success. It has played a key role in reinforcing the Government’s strong beliefs that employees’ rewards should depend on the success of the business for which they work.

    I have always believed, and have argued publicly for many years, that in a modern enterprise economy people’s pay should be closely linked to the performance of the business for which they work. The best way for businesses to motivate their staff is to let them share in the rewards of success. I am delighted that tax reliefs have helped to get that idea accepted so widely.

    Tax relief on profit-related pay was always intended to be a pump-priming measure, and it was introduced in very different circumstances. In the 1986 Green Paper, Nigel Lawson said:

    “There is considerable inertia to overcome, so it might make sense to offer some temporary measure of tax relief.”

    Profit-related pay is now firmly established as part of British businesses’ pay policy. It is one of the reasons for our success. More than 3.7 million people are in schemes. Ten years on, the temporary tax incentive has successfully served its pump-priming purpose.

    I can no longer justify the ever increasing cost of the tax relief to the 22 million taxpayers who are not in profit-related pay schemes. We cannot permanently divide the work force into groups of people who pay different levels of tax on the same earnings depending on whether the firm that they work for is in a scheme or not. The aim of the relief – a widespread use of PRP – has been achieved, and I would rather make faster progress on lower taxes for everybody. We have changed the culture.

    Good managers in today’s enterprise economy no longer need a tax relief to know that pay should be linked to their firm’s performance. Pay linked to profits produces it own rewards on the bottom line in a thriving economy.

    I shall describe to the House how the Government will start to withdraw this special tax relief. I intend to do that gradually, so I must ensure that businesses which need to adjust their pay packages and their sharing of the rewards of success have ample time to make those adjustments.

    The upper limit of pay attracting the relief will remain unchanged at its present £4,000 until 1998, which means that no one will be affected before then. [Hon. Members: “In time for a general election.”] But during the lifetime of a Conservative Government. It will then be progressively reduced until the year 2000, when the relief will be withdrawn altogether.

    Capital Allowances for Long Life Assets

    Investment is vital to our recovery, and business investment is now growing strongly. The tax system recognises investment through capital allowances. These allow the cost of investment to be written off against tax bills, frequently faster than it is written off in commercial accounts. But within that system, for plant and machinery with a long lifespan, the rate at which costs can be written off for tax is far more generous than for other types of investment, and bears no relation to the useful economic life of the asset. This is an unjustifiable distortion in the tax system in favour of particular types of business and investment.

    I propose changing the capital allowance for plant and machinery with a life of more than 25 years to 6 per cent. on a reducing balance basis. That will spread the tax relief more evenly over the average life of these assets. Groups spending less than £100,000 a year on such assets will be exempt. This will mean that the vast majority of small companies will not be affected. Ships and railways will also be exempt.

    Oil Production

    I also propose to withdraw the 100 per cent. corporation tax deduction for the intangible costs of drilling most production oil wells.

    OTHER TAX CHANGES

    The Government recognise that low marginal tax rates on income are a spur to hard work and enterprise. Taxes on spending do less damage to effort and enterprise than taxes on income, but the balance of the taxes that we do impose on spending must be right, and I am making some changes to taxes which help to move towards a better balance for the tax system as a whole.

    Insurance Premium Tax

    I propose to increase insurance premium tax, which applies to most general insurance, to 4 per cent. Three quarters of all insurance – including life insurance, and other long-term insurance – will remain exempt. Insurance remains undertaxed for consumers compared with other services in this country.

    The introduction of the tax – I made it a very low rate – did not harm the healthy insurance industry that we have. Most companies absorbed the tax, and some premiums actually fell for a time. Even after this further modest change – which I think is lower than many people expected – the overall rate of insurance premium tax in the UK remains very low, lower than in almost any other European Union country.

    Air Passenger Duty

    Air travel has also been undertaxed, because it has proved difficult – still proves difficult – to get international agreement to tax its fuel. The rates of air passenger duty are to be increased. The £5 rate on flights to most European countries will be increased to £10, and the £10 rate on flights to the rest of the world will be increased to £20. Those increases will not come into effect until 1 November 1997. [Laughter.] I realise that we are all thinking of a forthcoming election, but the reason why the Opposition cannot produce a responsible economic policy is plainly that they are obsessive about it. The very good reason for delaying until November 1997 is to give tour operators who have already sold their packages time to reflect the new rates in the prices that they publish in their holiday brochures. I announce necessary things before an election. That is responsibility; that is what is totally lacking among Opposition Members, who seem to propose to announce nothing whatever of any substance, apart from a windfall tax, this side of the election.

    Business travel is soaring, and the holiday business is booming at the moment in prosperous Britain. This modest change will not stop it booming in future prosperous years. About 40 per cent. of the revenue raised by passenger tax is borne by overseas visitors.

    Vehicle Excise Duties

    I am making the same changes to the main vehicle excise duties this year as I did last year. The cost of a car tax disc will go up by £5, around the rate of inflation. The cost of a lorry tax disc will be frozen for the seventh year in succession.

    Road fuel duties

    I firmly believe that motorists should bear the full costs of driving – not only wear and tear and congestion on the roads, but the wider environmental costs. Even those of us who frequently have to drive – and, contrary to rumours that Ministers always travel in limousines, that includes most hon. Members – can take steps to cut fuel consumption and we all ought to consider carefully the use of our car.

    I intend to stick to my 1993 Budget commitment to raise road fuel duties by an average of at least 5 per cent. each year in real terms. In line with this, I am raising the tax on all petrol and diesel by 3p per litre from 6 o’clock tonight. Those tax rises will encourage fuel efficiency and help to control harmful pollution.

    Air quality package

    I am glad to say that pollution from vehicles is already coming down, helped by tax measures in previous Budgets. The tax measures that we took to encourage unleaded petrol were a huge success. It now accounts for two thirds of the petrol market. I want to go further in this Budget for green purposes or, to put it more sensibly, to attack pollution in cities and to improve air quality by effective steps to reduce particulate emissions – the smoke produced by diesel engines.

    In recent years, new evidence has come to light strengthening the health arguments for reducing particulates. This pollution is being reduced, but we all want to see it being reduced further and faster.

    Ultra-low sulphur diesel is cleaner than ordinary diesel and it is slightly more expensive to produce, so I want to create the conditions where ultra-low sulphur diesel can cost the same at the pump as ordinary diesel. I have just said that I am increasing the tax on diesel by the same amount as petrol. I plan to reduce the duty on ultra-low sulphur diesel by 1p per litre relative to ordinary diesel, when I get the necessary international agreement.

    I also want to encourage high-mileage vehicles in our towns and cities to switch to cleaner gas power. Last year’s Budget changes broadly equalised the pump prices of liquid gas and petrol. From 6 o’clock tonight, I am reducing the duty on road fuel gases by a further 25 per cent.

    I also intend to reduce vehicle excise duty by up to £500 for lorries meeting very stringent emissions standards from early 1998. That will give an incentive for lorry owners to fit particulate traps or to convert to gas power. We will be consulting on the practical details of those changes.

    I believe that this air quality package will significantly speed up the reduction of urban emissions of particulates, helping us to meet our air quality targets for 2005 and beyond. We intend to ensure that the economic growth that we are achieving faster than others in this country is consistent with a healthy environment and with sustainable development as we become one of the most successful economies in the western world.

    In my 1993 Budget, I gave a commitment to raise duty on tobacco by more than inflation each year. I believe and accept that that is a fair and effective way to hammer home the message that smoking can seriously damage one’s health. So far as I am concerned, this announcement is necessary masochism in the wider public interest.

    From 6 o’clock this evening, the tax on a packet of 20 cigarettes will increase by about 15p, on a packet of small cigars by about 7p and on a packet of pipe tobacco by about 8p, but I am limiting the increase in the duty on hand-rolling tobacco to the rate of inflation. Hand-rolling tobacco is proving to be by far the easiest tobacco product to smuggle, although it represents a very small part of the tobacco market.

    Mr. Terry Lewis (Worsley): What time do the shops close?

    Mr. Clarke: Not yet.

    Alcohol

    I am aware of the serious problem that cross-border shopping and smuggling of alcohol causes our drinks industry in Britain. I have already announced that customs is further stepping up its efforts to catch smugglers.

    Last year, I was able to freeze the duty rate on beer and wine. This year, it will remain frozen. The proportion of tax on the price of a pint in the pub is now at its lowest level for 30 years. For some of us, that helps to keep our small cigars affordable – [Laughter.]

    Last year’s cut in the duty on spirits was the first cut that any Chancellor had made for 100 years, and I was tempted to maintain a striking rate of once every 100 years. But I am sure that the industry will be glad to know that it will not have to wait so long this time. From 6pm tonight, the tax on whisky, gin and other spirits will fall by another 4 per cent., which is worth 26p. The reduction in the rate on spirits boosts an important industry in the United Kingdom, and it will also reinforce last year’s signal to overseas authorities not to discriminate against our products. Only smugglers will regret that we are slowly moving our duty on spirits nearer to the continental level.

    From 1 January, the tax on alcoholic soft drinks will be increased by over 40 per cent., which will put up the price by between 7p and 8p a bottle–for those who have not yet tried them. That increase will meet public concern about the attraction of the “alcopops” for under-age drinkers, but it will also attack a distortion of competition by bringing the tax broadly into line with that on beer. The House will notice that I have considered carefully the balance of my overall package on this matter, and I have not yet been converted to a bubble-gum flavoured “alcopop”–[Laughter.]

    Business

    Nothing matters more for business than a stable economic environment – low interest rates and low inflation – and businesses throughout Britain are benefiting from the healthy sustainable growth in the economy that I have described today.

    As I promised in my last Budget, there will be, from April 1997, a cut in the main rate of employers’ national insurance contributions, to 10 per cent. The cut will be paid for by the proceeds that we are receiving from the landfill tax. A tax on waste is cutting a tax on jobs, and it will benefit employers in Britain and make it even cheaper to create new jobs in our growing economy. Our overheads on jobs are already less than half those in Germany, France or Italy. I am determined that we must keep that advantage over our competitors on the continent, where the creation of new jobs, in the rest of the European Union, is over-regulated and over-priced. That fact is another practical reason for being confident that our unemployment will keep falling.

    In this Budget, I propose to keep the three intermediate thresholds for employers’ national insurance contributions where they are now. I propose to increase – by £10 and £1, respectively – the upper and lower earnings thresholds for employers’ and employees’ national insurance contributions.

    In this Budget, I also want to deal with a particular concern of our small businesses, upon which so much of our future economic prosperity depends. I think that small businesses are most concerned about the burden of non-domestic rates.

    The uniform business rate is a fixed cost which can rise each year beyond the control of the manager of any business, and it hits the small business hard. Since the last revaluation of business rates, I have repeatedly slowed down the increase of rates for those businesses whose rates have had to go up. No business property has seen its rates go up by more than 7.5 per cent. above inflation in any one year. But I want to do more than that; it is not good enough. I have decided to freeze next year’s rates bill for all small businesses whose rates would have gone up. Small properties whose rates are falling will have those reductions accelerated, which will benefit over 1 million small business properties, by up to £130 a year.

    I want to go further. A freeze is a significant step that I can make right away, this year. We have already reduced business rates for rural village shops. But I realise that the current system of business rates bears particularly hard on smaller businesses, for which it represents a much bigger proportion of total costs compared with their large competitors. We must therefore move on as soon as possible to make more changes in the system to recognise this and to redistribute the burden more sensibly between smaller and larger businesses. My Budget next year will be a convenient opportunity to proceed with that.

    Inheritance tax

    The Government are committed to reducing and then abolishing capital gains tax and inheritance tax. I repeat those commitments. But we have always said that we will cut these taxes only when we can afford to do so. This is a responsible Budget which is protecting future growth and prosperity by putting the public finances into a healthier state. We will not be able to make progress on both these taxes this year.

    Mr. John Prescott (Kingston upon Hull, East): Next year.

    Mr. Clarke: The right hon. Gentleman can come back next year and discover from the same seat that he is now occupying.

    I am pleased to announce that we can take a further significant step towards abolishing inheritance tax. Inheritance tax is nowadays a penalty on thrift, independence and enterprise. It is a growing anachronism.

    Lloyd George’s maxim that the “the most convenient time to tax the rich is when they are dead” no longer holds. Inheritance tax today is largely paid by people of modest means who either cannot or simply do not make careful plans to avoid it. [Hon. Members: “Modest!”] Modest means in the opinion of all those outside the hard core of the labour movement, that is.

    Last year I made significant progress towards our commitment. In this Budget I will build on that by raising the value of the inheritance tax threshold to £215,000.

    Mr. Dennis Skinner (Bolsover): I read that this morning.

    Mr. Clarke: The hon. Gentleman appears to know that from this morning. Is he also aware that the Government have raised that threshold by 40 per cent. in only two years?

    Tax rewrite

    In last year’s Budget I announced a project to rewrite Inland Revenue tax legislation in plain English. That is a tall order. The project is as ambitious as translating the whole of “War and Peace” into lucid Swahili. In fact, it is more ambitious. I am told that “War and Peace” is only 1,500 pages long. Inland Revenue tax law is 6,000 pages long and was not written by a Tolstoy. We have consulted extensively on how the project should be carried out, and I am glad to say that there is wide consensus. The Inland Revenue will publish the plans and arrangements shortly after the Budget.

    The aim is to prepare a series of rewrite Bills, the first of them to be ready for enactment in the 1997-98 Session. My noble and learned Friend Lord Howe has produced a thorough and helpful report on how Parliament might handle those Bills. We endorse his broad proposals, and invite the Procedure Committee to consider how the House is going to handle the Bills in a sensible fashion. I can announce that my noble and learned Friend Lord Howe has agreed to chair the steering committee that will oversee the rewrite project.

    The project will bring the benefits of clarity and certainty to businesses and ordinary taxpayers. It has been widely welcomed and deserves the continuing support that it has enjoyed in all parts of the House.

    Income Tax

    The Government have led Britain towards our clear goal of a low-tax economy in which private enterprise has the incentive to generate jobs, investment and wealth to make people and their families more prosperous. We are moving towards a low-tax economy in which individual living standards continue to rise and the Government can afford the excellent public services that people want.

    Low direct taxes are the most effective way to encourage enterprise and hard work – a message to which we have not converted Labour Members, but one that they no longer dare to deny. Under this Government, those who do an honest day’s work and those who take entrepreneurial risk will keep more of what they earn and save by their own efforts.

    This year, people have taken more heed of my speeches on the overriding priority of securing future prosperity and jobs and financing key public services. Sensible people already expected my cuts in direct taxation to be modest before they read the one leak and many guesses this morning. They know that their well-being depends on lasting growth and more jobs and that living standards rise from a combination of steadily rising incomes in a successful economy and steadily lowering taxes. Tax cuts matter a lot to low-paid people and to men and women in ordinary jobs.

    I announced my income tax cuts last year as a return to our tax cutting agenda and, for the second year in succession, as a result of all the steps that I have announced, I can afford to deliver an instalment of that agenda. The choice is how best to do so. It is the old dilemma between thresholds and rates. Today it is between The Guardian, the Daily Mirror, The Independent or The Sun.

    I want to ensure that tax does not start to be paid at too low a level of income and I want to improve work incentives. Therefore, I propose to raise the threshold below which no income tax is paid at all.

    In this Budget, I am making an increase in the basic personal allowance of £280. That is 3.5 times more than necessary to cover the rate of inflation. It will also ensure that each and every person who pays any income tax at all will get a direct benefit out of the Budget.

    I am also increasing the married couple’s and related allowances by £40, maintaining the extra tax allowance to all married couples. It will now be worth nearly £275 each year for married couples. The tax system does recognise marriage, contrary to popular belief.

    We also give a special tax allowance to blind people. This year, I am increasing that by the rate of inflation. I am also moving to put indexation of that allowance on to the same statutory basis as for the other income tax allowances. I also propose to raise the threshold above which people start to pay the 40p higher rate tax by £600.

    One of the Government’s most important pledges is that we will move to a basic rate of income tax of 20p as soon as we can. We are proving that we can move towards the delivery of that promise and still maintain healthy public finances. Every step that we take makes that more credible and makes it more affordable to reach the ultimate goal to which we are getting tantalisingly near and which a Conservative Government will achieve. As a further step towards that, I propose to widen the lower rate band of 20p tax by £200 – twice as much as is required to meet indexation.

    That will mean that the slice of income on which a 20p tax rate is paid will have more than doubled during the lifetime of this Parliament. More than one in four of all taxpayers will now pay a marginal rate of tax at 20p in the pound.

    They are wide thresholds, so were the newspapers wrong? Am I indeed going to cut a penny off the basic rate of income tax? What the newspapers did know was that my control of public spending and borrowing and the responsibility of my Budget means that I can raise thresholds, widen the 20p band and also responsibly afford to reduce income tax as well. If I had put it all on tax rates, I could have taken 2p off the basic rate of income tax, but I preferred instead to raise personal allowances and widen the 20p band for those at the bottom end of the scale. In addition, I am able to reduce the basic rate of income tax by one penny to 23p in the pound.

    The small companies rate of corporation tax will be reduced to 23p in line with that, helping 400,000 companies. The main rate of corporation tax of 33p is already lower than in any other major industrialised country. I look forward to hearing what the Labour party says about the basic rate of income tax.

    Seventeen years of steady progress – so far – means that the basic rate of income tax is now a full 10p lower than the rate that we inherited in 1979. The standard rate is now the lowest for nearly 60 years – since Stanley Baldwin was Prime Minister and Wally Hammond scored a double century at the Oval.

    Another penny off the basic rate is a significant further step towards this Government’s target of a 20p basic rate of tax. For more than 7 million people, our promise of a 20p basic rate is already a reality. I am bringing other income taxpayers ever closer to that reality. A basic rate of 20p is a realistic and attainable goal for the next Parliament. We shall not be content until we have completed the task of getting it down to 20p and every Budget that I have presented has shown step by step how we shall get there.

    With increases in real earnings and all the tax changes in the Budget, a family on average earnings will be another £370 better off next year over and above inflation. We said it last time and it happened. The same family will have more than £1,100 more to spend each year after tax and inflation than they did before they voted Conservative at the last general election. In 1992, the background was one of a worldwide slowdown, but now we are enjoying strong growth and rising living standards, and we shall enjoy more of the same.

    In November 1993, I promised that I would put Britain firmly on course for a sustained period of rising prosperity and falling unemployment, based on low inflation and healthy public finances. I have done what I clearly said I would have to do and I have delivered on those promises.

    The Budget cuts public spending next year by £2 billion, and it generates an extra £0.5 billion in revenue through “spend to save”. It contains a balanced tax package – it includes tax cuts of £2 billion while it secures the tax base by £1 billion. Taken together, the effect of the Budget is to tighten fiscal policy and so protect healthy lasting recovery – and still achieve our target of cutting the basic rate towards our 20p goal.

    I am a man of the world: I realise that virtue does not always brings its own rewards. I am probably not a particularly virtuous Chancellor, but this virtuous Budget will bring rich rewards the rewards of economic success to the hard-working men and women who are now in the best economic circumstances for years. It will also bring rewards to the Government. We should never forget that good economics is good politics.

  • PMQT – 5 November 1996

    Below is the text of Prime Minister’s Question Time from 5th November 1996.


    PRIME MINISTER:

     

    Engagements

    Q1. Ms Primarolo: To ask the Prime Minister if he will list his official engagements for Tuesday 5 November.

    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.

    Ms Primarolo: Is the Prime Minister aware that, according to his own Government’s statistics, the average family living in council housing has been £3 a week worse off since the last election? Is not the main reason for that the fact that the Government have increased taxes 22 times since the election, and put VAT on fuel?

    The Prime Minister: If the hon. Lady is worried about the net cash position of council tenants, she might look to see who runs the highest tax rates across the country. The highest band D tax rates are imposed by Labour councils: Coventry, Salford, Hartlepool, Manchester, Islington, Redcar, Hackney–I will not continue the list; the hon. Lady knows them. If it is a Labour council, the council tax is high.

    Sir Fergus Montgomery: Will my right hon. Friend confirm that the Government are doing everything in their power to help with the rebuilding of Manchester city centre following the terrible damage inflicted by the IRA bomb, while using some of the existing initiatives to help to regenerate our inner cities?

    The Prime Minister: As my hon. Friend knows, following the bombing in June last year, my right hon. Friend the Deputy Prime Minister said that a task force would be set up to oversee the city’s recovery. My hon. Friend the Member for Bury, North (Mr. Burt), the sponsor Minister for Manchester, announced in Manchester today that EDAW had won a competition to redesign the city centre. That is an important step forward in the redesigning of Manchester, and, I hope, towards a greatly improved future Manchester city centre. Money has already been allocated from European funds, and it is quite possible that, if appropriate application is made, further funds will come forward.

    Mr. Blair: Will the Prime Minister admit what he denied just two weeks ago: that, with casualty departments closing and waiting lists up in many parts of the country–and with some hospital trusts technically bankrupt–the national health service is indeed in a state of crisis?

    The Prime Minister: No, I do not accept that. Nor do I accept most of the misleading statistics that, the right hon. Gentleman and his hon. Friends have used in recent weeks. If the right hon. Gentleman was so concerned about funding, perhaps some time ago he might have matched our pledge to increase funding in real terms each year.

    Mr. Blair: Perhaps the Prime Minister will now accept what his own Government’s statistics show: that, although they have spent an extra £1.5 billion on the national health service, it has gone into bureaucracy and administration rather than proper patient care. That is why there are 20,000 more senior managers and 50,000 fewer nurses since the Tory internal market reforms.

    I ask the Prime Minister to talk to people who use the national health service and who know when they go to a casualty department that something is seriously wrong; who know, when their appointments are cancelled and they are told that they are better off going privately, that something is wrong. Why does he not talk to women who had children in the national health service a few years ago and have had children recently and know the difference in the standard of facilities? Would it not be better for him to admit the existence of this problem and try to solve it rather than deny what everyone knows: that something is seriously wrong in the national health service?

    The Prime Minister: The right hon. Gentleman talks about management and bureaucracy in the health service. Perhaps he can explain to the country why he opposed the abolition of a whole tier of bureaucracy–regional health authorities–saving £100 million a year? The right hon. Gentleman’s party opposed that. If he thinks that a £43 billion service does not need proper management, perhaps he might remember what the Socialist Health Association said:

    “The NHS was traditionally under-managed and the party”–

    Labour–

    “should avoid bureaucrat bashing.”

    The right hon. Gentleman knows that it needs to be properly managed, that it is now being properly managed and that, as a result, money is being allocated to where it should go. He knows that waiting lists are falling, that the number of operations being performed is increasing, that a wider range of treatments is being produced and that the national health service is something that this country should be proud of, not something to be used as a political football by the right hon. Gentleman whenever that is appropriate.

    Mr. Blair: I do not think that the Prime Minister–[Interruption.]

    Madam Speaker: Order. If any of the Whips have anything to say, let them come to the Front Bench and say it.

    Mr. Blair: I do not think that the Prime Minister understands. This country is very proud of the national health service, but it is not proud of what the Government have done to the national health service. Is not the fear that any extra resources that are put forward now are just sticking plaster to see the Tories through to the election? Why will not the Prime Minister admit what the country knows: that there will be a crisis every year in the national health service while this Government remain in office?

    The Prime Minister: I seem to recall that it was a Labour Government who closed hospitals, cut nurses’ pay and genuinely created a crisis in the health service. The right hon. Gentleman would be well advised to give up these kindergarten soundbites and concentrate on reality. NHS spending will be more than £34 billion this year–more than £720 for every man, every woman and every child. That is an increase over and above inflation of about three quarters since 1979. There were over 9 million episodes of hospital care in 1995-96–25,000 every day, up 46 per cent. in 10 years.

    As the right hon. Member for Livingston (Mr. Cook) said, the acid test is whether more people are being treated. They are, and they are being treated better and offered a wider range of services. The right hon. Gentleman knows that but he will not admit it: he is more concerned with his politics than with the reality of improving treatment.

    Sir Jim Spicer: Has my right hon. Friend had the opportunity to see the statement made last week by the railway franchising director in which he states in clear and unequivocal terms that, over the next few years, taxpayers will be saved more than £2 billion as a result of privatisation? If we add to that better punctuality, service and customer care, does my right hon. Friend agree that it is time that the Opposition prophets of doom and gloom recanted and accepted reality–that privatisation is good for the railways and good for the taxpayer?

    The Prime Minister: My hon. Friend is quite right. Not long ago, the Opposition were trying all sorts of scares about privatisation–safety on the railways, services being cut–all of which have been shown to be utterly and comprehensively wrong. The reality is that new rolling stock is being introduced, the service is being improved, there is more investment than before and extra services are being run on a range of lines throughout the country. The hon. Member for Alyn and Deeside (Mr. Jones) may shake his head, but all he is showing is that he is ignorant–not that he has any knowledge.

    Mr. Ashdown: We have said what we would do to provide extra funding for the health service, both next year and now. If the Government have decided to commit more money to the health service for next year, that is a good thing. If they have decided that the right hon. Member for Witney (Mr. Hurd), the former Foreign Secretary, was right when he said that cutting taxes would be rejected in Britain if it was bought at the cost of closed hospital wards and sacked teachers, that is even better. But does the Prime Minister not realise that the crisis in the health service is not next year–it is now. Wards are being closed–now. Operations are being cancelled–now. Waiting lists are growing again–now. That money is needed–now. Will he provide it and, if not, what will he do to avert the national health service crisis and to prevent any further hospital ward closures this coming winter?

    The Prime Minister: The right hon. Gentleman had better wait for the statement by my right hon. and learned Friend the Chancellor of the Exchequer on health service funding. It will be made clear at the time of the Budget. I have nothing further to say to the right hon. Gentleman this afternoon except this: it was the right hon. Gentleman who, just a few days ago, was lecturing us about spending and debt. Now he is advocating extra expenditure. Whatever happens to be his tune for the day, he will shift to it. We have said–and we have kept the promise throughout 17 years–that we will provide extra resources for the health service to ensure that it is able to match the needs of the people of this country. That is why more people are being treated, and better treated, than ever before. The growth in the health service over the years has outstripped every other area of government, and I have made it clear that, in future, it will beat the inflation rate year after year after year. That is a pledge that people do not have to look in the mirror to see. They can look at our record. We have done it.

    Mr. Nicholas Winterton: Does my right hon. Friend accept that one of the present Government’s great success stories is the fact that they have brought about a growing economy with low inflation and falling unemployment? Will he now accept an invitation from me to visit Macclesfield, where all those facts are amply demonstrated–where we have a Conservative-controlled authority, where unemployment is falling and where we have an area that is proud to be Tory?

    The Prime Minister: I am delighted that Macclesfield is doing so well. Throughout the country, we see falling unemployment, increasing growth, increasing jobs and increasing prosperity. That will continue to be the case while we retain a Conservative Government following the policies that we have followed in the past few years.

     

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

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

    Mr. Wigley: Is the Prime Minister aware that more than 40 per cent. of retirement households in these islands depend entirely on the state pension–and that for a single person it is only £61 a week? Is he further aware that, if the link between pensions and earnings had not been broken in 1980, the pension would be £83 a week? On what basis can the Government deny pensioners who depend totally on the state pension any share at all in the increase in prosperity over that period?

    The Prime Minister: Of course I understand the hon. Gentleman’s concerns. That is why we have always recognised the significance of the state pension as the cornerstone of income in retirement, and ensured that it has kept up with the increase in prices. In addition, of course, I accept that for many people the state pension is not intended to be the sole income. That is why, in preparation for the future, we have encouraged personal responsibility and additional pension provision and why, for the present, we have targeted additional resources on the safety net of income-related benefits for people who have no resources other than the state benefit. That is apart from the entitlement that they would certainly have to council tax benefit and housing benefit, so we have targeted a great deal of additional resources to ensure that people who do not have a substantial income and who perhaps depend entirely on the state pension have additional help.

    Mr. Carrington: As my right hon. Friend knows, millions of ordinary people own shares in privatised utilities. Does he agree that a windfall tax on those utilities would damage those investments and push up prices for the consumer?

    The Prime Minister: There is no doubt about that. It is no good promising on the one hand to cut VAT on fuel while, on the other, proposing a windfall tax on the utilities which would put up the price of fuel by more than any potential reduction in VAT. Thus far, the shadow Chancellor seems to be spending the windfall tax on a number of different things, including helping the long-term unemployed back to work, improvements in child care provision–[Hon. Members: “Hear, hear.”]–new environmental tasks, small business VAT relief–[Hon. Members: “Hear, hear.”]. I am glad to hear Labour Members cheering. How much will the windfall tax be, and upon whom will it be levied? What will it do to the price of the utilities, which are used by everybody in the country? The more Labour Members cheer the spending, the more we know that the windfall tax will rise.

     

    Q3. Mrs. Ewing: To ask the Prime Minister if he will list his official engagements for Tuesday 5 November.

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

    Mrs. Ewing: On this historic day when a certain individual tried to set fire to the House of Commons, will the right hon. Gentleman give some serious consideration to the thousands of pensioners and disabled people who, this winter, will be afraid to put on the fires in their houses? Will he give serious consideration to a reduction of VAT on fuel, a review of the home energy efficiency scheme and an automatic payment, thereby giving us a better reason to remember 5 November?

    The Prime Minister: I have always rather fondly hoped that we celebrated Guy Fawkes day because he failed to blow up the House of Commons. The hon. Lady’s point is similar to that raised a few moments ago by the hon. Member for Caernarfon (Mr. Wigley), and I hope that I can rest on that answer.