Below is the text of Mr Major’s speech to the European Policy Forum on 27th July 1994.
THE ROLE AND LIMITS OF THE STATE
The party I lead has always been a party of change and reform. But we're a conservative party. Our instincts are for stability. We are wary of schemes to uproot what is familiar. So in discussing the role and limits of the state I am not going to unveil some new constitutional blueprint. I don't think this country needs politicians throwing the British constitution up in the air to see how the broken pieces fall.
Today, we are opening up the map of how Britain is governed. It's a big agenda, dwarfing any changes we've seen since the modern pattern of government was established. Times change; needs change. But change must come against a stable background.
So you will find me wary of change in the basis of our constitutional settlement -
In my first speeches as Prime Minister I placed wider personal ownership and higher quality in public service at the heart of our objectives for the 1990s. In 1991, I called for a revolution in ownership. I said then:
"I want to give individuals greater control over their own lives. For every family, the right to have and to hold their own private corner of life; their own home, their own savings, their own security for the future. Building the self-
Conservatives have always stood for ownership. As well as ownership of property we need ownership of the important decisions in our own life. Which school for our children? What skill training for ourselves? What pension provision for our retirement? These are decisions for individual adults. To deliver these choices, I believed we needed a second revolution -
As a councillor in Lambeth 25 years ago, I saw the alienation between bureaucracy and people, and I didn't like what I saw. So in 1991, with the Citizen's Charter, I launched a long-
In the past four years much has been achieved in making government more accountable and in raising the quality of service. We are pursuing change not for the sake of change, but change for the sake of people. And today, as a result, when people want to learn something about reinventing government, they come to Britain to do so.
The role of government
Ownership and choice are essential to put power in the hands of people rather than government. The longer I've been Prime Minister, the more certain I've become that government should be wary of interference, and aware of its limitations.
Over the years, the role of the state grows almost imperceptibly unless it is deliberately kept in check: a little subsidy here, a bit more regulation there, another Directive just there. We can no more stop fighting the battle against "big government" than the gardener can stop mowing the lawn or digging out the ground elder. We must resist the clamour for government action, magnified by pressure groups, on almost every item of news. It is one of the greatest follies of the late twentieth century.
In the 1980s, Margaret Thatcher began to roll back the frontiers of the state, with privatisation, deregulation and the restoration of personal incentives. We have cut back state-
But more is needed. For example, we did not manage to stem the tide of European regulation during the 1980s. Now we have put up breakwaters: the principle of "minimum interference" we secured at Maastricht; and, of course, our opt-
The tide is turning. The number of proposals for new directives tabled by the European Commission has fallen from 185 in 1990 to some 25 so far this year. The Commission has acknowledged that one quarter of its statute book needs to be revised or repealed.
At all levels my ambition is smaller government, efficient government, effective government, responsive government. When we say this, some ask if it is our ambition all but to abolish government. My response is no. I do believe that government has a vital, indispensable role to play. But I also believe strongly that the role of the state should be more limited.
We see economic growth as the opportunity to reduce the public sector's share of national income. Others take a different view. When they talk of using growth to pay for their pledges, they mean quite the reverse: expropriating the benefits of growth from those who created it. The second key difference, of course, is that we understand how that growth is created: and that if you plan to pay for your promises out of other people's efforts, you are likely to find they down tools.
So we see personal incentives as the key to growth; and growth as an opportunity to reinforce them -
To succeed in this, we need constantly to review what we do in Government and how we do it. Government must make a first-
But we need reform even in these areas. Putting the front line first, getting the basics right, securing the best value for the taxpayer's money and applying good old-
We live in a time of unprecedented social change. This throws up new problems. Government has a part to play in solving them. But it must recognise the limits on its wisdom and watch the unintended consequences of its action. Let me give an illustration. I have never hidden my ambition to extend nursery education, when the resources are available. But it would be destructive to enlarge it solely through LEAs and wreck private and voluntary provision. In all our policies, we must leave space for communities and voluntary associations. We must not let big government undermine the vitality of neighbourhood or family -
In welfare, for example, we need a system that reinforces people's efforts to be independent; and does not undermine them when they seek to improve their lives by their own efforts.
The state must not hold people down in a culture of dependency. Throughout the 1992 Election campaign, I repeatedly referred to the need to give a "hand up", not a "hand out". Since then, we have developed policies to provide that hand up. It is not enough to adopt these words as a slogan. You have to have the policies to make such aspirations a reality.
As a Social Security Minister in 1986 I helped Norman Fowler begin the reform of the social security system. We introduced Family Credit, which tackled the worst distortions of the poverty trap by the creative new device of assessing benefit on take-
The welfare system must complement the working of free and flexible labour markets. It is a job that offers the best hope of a secure route out of poverty. And thankfully, many new jobs are now being created.
Making it more attractive to hire people and more attractive to be hired will help cut into the bedrock of long-
We are now looking at a range of ways of encouraging people back into jobs, coupled with tougher action on that small minority who make no reasonable effort to seek work.
The ownership revolution
Concern for the individual. The defence of private property. And the protection of the citizen against the power of the state. These have always been central objectives of Conservatism. The central objective of socialism, by contrast, has always been the pursuit of equality. Egalitarians find allocation more palatable than choice. They put uniformity before improvement. That means more power to the state and less to the individual. If they had believed in ownership, as we do, they would never have opposed council tenants' aspirations for home ownership -
When the housing market overheated and fell at the end of the 1980s, it claimed many victims amongst those who had bought at the peak of the boom. The collectivist Jeremiahs drew the wrong conclusion: not that Government must try harder to maintain a stable economy, but that home ownership was fool's gold. Out there in the real world, however, people still aspire to own their own home. There were more than half a million first-
When I called for "the right to own" and "the power to choose" to be spread from the minority to the majority, I saw homes as only the first step. The corporatists, the collectivists, the central planners cannot cope with the notion of "popular capitalism". They resent other hands on the levers of power -
It is beginning to happen. Pensioners' incomes from investments have more than doubled since 1979. For the newly retired, it has nearly trebled. More than half of all pensioners now have an occupational pension. As a result, their average income has risen by more than 50 per cent, ahead of inflation, since 1979.
But the savings habit is spreading wider. Since I introduced TESSAs only five years ago, a total of almost £21 1/2 billion has been invested in them; and there are currently just over 4 million TESSA accounts. The total invested in PEPS -
Money widens choice. Low income tax rates widen choice. But there are other, more subtle, forms of ownership, too. I want people to have ownership of more of their lives, not just have things allocated as the state sees fit.
The Right to Buy gave choice in housing which over 1 1/2 million people have exercised. Parents in over 1,100 schools have voted for their school to be Grant-
But crucial to choice is information. Without knowing what is on offer, choice is meaningless. So we have launched an information explosion which I believe is irreversible. It may have worried many whose services can now be judged by their results. But such information meets the wishes of the public. It is here to stay -
The public sector revolution
This ownership revolution requires a transformation in the way government conducts its business -
Concern for the individual as the user of public services: concern for the individual as taxpayer. These lay behind the privatisation programme which began in the 1980s. Today, the total number of major businesses returned to private ownership has reached 47. The total raised, to pay off public debt and finance future services, has topped £55 billion. it is hard to remember now that every privatisation was criticised at the time as "a bridge too far" -
But there was a danger that those public services we believed should remain the responsibility of the state would be left behind by the stream of privatisation: that they would drift along, stagnant and second best. That was the challenge I faced: how to promote excellence in all parts of the public service -
Just because the state remains responsible for ensuring a public service is provided, it does not mean that it should be deprived of the energies of private enterprise, the stimulus of the free market, or the clarity of independent regulation which have transformed privatised companies. The task for the 1990s was to find ways of applying these within the public sector. Today, as our reforms advance, the boundary between public and private is open country, which an enabling government can scour for the best ways of using limited taxpayer's money.
Five ways to break down boundaries
So let me outline five ways in which we are mapping out this new territory.
First, we are continuing our privatisation programme, tackling more complex areas.
Second, we are bringing in private capital, to make better use of taxpayers' money, and introducing the skills of private enterprise into the public sector.
Third, we are bringing competition and choice into public services.
Fourth, we are devolving power within government itself.
And fifth, we are developing a "new accountability" -
Let me say a little more about each of these in turn.
The new privatisations
First, there are still industries in public ownership which need to be revitalised by private enterprise and competition.
The focus today is on industries which had seemed doomed to be locked in the grip of the state forever. To liberate them we need to develop new ways of safeguarding their public service obligations. For example, whatever the outcome of our consultations on the Post Office, we will maintain a universal letter service, and a universal charge for delivery. We are now consulting on whether these obligations are best maintained by partial privatisation or by another route.
Another example is the privatisation of British Rail. Here competition is being introduced into many parts of the old monolith. But we will continue to provide subsidies for train operating companies which are uncommercial. And, at the same time, we will require all franchises to meet, as a minimum, the standards of service set out in BR's Passengers' Charter.
Second, we are finding new ways of engaging private capital, to make every pound of taxpayer's money go further. The City Challenge programme involves 1.2 billion of public spending. But its effects will be multiplied by the £3.6 billion contributed by private sector partners. In Wigan, challenge funding was the seedcorn whose harvest is 2,000 new homes, 5,000 new jobs; and 800 new businesses in derelict areas of industrial decline. In East London, Manchester, all our big cities, you can see the same thing. And we have extended the principle of challenge funding to the new Single Regeneration Budget, which will be the cornerstone of our future urban policies.
The private finance initiative offers even greater potential for change. It levers in private capital, shares risk with the private sector and brings in its management skills. It is showing that the taxpayer need not finance all our economic infrastructure. The Dartford Bridge and Channel Tunnel are already open. The new Ashford Passenger terminal, another private finance project, is already being built.
We hope to agree a contract for a new train service for London Underground's Northern Line by the end of the year, and contracts for the Channel Tunnel Rail Link and the West Coast Main Line by next summer. In the autumn, we will be going out to tender for the first four privately built, financed and operated roads. And tender documents are going out this week to five consortia bidding to build two privately-
Private finance involves complex issues. Sharing risk between public and private sectors is not simply a matter of splitting the difference. But to make the best use of limited capital spending, we need to make sure each and every government department is looking for ways to use private finance to supplement taxpayer resources.
I am not convinced that they are. We asked departments to prepare a list of projects suitable for private finance. We will shortly publish this. It will show up some gaps. Some departments face legal obstacles. Where these exist, we must remove them. But all departments need to know that, as the private finance initiative develops, Ministers will have to convince EDX -
Competition and Choice
Third, we are letting competition and choice into the public sector as a spur to efficiency. In health, we have separated the function of paying for care for the patient from providing care for the patient. The OECD recently described these reforms as giving Britain "one of the most sophisticated and effective means of allocating health resources." The results have been dramatic. Our hospitals are treating one million more patients a year.
Competition has a wonderful habit of concentrating the minds of those between whom a choice might be made. So we have also been inviting private companies to bid for government work. Nowadays, we are not just letting out contracts to maintain buildings and clean streets, but to do white collar work as well. For example, the Inland Revenue has signed a 10-
Taking decisions at the right level
Fourth, we want to push power away from the centre of government itself. In the Civil Service we have some of the best talent in Britain. We aim to exploit it better. This means giving departments more freedom to manage their own affairs, and separating out agencies so that they can be more responsive to their customers. We've taken this approach right down to the local level: liberating Grant-
Quality of government and quantity of government are two very different things. Unnecessary layers of government do more for bureaucracy than democracy. There is no such thing as an idle piece of government machinery. If it exists, someone will use it to spend money or regulate something -
Sometimes we are told-
At present, for example, not everyone who can contribute to better policing by serving on a police authority has the time or political inclination to serve as a magistrate or councillor. So our reforms will allow for an injection of other local talent: such as headteachers experienced in dealing with the drugs problem, farmers who can help in the fight against rural crime, business people who will ask hard questions about how the police use their resources.
As our reforms progress, they do, of course, sometimes create new pieces of machinery as well as removing old ones. But in a more transparent system there will be more accountability, because it will be clearer where the blame for the inevitable mistakes should lie. New managers have to accept that the price of their freedom is personal responsibility and pay linked to delivering their objectives. Whitehall, for its pan, has to accept that part of the price of liberating the energies and talents of local management is that it cannot control every decision in every hospital or every school. However, there are some in Whitehall, the Town Hall or some of the new agencies who find it hard to give up the degree of control they have traditionally exercised. Politicians and press often discourage them from doing so by scattering indiscriminate blame on them. The result, too often, is that those being charged with new responsibilities as local decision-
I do not want to see the new freedoms we have given to local schools and hospitals, for example, restricted by new red tape and regulation. I don't want to see another circular the length of a telephone directory, or to be told that it normally requires 14 forms to bring a simple prosecution against a shoplifter, who actually wishes to plead guilty. Of course, those who run local services must be accountable -
And there's something else that I believe would help: circulars should spell out much more clearly the difference between a statutory obligation and recommended practices. I want all departments to make sure their circulars are produced in such a way that those reading them will be able to tell the limit of their statutory obligations without difficulty. This would go a long way to eliminating back door bureaucracy.
The listening service
Fifth, we have been making public services respond directly to the people who use them. Informing people is the first step -
Published targets tell people what they are entitled to expect. Performance tables tell you when these obligations have been met. Under the Citizen's Charter, public services now publish information on the performance of individual schools, hospitals and police forces. By the end of December, every local authority will have published information -
In 1989, before we published targets for waiting times for operations, 90,000 people were waiting over two years before they were treated. Today, no-
Publishing more information may mean that the Government faces more criticism. That may seem a perverse reward for greater openness. But it is better to have things out in the open and face the criticism, rather than have things swept under the carpet. When you shine a spotlight into a dark corner you may not always like what you find. But that doesn't mean that you shouldn't shine the spotlight. You need to know if something is going wrong because that is the first step to putting it right.
We can no longer be expected to believe that every element of public service is doing as good a job as any other, or that the only way to improve services is to spend more money. The league tables recently published on hospital performance showed that for four routine operations -
The new public sector
So the public sector is changing and will change further. In the future it will not only be smaller but less monolithic. We published a White Paper on the Civil Service just a fortnight ago. We aim to encourage the civil service to modernise and develop within a framework which maintains its traditional values of integrity and political impartiality. It will be unbundling the general task of administration into distinct, vital -
The relationship of departments with the providers of service -
And there will be another group of specialists with a duty to secure quality service for the public -
OFSTED is just one example. This new body will secure, for the first time ever, systematic inspection and reporting on all Britain's 24,000 schools in the next four years. Once this cycle is completed OFSTED's work will continue, although I should expect it to focus in greater depth on those schools where results are covered up or found to be weakest. This new four-
The way ahead
We will be legislating shortly to take these reforms further.
Our Pensions Bill is designed to give greater security, equality and choice. We will underpin occupational pensions with new protection against the possibility and the consequences of fraud. New age-
We will be introducing greater freedom and choice by liberalising the law on Agricultural Tenancies. And we will be setting the legislative framework for the new Jobseeker's Allowance.
The bill to authorise the Channel Tunnel Rail Link will provide the framework for a massive private finance project. And by one means or another, we will be giving the Post Office new freedom to expand its services, here and abroad.
We will be thinning out the layers of management in the Health Service. And where appropriate we will be reducing the number of tiers in local government.
The fight against regulation is never won -
What we are seeing -
I expect my ministerial team to put government on the citizen's side: to control public spending, cut back on regulations, deliver on their Charter targets, listen to ordinary people and give them greater ownership of their own lives. I want government that devolves, that gives the citizen greater space to build communities which are not dominated by the state.
There are better ways of acting together than in a state-
So the two revolutions therefore help to conserve what is best in this country: that is the very purpose of a Conservative government. And I believe government can do that best by delivering people the power to choose, the right to own, in a secure environment, a stable constitution and a strong economy.