Below is the text of Mr Major’s speech in Rugby made on Friday 26th April 1996.
Let me touch on a number of things including prospects and some of the things I may say to you over the next few minutes may perhaps surprise you, but I hope pleasantly in a range of ways. Let me firstly just set out precisely where we are economically and how we got there.
It is not all that long ago that we and the rest of western Europe, the United States, Japan, most of the world in fact, south east Asia perhaps excluded, were in the midst of perhaps the most severe recession that we had seen for 20 years or more. When we went into that recession, I made a promise to myself and to my colleagues that we have kept and that is vital for the future of our economy. The promise I made was this: we will do nothing during the recession that will mean when we come out of the recession we have laid the seeds for future problems. Time and time again that has happened in recessions, as economic cycle succeeds economic cycle since the War we have seen that problem. Recession, pressure, the Government takes action, it gets out of the recession but the seeds are laid for a fresh inflationary spiral and we go, after another move in the economic cycle, back into the same problems. How many times have we seen that happen since the War?
I have had vivid experience of inflation. You have of course as businessmen, you know the perils of it, I needn't spell them out to you, but I have to say to you, quite apart from the business perils there is a social implication to inflation as well that I feel extremely strongly about, too strongly perhaps you may feel but I will express it for you:
If you have ever been in a position where you wonder at the beginning of the week whether your family can pay the bills at the end of the week because the prices are going up, then you begin to see inflation not as some abstract economic theory but as something that threatens the very security of the way you live so I loathe inflation and I make no secret of the fact that I loathe it and we have taken every precaution we can to prevent that inflationary genie escaping from the bottle again and what is the result of what we have done during the period of the recession. And I would like you to bear in mind when I say that that we have lived in the same economic climate as our partners in Germany, France and other parts of western Europe. What are our economic circumstances now?
We have inflation under 3 per cent for the third successive year and it is still going down, we will hit our target of 2.5 per cent or less at the time of the next general election. Apart from the social implications, you don't have to worry in your future planning in the way you once did about whether Your investments are going to soar in cost because of inflation or whether the projections upon which you based your investment will suddenly fall apart. That is the first point to be made.
The second point is that a very unusual economic trick has been pulled. Not only has inflation come down but contrary to what we have often seen, inflation has come down in parallel with unemployment. Unemployment has dropped by three-
What has happened elsewhere in western Europe in those countries in the same markets, in the same economic environment? As our unemployment has fallen steadily, theirs has gone up. If you look at Germany, their unemployment rising far higher than ours; in France, their unemployment round about 12 per cent, stuck, no sign of it coming down. We are below 8 per cent and falling. And neither is that a false measure. Not only do we have a lower rate of measured unemployment, we have a higher percentage of our workforce actually in jobs than any major economy across Europe through inflation below 3 per cent and falling and unemployment falling. There are not a lot of people in this room who will remember when that combination was as secure as it is at the present time.
Has it been done at the expense of nil growth? We have had larger growth in our economy over the last couple of years than our competitors across Europe; that is going to be the case this year, it is going to be the case next year, so low inflation and falling, too high unemployment but lower than anybody else and falling and growth as good or better than any of the other European countries. What has happened to competitiveness? You know very well what has happened to competitiveness. We are now taking markets we haven't had for generations in this country, exports are running at record levels. Go and listen not to what I say -
That is where we are, the question is what do we do with it because that factor is apparent. What we have built is the platform for future prosperity but the prosperity itself needs to be built and it needs to trickle down to the people up and down this country who by their efforts have played a part in creating the opportunities that now lie in front of us.
We had to put up taxes, something I loathed doing but it was taxes going up or high borrowing and interest rates going up instead. But now we have begun to reduce taxes, the first tax reductions are in this month's pay packet and they are well worth having. I hope we will be in a position to do more, as soon as we prudently can, we most certainly will.
Let me touch on two or three other things:
Peter mentioned the social chapter. That is one of the principal reasons why we are more competitive than other countries. Not the social chapter as it is but social expenditure as it is across Europe. Let me give you the figures:
For every £100 in wages that a British employer pays, it costs them an extra £18 in employers' national insurance contributions and on-
Why does the social chapter matter? Our political opponents say it is a set of principles -
There are some very large companies in countries like Germany and Austria; if they had to make staff changes perhaps for an extremely good economic reason, they can't do it without going through a works council if they have more than 5 employees. If you want to work overtime in the country of one of our European competitors, you actually have to get permission from the government in order to work overtime. Can you imagine the questions? "Are the staff fit? Is it Sunday? How much are you paying? What is the reason for this?" By the time you have sorted all that out, the export order for which you wanted your workers to work overtime has gone to Britain I hope, because we are beginning increasingly to be able to [indistinct].
Let me just say a word about taxes:
All the figures upon which people can base their broad tax projections are in the public sector. You can’t be detailed, I accept, but the broad figures are there, there is nothing hidden, our accounts are as open as the accounts of any nation in the world so anyone can have a pretty good idea what their tax objectives are, they don't have to hide behind obfuscation and downright deceit.
My tax objectives are perfectly transparent and clear. As soon as I am able, I wish to reduce taxes further and I wish to go down to a 20 pence basic rate of tax, I am not changing the upper rate of tax and then I want to tackle capital taxes because I think they damage the market, they damage job creation and what we need is job creation and a competitive environment to keep our people in work and to put more of our people in work. These are our objectives.
What are our opponents' objectives? It is very difficult to say. When asked privately, the leader of the Labour Party said: "We aren't going to touch people up to £30,000!" which I would have thought to any rational observer would have meant they are going to touch people earning over £30,000 but after that remarkable slip of the tongue, one of the leader of the Labour Party's minders rushed along to the press to say: "He didn't say that, he didn't mean it, it never happened!" Claire Short -
The people I am concerned about are the people up and down the country who at the moment are being told one thing by the leadership when it is transparent that that is not remotely what their position would be likely to be were they in government. That tax slip of Mr. Blair's was brushed to one side. Gordon Brown was a bit more explicit on another aspect, on child benefit. Because he is being pressed on tax, he decided he had better display a touch of virility so he decided to announce that he was going to take away child benefit for people with families of youngsters between the ages of 16 and 18 who decide to stay on at school. Let me say something about this:
I left school at 16. I didn't leave school at 16 because I didn't want to stay, I didn't leave school at 16 because my parents wanted me to leave school at 16. I left school at 16 because we could not afford for me to stay at school and I chose to go out and work; my parents didn't like it but I chose to go out to work.
If you take child benefit away from any youngster in any family, perhaps a low-
Apart from the stupidity of that in inhibiting youngsters whose parents have modest incomes going on to further education, it is thoroughly dishonest for this reason: child benefit was a tax allowance. We changed it from a tax allowance to a cash benefit payment so that it actually went directly to the mothers to be used predominantly for the children because of concerns that that wasn't happening. What would be happenings is you would be taking away a tax allowance and what is the equivalent in tax? For someone on average earnings, that is the equivalent of an increase of 5 pence in the pound on the standard rate of income tax if that was actually withdrawn from families. That has crept out without the Labour Party realising exactly what it would have meant for people. If that has crept out under pressure, I would like to know what else is lying hidden that needs to come out and that we need to examine before we get towards the next general election.
Peter asked whether we are going to win. I remember Peter asked me that before the last general election. [Laughter]. I look forward to Peter asking me that before the next general election but one and I will give him the same answer: yes, we are going to win and I will tell you why we are going to win:
We are going to win because when you strip away the absurd hyper-
I don't think that will happen but I don’t base my confidence only upon the economy though I am confident about the economy. I base it on one or two other things that hit here [touching part of body?] rather than in the wallet and the first of those is the proposal for constitutional change that our opponents have. If you wanted to draw up a recipe that would divide and break up the United Kingdom, you would draw up the proposal fox constitutional change and particularly a tax-
What have they got against the Scots that they should pay more taxes? What have the Scots got against themselves that they could contemplate any party that would want them to pay more tax?
Then there is the question of Europe. No issue has been more explosive, no issue has been more misrepresented, no issue has been more conducted in stereotypes with the debate often determining itself only on the fringes of argument -
I can tell you quite frankly I have no intention whatsoever of going down the route to a federal Europe. I just don't believe it would be right for Europe to go in that direction and I know that it would not be right for this country to go in that direction and we have no intention whatsoever of doing so. We will argue the case, we will debate the case, we will win the case -
At Maastricht, we had huge disputes. Nobody truly believed that I would come back from the Maastricht debates having said "Non to the social chapter and "No" to a single currency with the opt-
At the inter-
We are not going down the federal Europe route but our political opponents are, the Liberals because they believe in it, the Labour Party because they believe it is fashionable. I just believe it is wrong and when we come to the general election that will be a big division so there will be divisions on tax, divisions on the constitution, divisions on Europe and great divisions on education and other matters.
The fact of the matter is, Peter, when people come to vote in a general election, forget the nonsense of by-