Below is the text of Mr Major’s press conference in Birmingham, held on Friday 16th October 1992.
Let us now move to the second half of this mobile press conference.
Let me say something about economic and domestic matters and then I will be happy to take whatever questions you have.
Let me firstly say that I am delighted that the Chancellor has been able to announce today a further 1% reduction in interest rates. Base rates have now been cut from 15% to 8% in just over two years. The impact of those reductions, that they are worth around £9 billion a year off industry's interest bill and about £100 off the payments of a typical mortgage, has now been a substantial but in my view justified easing of monetary conditions and as a result of that British industry can look forward with more confidence to improving domestic and overseas sales.
As I said a week ago at the Conservative Party Conference at Brighton, we will be looking to help British exporters take advantage of the new competitive situation in Europe. The Chancellor will be consulting industry in the coming weeks about what the Government can do to help industry further and he will be doing that in the context of our continuing commitment to control public expenditure and contain inflation.
Britain's recovery from the recession we have suffered for so long depends crucially not just on domestic circumstances but on world recovery and particularly upon prosperity in the European Community. Over 60% of our trade is with our Community partners and that is where the new jobs and the growth that we want to see is going to come from and that is why it is so important that the Community progresses on the right lines and why today's Council in Birmingham was so essential. It is also why the Chancellor and I have made it absolutely clear that even though we have been forced to suspend our membership of the Exchange Rate Mechanism we must match the best inflation performance of our competitors in Europe and I believe we are on course to achieve that.
Let me say something about British Coal and the announcement of large pit closures
earlier this week. In answering questions earlier this week, Michael Heseltine said
that the decision to agree British Coal's plans for closure was about the most difficult
decision that he had ever had to make. I can certainly endorse that. It was similarly
difficult for me but the fact was that we simply could not ignore reality. The demand
for coal is shrinking. The electricity generating companies want to buy only 40 million
tonnes of coal next year whereas British Coal would produce 88 million tonnes of
coal. Shift after shift, miners have been coming up to see piles of unwanted coal
growing day by day. Stocks at the present time are increasing by more than 1 million
tonnes every month and as a result of that, we have been spending £100 million a
month of taxpayers' money on keeping pits open even though the products of those
Why did we make the announcement now? We made the announcement sooner rather than later because we felt it right to remove uncertainty and because we did not believe that we would make a difficult decision easier by putting it off. There were rumours, there were leaks. Many people in the industry had been expecting difficulties in their own particular pit for a long time and it was getting to be an increasingly debilitating and difficult position to sustain.
What we have done is to announce one of the most generous redundancy packages that
we have ever seen. It is up to £1 billion plus a package of special measures to help
the areas that have been affected by the closures. Those special measures include
special training, help in finding new jobs, new factories, assisted-
Michael Heseltine will be announcing more details about this special programme in
his statement to the House of Commons on Monday but I can say to you now that there
will be an immediate, closely-
Nobody could do anything other than regret the anguish of the mining families. I understand that and I know and I regret the anguish faced by anyone who finds themselves made unemployed. Whether they were expecting it or not, it is always a shock when it happens but I do believe equally firmly that it would have been wrong to keep producing coal for which there is no market and for which, alas, there is going to be no market in the future. The important thing that we now have to do is to get on with helping the miners and their families and get on with beating the recession and that is what we are seeking to do.
I know a number of questions arise from that and I will be happy to take as many of them as I can.
QUESTIONS AND ANSWERS
QUESTION (ELEANOR GOODMAN -
You talked about the reality in terms of the pit closures but isn't the political reality that you have a large section of public opinion against you, you have a large section of the Tory Party against you and that you are going to have to rethink otherwise you risk being defeated in the House over it?
Nobody would have wished to close those mines unless it was essential. Nobody would have wished to do that. It is not a pleasant thing to do. Nobody gets any pleasure from it whether you are part of those who face the anguish of being without a job or whether you actually have to make the decision to do it. It wasn't easy for British Coal, it wasn't easy for the Government and none of us did it with any pleasure whatsoever.
What we have seen in the mining industry over many years is the steady shrinkage of an industry because of the collapse of demand. If one takes, for example, the 1970s, there were around 30,000 mining jobs lost each year on average right the way through the whole of that decade simply because of shrinking demand.
What we need to do is to deal with the problem, remove the uncertainty and seek to regenerate hope and employment in those areas and if I can give you a practical illustration of this, just a few weeks ago I visited Wales and I visited the site of the old Shotton Steelworks and many of you will remember that at the beginning of the 1980s, 10,000 jobs all on a single site were lost in a single day.
What has happened as a result of the regenerative measures there is that there is
now a modern industrial estate there providing secure, permanent employment for the
people who once worked in the Shotton Steelworks, mainly medium-
QUESTION (Peter Riddell -
Prime Minister, two parts: one, what has changed since earlier in the week when the
Bank of England signalled that there would be no change in interest rates and the
Chancellor was cautious to the Treasury Committee to justify a one-
The Chancellor's discussions with industry will be with leaders of industry and they
will be face-
As to the reduction in interest rates, the Chancellor set out in an addendum attached
to his press statement today precisely why we thought it was appropriate to cut interest
rates at the present time: M0 close to its target range; M4 at its annual rate of
growth at 5 1/2% is at the lowest level it has been for 20 years; M4-
Prime Minister, it strikes me that you have no clothes. The Germans subsidise their coal industry, you subsidise the nuclear industry. You are throwing 30,000 miners out of work at once with immediate effect it seems to them. Why can't you phase it out? Why can't you act more slowly? Why so precipitate?
Let me take those points and let me put it in a wider context than you did:
The Germans will have to phase out their subsidies; they are no longer legal and they will have to be phased out. If one looks elsewhere, you will find in France the coal industry, once a very big coal industry, has now virtually gone. If you look at Belgium, you will find the industry has virtually closed. We will still have in the United Kingdom a significant coal industry, not only a significant coal industry but one that will be viable provided we no longer operate with pits that are not viable that have not only the effect of making losses in those pits but inhibit the profitability of other pits elsewhere.
I know it is a painful decision. If it could have been avoided, we would have avoided it. At the very last moment before the decision to go ahead was announced by British Coal, we reviewed the whole matter entirely in two aspects: firstly, whether it was right in strategic terms, whether we were certain that we wouldn't need that coal capacity in the future and secondly, to make absolutely sure that we were not closing marginal pits that could themselves survive and just before the announcement was made called together the Ministers affected and we had a lengthy and detailed examination of everything that underlay that decision to make sure that we could satisfy ourselves that it was a proper decision to take.
I do believe that the sooner we take those difficult decisions, the sooner we can
embark upon the lengthy but necessary task of putting back jobs that are self-
Following the Rio de Janeiro World Environment and Development conference where it
was agreed to return emissions to the 1990 level by the year 2000, could I ask two
things: first of all is the present closures policy in the coal-
On the answer to your first question the answer is no, it is not directly related
to any commitments made at Rio or elsewhere. I suppose you could argue in a sense
it is indirectly related because one of the reasons why the demand for coal has fallen
is that the consumer demand for non-
As far as the Dutch energy policy is concerned, I am not really sure that I am in a position to answer that with any authority so if you will forgive me I will not attempt to do so.
QUESTION (Dan Revive, CBS News):
If I could try again with Elinor Goodman's question which is on the pits issue, how will you cope with public opinion being against you on this issue as well as some Tory MPs and the press that normally supports you?
I push aside the last part. It was hardly to have been expected that public opinion would welcome a decision like that, who would possibly welcome a decision like that or having to make a decision like that, of course people do not like it. There is a very great respect in this country for the mining industry, it is not a job which most people would wish to do themselves and if I may say so I have yet to meet a miner who would wish their son to be a miner. So there is very great respect in this country for people in the mining industry and so of course there will be great disquiet at what has actually happened.
As far as Parliamentary opinion is concerned, of course Parliamentary opinion is concerned about what has happened. But what Parliamentary opinion of course yet does not know are the full reasons behind the closure that will be set out both in the statement next week and in the debate that we will have next week, and also of course the measures that will be taken to assist those particular areas.
Although it is a tremendous shock when so many jobs of this sort go in a single way, it is the fact, and the miners will concede the fact, that they know that many of those pits had only a limited life and over the last few years there has been a constant closure of pits, whichever government has been in power, as it happens Conservatives have closed rather fewer pits than the Labour Party in government. And the figures I gave you a moment ago, 30,000 mining jobs every single year in the 1970s, is an indication of the economic trend. It is not suddenly something that we have woken up, rubbed our eyes and decided to do something beastly to the mining industry, if it was not economically unavoidable we would not have done it, but since it became economically unavoidable we thought it better to do it cleanly and quickly and then be in a position to put measures to alleviate the difficulty and help regenerate the areas in place. I think that is the right way to do it even though I understand it causes great disquiet and great anguish to the people concerned.
QUESTION (Chris Moncrieff, PA):
Is the proposal final, will there be any going back, any amendments or any changes to the timetable?
I do not anticipate any. I know many people are very worried, they say well why have you taken such an unpopular decision? If I may say to some of the people who say that, they cannot say to us one day that the government have to take decisions, you must show leadership and take decisions, and then the next day criticise us for doing something that everybody would have wished to avoid. We did it because it was necessary and only because it was necessary and economically unavoidable for the reasons I set out a moment ago.
QUESTION (Alistair Campbell, Daily Mirror):
What do you say to a miner who voted for your party because you said vote Conservative on Thursday and the economic recovery continues on Friday, and what do you say to all the others who have been betrayed and let down day after day since the election?
I think we made it perfectly clear at the time of the election that we thought that
recovery was beginning to come, and we were not alone in that. There have been two
occasions when recovery has flattered to deceive, in the summer of 1991 and then
in spring of 1992. But we still intend to get permanent sustainable recovery. It
is very easy sometimes to buy short-
Now that is not easy and it is not quick and it is not painless, but that is what
we believe we have to do and those are the policies we are seeking steadily and daily
to put into place. It is not all that long ago when people were saying: interest
rates are 15 percent, when will they ever get down -
As to the general economic circumstances, it is not just a British problem, I do not say that to push aside the British problem, but if you look at what is happening in the United States or Japan you begin to see the scale of what is happening all around the world. If you look at France, they have 3.75 million people unemployed, 13 percent interest rates, 10 percent real interest rates. If you look at Germany their economy is slowing down at an astonishing rate. Nobody here I think will need telling about the economic difficulties in Italy or the problems that exist in Spain. They are very painful, not just domestically, but abroad. And of course all our economies are interlinked, there is an impact one upon the other, and it is a combination of those factors that has made this particular recession so painful and so lengthy in this country and in others. But what we need to do is to stick to the policies that will get us out of it in a form that will ensure we do not dip straight back in it 9 months or a year later, that would be unfair and that I am not prepared to take a risk in doing.
QUESTION (French Tribune):
About the decision to organise a meeting between the Chancellor and leaders of industry, is it not the whole point of having a Department of Trade and Industry and a Secretary of Trade and Industry to take the pulse of industry to help them, why do you have to resort today to this somewhat unusual channel?
It is not that unusual, we frequently meet businessmen and we frequently discuss with them their concerns and what they think is necessary. But we are facing, as I indicated in the question I just answered, circumstances that are not wholly unprecedented but very unusual economically at any stage since the Second World War, so we are in very unusual circumstances. In those very unusual circumstances I think it is wise to step up a gear with the consultation with the people who are in the front line and that does, I think, mean an extra higher level between industry and commerce, both with the President of the Board of Trade, whose regular routine this is, and also with the Chancellor of the Exchequer and that is what the Chancellor proposes to do. I think it is a worthwhile initiative and one that will be welcomed by industry.
QUESTION (David Langstone):
This Council was called after what has been loosely termed the turmoil in the markets. We have heard very little discussion whatsoever today about economic matters, I know that you have taken subsidiarity to your heart and shelved that over to EC ECOFIN Ministers, but could you tell us what you have discussed on financial and economic matters today, I cannot believe that you and Chancellor Kohl did not talk about the economy, can you tell us something about the reason for this meeting being called which now seems to have slipped off the agenda? And finally, did you talk about the environment?
No, we did not talk about the environment, that was not on the agenda today. The substance of this meeting today was set out in my statement earlier, it was not just the question of the turmoil in the markets. The work that needs to be done to discuss that turmoil in the markets is not the subject of a general discussion in the course of one day between Heads of Government, there is a great deal of detailed work to be done. And as I indicated in the earlier press conference I had, we have commissioned that work to be done by the Economic Ministers, by the Finance Ministers and by the Central Bank Governors, that work will be done and then reported to the Heads of Government. It is very important that we got the authority of the Community to proceed with that work, that is what we have done. As to what private conversations I might have had with Chancellor Kohl, I am sure you will understand that I have no intention whatever of telling you about those.
[Indistinct] on the problems of Europe's economy?
I think the over-
You need several things for that, you need general confidence, you need general stability and sometimes there is a catalyst to start it, but that will vary as one comes out of different recessions.