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1996 - Mr Major’s Comments on the Economy

Below are extracts of Mr Major’s comments on the economy, made during an interview held in London on Thursday 18th July 1996.


QUESTION:

[Mr Major was asked if this year’s spending round would be a tough one].

PRIME MINISTER:

Yes, it is. It is always tough to keep spending down. It is very easy to increase spending but it is tough to keep it down, but we need to keep it down. The borrowing requirement is still too large and it is necessary to keep borrowing under control. That is partly why we have got such relatively low interest rates. I would like to keep them low so that mortgages remain low. So yes, it will be tough but I think a fair round.

QUESTION:

[Mr Major was asked how he would achieve those aims].

PRIME MINISTER:

We will do it as we always do. We have to discuss bilaterally what our priorities are and we have to put our money where our priorities are, where we can make savings we can and we should because the money we have isn’t our money, it is the taxpayers’ money and we have an obligation firstly to take as little of it as necessary and secondly to spend it wisely and that is what the spending round will be about.

QUESTION:

[Mr Major was asked if the spending cuts would hurt].

PRIME MINISTER:

We will have to see what the outcome of it is. I can’t judge precisely what the outcome will be and precisely where the savings will come. We have made savings over a number of years but our public expenditure is still too high a proportion of our total national take. We would like to get it down, we would like to get it down to 40 per cent of GDP and then, if we can, lower so it is necessary to restrain expenditure and there is no getting away from the fundamental reality that if expenditure rises too high than you are in danger of creating inflation, you are in danger of higher interest rates and you have the certainty over time of higher taxes and nobody in the country wishes to see that, so we must pick our priorities and put our money where our heart is to deliver the priorities that are right for this country.

QUESTION:

[Mr Major was asked if he was caught between Conservative MPs wanting tax cuts and the country not being able to afford them].

PRIME MINISTER:

We have said all along that if it is appropriate to have tax cuts, if the economy is in a shape for tax cuts, then we will deliver them, we will deliver them because we believe that people can spend their own money better on their own behalf and on behalf of their own families than any government can spend it for them, so if it is possible to cut taxes we will cut taxes but we won’t be imprudent, we won’t cut taxes and put the economy at risk. We will cut them if we are certain it is right to do so.

QUESTION:

[Mr Major was asked about Tony Blair’s comment that the economy was in a bad way as every household was paying 1,000 pounds a year to service the country’s debt].

PRIME MINISTER:

Well I must say I think it is rather ripe of the Labour Party to say that. I doubt that anyone watching this programme can ever think of a time when they supported us in cutting back expenditure. Their habit is always to cry, “Let’s have some more expenditure!”. They have opposed almost every expenditure reduction that we have proposed in recent years and I dare say when we cut back spending again they will oppose it and when expenditure rose in the early 1990s because of the recession what were the Labour Party saying to us? They were saying we hadn’t put up spending high enough, so it is frankly a little two-faced to run that argument.

QUESTION:

[Mr Major was asked if he would protect the vulnerable].

PRIME MINISTER:

Throughout the years we have sought to save on public expenditure, we have sought to ensure that we do so whilst protecting the position of those who are most vulnerable and that is one of the reasons we get so much criticism for the size of the social security budget. We do so because we look at the people who are vulnerable and we have to make a judgement about whether it is right to make savings in that area. Sometimes there are areas in social security where we can make savings, others we can’t, it is a value judgement on each occasion.