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1996 - Mr Major’s Joint Press Conference with Kenneth Clarke

Below is the text of Mr Major’s joint press conference with the Chancellor of the Exchequer, Kenneth Clarke, held in Dublin on Friday 13th December 1996.


PRIME MINISTER:

Let me just set out one or two observations of what we have been doing today and what now lies ahead in the early months of next year.

I have now attended around about 15 or 16 of these summits and almost invariably on these occasions the United Kingdom is portrayed as if it was a minority of one or a very small minority. It almost seems to have been the script since the dawn of time. Nonetheless, it may surprise many people the large number of occasions that we seem to get our own way. The United Kingdom perhaps sometimes is the grit in the European oyster, it may not look pretty from the outside but I can tell you it is very effective from the inside, and I think that is going to remain so in the months up to Amsterdam.

Let me say a few words firstly about the discussion we had on employment this morning. There is an employment text provided by the Presidency. It embraces many of the British ideas, though not every aspect of it is a British idea. But subject to the fact that it is clear that it doesn’t prejudice the text that will be agreed at Amsterdam, subject to the fact that it makes clear that we are going to proceed down the Essen Formula, and subject to the fact that it makes clear that employment matters are for the nation states predominantly and not for Europe, it is probably a text - whilst we don’t agree with every dot and comma of it - that we can live with and that was the substance of what I said this morning.

This afternoon we have had I think the most substantial discussion that I have yet heard on the substance of the Intergovernmental Conference. For the first time I think a number of the contributions actually got beyond stating rather general positions and looking at some of the specifics of what will need to be decided on the back of the Irish draft treaty text. The draft text, as you know, sets out accurately and very well, the Irish have done a very good job, all the positions taken by member states, both majority positions and minority positions, as the basis of the negotiations still to come. During the discussions, President Chirac suggested that we should throw away pre-prepared briefs and say precisely what we thought about some matters, and I rather agreed with him about that, so I did precisely that, and set out some of the concerns that we have.

We British are often perceived as having many disputes with our European partners. That isn’t in fact true. We have one substantial dispute with our European partners that spreads into very many areas and keeps reappearing, and that is the fact that there is more than one vision of Europe. At stake in the Intergovernmental Conference is the future direction of policy. Jacques Santer said some time ago the moment of truth is coming, and in terms of the direction of European policy, I agree with him about that. The agreements that will be reached between now and Amsterdam, and probably reached at Amsterdam, will certainly determine the future direction of policy. And I set out to my European colleagues the fact that there is more than one vision of the way the European Union can develop.

A number of our European colleagues advocate a much more centralist, much more integrationist European Union. Well I understand that view, I respect that view, but I don’t share that view and I made that point clear this afternoon. I would view an integrationist, centralist European Union with some dismay. I don’t think it would be in Britain’s interest and I have repeatedly made that clear. I believe it should be a partnership of nation states with Community competence where it is needed, and in some areas Community competence is needed, but where it is not needed the Community should not reach out take and take competence away from the nation states.

I dealt also with another argument that frequently appears in European debate, and that is the view that there are only two sorts of the European Union: the one that is inevitability leading to greater political union as well as economic union; and the second view that Europe is only seen as a free trade area. Well that is not Britain’s view. Britain does not see the European Union as simply a free trade area. There are many areas where Britain’s role goes well beyond free trade - the development by consensus of a common foreign and security policy; closer intergovernmental cooperation on crime and drugs and terrorism; a common external trade policy; we need European institutions, the European Court of Justice isn’t always to our taste but it is necessary to ensure common rule is applied right the way across Europe. And I set out these as illustration of the way that Britain actually sees a European Union developing, a European Union that is not integrationist but is neither simply a free trade area.

The key point in the discussions that lie ahead is one upon which different people have expressed views but nobody has clarified their view very clearly, and that is the question of flexibility. I touched first on this question of flexibility in the Leiden lecture some two years or so ago, and since then as a debate within Europe it has gathered pace. But of course when different Europeans speak of flexibility they often mean quite different things, one from another. Some of the ideas on the table about flexibility could create a core Europe, an inner core Europe that moves ahead on its own. Other proposals would allow action to be taken in the name of the Union with those outside the care having no say in those particular decisions. And I raised those questions and asked whether that was the sort of Europe we really wanted.

The right sort of flexibility will ensure that those who wish to integrate are not unreasonably frustrated. But it also means that others who do not wish to integrate are not forced into unwished for obligations which are unattractive to their electorates, unappealing to them as governments and which build up resentment across Europe. The wrong sort of flexibility, as I indicated this afternoon, would blow the European Union wide apart, and so that is an area where we need to reflect very carefully. We are still doing so, we have not yet reached final conclusions as to whether the sort of flexibility we advocated is best put in the treaty or dealt with on a case by case basis, this is a very fine judgement and I hope we can reach conclusions on that fairly soon.

There are aspects in the Presidency document where good progress has been made and where we support very strongly the progress made - on subsidiarity, on a greater role for national parliaments, on improvements to common foreign and security policy to make it more effective, on improving the quality of legislation, on introducing greater openness into the European Union, and some other areas.

Other areas are less attractive for us. I see no point in writing an employment chapter into the treaty. Declarations of that sort will not create a single job. I see no point in that, though other partners are attracted to it. Neither do I accept the argument that an enlarged European Union would grind to a halt unless it had an extension of majority voting. I do not accept that and I think that is clear to my partners. In the external field a common foreign policy is thoroughly desirable. A majority foreign policy, determined by qualified majority against the wishes of a minority, would not carry weight internationally and frankly is not a sensible way for us to try and conduct our foreign policy. On defence, let us by all means have more cooperation, but we cannot have the Western European Union subordinated to the European Union itself. And on justice and home affairs, Communitisation of justice and home affairs, bringing it under the central pillar, I think would be very damaging indeed and is not something that we could remotely contemplate. Apart from the fact that we think it is wrong, I very much doubt whether any British parliament would ratify a treaty that transferred competence in those sensitive areas to the Community.

In a few moments we will set out in there a number of areas where there can be more cooperation on justice and home affairs, but I think it has to be cooperation, not a Communitised policy. I re-emphasised our familiar positions on the European Court of Justice, on the Working Time Directive and on the Common Fisheries Policy and I know most people here will be familiar with those and I won’t reiterate them.

We have not had, though I think many people present perhaps expected it, we have not had a general discussion on Economic and Monetary Union today, but let me say just a word about it in any event. The launching of Stage 3 of Economic and Monetary Union will be the most far-reaching decision that the European Union has ever taken. It will dwarf the earlier decisions that have been reached. The United Kingdom expect that we will meet the Maastricht criteria, that the Protocol that I negotiated at Maastricht gives us the right to decide whether or not we will participate at a time of our choosing. We have not made that decision yet, and nor will we, until we are clear about all the unnecessary issues, because too much of what we need to know is frankly still a mystery, including crucially our assessment of the prospects for real and sustained economic convergence in Europe. There is no point in having the right economic conditions on one particular day unless that is going to be sustained for the future.

I have made clear before, and I have not changed my mind, of my doubts that enough European Union countries are economically ready to allow a single currency to safely go ahead. A number of European countries have made Herculean efforts to get to those criteria, perhaps they will do so, time will tell, but I myself still have doubts about it. But insisting on a particular timetable for political reasons is not sensible and can end in disaster. The really important matter is that the economic criteria are right. And whether or not particular countries meet particular targets on a particular day, and clearly those figures mustn’t be fudged, that is much less important than the degree of genuine economic readiness for such a far reaching step as Economic and Monetary Union. Because once a country is in, the only safety valve for poor economic performance would be higher unemployment and the risks are obvious. Unemployment is already too high across the Community - 1 in 10 adults, 1 in 5 of young people without work - and I don’t think anybody would sensibly wish to gain a political triumph by meeting a particular date for Economic and Monetary Union if it was followed by an economic disaster thereafter because the convergence conditions weren’t correct.

So we haven’t had the debate on Economic and Monetary Union but my earlier remarks paraphrase what I have had to say in the discussions today and I think they have been very constructive and worthwhile discussions.

I am afraid that is a rather lengthier statement than I normally make on these occasions, and I see Michael is anticipating I have finished - he is right, I have - but I think it was probably worthwhile to set that out and Ken and I will take any questions you may have.


QUESTIONS AND ANSWERS

QUESTION (Phil Murphy, Press Association):

Could I ask the Prime Minister and the Chancellor, do you not feel in a way that you might be contributing to a weaker currency by backing the French and persuading the Germans to compromise in setting up the single currency?

Secondly, Prime Minister, in the light of yesterday’s comments will you be buying the Spice Girls’ Christmas single this year?

CHANCELLOR OF THE EXCHEQUER:

What we have done here is the finance ministers completed through last night the details of the progress so far on stage 3 and there is a report that is going to be attached to the Conclusions showing where we have got to and a small group of us broke away this morning to complete that report and settle the final details and it addressed what you have said.

Two things are absolutely necessary in our opinion if you are going to go ahead with stage 3 as planned. The first is that it should be run on the basis of proper financial discipline, the convergence criteria must be met. The key thing is the countries must remain convergent because they are dependent upon each other and fiscal weakness by any one country will drive up interest rates and threaten the stability of all of them. For the reason, the report sets out the very strict basis upon which it will be run and on that we were on the German side if you wish to take this rather simplified account of a discussion between fifteen member states.

The report makes it clear that each member state that goes into economic and monetary union will commit itself to a balanced budget or a surplus budget at various stages in the cycle and the 3 per cent is meant to be a maximum and I personally am very keen on financial discipline amongst any countries that go into a monetary union and you have to have a system to sustain that.

The second point where we were closer to the French was the system must not be some rigid application of automatic rules; it must be a political system remaining within the control of the finances ministers of those countries who are members so that they will eventually decide whether a country is taking adequate steps to get back towards the convergence that is required in economic and monetary union and will impose penalties as ministers on a country which fails to take effective action to comply with that and if you look at the whole report, that balance has been successfully struck. Indeed, I think we took a very balanced position throughout the entire discussions. We are keen that nothing should be fudged, keen that any countries in economic and monetary union remain convergent and competitive with each other but also keen that we don’t have some incredible inflexible system dependent solely on rules that do not allow the ministers to keep proper control upon it, and that was the key issue that took longest. When you look at the report you will see a lot of other issues have been tackled by the finance ministers in order to keep this process rolling forward.

I share the Prime Minister’s view that this is all very important, it is going forward. The more we go on, the scale of the task remains very great and I too, as I was saying only a few days ago, am not at all sure that they will make the 1 January 1999 and I continue to believe that getting all these details right matters far more than trying to strike some artificial timetable, but we are there, as we are in this entire Council, contributing very heavily. If you sit alongside the Prime Minister at a council of this type you are sitting alongside one of the three most powerful statesmen in western Europe and we are part of a team that makes a very heavyweight contribution to how these things are taken forward and that is what we have been doing.

PRIME MINISTER:

I am not sure whether that leads me directly on to the Spice Girls but I think I had better answer your question about them and I am sure their support will ginger us up. As to whether I will be buying the single, I have a shrewd suspicion it might be brought for me now!

QUESTION:

Prime Minister, do you accept that it is a bit of a benchmark today for Europe given that the policing of the single currency seems now to be accepted, the structure, and of course the notes have been unveiled. What do you think of the notes and do you not think, given the momentum that now seems to be in play, that despite what the Chancellor says there will be a group of countries signing up on 1 January 1999?

PRIME MINISTER:

On the last point, I am very dubious about that. One of the things we did today was formally agree that the previous target of 1 January 1997 was not going to be met. We had formally to confirm that that wasn’t the case and we did that today.

I am by no means certain that they will meet the 1 January 1999. There will be a huge effort to try - I agree with that - but the difficulties that there were in agreeing the elements of the stability pact that took a lot of discussion last night and today is but the first of a whole series of detailed decisions that will have to be taken that will be difficult and there is no doubt that unless the economics are right people are going to shy away from the 1 January 1999 so it comes down to a judgement of whether it can safely be done at that date. I am very doubtful whether it can. I can’t be certain, no-one can. I am very doubtful whether it can. I can’t be certain, no-one can. I acknowledge that they will try and meet that date, I am not at all certain that they will be able to meet that date.

You say “a benchmark day”. Well, an awful lot of decisions still remain to be taken and they are pretty crucial decisions and most crucial in due course will be the assessment not just of whether the criteria are artificially set on a particular day but the assessment as to whether those criteria are substantial over the long term and if there is to be a benchmark day it will be that day when it becomes clear whether the assessment is likely to show that countries could sustain it.

As far as the notes are concerned, I have had very little time to look at the notes yet. I had sufficient time to notice that they had left Cyprus off the map, Turkey off the map, the Balearic Islands of the map, and to learn that therefore it was only a draft map subject to some revision.

As far as the national symbol is concerned, I hope that they will decide in due course there is going to be a national symbol - there seems some lack of clarity about that at the moment - and I will look at the notes and study them more carefully. I am not immediately any more enthusiastic about the notes than I was about the name but the important issue is the economics, not the notes.

QUESTION (Michael Brunson, ITN):

Prime Minister, the fact that they did agree the notes today, that they reinforced the date, that they have set the rules, did you have a sense that they are, for good or ill, all going off now in one direction and we are rather firmly set in another direction?

Secondly, given Barnsley, given that they know the political situation in Britain, did you feel any sense - they obviously would not say it because they wouldn’t be so rude - but did you have a feeling that they were regarding you as any kind of a lame duck?

PRIME MINISTER:

None whatsoever and that wasn’t remotely the feeling of the meeting and it isn’t the way that these European negotiations are undertaken.

We have a significant contribution to make to these negotiations. There is no doubt that our European partners are keen to have Britain’s cooperation and participation wherever possible. Where it is appropriate, we are keen to cooperate and participate but it has to be where it is appropriate. There are some areas where we just take a quite different view as to the sort of European Union we need and as I indicated a few moments ago, many of the differences that there seem to be between us and our European partners spring essentially from that fundamental fact that we have a different perception of how the European Union should develop than many of our European partners and I think they understand that and there was no doubt about the seriousness with which they took that in the discussions today.

QUESTION (Adam Boulton, Sky TV):

Prime Minister, could I press you a bit more about the politics of all this because you see, it has been reported on the wires that one of the ministers who listened to you this morning on employment came out and said it was a monologue, not a dialogue, and there are a lot of people saying when they are briefing privately that they regard the British team as a bit of an irrelevance.

Can I just go on from that and ask you whether what we actually heard at the opening here was another wobble on Europe when we hear the Chancellor talking about “I am not sure whether they will make it before 1999!” and we hear about you talking about the possibility of blowing the Union right apart. It seems as if you are going back in the Teresa Gorman direction a bit.

PRIME MINISTER:

I think you are talking nonsense, with great respect, Adam. I set out the whole series of areas where we cooperated as well so let us not manufacture an artificial story today, please. Let us stick to the realities!

As far as the employment debate was concerned this morning, I set out the position that we agreed at Essen. I don’t know which Socialist ministers you were talking to but presumably that Socialist minister agreed at Essen with the supply-side reforms and the supply-side approach to unemployment that I set out again this morning and I wonder what the unemployment level is in that particular minister’s country and whether it is going up or going down - ours is going down because we have followed the formula that was set out in Essen and clearly he didn’t stay for the whole of the debate because he would have heard the support for what I had to say from a number of other people who were actually there.

As far as your remarks about policy are concerned, I set out very clearly this afternoon what we have said in the past about the British position, what the Chancellor said in the past. We both made the same points about the importance of the economic criteria. I have made the point on more than one occasion in the past that if we get this wrong it will make a material difference. I spoke some days ago about the moment of truth and set out the points I made again this afternoon so there is no change in the position that we have set out in the past. I have re-emphasised it so that it is not mistaken or misreported by anyone anywhere.

CHANCELLOR OF THE EXCHEQUER:

I didn’t take part in this afternoon’s discussions, I sat through the discussions on the intergovernmental conference and I heard the debate and could I say I think the Prime Minister firstly made by far the best speech this afternoon and the one that was listened to with more attention than that of any of other minister because of the point of views he was putting and what he was saying about flexibility and about where we are going and the big historic issues that ought to be addressed in this IGC. With great respect, one or two of the others were going into minutiae rather than facing the big issue.

So far as our role here is concerned, I know it is very dull sitting around at the edge of these councils and you will find stray people from other delegations to gossip to, I find that is one of the problems when I go to council meetings. We are here as one of the big global economies. There are four countries here from the G7 and we are actually here representing one of the four big global-sized economies, we are the strongest performing economic nation here. We have growth, we have falling unemployment, we are competitive with them, we are attracting all the inward investment so when we speak we do actually speak with some clout and the result is therefore we take a very large part in discussions on employment. We are certainly better at creating jobs and certainly better at reducing unemployment than they are and they know that. We take a full part in economic and monetary union because this is our single market, we are drawing investment to participate in it and we have the right to choose whether we are in or out and whether we are in or out we want a Euro-zone that does not disturb our present conditions and creates more stability and more prospects for us so we take a big part in the discussions; you will find that until three in the morning I was taking a very large part in the discussions and I was in the small group that thrashed it all out this morning and what we have put together is wholly consistent with our economic policy - balanced budgets, moving towards surplus in good times, sticking to what are described here at “convergence criteria”, what we call “healthy public finances”, making sure the ministers of finance in charge of all that and keeping it on course keep some control in their hands so that we can discipline each other and make sure that all benefit if they are inside the single currency.

I know the British press come here playing sort of soft echoes of the kind of debate we have about Europe back home but when you are really looking at a Council like this at a very key moment in the European Union, when there is a lot on the agenda, actually the team that John brings here is one that contributes powerfully and in a heavyweight way and if sometimes this upsets one or two of the ministers from some of the smaller nations it is because they know that they do have to take notice of our influence and they know perfectly well that we are showing them how to do it in quite a lot of these key areas.

PRIME MINISTER:

If I could add just one other point, the prospect of Ken taking a small part in any discussion is against nature!

CHANCELLOR OF THE EXCHEQUER:

That was one of my shorter contributions.

QUESTION:

The Chancellor rather famously made an assessment previously about the likelihood of EMU starting on the target date of 1st January 1999. I wonder if you would give us what your current assessment of the likelihood of that start date?

CHANCELLOR OF THE EXCHEQUER:

My assessment is that I said 60/40 will go ahead at all around the turn of the century.

SAME QUESTIONER:

What are your current views on that?

CHANCELLOR OF THE EXCHEQUER:

I haven’t revised and updated mine.

PRIME MINISTER:

I expressed mine a few days ago that I still have doubts about 1999 and we will have to wait and see and the Chancellor has doubts about not only 1999 but 2000 as well it would seem.

SAME QUESTIONER:

Let me be clear about this! You say you have doubts so on balance you think it is unlikely that it will start on 1st January 1999?

CHANCELLOR OF THE EXCHEQUER:

You are asking us to forecast the course of the economy in France, the Federal Republic of Germany, the Netherlands and quite a lot of other key countries. They are all working on the basis that a large number of them are going to be truly convergent on the figures for 1997. I hope we achieve that degree of success across western Europe because the more successful the economies of the European Union are, the more we, the British, do well, because we are probably becoming the most competitive of those economies but I have enough trouble with economic forecasting and if you look across the rest of western Europe I think it is far too soon to tell. That is one of the very very big questions still be resolved before we get there.