Below is the text of Mr Major’s press conference on the competitiveness White Paper, held in London on Tuesday 24th May 1994.
Perhaps I can just make a few brief opening remarks. You have all no doubt heard the statements by Michael [Heseltine] and David [Hunt] already this afternoon and I hope all of you have a copy of the press pack and the White Paper.
Let me just make three overriding points right at the outset. All of us would like to see higher living standards and better public services, but if we are going to achieve that, over time, there are really only two ways to improve and sustain the level of quality of public services that we want, the first of those is business success yielding higher taxes, and the second of those would be higher tax rates. There is no doubt which is preferable. Secondly, there is no doubt that long term business success needs long term policies in order to obtain it, the long term policies we need are those we have in place and those we have set out in the White Paper today, we have brought them together in this way I believe for the first time. And thirdly, let me just make a point about the world in which our businesses have to compete, both large businesses and small.
It is becoming a truism to say that the world is more competitive than ever before and it is becoming more so day after day. Technology and free trade have created a global environment, there is a global market place, there are new opportunities but we are only going to take those opportunities if we can keep up and beat the best of the competition. And many countries around the world who used to be fairly easy markets for us many years ago are now very firm competitors for us, there is no sentiment in the market place, we have to be better or our companies simply will not win in the sort of world market that exists at present.
The White Paper shows what we can do to help our businesses to win and demonstrates our commitment to industry, manufacturing industry and services. As I think a number of you present will know, not least because you will have been with us on the trips, a number of my colleagues and I travel frequently batting for Britain with delegations of British exporters. Many of those visits have led to very substantial orders for the United Kingdom, bringing jobs and better living standards here. Those visits have brought home to me two lessons -
It is of course the private sector companies, employees abroad, decision-
A great deal inevitably must rest on work that has been done throughout the past 15 years and we are building on that with low inflation, deregulated, flexible and an open economy. But in addition to that the White Paper looks at a wide range of specific key areas and especially of course education and training. We have to give our youngsters the best start at school, that of course is the reason for our education reforms and it is the reason we are now introducing more vocational options for our 14 -
But of course a great many of those people, upon whom our future success depends, do not necessarily go on to college, so we also have to help them manage the transition from school to the early years of work and that is precisely what our apprenticeship programmes are about. Our intention is really very straightforward and very simple, whether children follow the academic path, the vocational path, or a mix of both, they will be given the opportunity to acquire the qualifications and the skills that they will need to get on in life and that we as a country need to assist our businesses in the competitive world in which they must compete. But we owe that I think both to our businesses and to those children and we owe it to our country to provide the best foundation for a competitive Britain in the next century.
This is a long term look, there are no short term fixes in this White Paper, this is a comprehensive look at things that need to be done, some in the short term, some in the long term, in order to give us the best opportunity in the world's business environment.
I would just now like to ask Michael to say a word or two, and then David, and then we will take your questions. Can I say a word about questions? I have with me the Secretaries of State, all of whom in separate ways have been involved in the production of this White Paper, so I hope we will have questions of detail, we have the people here who will be only too happy to respond to those questions.
Prime Minister, when you entrusted some of us with the preparation for your consideration of this White Paper, you gave us some very clear steers. The first was to be absolutely certain that nothing was to be proposed that would upset the main macro-
We have done our best to fulfil that remit, it has required a superhuman endeavour by civil servants working right across government, it has involved the widest possible consultation outside government with organisations that have a role to play, and it is a particular indication of the significance that we give to the exercise that not only have we done that in the first place but that the committee that you entrusted with the initial task is to remain in existence and will as appropriate at given times update the work if the government believes that that will help. We are very pleased to have played a role in this.
Prime Minister, in setting the framework for a stronger partnership between government and industry, the role that John and I in particular have played is to put people right at the heart of the drive to ensure that the UK wins through in the 21st century, and programmes have got to be tailored to the needs of individuals, they must offer opportunities to individuals and they must ensure that individuals are motivated to take advantage of them. So our ambition is for our people to succeed. So we have a range of ambitious measures aimed at bringing out the best of the talent and skills of our people, you have heard the figures, you have heard the programmes.
Right at the heart of the strategy, Prime Minister, something that I know you personally have always been strongly committed to, which is the new modern apprenticeship scheme offering real opportunities to youngsters to play a key role in adding to Britain's brain power. And these new fast track apprenticeships are something that many organisations, many individuals, have been pressing for, we are now extending the opportunities beyond the 16 and 17 year olds to those aged 18 and 19, and key is a revolution in careers guidance now involving independent advice, probably to about 1.5 million one-
Why was it felt unnecessary to accept the main recommendations of the all party Trade and Industry Select Committee, such as a training levy on employers and a programme to combat short-
I think there were about 4 or 5 areas which we were not able to accept in the Select Committee report, by and large we accepted and agreed with the analysis and the proposals. But actually the Select Committee did not propose a training levy, if you look at the Select Committee report they admire the direction in which we are going and what they say is that we should come back to and consider a training levy if no better results are forthcoming in other ways, so they did not make that recommendation and it was a mistake for people to suggest in the House that they did. There were a number of other things that we were not able to agree, we were not able to agree with the suggestion that targets should be set right through every sector of the economy, I think that frankly is not realistic and I know of no government that has ever tried that ever succeeded, there are some who have tried but they have never succeeded.
Prime Minister, why do you look so grim?
I am glad you are so concerned about that, I am trying to peer through those television lights, if you really wish to know the truth, if anyone whom I have known for years stands up and I do not recognise them, the answer is that beyond those lights all you can see are black spots, so I am not grim, just peering to see who is there.
[Indistinct] 4.55 in the paper on accelerated modern apprenticeships, you say if industry plays its part government will provide funding of 107 million pounds over three years, what precise part do you want industry to play for these modern apprenticeships for 19 and 18 year olds, and is this 107 million pounds over three years additional to any previous funding?
This is an additional commitment of 107 million pounds over 3 years and what this will do is to produce a fast track for those who have stayed at school, done A levels, GNVQs, etc, to move into work-
What precisely does industry have to do to get the government to provide the funding?
We have got 14, now just gone up to 17, pilot areas which we are starting this autumn. Each apprenticeship will have a different cost, apprenticeships in some of the more specialised engineering sectors will differ in cost from those in other areas and I am now awaiting reports coming from the working parties working up these pilots which will start later this year with a view then to introducing the full scheme in 1995, and we will be looking for a partnership whereby taxpayers' money will be put alongside the private sector to secure through that training credit the opportunity for that youngster at 16 or 17 to have a 3 -
There is a section in the document which allows pupils to spend what are presumed to be a voucher on a place at the school, college or training institution of their choice. The reforms were originally parent-
It is at very early stages here, let me ask David to say something, John might wish to as well.
What we have said in paragraph 4.56 is that we see attractions in providing all 16, 17, 18, 19 year olds with learning credits with a real cash value, and that would give power to young people to buy their own education and training from schools, colleges, employers and other recognised providers. But we recognise that that would be a far reaching change in funding which is why John and I have said that we need careful preparation and we are going to consult further on the practical implications of learning credits and to discuss the issues widely and openly and also to introduce some pilot schemes on the basis of local partnerships.
I would only add one thing to what David has said, and that is that yes we are totally devoted to parent power and parent choice for the parents of children of 5 -
The Prime Minister admitted that this White Paper brought together for the first time a range of initiatives, and right at the back of the document, on page 159, we discover that all it does is report on matters already announced and in progress, it is in effect a snapshot of the work in hand across government, basically the previous 158 pages are covering up for the fact that there is nothing new at all in this.
That is, with great respect, rubbish. But let me ask the coordinator to spell out some of the details of why it is rubbish.
There are 60, I think, new proposals, 59, 60, 61 depends on the precise classification and I could mention a whole range of the ones that are announced here, the whole of the education and apprenticeship announcement that has been made are new, new money; the fact that we are spending 150 -
In the section on public purchasing you mention that you want a constructive partnership rather than an adversarial relationship in the government's construction programme, could you outline how that will work?
On public purchasing, we believe that there is an opportunity to get a greater degree of professionalism into the purchasing machinery of government and a significant part of the initiative here is to improve training. But there is then another aspect to that and that is to set up a machinery across the country in order to make it easier for small companies to get access to large contracts and to so organise those contracts that they are more capable of being competed for by small companies. We are also going to work with the supply chain in order to encourage companies that are buying without thought to local sourcing the opportunities that they could create for British companies if they were to do so, there are a whole range of partnership arrangements that can be developed within such a framework and it is to bring professional management and an opportunity for particularly small and medium size companies in this huge public procurement process that is under way.
Also, we constituted our sponsorship side for the construction industry which fits in with this and of course throughout government we will be ensuring that the purchasing arrangements will be on the basis in which we also introduce the environmentally friendly kinds of concepts which enable our industries to be able to compete throughout the world. One of the things about competition is that you have to have the highest standards in this country in order to win markets elsewhere and that is very much driven by the standards which government demands as well, so this is inter-
You say that the basic thrust of this is to produce a more long-
Let William firstly just say something about R&D because I think often there are many comments made about the levels of research and development expenditure and investment which frankly are not right.
The Government contribution on R&D is in the middle of the pack for the G7 and we remain one of the big five or six science countries of the world. Indeed, in terms of one of the indices, the citation index, we are probably the second biggest producer of innovative science ideas after the United States of America.
The importance of getting longer-
We are having what we call a "Finance for Industry Study" in the Treasury and we are having a look at the views of companies themselves, the banks and other people about the flow of finance into industry in this country. Certainly, one of the things we will have a look at is the fact that, as you say, compared with some continental European countries certainly a greater proportion of profits are distributed in dividends here than are retained and we will look at that and decide the extent to which that gets the right balance between having properly functioning capital markets and on the other hand making sure that you can use some retained profits to build up your financial base. All these matters we will be considering in the run-
We have already shown that we are prepared to take measures in the budget to stimulate the kind of investment we require, particularly longer-
The intention is of course that these various examinations should interlock. As Ken has just illustrated, there are in effect four areas that the Treasury are looking at at the moment: savings, the working of capital markets, the flow of funds to business and as a result of that, the implications for taxation and I think it is very desirable that that work should be done. It is but part of the whole patchwork but I think an important part.
Prime Minister, you have said today's initiative is probably unprecedented. Why has it taken almost fifteen years of Conservative Government before it could happen? Isn't today's White Paper somehow an implicit recognition that so far the Government was not helping British businesses enough?
No, I don't think so. A great deal has been done in the 1980s. Government is usually about the language of priorities and throughout the 1980s the first priorities were to deal with many of the macro-
Those matters have been done. We are operating against a quite different background of better macro-
So we operate against that background and against that background there is every opportunity of maximising the competitive position that we have. It was an opportunity to be taken and that was the genesis of the White Paper.
There are many small businesses who have wanted to expand up to now and recently. They say they can't expand because they can't find skilled workers and they can't afford to pay apprentices. How, tomorrow, will they be able to say: "Ah! What you have announced today helps me, I can go ahead and expand now!"?
I will get David to elaborate upon the apprenticeship point but can I just say something about small businesses before I ask him to do that. It is a quite staggering statistic that about 97% of the people employed in this country are employed by companies who have a very small number of employees, under 25 employees, that sort of size, so the implications for employment apart from anything else of the success of the small business sector are self-
Prime Minister, I have already spoken in the few moments I have had since leaving the House of Commons to several people who represent the small business sector who enthusiastically welcomed this White Paper. There are a whole set of provisions specifically for small firms. I will just mention one which is its identification with the assistance of small firms of up to 24,000 key workers who have got skills who just need that extra training to be able to pass on those skills to the next generation. That, allied with the new apprenticeship scheme, is directly targeted at small firms worth £63 million over three years.
As Michael announced, we also of course have the innovation credits. That is another example. They are worth up to £1,000 a company for the innovation counsellors to enable the companies to pay for the best possible information or advice about innovation.
Those are just two examples of a whole list of packages of opportunities for small firms because we recognise that much of the job-
Prime Minister, in considering the problems of making Britain more competitive, did you find yourself casting envious glances at Germany where short-
I certainly didn't cast envious glances at Germany. I think over the years there have been things we have been able to learn from Germany. There are things I very much admire about the way they conduct their affairs. I am not sure that their interlocking shareholdings are one of the things that I would necessarily wish to replicate here, I think they were a product of particular circumstances in Germany.
In terms of some of their industrial training, the particular emphasis in factories that you will see given to the foremen for example, I think there are areas there where there is something for British industry to learn but generally, no, I am not envious. If you look at the German economy at the moment, you will see that it is facing some difficulties. There has been massive job-
I will ask the Chancellor to add to this because I think I heard a Chancellorial grunt on my left which suggests he wants to say something!
I happen to have had the chance to meet quite a lot of German ministers, bankers and businessmen recently and I don't think they will actually share your view. Obviously, currently as we know, their unemployment is higher than ours, theirs is not yet coming down, their rate of growth is slower than ours and quite importantly, they have actually lost their competitive edge vis-
Like the Prime Minister, I admire a lot of things German. Theirs is a very powerful economy where they are putting right the things they know they have to put right to improve their competitiveness but at the moment we have the edge over them and we have got to address the things we are addressing to make sure we do our best to take advantage of the position we now have where at last we are able to compete with the Germans on level terms.
The reason I grunted, smiled or whatever I did, was that recently I met a whole lot of people from a German private bank and one of the German bankers amused me by saying: "What we need here in Germany is a bit more of your British short-
That doesn't go back on my previous answer. We know here that we do lack sufficient long-
We have got to compete with the Germans and there are a lot of good things in Germany but the idea that we sit here envious of the German situation is not true. For the first time in my lifetime we have the prospect of being a more competitive economy than Germany and we have got to take advantage of that finally and not least by aligning with German ministers who want to get deregulation going in Europe and in Germany of the kind that we have already got going in the DTI in the United Kingdom and which we are going to get going in Europe with German assistance.
You raised one other point about the middle range of companies and I am going to ask Michael to say something about that but if I can just add one point to what Ken said a second or so ago, we have a very close alliance indeed with Germany in terms of seeking deregulation in the European Community. I will be very surprised indeed if deregulation across the Community isn't one of the principal aims of the German Presidency of the Community in the second half of this year and the Germans and the British work in very close alliance on this and have done for some time I think to the benefit of both our countries and to the benefit of the rest of the European Union.
A very important question and nothing so reveals the long-
The reason basically for it is that for much of the post-
We then had the existing businesses that had already started and many of them were medium-
The exciting long-
On this issue of training and education in Germany often held up, rightly, to us over decades as a model, I think actually the Germans are beginning to look to us and the sort of innovative work being done by David Hunt and by people in the Department for Education to produce new higher-
Just two other things: we do need, all of us in industry and in education and in the world of the employer, to link up in a national crusade to hit the national education training targets that we have set ourselves by 1997 otherwise we are not going to be as competitive as we wish by the end of this century. An awful lot has been achieved over the last fifteen years, standards are going up, standards are improving and best of all from the employers' point of view, more young people than ever before are staying on at school post-
Prime Minister, if this report is as successful as you say it will be, how many jobs do you think it will create long-
I don't think you can produce an estimate of that. We can see at the moment that the rate of unemployment is falling rather larger than we had imagined just a few months ago. I very much hope that will continue and it looks at the moment as though it is certainly going to continue for some time but I think it is very unwise to forecast the levels of unemployment and of employment. No previous Government has done it and I think it would be very unwise of us to try. What one can certainly say is that if the economy becomes more successful, it generates more growth, it generates the growth of small businesses, then it is going to create more employment but quantifying that I think would be an impossible task.
The modern apprenticeship system as presently proposed is going to cost £1.25 billion over the next three years. Now you are proposing £107 million extra to almost double apprentice numbers. I accept the point that the apprenticeship will be shorter but when you talk to people from Techs and ITOs they say that the modern apprenticeship scheme will last two years, maybe two-
May I just explain the background to the figures. What we are talking about now is a total budget over the next three years which is up to £2.5 billion -
The £107 million investment over three years is what my officials tell me after consultation is necessary to introduce a short fast-
The actual quantification of the cost of each sector will follow the detailed negotiations that are now taking place but all of this is against that background of £2.5 billion.
Finally, Prime Minister, can I say about employment something just revealed in the House of Commons which I don't think many people are aware of and that is when you look at the percentage of our working population now in work, we are just about the highest with one other country in the Europe in the league table in Europe. We have 70% of the male and female population aged 15-
Regarding the sections in the White Paper both on transport and London, Could you tell us what is happening to the "Crossrail" project and whether it will be built?
We remain firmly committed to the "Crossrail" project. The promoters are currently looking to see whether they can revive the Bill.
It is very important for London and we are determined to ensure that this range of new opportunities are made available. The fact of the matter is that even though we are spending an enormous amount of money, much more than was ever spent when there was a GLC, it is still true that the standards which we are trying to produce and the opportunities go on increasing and that is why this is another step on a course which we started a long time ago.
It is incremental but it will be all the more exciting if we can get "Crossrail" as well.