1997 Onwards -
Below is the text of John Major’s speech at the annual Bow Group lecture, made on 23rd February 2005. The speech was entitled -
SIR JOHN MAJOR:
The economy is central to politics: now is a good time to look beyond the soundbites and separate fact from fiction.
First, some background.
By the late 1970s, our economy was a basket case. Inflation and industrial unrest had dragged us down. We were “The sick man of Europe”.
In the 1980s, market reforms turned us once again into a competitive nation.
In the 1990s, inflation was -
The 1970s were Labour years.
The 1980s and 1990s were Conservative years during which the Labour contribution was to oppose the Government’s policy.
There is a tendency to take the present Chancellor of the Exchequer at his word. A small vignette suggests this can be a mistake.
On his first weekend as Chancellor, Gordon Brown was given a presentation on the economy. “The figures are fantastic”, he was told by officials at the Treasury, “much better than predicted”.
“What am I supposed to do”, asked the Chancellor, “write a thank you letter?”. I use the neutral word “asked”: yet, in his biography of the Chancellor, Tom Bower’s use of “snarled” gives a more vivid picture of the exchange.
That same weekend, the Chancellor’s spin doctor was despatched to brief the media that “errors” and “black holes” had been discovered, all of which “threatened a nightmare”.
The spinner of this little fib was Charlie Whelan, the Chancellor’s “Man in the Red Lion Pub”, whom you may recall as Alastair Campbell without the charm.
It was -
They are very clear.
The economy began growing in the First Quarter of 1992.
By 1997, there had been five years of progressive growth every Quarter.
During that five year period:
Moreover, despite the outcry over alleged punitive Tory tax rises between 1990/97, the facts are striking.
In 1990/91, tax as a percentage of GDP -
In 1997/8, it was 36%. The net increase over 7 years was 0.1%.
As Treasury officials had told the incoming Chancellor -
Economic conditions unwind over a long period. Neither good nor bad policy reveals itself immediately -
When Gordon Brown boasts of the record length of continual growth he is right -
What Gordon Brown writes into his script is the charge that the Conservatives were responsible for “boom and bust”. This is one of those fibs, repeated ad nauseum, until it is so fixed in the public mind it becomes the accepted truth. It is a rewriting of history. In fact, before 1990, all Parties could have had that charge levelled at them: “stop-
But not everything has rolled on unchanged.
Since 1997, the economy has continued to grow, but taxes have grown far faster. Using the same measure for calculating tax rises as in the Conservative years -
Income tax rates have not risen -
But the facts are as follows:
tax by under-
New and imaginative taxes have been invented, including a tax of £5 billion every year on Pensions creating a crisis that is continuing. The sum total lost to Pensions now exceeds £40 billion. As a result, many pensioners may have to retire later or live on less than they had anticipated.
The Chancellor was given specific warnings about this -
Thus far, the cumulative total of tax rises is 66 -
Perhaps a more vivid indication of the scale of those rises is this: if they had all gone on to the standard rate of tax, rather than to every nook and cranny of our lives, the basic rate of tax would have risen to 39p in the Pound.
The market reforms of the 1980s and the death of inflation in the 1990s created the robust and growing economy Gordon Brown inherited. But, although there may be a time-
(i) The growth in our productivity has collapsed by one-
(ii) Private (non-
(iii) We now have the largest Trade Deficit for over 300 years. The Chancellor hopes export growth will correct this but all the signs are that it is set to widen further as our share of world exports is falling.
(iv) As a competitive Nation, we have dropped from 4th in 1998 to 12th in 2001, and 15th in 2003.
(v) Household debt is soaring and savings are falling. Under Gordon Brown, the savings ratio has never been above 6.7%; between 1991/7 it was never below 9.3%. This is not a semantic statistic: it means people are becoming very vulnerable to unexpected economic shocks. Live today -
I could go on -
It has not gone -
We will hear none of this from the Chancellor.
He will talk of success -
He will talk of growth -
He will talk of enterprise -