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1997 Onwards - Sir John Major’s Interview on the Andrew Marr Show

Below is the text of Sir John Major’s interview on the BBC’s Andrew Marr show, broadcast live on 13th July 2008.


ANDREW MARR:

Welcome Sir John.

SIR JOHN MAJOR:

Good morning Andrew.

ANDREW MARR:

How bad is it going to get in your judgment?

SIR JOHN MAJOR:

I don't think it's quite clear how bad it will get. I think we're going to be very close to recession, if not technically in recession, two quarters of negative growth. I think that's entirely possible. But the problem we face at the moment is rather different from the one we faced in the early nineties or indeed in the early eighties.

ANDREW MARR:

In the early nineties we had that terrible problem of negative equity in particular and unemployment shooting up. A lot of people will say well it can't be that bad this time round.

SIR JOHN MAJOR:

Well I said just now the problem was rather different. If you recall, on the day I became Prime Minister we had interest rates at fourteen percent. We had inflation at nine and a half percent. We had unemployment beginning to rise. All that was happening. We were heading for a recession as a result of the nineteen eighties boom.

Now it was necessary then to deal specifically with one primary problem. And that primary problem was endemic inflation which had damaged the economy time and time again in the last forty years. And it's precisely for that reason of course that Margaret Thatcher and I entered the exchange rate mechanism to bear down on inflation which was our predominant problem. And we did so.

And the result of that of course, the figures when I became Prime Minister in nineteen ninety were awful. When we left I think by common consent we left the best economy people had seen for a very long time. But in the interim some very painful things were done and you mentioned some of the results of those painful things. But they were done to get inflation down, to put the economy on an even keel. And as a result of doing that we've had an extremely good economic run for a very long time.

So the circumstances are different from the nineteen nineties.

ANDREW MARR:

Are we going to have to see similarly painful things in order to get inflation down now? And by the way what do you think inflation really is now?

SIR JOHN MAJOR:

Well on the second point it certainly isn't the figures produced either by the Cost And Prices Index or indeed the Retail Prices Index. If you recall the government changed the mechanism for calculating the CPI. They took out housing costs and they took out Council Tax. Now that for many people's expenditure is probably forty five percent of their expenditure. So the CPI is the government's preferred measure. But it's an extremely misleading measure in terms of people's spending patterns.

ANDREW MARR:

So do you think inflation's what double, double the CPI figure?

SIR JOHN MAJOR:

Oh I think more than that.

ANDREW MARR:

More than double? Where would you put it?

SIR JOHN MAJOR:

Well I think it depends precisely where your income group is.,

ANDREW MARR:

But roughly?

SIR JOHN MAJOR:

I would think for most people on average incomes if you look at what's happening to food, you look at what's happened to heating, you look at what's happening to the expenditures that most people cannot avoid, I would say inflation is probably double the RPI figure so we're between eight and ten percent.

ANDREW MARR:

The government says that most of this, if not all of it, is imported. It's what's happened to oil prices, it's what happened to food prices, it's, it's a global problem, a banking problem and, and Britain is relatively well placed to deal with this.

SIR JOHN MAJOR:

Well to the extent it's well placed it's because of the structural reforms of the eighties and the destruction of inflation in the nineties. It's got very little to do frankly with what the present government have done. But as far as the cause of the problem is concerned the government's mantra certainly is that this is an imported problem and that is partly true.

It is certainly true that there is an element of imported inflation with oil prices. That is undoubtedly true. What is equally true I'm afraid is that because of the actions the government themselves have taken over the last ten years or so we are not in a very good position to deal with that problem.

ANDREW MARR:

Actions and spending too much?

SIR JOHN MAJOR:

They certainly can't cut taxes because they, in terms of increasing consumer choice because they have such a big fiscal deficit. They can't increase public spending because they've already spent the, the money that we would normally use. So they have cut off the solution to this problem just as the problem has arisen.

And it's quite extraordinary that over ten years in which the world has had the most benign economic circumstances for a very long time, that we have run up such a huge fiscal deficit. We have increased taxes to the extent that we've increased taxes. And we have a trade deficit that's about between fifty and sixty times higher than it was in nineteen ninety seven. So the problem is although there is a problem the traditional solutions to that problem are not practical at the moment.

ANDREW MARR:

Are not available. So what can they do do you think?

SIR JOHN MAJOR:

Well I think to a certain extent they're going to have to sit this through. It's going to take a couple of years to work its way through. Nobody's quite certain how serious it's going to be. I think it is a very serious problem. Some of the talk of Armageddon I think is overdone. I don't believe that.

ANDREW MARR:

You travel around the world. You're in the States a lot. These two big mortgage companies which are deeply in trouble in America, is that kind of thing going to be, be felt here? Is that, is that part of the crisis?

SIR JOHN MAJOR:

Well I think that must be one of the great worries that you're going to have the collapse of a large institution, a large financial institution, and that would present very real difficulties for the Bank of England. But here again I'm afraid the regulatory changes made in nineteen ninety seven, certainly, if one puts it as its kindest, muddied the regulatory system.

And the result of that may well have been Northern Rock. So I think we do have to look very carefully at precisely where the responsibility is for regulation. Some people I think are pretty unclear about that. We need to be absolutely clear about that.

And the other thing that is essential, not something I can see that can be done over night, but at the moment the government, the state, are consuming between - depends on whose figures you use, the government's or the OECD's - between forty two and forty five percent of the national income. Well you and I are old enough to remember Roy Jenkins saying once you came above forty percent you were damaging a plural society.

Now on the government's own figures it's around forty two to forty three percent. On the OECD's forty five. So undoubtedly for the medium term health of the economy the proportion of public expenditure to national income has to fall. Now that plainly can't be done over night, but it must be an objective for this chancellor and future chancellors.

ANDREW MARR:

Yes. Should be said you weren't in parliament but your party wasn't vociferously opposing any of those increases in public spending as they happened.

When we look at what's going to happen now, however, house prices are bound to fall quite sharply. Everybody accepts that. Unemployment's about to go up again. And we're going to see inevitably increasing numbers of bankruptcies aren't we?

SIR JOHN MAJOR:

I think you are. Quite how bad that will be I'm not sure. Once again the unemployment figures are quite difficult to disentangle because the method of calculation now is different from the past. And a huge number of people who perhaps traditionally would have appeared in the unemployment figures now receive Invalidity Benefit and are excluded from the unemployment figures. So unemployment, if you're seeking the comparison you made at the outset with the early nineties is certainly a good deal higher than the government say. There are going to be more bankruptcies.

ANDREW MARR:

Again, have you any sense of where it is really?

SIR JOHN MAJOR:

I think there have been so many technical changes.

ANDREW MARR:

It's impossible?

SIR JOHN MAJOR:

I mean well I think if one wished to be fair to the government I think it's impossible to make a guess. But substantially higher than the figures they produce. I think that is true.

ANDREW MARR:

Right.

SIR JOHN MAJOR:

There are going to be some more redundancies. I think that is clear. There are going to be some bankruptcies.

Depending upon how liquid the banking system is and how available loans are will be absolutely crucial to determining how bad the situation is. So the underlying sub prime mortgage problem which has damaged inter-bank lending for example is very important.

Fear is toxic and…

ANDREW MARR:

And it's spreading?

SIR JOHN MAJOR:

And it is spreading. And that is a real, quite apart from the realities of the situation that, that toxic element, that fear element is very serious. And I think the government and the bank will need to look and see how they can give some hope, some circumstance where one can see things beginning to get better. And the sooner we can identify some of that and put that in place I think the better it will be for everyone.

ANDREW MARR:

Can I ask you about the Conservative Party because in many ways they are playing tunes that you will find familiar, what David Cameron said about responsibility and so on. You, I think you talked about we should understand a little less and condemn a little more and got into some trouble of that but there's certainly echoes.

SIR JOHN MAJOR:

Well it was, that's because it was totally distorted. I mean…

ANDREW MARR:

Inevitably. It always is.

SIR JOHN MAJOR:

When I, well I dare say. I mean it's a dangerous territory, but I mean there were two things. I said "back to basics" which was actually about traditional education and nothing to do with the matters that subsequently earned huge headlines. And when I said we condemn a little, should condemn a little more and understand a little less I was talking specifically about making sure very young children under the age of two or three actually understood there were boundaries and one didn't instinctively say oh well, isn't he lovely, forget the fact that he's breaking all the crockery.

ANDREW MARR:

But, but with knife crime and stuff people are talking about this again.

SIR JOHN MAJOR:

But of course it was wholly misunderstood.

ANDREW MARR:

Yes but I mean, but in a sense what David Cameron is saying now?

SIR JOHN MAJOR:

Yes.

ANDREW MARR:

It’s quite similar to what you were saying.

SIR JOHN MAJOR:

It's very similar. And indeed I think the underlying prescription needs to be similar as well. If you look at knife crime in the cities, if you go back to the time when I was a boy I, I lived in the middle of Brixton at a time of quite a lot of social turmoil, when there was relatively little to do. But there were gymnasiums, there were places where you could go and you could box, you could play indoor soccer, you could do things of that sort.

Now one of the reasons I set up the Lottery which the government have ransacked and taken a large part of the money sadly, was to set up things like that right the way through the big cities. We need to find things for our young people to do. In the early part of the century, the previous century when there was a lot of trouble with youngsters, er, youth clubs, the Scouts, things like that were established and became set up.

Maybe not the same prescription. But we certainly need the opportunity for sporting facilities and arts facilities inside the inner cities so that youngsters have something to do when they go out rather than stand on the street corner. Give them something to do. Give them the opportunity to do it. I think that would be expenditure well spent. It was the purpose of the Lottery. I very much hope and believe that a Conservative government will return the Lottery to its original intention.

And I think we should work with the voluntary agencies and bodies like Chance To Shine, for example, who do so much to spread particularly cricket, to bring those leisure opportunities to young people in the cities. We need to help them. Of course we condemn people who use knives. That is unacceptable by any measure. But let us give them something to do that will attract their interest. And if that isn't worthwhile expenditure I cannot myself imagine what is.

ANDREW MARR:

Could you imagine yourself coming back into public life? Just listening to you talk now.

SIR JOHN MAJOR:

No I don't think so. No, no. I was in public life for a long time. I enjoyed most of it but I don't think I'm coming back, no.

ANDREW MARR:

If, if those are areas where you and David Cameron would feel comfortable it seems to me in one other area the Party has changed radically from the Party that you were leading. In those days Euro-sceptics were a very, very difficult minority that you were struggling with. Now they're in charge.

SIR JOHN MAJOR:

Well they were certainly extremely difficult at the time. That is absolutely true. But I think public opinion generally has changed. There were some issues particularly on Europe magnified of course by our exit from the exchange rate mechanism.

I mean because that was the European exchange rate mechanism, it was magnified out of all proportion. Had it for example been an American exchange rate mechanism we wouldn't have had so much trouble with it. But there was a lot of Euro-scepticism. I think there is more unity in the Party. I, I hope it is not a unity that is wholly Euro sceptic. Europe is still our largest trading partner. It is our, it is our nearest partner. It is an enormous market. But I think a too prescriptive Europe wasn't amenable to me in the nineties, let alone the Euro sceptics.

And I don't think it's amenable to most people in this country. And I think the prospects now of Britain as a nation having more allies amongst the members of the European Union is greater now than it has ever been. When Margaret was there and when I was there we were often isolated in Europe. That is no longer the case.

ANDREW MARR:

One other thing which has come back again I'm afraid is sleaze. I mean the Conservative Party's got yet more problems over who's paying what to whom. So has the Labour Party. It's not one party or the other.

SIR JOHN MAJOR:

Well indeed it isn't.

ANDREW MARR:

But this must make you kind of despair because you know it was, it was supposed to be something that was around in the eighties and then disappeared again, whiter and white, purer than pure. It's back. Both parties.

SIR JOHN MAJOR:

Well I was concerned in the mid nineties which was why I set up the Nolan Body in the first place and that was widely criticised by many people.

But I felt, frankly I didn't know how widespread it might have been. My inclination was to think that it wasn't very widespread and Nolan would show that. Well in fact over the years it seems to have been rather more widespread than I had thought.

ANDREW MARR:

Is there anything can be done about this?

SIR JOHN MAJOR:

Well I strongly believe that it is desirable to audit which Parliament rejected last week. I think it is desirable to audit the money received by members of Parliament, the public funds received and the expenditure. I'm less certain about the publication of individual figures. They can be distorted and they can be utilised in a way that is often rather unfair.

But I do not see any case whatsoever for there not being a private auditor set up by the Speaker or, or whomsoever who has access and audits the expenditure made available to MPs and the way they use the money made available to them and effectively producing an audit certificate saying this is within the rules. I see no credible case against that and I am absolutely baffled why the government opposed it.

ANDREW MARR:

When you look at Gordon Brown today human sympathy or Schadenfreude?

SIR JOHN MAJOR:

No, no, no, no. No. Well I hope it's human sympathy. I have very strong disagreements with many of the things politically that Gordon Brown has done. But he's doing an extremely difficult job. He's doing it in extremely difficult circumstances.

They may be partially of his making. But nonetheless it's not helpful to the country or anybody else to have some of the comment about him that there has been and I, I regret that.

ANDREW MARR:

All right. John Major for now thank you very much indeed.