Below is the text of Mr Major’s speech made to the Confederation of British Industry (CBI) in London on Tuesday 21st May 1996.
Over this excellent dinner, the President and I were talking about how times change. And when we were talking, in the fashion that sometimes happens, a mental image came into my mind, an old piece of flickering black and white film came in front of my eyes as a memory aid. And it was Harold Macmillan, then Prime Minister, landing at Heathrow Airport and walking down the steps of the plane with Mr Selwyn Lloyd, who was then the Foreign Secretary. And he walked down to the bottom of the steps, and there at the bottom was one single television camera and reporter. And the reporter leaned forward with his microphone to greet the Prime Minister on his return from abroad. “Welcome home, Sir”, he said.
“I am from the BBC. Do you have anything to say to the BBC?” And this was a tough question. And Mr Macmillan turned around to Mr Selwyn Lloyd and he said: “Do we have anything to say to the BBC?”. And Mr Selwyn Lloyd said: “No”. And Mr Macmillan said: “No, I have nothing to say to the BBC”. And the reporter leaned forward with his microphone and he said: “Thank you, Sir”.
Not precisely that way today. So times have changed, and that is one of the themes that I want to talk about a little tonight -
All that has happened and is behind us. But what is more important is what lies in front of us and the changes that must still come. We have, as a government, a clear economic ambition, an enterprise economy with the lowest possible taxes and with the least possible burden on business, an economy ready to compete and ready to prosper as the Enterprise Centre of Europe. A full-
And all these of course have a direct bearing on the business environment and on the prospects for enterprise. And it is for that reason that we have put competitiveness right at the top of the agenda. Every single area of government policy, even those which don’t immediately strike people as having something to do with industry, can help make Britain competitive and we must make sure they do.
And tonight I would like to conduct something of a snap audit on how we are getting on. At the root of an Enterprise Economy is a stable economic climate. I believe that is now well in place. We are growing faster than any European economy at present and inflation is law, and staying low, and has remained lower for longer than I think anyone in this particular room can remember.
There are some people who hold out the belief that a little inflation is no bad thing. And I guess what they mean is that inflation can make people feel a little more prosperous for a while, wages rise, house prices rise, pensions seem to go up. But it is of course a mirage and it is a mirage that is no good for business. But Britain has learned that lesson the hard way. How many times in the last 50 years since the war have governments lost their economic bearing when the economy slowed? How many times have they been panicked into premature re-
When the recession of the early ‘90s hit Britain, we were determined not to fall into that trap. So we took tough action on inflation and on borrowing. It was not popular, it did hurt in the short-
Now of course, being open-
Let me touch, for example, on privatisation. Do you remember what was said about each successive privatisation? Morally wrong, wouldn’t work, prices would rise, standards would fall, competition impractical. And we are now seeing how wrong all that was.
Who feels nostalgic now for the day to day failures of the old state-
It is results like that, the practical proof of the policy, that have won the argument. Private enterprise and competition motivate people. It gives them an incentive to cut prices, attract customers and improve services.
Now of course those policies are controversial, inevitably so. Every privatisation has been categorised by many people as a privatisation too far. But they have worked, they have worked, and that is what matters, and enterprise and the British economy as a whole have benefited.
Rail is the latest example. “Couldn't be done”, the critics said, but it has been. And as of yesterday Railtrack is in the private sector with over 650,000 private investors applying for shares in the company. If Sid was in hiding, he came out again the other day in spectacular fashion. 80 percent of the passenger railway now either sold or on the market; 5 franchises, almost one-
And look at what that means for the passenger? New rolling stock on the Gatwick Express and on lines where passengers have been complaining for years, like the Kent Coast and the London/Tilbury and Southend line. New services in the Midlands and south London where the new franchises have spotted gaps in the market. And where the new passenger, charter commitments. All this at a falling cost to the taxpayer and with a guarantee of keeping fares down that the passenger has never known at any stage before in the history of British Rail. That simply would not, could not have happened; would not and could not have been affordable under public ownership.
Of course these changes are controversial; they are too disruptive to be otherwise. They are something governments do because they believe it is in the long term interests of the economy, because they believe that harnessing the innovation and energy of private enterprise gives us better public services, better infrastructure and helps build a competitive economy. And that is the point, that is what we are about. Spending the taxpayers’ money efficiently and effectively is central to all this.
The biggest budget in Whitehall is social security. If we would like a low tax economy, and we would, and I suspect you would as well, we have to get a grip of benefit spending while still being fair to the people who need help. Let no-
The new incapacity benefit, job seekers allowance, child support, changing the pension age -
Social security has been growing at an average of 5 percent a year ever since the war. Thanks to the reforms that we have carried through, expected growth is now down from 5 percent a year to 1.25 percent a year in real terms. For the first time in generations, benefit growth will be less than GDP growth, so benefits will take a smaller share of the national cake in the years that lie ahead, and that is something that no government since the war has achieved or been able to look forward to.
And why does that matter for you? It matters for you because it helps to build a huge competitive advantage for British business. Our competitors in Europe still have to tackle their spiralling welfare bill, and their businesses may well have to pick up the tab. But we have planned ahead over many years. Britain has more invested in private pensions than the rest of the European Union added together. Ours is a system we can afford today and into the next century, and we intend to keep it that way in the future.
But what of the other things, the things that any government serious about an enterprise economy has got to do to secure those ambitions? Well first and foremost, we have to listen to what it is that business says in the wider sense, and they ask for things way beyond the obvious tax and spend elements of economic management. And first and foremost, we have to complete the task we have set ourselves of getting the education system right.
There is a great deal to be proud of. Higher education in particular has expanded beyond imagination in the last few years. Higher education is now a reality for 1 in 3 of our young people. At the start of the 1980s, that was 1 in 8 of our young people. So you can see the scale of the changes.
Our new vocational qualifications, because we believe, I passionately believe, that so-
And our schools are changing. They are now among the world leaders in the use of information technology. And I would like to keep them there to develop those skills and the advantage they give those children in their future when they leave school, and the advantage that they will give you, as employers, having youngsters coming out of school with a secure basic knowledge of the information technology that is here to stay, whether people like it or not. We either embrace information technology and play our part in leading the world economy, or we push it to one side and we watch other people forge ahead. And that is why Ian Taylor and his colleagues in government are seeking to do all they can to embrace the advantages of information technology.
Tackling that problem is a long haul: the national curriculum, tests and league tables to measure schools’ performances. I personally believe that they are essential and I will tell you why, it is a perfectly common sense reason.
If you wish to teach a child well, you need to know what it is that the child may not have understood. That is why you need tests. If you can identify what they have not understood, then you can correct the weaknesses and teach them it again until they do understand it but if you never find that out, those children will find themselves hobbled as they move on to higher and more difficult areas of learning. That is why we are seeking to change the culture of education, to bring back methods that work, to turn our back on fashionable theories that I believe have failed a generation or more of our schoolchildren.
We now have a school inspectorate to punch home that message. Gillian Shephard has made it clear that she will give OFSTED -
The fact is, Mr. President, that business and Government must work together to address the challenges of the future, that is essential. Neither of us, neither Government nor you in business, whatever great captain of industry you may be, none of you will achieve what you want entirely on your own.
Let me give you an example, transport, roads, something I know of great concern to the CBI, that Brian and Adair come to talk to me about every other day, so I know the concern you have about it. Many people recognise the reality of how tightly we have to control public spending and in that climate we simply can’t rely on spending ever more taxpayers’ money on any matter, even one as important as roads. Instead, we have to get the best possible value out of every pound that is spent and that is why the emergence -
It is not just transport but health too, also vitally important for employers. You want the minimum amount of sickness amongst your workforce and increasingly the days that people are taking off sick are falling year after year as health care and diet increasingly improve but health too is being transformed: five major hospital projects with capital values of over £10 million have reached an advanced stage in the last six months compared with only one a year for the past ten years.
Just last week, an exciting new £200 million investment was announced for a social security card that will modernise our benefit payment system and crack down on taxpayer fraud.
Of course it will take time to change the culture as we are seeking to do but we are slowly but steadily doing that and we welcome your help in pointing out what needs to be done and where we can improve the way that PFI works.
Let me say a word about our relationship with the European Union and the importance of it:
We must fight together, business and Government, for the things that matter to you in Europe: extending the single market in the areas that still have to be opened up such as energy and pension funds and completing the process in telecommunications. Never forget that the single market, vital and important though it is, is not yet completed. Making sure that others observe the rules that they have signed up to; we invariably do -
We have our own distinctive, British view of how the European Union should develop and in many important ways it is different from the views of many of our European partners but nobody should misunderstand the significance of that difference but if they do, let me make it clear that Britain is in the European Union, it is going to stay in the European Union and it is going to fight in the European Union for the sort of business environment that is right for business prospects in this country and to try and build the sort of European Union with which the British nation are comfortable.
We work together with our European Union partners where we can but that does make it, to my mind, doubly important that when agreements are made those agreements are held to. At Maastricht, I obtained an opt-
I do not believe it is right for politicians to seek popularity across Europe by laying benefits upon people in work at the expense of employers with the absolute certainty that it will make it more likely that those people still out of work will remain out of work because it will be too expensive to employ them in the future. There are 20 million European adults out of work. In this country unemployment, thank goodness, has been falling for two and a half years and is lower than any of our partners in Europe of any significant comparable size to the United Kingdom but that is not true across Europe and I do not see it as a moral position for governments to add costs to employment in the certainty that that will mean that the people who are out of work today may stay out of work for many years in the future. It is not just industrially “bonkers”, I believe it is morally wrong and we will not sign the social chapter.
Let me, however, add another point. At Maastricht our European partners agreed that we would not be part of the social chapter but today there is a threat to that opt-
Mr. President, the most urgent issue facing us in Europe as we meet this evening is the crisis in the beef industry across the Continent and the export ban on British beef and on British products. We are taking every necessary step to tackle the problem of BSE in Britain and we are doing that in the interest of the British beef industry. We wish to eradicate BSE in our own interest, not under pressure from our European partners but in the interest of our own beef industry.
The incidence of BSE has already come down radically, with the measures we have taken it will be eradicated slowly but certainly. The new measures we have taken to ensure the public is safe are costly measures, many are also painful for the farmers and difficult to implement speedily but we are absolutely determined to do everything necessary to ensure there is no risk to the consumer and that is why we have found so frustrating the lack of progress in persuading our European partners to agree on a strategy to lift the ban.
The European Commission, President Santer and Commissioner Fischler have been very helpful. A majority of member states supported the latest Commission proposal to lift the ban on some beef derivatives as a first step but others ignored the scientific evidence, and did not support lifting that ban. The result is that so far we have no tangible progress in the European Union.
As I told the House of Commons earlier today, this can no longer be tolerated. If some of our partners are unwilling to extend goodwill to us we shall have to withhold our own. As long as there is no agreement on a process leading to a progressive lifting of the ban, we shall not be able to cooperate where others need our agreement in the European Union. We shall also actively pursue our legal case against the ban.
I do not embark upon such a course lightly but the scientific evidence so clearly on Britain’s side is being set aside. Progress on lifting the ban to help the British beef industry has to be at the forefront of our efforts in Europe but cooperation must be a two-
This is not an “empty chair” policy. We will be there arguing our corner at every meeting, arguing it as hard as ever but we will not agree to measures where our agreement is needed. This is by no means the way in which I wish to do business in Europe but I see no alternative.
I now seek a rapid agreement through negotiation with the Commission and with our partners. I will do everything I reasonably can to make this possible. We can then return to normal business and nobody wishes to see that more than I do but mercifully, Mr. President, there is more to life than Europe and beef. Although half of our trade is with the European Union, the other half is not and the opportunities here are immense. If I had one wish for our European partners, it would be that the whole of the European Union would lift its eyes, look beyond competition between France and Germany and Portugal and Britain and look at the competition in the Pacific Basin, in the United States, in Japan and in growing ways in Latin America.
The opportunities for we British in those markets are immense. We have fantastic advantages in overseas markets: a strong economic base at home, the great plus of the English language -
As we dine together this evening, Michael Heseltine I am reliably told is in China. No difficult votes, he is in China! -
We have already done -
We live in the most competitive world economy we have ever known. Some people may find that threatening, I don’t. The future will bring new challenges but we can face then with the policies and the principles that are steering this country to a better economic future, we have never sought to duck change or to hide from challenge, we know that change can be turned to our advantage and that is what we have sought to do.
We are ahead of the game with many of tomorrow’s challenges precisely because we have tackled problems that have beset the British economy for decades. Our competitors know that but perhaps we as a nation should acknowledge it more often because if we fail to recognise our own achievement we may not secure and build upon the opportunities that they present.
My ambitions for the future are rooted in the policies and principles that have delivered results. We have policies that have brought low inflation, let us build on them and get inflation lower still; we have policies that have brought us falling unemployment, let us build on that and get it lower still; we have policies that have brought taxes down, let us build on that and get them lower still.
I want this country to have the self-