Below is the text of Mr Major’s statement to the House of Commons on 9th June 1993 in the Economic Debate.
The Prime Minister (Mr. John Major) : I beg to move, to leave out from House' to
the end of the Question and to add instead thereof : welcomes the widespread indications
of economic recovery in the United Kingdom at a time when many other major economies
are in deepening recession ; recognises that the interests of industry are at the
heart of the Government's policy and acknowledges the comprehensive programme of
training and employment opportunities for unemployed people that the Government has
put in place; welcomes the Government's commitment to its Manifesto pledges including
its commitment to improving the efficiency and effectiveness of public services through
the Citizen's Charter ; deplores the scare-
Before I turn to the substance of the debate, I wish to say a word or two to my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) regarding his remarks at the commencement of today's debate. In his speech, my right hon. Friend spoke of a number of matters of very great importance, including the case that we have discussed on many occasions over the past two years for an independent central bank.
I share my right hon. Friend's loathing of inflation. That is an issue that we discussed
frequently. We both saw the case for an independent central bank, able to take decisions
on the implementation of monetary policy. There is a genuine case for that. I do
not dissent from my right hon. Friend's remarks about it. The very real concern that
I have always faced is one that I believe is spread widely across the House : the
need for accountability to Parliament for decisions on monetary policy matters. Were
a way to be found to get the benefits of an independent central bank without the
loss of parliamentary accountability, my views would be very close to those of my
right hon. Friend, but I have to say to my right hon. Friend-
Also, I entirely share my right hon. Friend's vision of the economic goals of this
Government and of the difficult path that we have had to follow to achieve and maintain
low inflation and restore sustainable growth and employment. My right hon. Friend
Madam Speaker : Order. The House must settle down. Hon. Members do not have to listen, but whoever is speaking has to be heard. There is a great distinction between those two statements. The Prime Minister.
The Prime Minister : My right hon. Friend and I faced crises both before and after
September last year. We worked together towards objectives that we shared, and we
were always agreed as to our main goals : low inflation, sustainable economic growth,
an increase in prosperity for all our people as medium and long-
Dealing with the problems of a small majority is a fundamental fact of democracy
that no one dare or should even attempt to overlook. However, as we have shown in
the battle over inflation and in our pursuit of European policy, against great difficulties
in this House, we were not prepared in the Government to allow short-
I am grateful to my right hon. Friend for his support and help throughout the past two and half difficult years. I acknowledge the difficulties that he has faced and the courage with which he has faced those difficulties, and I accept the support that he has offered to the Government for the future. I welcome the opportunity to debate economic policies at a time when output is up, exports are up, productivity is up, confidence is up and, as announced today, when business starts are up.
The right hon. and learned Member for Monklands, East has just made the speech that
we expected of him. At the end of it, we are no better informed about his economic
policies than we were at the beginning of it-
What does seem right about the right hon. and learned Gentleman was said by the right
hon. Member for Chesterfield (Mr. Benn). I remind the right hon. and learned Gentleman
what his right hon. Friend said about him : "I do not think that Members of Labour's
Front Bench would have even two ideas about what to do with the economy if they came
to power a series of sound bites glued together and called an economic policy is
not an economic policy."-
Today's debate goes right to the heart of the fundamental divide between the Conservative
party and the Labour party. The Labour party stands for higher public spending, higher
taxation and more state interference in business and industry. We stand for controlling
public spending, bringing direct taxation down where we can and getting the state
off the backs of businesses and individuals. Let me deal with one matter that was
fundamental to the right hon. and learned Gentleman's speech. Let me turn immediately
and clearly to social policy. I did not come into politics to dismantle the welfare
state. I have no intention of doing so and neither does my party. At the moment,
in different parts of the country there are many vulnerable people who are worried.
They are worried because the Opposition systematically, day after day, leak after
leak, sound bite after sound bite, have sought to frighten them. The Opposition have
peddled scare after scare-
Several hon. Members rose -
The Prime Minister : I will give way later. The Opposition have peddled the man to
spread scare stories; surely not a man to condone scare stories, so let me be charitable
to him. Perhaps he did not know-
What did the hon. Member for Holborn and St. Pancras (Mr. Dobson) say? He said that the Government were "threatening to cut pensions and benefits for the worse off." In the autumn statement 13 days later, pensions and benefits rose. I am sure that the right hon. and learned Gentleman did not know what his hon. Friend would say, because he is an honourable man and would not have sanctioned it.
It was the right hon. and learned Gentleman's party that repeatedly claimed that
trust hospitals were leaving the health service. They were not : the Labour party
knew that they were not, yet it needlessly scared sick people for a vote or two,
time after time. The right hon. and learned Gentleman could not have authorised that,
because he is an honourable man-
The right hon. and learned Gentleman claims that the Conservative party won the election by telling untruths. Let me remind him about that election. It was his party that published 10 patient case histories and had to withdraw them when it turned out that it had made them up. It was his party that made up untruths about a sick little girl and spread them across the country. That is the party that dares to talk to us about standards. There is a word for that, but it is not parliamentary.
Let me turn to the subject of public spending. The Government know that, if the economy
is to grow, the tax man cannot take more of the proceeds than the country can afford.
In the Conservative party, we understand that people want more money in their own
pockets and do not want the Government to spend their money for them. Of course,
in the recession, spending had to increase. I do not apologise for that increase
Mr. Calum Macdonald (Western Isles) : Will the Prime Minister give way?
The Prime Minister : Later. During that recession, not only did expenditure necessarily
rise but income necessarily fell and that added to the borrowing requirement. Even
though a great deal of that will reverse as growth returns, it is going to take time.
That is why we have embarked on the public spending review. Governments have to take
difficult decisions. We have to face structural increases in public spending, as
any Government would. There are demographic changes, changes in student numbers and
more elderly people, especially the very old. As we address those problems, the Opposition
gaily spread mischief-
The right hon. and learned Gentleman cannot run away from what he said : "We" -
How responsible the right hon. and learned Gentleman is. I suppose that that comment shows that he wants to grapple with real problems, but when he faces other audiences, he wants to rule everything out. Which is the real right hon. and learned Gentleman? The gritty, determined facer of problems who wants to examine everything where nothing is ruled out, or the wriggler, twisting and turning, saying one thing to one audience and another thing to another audience?
Mr. John Garrett (Norwich, South) : Could the Prime Minister, First Lord of the Treasury, tell us what he was doing during the long period of recession, which has caused so much misery throughout the country? Was he looking the other way? Was he train spotting? Was he walking into cupboards? Has there ever been a more wimpish approach to the problems that face this country than that which he has shown?
The Prime Minister : I shall tell the hon. Gentleman directly : we have been presiding
over a policy that brought inflation down to 1.3 per cent. and interest rates down
to 6 per cent. so that this country is now poised for the largest growth in the European
Community this year, next year and probably for the years beyond that. We have been
taking the long-
The Opposition will be glad to know that our review of public spending will be careful and thorough. There will be two criteria : are any changes fair, and are vulnerable people protected? When the answer is no, we shall not make the changes. When the answer is yes, we shall set out to the House the implications of those changes. There are no soft options. The Government's duty is to examine them all and pick the right ones. We know that we need to reduce public borrowing, which is why, in the last Budget, we decided that some increase in revenue was necessary.
We decided to introduce value added tax on fuel and power, not least because it would
help meet our Rio commitments, commitments that the Opposition urged us to extend.
We had every reason to expect cross-
What did the Labour party say? It said : "Zero rating on items such as food, fares,
books and children's clothing should remain as an essential part of the VAT system."
That was quite clear. It continued : "We will also use the tax system, as well as
regulation, to help protect the environment." That can mean only one thing. In the
list of zero-
When we introduced VAT on fuel and power, we made it clear that there would be extra
help for less well-
Ms Harriet Harman (Peckham) : So have the voters.
The Prime Minister : So did the voters, says the right hon. Lady. What the right
hon. and learned Gentleman did not mention is that he was the Energy Minister who
let electricity prices rise. What was the increase-
There is another case where the right hon. and learned Gentleman's actions do not match his words. Today, he again attacked our borrowing levels, but his election promises would have put up borrowing way above the present level. He is still at it. "Let's spend £6 billion of capital receipts," says the right hon. and learned Gentleman. "Let's spend an extra £1.5 billion on public sector pay." The shadow Chancellor says, "Let's renegotiate our rebate and pay more to the European Community."
Is there any area of Government spending that the Opposition are prepared to cut? Perhaps the shadow Chancellor can tell us. Perhaps we could have another sound bite to tell us where he would find the necessary savings. Or perhaps the deputy leader of the Labour party can tell us; after all, she came into government to implement the cuts in education that her hon. Friend the Member for Eccles (Miss Lestor) refused to make.
Mr. Geoffrey Dickens (Littleborough and Saddleworth) : Will my right hon. Friend explain why, if the Opposition are sincerely worried about the disadvantaged people of this country, they demand more and more overseas aid, day in, day out? [Interruption.]
Madam Speaker : Order. We all like a little bit of fun and hilarity, but we also want to hear the Prime Minister.
The Prime Minister : The fundamental point about overseas aid is that, in order to
sustain it as the Government have done, one needs to pursue the right economic policies,
as we have also done. I am glad that the motion mentions manifesto promises-
Mr. John Fraser (Norwood) : When the Prime Minister went on his trip down memory lane to Brixton and other ethnic areas, did he tell the people that he was going to take away the right of appeal for visitors?
The Prime Minister : The hon. Gentleman knows as well as any hon. Member that the
great improvement in race relations in this country is directly related to the firm
but fair immigration policies pursued by this Government. I am surprised to hear
him venture down that track, in view of his record of favouring good race relations.
We promised to deliver low inflation, and we have delivered on that promise. We promised
to resume economic growth, and it is now resuming. Inflation, at 1.3 per cent., is
at the lowest level for 30 years. Interest rates, at 6 per cent., are the lowest
in the Community. There are now too many signs of recovery for even the Opposition
to ignore them. Manufacturing output has increased for months in succession and unemployment
has fallen three months in a row. It is too high-
It is certainly sooner than the hon. Member for Dunfermline, East (Mr. Brown) expected,
because, after the Budget, he said : "I make one Budget forecast-
Madam Speaker : Order. Hon. Members must come to order. The bawling and shouting coming from the Back Benches this afternoon is utterly disgraceful. [Interruption.] I know who the Members responsible are, and I need no one to point them out for me.
The Prime Minister : Some time ago, the right hon. and learned Member for Monklands,
East admitted : "we change our policies as we move towards a different election,
we'd be a very foolish Party if we went into an election in 1995-
It was not Milton Friedman who said that, nor my right hon. Friend the Chief Secretary,
nor even Lord Desai-
I know that the exchange rate mechanism and economic and monetary union are matters
of some importance to hon. Members on both sides of the House. Since we left the
ERM, there has been substantial debate about monetary policy and the possibility
of economic and monetary union. In the negotiations at Maastricht I sought and secured
The economies of Europe are not remotely ready for one currency throughout the 12,
soon to be 16, countries, and I believe that they will not be ready -
We have sought reform of the exchange rate mechanism. I make no secret of the fact that I prefer stable exchange rates, and so does industry. But I cannot accept that the present operation of the ERM is satisfactory. Sterling was forced out, in the circumstances described by my right hon. Friend the Member for Kingston upon Thames, but so was the lira. The franc, the peseta, the escudo, the punt and others have at different times been put under great pressure. Certainly, I could not recommend that sterling return at present. We should need greater convergence between the monetary policies appropriate for all the Community economies, and we should need to be satisfied that the system would be operated to the benefit of all its members.
In January, I made it clear that those circumstances would not apply this year. I
now doubt whether they will apply for some years ahead-
Sir Peter Tapsell (East Lindsey) : There will be a widespread welcome throughout the party for what my right hon. Friend has just said to the House, and there will be great support for the policies that he has enunciated throughout his speech.
The Prime Minister : I am grateful to my hon. Friend, and delighted to have a party
at ease with itself. It is clear that the Labour party has no policies at all, and
certainly no economic policies. When it had policies, they lost it the election.
As the hon. Member for Brent, East (Mr. Livingstone) put it-
And now Labour has none. That is not my view alone. It is clearly shared by Mr. Edmonds
of the GMB, the union that sponsors the Leader of the Opposition-
The Labour leadership cannot have been examining economic policy, because the shadow
Chancellor would not recognise economic policy if it gripped him by the windpipe.
The Labour leadership may have been absorbed in its falling membership, or it may
have been trying to fight off the defeat of the right hon. and learned Gentleman's
party reforms. There is one area of total agreement between the right hon. and learned
Gentleman and myself : he wants one man, one vote-
So long as the Labour party remains subordinate to the trade unions in policy, a paid for and wholly owned subsidiary of the trade unions, Labour Members will sit on that side of the Chamber. I shall tell the right hon. and learned Member for Monklands, East why he and his party fail to convince even the leader of the union that sponsors him. It is because Labour is a party without policies and without principles that it will remain, in the short and the long term, a party without power.