NB. THIS TRANSCRIPT WAS TYPED FROM A TRANSCRIPTION UNIT RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT; BECAUSE OF THE POSSIBILITY OF MIS-HEARING AND THE DIFFICULTY, IN SOME CASES, OF IDENTIFYING INDIVIDUAL SPEAKERS, THE BBC CANNOT VOUCH FOR ITS ACCURACY ................................................................................ ON THE RECORD RECORDED FROM TRANSMISSION BBC-1 DATE: 18.7.93 ................................................................................ JONATHAN DIMBELBY: Good afternoon and welcome to ON THE RECORD. This week the Prime Minister will face the greatest test of what has already been an exceptionally testing leadership. On Thursday Parliament will vote on the government's opt out from the Social Chapter of the Maastricht Treaty. If that vote goes against him then John Major's future as leader of a Party at war with itself over Europe will be even more in question than it is already. The Tory victory at the last election fifteen months ago, was a personal triumph for the man whom his colleagues had chosen as their leader after they'd dumped Margaret Thatcher. Today though he is more unpopular in the polls than any Prime Minister of modern times, his backbenchers say he is now on probation and he has also been deserted by a Tory press which now reviles him routinely as incompetent, indecisive, and adrift. By any objective measure John Major HAS had a pretty dreadful year. He had promised "vote Tory and the recovery starts tomorrow" - but the pain of recession went on for month after month. There was the debacle of Black Wednesday, the budget which extended VAT to gas and electricity, and the prospect of worse to come. There were the pit closures, the interminable conflict with the teachers and the unresolved scourge of rising crime. There were the resignations - Lamont, Mellor and Mates, Asil Nadir's contribution to Conservative funds, and a host of lesser embarrassments which have all combined to leave John Major looking distinctly beleaguered, defeated at Newbury and threatend at Christchurch. It was against that background that I went to interview the Prime Minister yesterday at Number 10, Downing Street. Prime Minister, you will hardly need reminding that you are now the most unpopular Prime Minister for virtually as long as anyone can remember. How do you explain such a remarkable fall from grace? JOHN MAJOR: Jonathan, I'm much less concerned with what people think of me than what I'm actually able to achieve for them. What I think people might wisely concentrate on is what has actually happened in the last year. It has been a year, I freely admit, of unprecedented problems, difficulties crowding in from abroad and the domestic problems of the recession and a very bitter dispute to be frank, over European policy. But what has actually emerged at the end of that year in terms of economic policy and other things, that's actually what matters. If you and I had had this discussion a year or so ago, would we have imagined we'd have inflation at one-point-two per cent, the lowest level for twenty-nine years? Would we have anticipated interest rates at six per cent? Would you have really thought we'd have had exports growing more rapidly than anyone else in the European Community? Would it have been people's expectation that we were leading Europe out of recession, with growth this year and growth next year larger than everyone else. I doubt most people would have imagined that. That is the reality that has come out of the tough decisions that we've taken over the last year, and it isn't frankly just in the economic sphere. We've tilted, I believe, quite significantly European policy towards the British agenda. We've tried to do that for thirty years, we haven't succeeded, we have now. We've dealt with other issues. We've carried through the health reforms, we've carried forward the education reforms, vital I believe for our future and our competitiveness in every conceivable way. Many other countries have faced great problems with asylum and immigration. We saw those problems, we dealt with those problems, they've gone. When we spoke a year ago, you referred to the problems we might have with the introduction of the Council Tax. It's been introduced, it's been a success. That is the reality that underlies much of what has happened in the past year so I accept the problems that have occurred and the difficulties that have come from them, but the things that have gone right are the things that really matter. DIMBLEBY: Now that's a long list and I want to explore many parts of it, but the fact remains that you are exceptionally unpopular and people blame, not so much the Government for what has gone wrong or the difficulties that they've faced, they pin the blame on you personally as John Major. MAJOR: Politics are personalised, I think that's part of the baggage we accept as Prime Minister, I don't complain about that. No doubt as we move back into a clear and recognisable recovery, we're back in recovery, it's getting bigger every day. No doubt people will observe that in due course as it occurs. I don't complain. I expect leaders to attract unpopularity. It's not a phenomenon here, of course. It's a phenomenon you can see in every one of the industrialised countries. DIMBLEBY: But there has been a sustained critique which you, I expect at the receiving end of it, will regard as an onslaught from the Press that is frequently called the Tory press. Is that critique, has that critique of your leadership, of your style of leadership, of the way you've led the party had validity or not in your judgement? MAJOR: Well I don't frankly believe it has. I mean I'm not here to talk about what the newspapers say, the newspapers are there to write, I'm here to do. I'll get on with what I think is right for the country and I'm not going to change my agenda on the basis of external criticism. But what are the things that really matter to me? What are the things that I would like to be judged on, both now and in the future? The first thing that I said on the day I became Chancellor, long before I became Prime Minister was that I regarded inflation as public enemy number one. I was in no doubt about the difficulties of getting inflation down, the unpopularity of getting it down, the problems that that would cause, but I believed it was essential to get it down; as Chancellor and as Prime Minister, I've consistently pursued policies that will do that. The success of that is evident. The lowest inflation rate for thirty odd years, but there are other things as well if I may say so. European policy has created a great schism in British politics, it's not new, it's been there for thirty years or so. When I became Prime Minister, there was a crack in the ground, and I had one foot on either side of a widening crack about the problems on the European policy. DIMBLEBY: In your own party. MAJOR: In all parties, I think really across the country. But the reality is that we need to play a leading role in how the European Community develops. I don't accept the argument that many people do, that we lose the arguments in Europe. We patently don't. We win the arguments
in Europe. The single market was started by Margaret Thatcher, completed by me, one of the most vital things in the European Community. Enlargement occured because I pushed for it. We are winning the arguments in Europe and our economic interest depends upon us having a leading voice. DIMBLEBY: I will return to those things, but the public will want to know what your reaction is to those newspapers who've been hitherto supportive of Conservative Governments, that are regarded as serious newspapers, the Financial Times, Sunday Times for instance that have consistently said that your government is despite what you are telling me now, rudderless - I'm quoting, driverless, lost. A Prime Minister, says the Sunday Times, tested and repeatedly found wanting. Do you regard that as completely getting it wrong or do you recognise some truth in it? MAJOR: I am not going to waste my time talking about the comments by commentators. They have to commentate, I have to do. (INTERRUPTION) I am prepared to be judged by the results of what occured. I wonder how many of those critics would have anticipated the fact that we would be leading Europe out of recession into recovery in the way we are. None of them. How many of them thought that we'd probably got the Council Tax wrong? quite a few of them. We were right, they were wrong. How many of them would actually have been able to tilt European policy in the way that we've actually achieved over the last couple of years? It is the reality of what has happened, not miscellaneous comment that I need to concern myself with, and that is what I am going to concern myself with. DIMBLEBY: I understand that. The reason why I put it to you is because you said in a speech in quite tough language, 'I'm tired and weary of gossip dressed up as news, malice dressed up as comment'. Well there's ... Do you think that's malice? MAJOR: No I'll tell you why I'm concerned about that. This country, every country in Europe - every industrial country in the world, but this country is the one I'm concerned about, faces some strategic problems, they've been there for a long time and the recession has stripped the masking tape from them and they're more evident. We do need to expand, widen and deepen the industrial base in this country and improve competitiveness. We do need to look at the long term difficulties we face in funding all the social expenditure we want to carry out. Year in, year out, good years and bad years, we're finding expenditure on social matters exceeds inflation by about three per cent a year. We have to look at that problem and address it. We have to address the problem that parts of our education system is less good than it ought to be. I want a genuine public dialogue about how we take the long term decisions to get those things right, and the frustration if I have one is the difficulty of engaging the public in a long term dialogue about these long term issues, and I passionately believe we have to solve. DIMBLEBY: The context in which these criticisms occur which is frustrating to that degree as you describe it is one in which people have said, you will regard unjustly for certain, said that the man is indecisive and they cite again and again the sackings. This was a man who could not bring himself to make tough decisions and get rid of ministers when they were damaging his administration. He left it until the chorus of the press said 'They've got to go.' MAJOR: Well I frankly don't think the Ministers would see it that way, I really don't think the Ministers would see it that way and I'm bound to say, if the chorus of the press had been answered immediately, the press chorused and I got rid of a minister, then I think the press would have a case, but that isn't the position. I will determine who's in the Government and nobody else, and I have to make a judgement, about not what is approved of by the press or other people, but about what is right for the Government and the conduct of public business, and those are the bases upon which I'll make those judgements. DIMBLEBY: But was it right, when there was a clamour to get rid of your Chancellor, Norman Lamont, after Black Wednesday to hold onto him for another eight months and then get rid of him? MAJOR: I think it was right to act precisely as I did. It's always a tough decision to decide to get - to change the Chancellor of Exchequor. I wanted Norman to serve elsewhere in the Cabinet. One has to put the people you have in the positions that you think are most appropriate at a particular time. I thought Ken Clarke was the right Chancellor to lead us into recovery. I think Norman Lamont did a remarkable job during extremely difficult circumstances and I've said that publicly before and I'll repeat it again. I asked Norman to serve elsewhere in the Cabinet. DIMBLEBY: And he refused that. The charge though was that by holding on to Norman Lamont during that period, not only was confidence in Britain continually undermined in itself, but that you only held onto him because you were fearful that if you didn't, the flak would be directed at you personally. MAJOR: Well, any Prime Minister is open to charges of that sort. I could spend my life defending myself against silly charges like that, I've no intention of doing so, I have better things to do. The things I have to do are to get on with the business that needs to be done and I think in terms of the economic changes and the social matters I set out earlier, that is precisely what we're doing. We've been in a silly period, a frenetic period. Politics has been pretty silly, there have been all sorts of funny stories that have appeared, they've run for a while, they've gone away, it's been a sleazy period in that sense but I hope we are through that and we can concentrate on the long-term problems that are vital to this country's prosperity. DIMBLEBY: You say it's been a sleazy period. Has not trust in your government and in your Party been undermined by the impression that you aren't too scrupulous about your own act, by which I mean that you appear to be ready to accept donations to your Party from somewhat dubious sources. MAJOR: Everyone who works in the Conservative Party and there will doubtless be millions of them watching this programme Jonathan, know how we raise our money. We raise most of our money in the constituencies, from businesses who actually support us, who believe in our philosphy, who believe we create the right framework for this country. There are other donors who believe in us, believe in our policies, have an interest in this country, they have a right to remain anonymous if they wish. DIMBLEBY: Like Asil Nadir? MAJOR: There is... DIMBLEBY: Like Asil Nadir Prime Minister? MAJOR: Well let us deal with Asil Nadir. Asil Nadir made donations to a whole series of charities right the way across this country and he also made donations to the Conservative Party in the 1980s when he was seen by everyone as a respectable businessman who was running a very large company. What happened recently when he subsequently ran into great difficulties, we've had a really rather frantic affair, everyone who seems to have had some connection with Asil Nadir perhaps ten years ago has been pursued. I know a man who knew a man, who's mother danced with Asil Nadir. Good gracious, another Tory link with Asil Nadir, it was a very silly period and what has happened to all those revelations that were going to come from Mr. Nadir about the Conservative Party? They've disappeared off the map; they haven't appeared. DIMBLEBY: But then how can - however, people have confidence in the funding of the governing party when they only know the names of those individuals who are on the run. MAJOR: The overwhelming majority of Conservative Party donations come from the constituency parties and from companies who report those donations in their company accounts, that's the fact of the matter. We're a democratic party funded by democratic means and what is the alternative? Is the alternative to be State funding? Is the taxpayer to be ransacked compulsorily in order to support the political parties? I don't believe that is an attractive posture at all. I do see a case reluctantly but I see a case for supporting opposition parties so that they can do their job and oppose the government, there is a case for that but I do not wish to see us move in this country to a position where the taxpayer is the main supporter of all the political parties, that is not what I wish to see in British politics. DIMBLEBY: Do you - on the question of your leadership still, do you recognise at all that the public feels let down, feels that promises haven't been fulfilled, feels that commitments haven't been honoured and therefore, you and your government now are not to be trusted? MAJOR: Which commitments? I gave a clear commitment that we'd bring inflation down, we have done. I gave a clear commitment that I thought it was right for us to carry though the Maastricht Treaty, that is all but done. I gave a clear commitment that we'd tackle unemployment, unemployment is starting to fall. I gave a clear commitment we'd carry through the health reforms, we have done. I gave a clear commitment we'd carry through education reforms, we are doing. I gave a clear commitment we'd deal with the problems of asylum, we have done. I gave a clear commitment that we'd satisfactorily introduce the Council Tax, we have done. What about the things that have happened and have happened successfully but are so often swept aside? DIMBLEBY: So you have no sense that the public rightly or wrongly, you've given a long list there that suggests that if they do feel it, it's wrong, you don't have a sense that they do feel let down by you? MAJOR: What I think the public are concerned about is the way in which much political debate these days is conducted and frankly I share that. There are very complex issues that I would very much like as Prime Minister to be able to get over in a mature way to the electorate
at large. It is astonishingly difficult; what do the electorate see of politics? They see Prime Minister's Question Time, the Prime Minister and the leader of the Opposition exchanging harsh words on a regular basis, I don't think that actually is the most edifying sight in British politics and I don't believe that John Smith does or that Neil Kinnock did before him. What do they see beyond that? Prime Ministers, members of the government make long speeches on a whole range of matters, they get a minute or two on the news, followed by a minute of opposition parties criticising them. We have interviews, we discuss the sort of things we're into, we've been discussing in the last few minutes, not the long term structural problems, so infrequently do we discuss those. Yet out there in the country people are concerned, they want to know what their future is, they want to know are we going to get people back in employment, are we going to improve the education system, is the improvement in the economy going to be sustained, what is the position we are going to have in Europe? What is our position as far as the rest of the Commonwealth are concerned? What is the likely outcome in Bosnia? How do we view the problems in the Soviet Union? It is extraordinarily difficult in an age where the media moves at such pace, I make no particular criticism of it, I simply observe it, where the media moves at such a pace to stop, consider and seriously address matters that I believe concern people in every part of the country. DIMBLEBY: That's tantamount to saying, I can't get the message across, leaders can't be leaders. MAJOR: No, it isn't tantamount to saying that, it's tantamount to saying there are great difficulties in engaging in long term debate. I want to engage in long term debate, not silly, trivial short term issues. DIMBLEBY: Let's look at something which is by no means silly and trivial, and about the trust that the electorate may or may not have in this government. Just before the election as you will recall, you promised: Vote Tory on Thursday and the recovery will start on Friday. The public were entitled to feel very let down by what must be regarded by them as an extremely misleading statement. MAJOR: Well, was it misleading? Was it really misleading? If you actually look at the statistics that always become available historically this economy started growing in June of last year. There was growth in the economy between June and September, between September and October. DIMBLEBY: Much higher - much higher from September - after September, after Black Wednesday .... MAJOR No, it accelerated a little, it didn't accelerate a great deal. It had started in June, there was growth from June to September, September to December, December to March and March onwards. It did start growing then and it is becoming increasingly apparent that that is the case and I ..... DIMBLEBY: Well I will come to that .... MAJOR: Just let me finish the point. DIMBLEBY: Okay. MAJOR: And as far as the statistics over that period are concerned, as more information becomes available it becomes more apparent that the growth was actually starting then before Black Wednesday, shortly after the general election, just as I indicated it would during the general election campaign. DIMBLEBY: But, if you are a voter in an election and you're told the recovery starts on Friday and you discover that for the next nine months unemployment continues to rise, three hundred thousand more on the dole, if there are still repossessions, still bankruptcies, you're liable to think, "I've been misled". MAJOR: But Jonathan, after the 1981 recession there was a tail of unemployment that ran for four years. Not very many months ago it was the fashionable view that unemployment would go up to three-and-a-half million, that it would go on for another two years even though we're clearly now going back into recovery - but no, just a second - it hasn't happened. Who would have forecast in January that we would have had five successive falls in unemployment, that our long term unemployment would be a smaller proportion than almost anywhere else in Europe, and similarly the same with youth unemployment. Very few people would have forecast it, but it has actually happened and it is certainly in tune with what we were saying in the election. DIMBLEBY: But I wonder, Prime Minister, whether the electorate aren't still right to have felt that they were misled with that promise in the election, and I say it partly on the basis of what you yourself said in an interview not very long ago, when you said, "Immediately after the election, immediately after, I said to quite a few people, within the course of the next twelve months I will be one of the most unpopular people in Britain". Clear foresight and you added Prime Minister, "because I could see the way the economic cycle was going". People were going to feel worse, not better. MAJOR: No, no, I'm afraid you've misunderstood the point. I certainly expected there'd be very great difficulty because I knew we would have to deal with many of the long term problems that are becoming apparent, the problems we are dealing with. I was in no doubt about the impact that would be felt right the way across Europe by the problems that actually existed in some continental countries. DIMBLEBY: .....should they vote Tory, life is going to be very difficult still. MAJOR: Life is getting better. The economy is recovering, unemployment stabilised and has started to come down, investment is recovering, growth is recovering. It does take a while for that to work through from the workplace into people's pockets. What is now beginning to happen is not only that unemployment has fallen over the past five months, albeit by modest amounts, I don't make too much of that, I'm delighted it's fallen but I don't make too much of that, but also the fact that those people in work are starting to work overtime again to a larger extent. Now that is the classic sign of an economy that's moving back into recovery as we said it would, and we need to sustain that. DIMBLEBY: Let us then see how confident you are that it can be sustained. Let me ask you first of all, is the pound now at the right kind of level for sustained recovery? MAJOR: I don't think anyone's ever going to talk to you about, for obvious market reasons, about whether the pound is at precisely the right level. What I will say is that as a whole British industry is very competitive, that's not just the exchange rate of the pound, it's productivity. The productivity growth in manufacturing industry has been astounding. Some figures released recently actually indicate that. For the first time in thirty years relative to the Japanese and the Germans, we are becoming more competitive. Now in our adult life you and I can't remember that. It's one of the reasons, even when so much of the European market, our traditional market is depressed, and also other parts of the world. Our exports are still increasing and we're taking a larger share of smaller markets and that isn't just the exchange rate, a sterling change, it's also the increased fact that we are more competitive. DIMBLEBY: Now, given though that the exchange rate
plays a part - and I understand that you're not going to start playing the markets on television - is it your intention to ensure that the pound remains competitive? MAJOR: No, I'm not going remotely into that, and I think you know very well that I'm not. What I am concerned about is to make sure that British industry is competitive and increasingly it is, it's taking the right sort of decisions in terms of wage increases. I know low wage increases aren't popular with the people in work, but they ought to be popular with the people out of work because they make it more likely that those people will be priced back into jobs and they also make it more likely that we'll sustain our exports and sustain the growth in our economy. DIMBLEBY: Given the fact that we are relatively competitive, but also the fact that Europe is now going deeper into recession, particularly Germany and France, our principle partners and competitors in Europe, it is inevitable that people are going to feel extremely sceptical about a sustained recovery when the markets, the export markets upon which that recovery heavily depends are declining in size. MAJOR: Yes, there's some validity in that and I've made that point myself in the past. I mean we export around the world and are doing so increasingly in the United States, the Far East, all the way around the world, but we have very substantial exports to Europe, one of the important reasons for us taking a high profile in the European Community, and there is a collapse particularly in the German, the French and the Spanish markets and that is a worry. It is being offset as far as we're concerned by the fact that we are more competitive. What it means is that we are getting a larger share in Europe of a smaller market in Europe and it does emphasise very clearly the absolute imperative for us to remain competitive and that means relatively low wage increases, it means that we have to contain our costs and keep inflation low.. DIMBLEBY: But aren't people also going to be extremely sceptical when they hear this new talk about partnership and intervention and what they know is the reality of pits that have closed and shipyards that have closed or closing? MAJOR: No, not intervention, partnership and working together most certainly. I do think there's a case for a different sort of partnership with industry and commerce, but let me try and indicate to you what I actually mean by that. There are a range of things that have - that perhaps illustrate this. We've improved ECGD coverage for example so that British firms no longer operate at a disadvantage. DIMBLEBY: Can you just for the benefit of those who aren't acquainted with ECGD coverage .... MAJOR: I'm sorry - it's export credit cover to enable our firms to export more competitively abroad. Our embassies abroad are working much more efficiently, the government is increasingly taking missions of British businessmen abroad to use our political muscle to sell British goods abroad. In a whole range of other areas we're looking at a whole series of projects such as joint finance between the government and industry. What we are not doing is looking at artificial intervention and subsidy to sustain industry. The other great change that I think is necessary that we have in hand at the moment is deregulation, taking red tape away from businesses. There's still far too much of it from Europe and in Whitehall, and often Whitehall adds to the European regulations and makes them more difficult. DIMBLEBY: So when you use this phrase ..... MAJOR: We have to deregulate so that business can do the job it's there for. DIMBLEBY: So when you use the phrase that in the eighties there was a cold bath too far, what you're talking about is a bit of red tape removed, a bit more help for exporters abroad but nothing more substantial than that. MAJOR: Oh, well I think you understate it, and you miss one ingredient. Certainly making sure that export credit remains competitive is a vital point as any businessman will say to you. The government using its political muscle is an important difference. Deregulation is a big matter, not a little matter, for business and exporters and I think the general climate of ensuring that we work with business to promote their interests and consequently the country's interests abroad is a very important matter indeed. DIMBLEBY: Prime Minister, you go on a great deal too about the importance of education for a sustained recovery because you need the quality of people in that economy. People are going to extraordinarily sceptical when they say, "Well it's all very well for him to bang on like that, but for fourteen years this government's been in power. Why on earth haven't they got it right?". MAJOR: Well, I think a great deal has been done in education. that doesn't mean there isn't more to do, A great deal has to be done, but what I have to look at now is what is the position going to be in the next few years. Are we going to be producing from our education system young qualified people who are the equal or better than the Japanese, the Germans, the French, the Americans and others. I need to make sure that we are. Now the top percentage of the young people coming out of our schools are very high quality indeed, we need fear competition with no one in the world, but beyond that there are a large number of youngsters who I do not think emerge from our education system with the same qualifications as they do in some other countries and we want to improve that. DIMBLEBY: So you end up in a slanging match with the teachers that you lose. MAJOR: Well I don't think it is a slanging match, I certainly don't want a slanging match with the teachers. I'll tell you exactly what I want with the teachers, I want to work with the teachers to improve our education system and I mean that right the way through the education system from when they enter school to when they go onto further education. We've said for example, that we wanted about one in three of our youngsters to go into further education by the turn of the century, we're well ahead of schedule on that, we're very nearly there. But one of the reasons we are so concerned about testing in schools, there are two reasons effectively to be frank, one is that if you test youngsters you find out what they do not know and you can then put it right and secondly, I think parents have a right to know right the way through school precisely how their child is doing at school - those are the two things that underline testing and I believe most good teachers agree with us about that...where the difference is is that they think the tests are too bureaucratic, we'll look at that. DIMBLEBY: But if they still don't like it, do you give way again and have the fiasco of this summer or do you say I am sorry folks, I am a leader who feels so strongly about this I am prepared to legislate to ensure that you do do it. MAJOR: I'm not going to permit you to talk me into confrontation with the teachers today. DIMBLEBY: Well you've been pretty confrontational in everything you say. MAJOR: Just one moment, the teachers themselves want to improve the quality of education, they don't object to testing per se. What they are saying is that the tests were too complicated, well we're looking at that, what we want is simple pencil and paper tests that can actually identify what the child doesn't know, we have a report by someone, Ron Dearing who is widely respected in the teaching profession, that I hope we'll get in the next few weeks. DIMBLEBY: And if they don't like it? MAJOR: Well you presume they won't, they may be very keen on it. DIMBLEBY: And if they aren't? MAJOR: We'll face that problem when and if it comes...I so no reason..I see no reason to suppose they are not going to welcome the changes that Ron Dearing makes. DIMBLEBY: Now all these things are part of the longer term that we've discussed. Let me ask you about the immediate difficulties that you still face as a consequence of the recession - a deficit of some fifty billion. The public, therefore, feels itself to be facing a pretty unpalatable possibility. You've let them down already on VAT - they'll want to know are you ready to do it again? MAJOR: We're certainly going to see the deficit close. We've taken a good deal of action to close the deficit. I think it's fair exorcising for a moment why the deficit rose. A very large part of the deficit - people argue about how much - but a very large part beyond dispute is cyclical. That is to say it is the result of the recession. In a recession there are more social expenditures to protect people and incomes fall. DIMBLEBY: You said it's two-thirds. It's a bit of a guess isn't it? MAJOR: Nobody can be precisely sure what it is but it's a very large sum. It's a very large proportion of it. Some people would say a hundred per cent; some economists have said a hundred per cent. I'd say two-thirds, others have said less. But we can agree it's a very substantial part of it. It's because expenditure goes up to protect people and income falls for a raft of reasons - fewer houses sold, no stamp duty; fewer expenditure, less VAT; fewer in work, less tax. So you get a gap. That reverses itself as the economy recovers. We've taken a certain amount of action already on public expenditure and I've made no secret that it will be a tough public expenditure round again this year and neither has the Chancellor or the Chief Secretary. We have tax increases that we have announced to come into effect. So they will go a long way towards clearing what the deficit is. We will certainly look in the public expenditure round at what more needs to be done and it is necessary for it to be done, because if you have a long.. a large deficit for a long period it will push up interest rates - that would be very damaging. But I think there are two other points worth making. We are not alone in this problem. This problem exists in every one of the countries gathered round the G-7 table, with the exception of Japan. They all have this problem. But the final point, if I may Jonathan on this point, is when we were in the recession I heard no-one saying to me "Don't protect people in the recession". I heard no-one saying to me "Don't protect firms in the recession, because of the impact of it". We were right to do so, and if we hadn't done so we'd have faced a bigger problem today. DIMBLEBY: But during that recession, you said in the run-up to the election, I've made the pledge in the past, you said, for VAT, and I have made the point before - we have no need, no plans to extend the scope of Value Added Tax. People, as you well know, feel very let down by your reversal of that pledge. MAJOR: Nor had we Jonathan. If we had I would have said so. DIMBLEBY: But I thought you said you knew exactly what was happening to the economy. So you got it wrong? MAJOR: Let me respond to you in full. We had no expectation that that would be necessary. You've seen what has happened in the economy - we are not wholly an island, except geographically. We have to reflect what happens in the world economy. Is there anybody watching this problem who doubts that the economy changed quite dramatically last year? You yourself referred to what happened in Germany, what happened in France, what's happened in Spain, what's happened in Japan, what's happened in the United States. They all have an impact upon us. If we had any plans to do that, we would have set those plans out. DIMBLEBY: But was it not, in truth, misleading to say to the public "Don't worry" - this was the General Election - this was the general message "Don't worry - vote for us" you said.... Just let me make the point I was suggesting you were seeking to make in that campaign to the public - as I'm sure you may feel you'll agree with it. What you were saying was "Vote for us, vote Tory - taxes go down. Let me reassure you we ain't going to do anything about VAT - trust us". The result of what happened is that people do not trust you. MAJOR: We faced at that stage not just the single extension of VAT to which you've just referred. We were facing accusations, day after day, from our political opponents at the time, without any foundation whatsoever that we were planning to increase the rate of Value Added Tax from seventeen and a half per cent to twenty-two and a half per cent. Not only were we not planning to do it, we saw no need to do it, it hadn't been considered, it hadn't been discussed, it wasn't remotely on the agenda; and yet day after day my colleagues in interviews like this and in the newspapers and elsewhere were facing charges that that was the case. It wasn't the case. DIMBLEBY: All right. Now then can I ask you - are you able to reassure the public who are wondering whether or not this recovery is going to be sustained in their own pockets, whether you can give them the same undertaking as you gave them so happily in the election that you don't have need or plans to extend VAT beyond where you have already extended it? MAJOR: Well, I dealt with that point a moment ago when I said we were seeking to control public expenditure. DIMBLEBY: Does that mean that you can give them the guarantee on children's food, on food, children's clothes? MAJOR: Just one moment and I will come on to those points. We need to examine exactly how much we can save in public expenditure. Exactly how much growth will eat away the deficit. The answer is we don't have plans. I don't know exactly what the circumstances will be in the future and for precisely the reasons you've just put to me at the moment, that we were forced to change our mind by circumstances, it would be unwise for me to rule anything absolutely definitively in or absolutely definitively out. What I can say to you is we have taken action on the tax front, we have taken action already on the public expenditure front, we are seeing growth and we are certainly planning to take more action on the public expenditure front. When we have done that we will have to look and see. DIMBLEBY: But at the moment you say, in all conscience, we have no plans... at the moment we have no plans, is the word used, we have no plans, and at the moment so far as you judge it, no need to extend the scope of VAT beyond energy into food, into children's clothes, into shoes. MAJOR: You mustn't put words into my mouth. I set out the position precisely as it was and I've nothing to add to that particular point. The Chancellor of the Exchequer will have to look at things as we run up to the Budget. DIMBLEBY: The Chancellor of the Exchequer, only this weekend, has said that he has it in mind - I'm not quoting him exactly - he has it in mind that VAT in itself, an extension of VAT, is a perfectly valid way of raising more money. MAJOR: He has refused to rule anything out or anything in, and I think on the background of what has happened in the world economy in the last few years that must be a wise thing for a Chancellor to do. The moment you invite me to rule one thing out, you'll move on to another. DIMBLEBY: I didn't ask you to rule anything out. You used the word - Prime Minister, with great respect - you used the word we have no "plans" in respect of VAT. MAJOR: Once one begins to rule in or out any individual thing - we have learned from experience - the caravan rolls on to something else. It is better not to get involved in that. DIMBLEBY: Just one more thing and it's just to clarify what I know that you.. and you know you've actually said in this interview: you are not ruling in or ruling out, I understand that, because of the change in circumstances that might occur. But at the moment you have no plans on VAT to extend it? MAJOR: That's certainly the case. DIMBLEBY: Now can I put further to you that if you do raise taxes - personal taxes, direct taxes or extend VAT further - then regardless of whether it's necessary or not in your judgement, your credibility will be in tatters, given the pitch that you've always made to the public. MAJOR: Well, you're predicating this on an "if" basis. I'd rather talk about what we are doing and what our plans are in areas where we can make proper plans rather than predicate "if" questions. I'm not going to get involved in those questions. DIMBLEBY: Can you be confident under the circumstances that you will honour all your electoral commitments on spending? MAJOR: We set out some very precise areas where we have specific election commitments and we have made it clear - the Chancellor's made it clear again in the last few days - we will honour those specific commitments. DIMBLEBY: Child benefits, pensions and so on. And, and... so when my.. go on. MAJOR: Let me make it clear. There are some areas where we think it is attractive, where we can afford it, to spend money. We don't instinctively and ideologically want to cut spending in every area. There are some areas where it is attractive and it is necessary. DIMBLEBY: Including single parents? MAJOR: There are demographic areas just a minute.. there are demographic areas where it is necessary to increase expenditure. There are going to be more people of retirement age, they're going to be living longer, doctors and surgeons are continually going to find more ways of treating people. We want to improve that. We will need to look for resources to cover those areas of expenditure by making savings elsewhere. But what we do say is - like every individual household - we have to bring our expenditure as a whole into what we can afford, and that means we have to pick priorities. Don't ask me before the patchwork is complete to pick out each and every one of those priorities, for I can't. What I can say is there are certain areas with evident priorities, but we will have to wait until the whole patchwork becomes clear. DIMBLEBY: But the manifesto commitments you will stick to. When Michael Heseltine said earlier - and it happened on this programme - said that if you rule out options because they're manifesto commitments, he added, well, you won't then just have a fifty billion deficit, it will be higher. MAJOR: Well, I think we'll have to wait and see about that. The borrowing requirement yesterday was a good deal lower than many people imagined in terms of the fifty billion deficit. I think people have to take into account the revenue from growth, the revenue from the tax increases already announced, and the savings from the public expenditure we've already announced. DIMBLEBY: You are saying in effect, given these problems of spending that you face and the demographic changes, that down the road, even if we have a sustained recovery, Britain is going to be too poor to pay itself the kind of benefits that we believe now, across the board, are appropriate? MAJOR: What I'm saying is in every single country, industrial country in the world - it was clear at Copenhagen amongst the whole of the European Community and clear right the way across the G-7, the most powerful nations in the world - that in order to cope with the demographic and other increases in expenditure that will be necessary, we will have to look
for savings elsewhere. The alternative to that is an ever growing tax burden upon everyone, large incomes and small, that would damage us in a raft of ways. Now that isn't a sensible way in which to deal with it. DIMBLEBY: I understand that argument... MAJOR: Let me finish because it is vitally important. This is a long-term problem. It's not just a short-term problem for this year or next year. There have been two things that have been happening over the last twenty years or so that is now crystal clear. No just in this country, I emphasise, but right the way across the industrialised world. First is that unemployment has been on an underlying rising trend throughout the whole of that period and in many countries the levels of long-term unemployed is a good deal worse, are a good deal worse than they are here. We need to look at structural economic changes to cope with that. And, secondly, is that the growth in the whole levels of social cost expenditure have outstripped what even the most powerful economy can afford, and if you look across Europe - the Germans have just made Draconian changes, the Dutch have, the French have, the Spanish have - every country is doing it. It's not a unique problem to hear - it is sensible and prudent housekeeping in changing circumstances. DIMBLEBY: On the matter of Europe, Prime Minister, you face a not insignificant test of leadership this Thursday when the House votes on the Social Chapter. It is clearly going to be a very close call. How vital for you is victory in that vote? MAJOR: Let me touch upon the issue of the Social Chapter. I have opposed the Social Chapter very vigorously. Let me tell you why - there are several reasons why. Firstly, because I believe it will add to costs on employers and it will, therefore, cost jobs. I want to see less people out of work not more people out of work, so I oppose it for that reason. The second reason is that it is a most massive extension of authority to Brussels. It would give them power across a whole range to produce directives that would add further and further costs to British industry and commerce. I do not believe that is the right thing to do and I don't believe any Conservative Member of Parliament believes it's the right thing to do. I can understand why Labour like it - because it does effectively introduce Socialism by the back door. I am baffled as to why the Liberals do it, except that they are by instinct Federalists, they do believe in transferring more power to Brussels. DIMBLEBY: Now given your passionate commitment on that matter, you have always said that you would not ratify the Treaty with the Social Chapter. Is that still your position? MAJOR: We're going to win the vote on Thursday, I believe, and I'm not entering into ifs and buts, but let me just come back to the question of the Social Charter again. I found something quite interesting the other day - I think it is a fairly unprincipled series of opponents that we have across the floor of the House on this Chapter - let me read something to you, and if you'll forgive me I'll read you a quote: "I believe what is now being put forward in the Social Chapter may well lead to a form of Euro-sclerosis. The Social Chapter in the Maastricht Agreement it seems to me is a really worrying attempt by Europe to try and rebuild in Britain the things that we have dismantled over the last twelve or fifteen years". I agree with that, absolutely. Who said it? Chancellor of the Exchequer? Me? Douglas Hurd? It was Paddy Ashdown. What on earth are the Liberal Party doing if they believe that, supporting the Social Chapter? DIMBLEBY: Now if I may say given that it leads in your view to a form of Euro-sclerosis... MAJOR: No, no, no, no. That it his view. DIMBLEBY: And you share the view. Given that it has all these qualities, I have to take it that you, under no circumstances, would allow yourself to ratify a Treaty with the Social Chapter. MAJOR: The situation Jonathan is purely hypothetical because I cannot believe, given the damage of the Social Chapter, that it is not going to be defeated. Let us consider... DIMBLEBY: Prime Minister, as Leader of your Party, on a great matter of principle.. MAJOR: I have told you... you are dealing with hypothetical matters. I'm telling you the situation isn't going to arise. On Tuesday of next week, unless something quite extraordinary happens, the Bill approving the Maastricht Treaty - the European Community's Amendment Bill - will complete its passage in the House of Lords. It will be law, it will get Royal Assent. Here is a free-standing debate on the Social Chapter and I don't believe - given the nature of the Social Chapter - that Conservative MPs when they consider what it means and what it can do are going to do other than support the Government in that division and I am simply not.. we are wasting our time if we go further. I am not going to get drawn on what tactics might occur if something else happens. DIMBLEBY: I don't seek to ask you about tactics. I'm asking you about principles. If it was hypothetical just now whether or not you would support, it was hypothetical on the previous occasions when you have said, unambiguously: "I would not sign a Treaty with the Social Chapter". MAJOR: I don't think I can make it any clearer. I don't believe the circumstance is going to arise. I do believe on Thursday that people will examine the issue on its merits. The issue is the Social Chapter. Is it good for this country or bad for this country? I believe it's bad for this country. I don't know of anyone in the Conservative Party who doesn't believe that it's bad for this country and perhaps more important in the eyes of many of your viewers, I don't know of a single employer, large or small, who does not believe that we would be unwise to have the Social Chapter. It is a Charter for unemployment not Employment. Now I don't see how anyone can support that and, given what they have said themselves, I don't understand how the Liberals can. DIMBLEBY: Now given that this is an important matter of principle for you and you are asserting your confidence in the matter, let's get clear, however, what the constitutional position is. I'm not asking about what happens if you lose the vote. If you WIN the vote, as you say you will do, I presume that that gives you the authority to go ahead and ratify. Is that correct? MAJOR: Well, we now face a Court case, and I think the Court case.. the Court case may inhibit ratification, but that would be the only inhibition... DIMBLEBY: If you get the approval you can ratify? MAJOR: If we get the approval we can ratify. DIMBLEBY: Now that suggests if you DON'T get the approval you can't ratify, as a matter of constitutional logic. MAJOR: With great respect to you Jonathan, I have indicated that I am not going to get involved in "what ifs". I believe we are going to win and we will be able to go ahead and ratify, subject only to the difficulty that may arise over the Court case. DIMBLEBY: What you've said is that if you get the vote in favour you then can go - subject to the Court case - to ratify. Now the Clause in the Bill which you approve - which is why you're having this Debate, this Motion, on Thursday - says the Act shall come into force only when the House of Commons has come to a resolution on the Motion. What does resolution mean there? MAJOR: Oh well, we're going to debate it, we're going to reach a conclusion on it, we are going to defeat it, that's a resolution. DIMBLEBY: But the resolution can mean several things. It can mean a vote that goes in favour of your position or it can mean simply that a vote was taken. MAJOR: We have spent a long time dancing on the head of a pin with legal advice on a whole series of occasions during the process of this Bill and I think you know and I know and probably most people watching this interview know. I'm not going to get drawn down legal niceties. I think most of this is going to turn out to be irrelevant. We will have agreement ... (TALKING TOGETHER) MAJOR: We will have the debate on Thursday. We will reach a conclusion of the resolution because we will win the vote on Thursday. DIMBLEBY: Now that suggests that a resolution does mean that we have to win the vote in order to go ahead. MAJOR: Well I've indicated that we are going to win the vote in my judgement. I cannot conceive that Conservative MPs concerned about unemployment are not going to vote against something that they believe will damage employment and hand massive powers from the United Kingdom to Brussels in a whole stream of directives that will add costs to British industry and British commerce. It defies logic that they would do so. DIMBLEBY: Now if it's the case that ratification depends upon a vote in favour in this motion on Thursday which is a position that is the correct position to take? MAJOR: Well I've just indicated to you Jonathan that I'm not going to get involved in the legal niceties of this. I believe we will win the vote on Thursday and then subject to whatever may be the outcome of the court case, and I've only just heard about that a day or so ago, we will then be able to go ahead and ratify, and I expect to be able to do that. DIMBLEBY: Just one more thing, because people watching this programme, individuals who may want to speak about this to their Member of Parliament, Members of Parliament who say he's the leader and I want a lead from him, will want to know whether or not the outcome of that vote determines whether or not ... MAJOR: The lead is quite clear, the lead is quite clear Jonathan, let me leave nobody in any doubt about the lead. I believe in the wider European interest for us to ratify the Maastricht Treaty is very important. That is why, though on a number of occasions I could perhaps have ditched it, I've been under heaven knows enough pressure to do so, I believe it is right in the long-term interests of this country, and its influence in Europe to approve this treaty. If we're to build in Europe the sort of open market, free trading, wider Europe that I want, we must have that influence in Europe and that is why I feel so passionately about this particular bill, I equally feel that the Social Chapter would be very damaging to this country and I shall be advising my party to vote against it, I expect my party to vote against it, I expect them subject to the court case to be able to ratify the Treaty and I then propose to move onto the wider European issues of importance to me, widening the Community and making sure that the Community operates in a more democratic matter with a completely open and free market. That has always been my ambitions for the Community and I don't propose to be pushed off them. DIMBLEBY: But given that passionate commitment, Prime Minister, it will seem remarkable to people, not least in your own party that you are not willing to say what you've said so many times in the past 'I will only ratify a Treaty which excludes the opt-out'. MAJOR: We are facing a vote on Thursday that we're going to win. What you're inviting me to do repeatedly, and I decline to do, is to get involved in what happens if. DIMBLEBY: That's not a what happens if, that's a statement of principle, Prime Minister. MAJOR: I'm not going to get involved in it because I can tell you what will happen. Conservative MPs will realise that the Social Chapter is damaging to this country, damaging to employment, hands powers to Brussels and the Government will win the division on Thursday and we will then ratify the Treaty. Now I hope that is quite clear. DIMBLEBY: It's up to a point clear, it's as clear to this extent, as you say if you get the approval then you'll be able to,
subject to the court case, go ahead and ratify which suggests to me that you need the approval in your own minds eye. Let me put this to you, are you a man who is willing to defy majority will or not in Parliament? MAJOR: Well again you are asking what if. DIMBLEBY: A matter of principle. MAJOR: Let us consider Parliamentary will then Jonathan. Parliamentary will, by Thursday will have approved the Maastricht Treaty. We are discussing discreetly the Social Chapter. We will win on the Social Chapter. We will then go ahead and we will ratify, subject to the court problems, the Treaty. DIMBLEBY: Prime Minister, is this a vote of confidence in you on Thursday. MAJOR: It's a vote on the Social Chapter. The motion is quite clear. It is a vote on the Social Chapter and it is a vote that the Government are going to win on the Social Chapter. DIMBLEBY: Is it a matter of confidence in you. MAJOR: To vote on the Social Chapter, Jonathan, it's perfectly clear what the vote is about. It couldn't be clearer. DIMBLEBY: So your job's not on the line over this. MAJOR: It's a vote on the Social Chapter. A vote that's important that we will win and will enable us then to proceed with a Treaty that I believe is essential for us to maintain our authority in Europe and build the new Europe. DIMBLEBY: And in your view has no implication about whether you remain or do not remain Prime Minister. MAJOR: I've indicated to you quite clearly Jonathan, it is a vote about the Social Chapter. DIMBLEBY: We've explored that relatively thoroughly. You've got another old test coming up in a few days time which is much more immediate in terms of the local political situation. Can you afford to lose Christchurch? MAJOR: We have a very good candidate in Christchurch and I very much hope we're going to win Christchurch. By-elections are always difficult for the Government of the day, that's been the case for twenty or twenty five years, not just in this country. I think President Clinton lost one or two rather serious by-elections just after he became President. It is a fact of modern political life, but I very much hope we're going to win in Christchurch, I'm sure we have the best candidate, very experienced candidate, Robert Hayward (phon) I think he's going to win, I look forward to welcoming him to the House of Commons. DIMBLEBY: Peter Brooke, your colleague issued a pretty clear warning that the defeat of Christchurch, because of the small majority that you have would increase the risk of an early general election with the possibility that Labour might ... MAJOR: No, no, no that's not remotely what Peter had in mind... DIMBLEBY: Let's clarify what he had in mind for him. MAJOR: Well I'll tell you perfectly clear. If you have a majority in the teens and you lose your majority by one, then clearly that's very unattractive. If you go on losing your majority by one, in due course you don't have a majority. But I don't expect that to happen and neither does Peter expect that to happen. He was pointing out logically that if your majority goes down by one, life is more difficult, there's nothing very newsworthy about that. DIMBLEBY: Well it would be of course if that's what happened, if the outcome is what he warned, a Labour government might be elected in a general election as a consequence. MAJOR: I must say I think that's extremely unlikely. Labour are in a political Jurassic Park (phon) as far as I can see. DIMBLEBY: Prime Minister do you accept what many in your party have said openly, and rather more say privately, that you are now as Prime Minister on probation? MAJOR: No I don't. I'm not going to waste my time with this extraneous often anonymous chat. What I am going to do is to concentrate on the things that matter to me. I'm not in politics just to be Prime Minister, I'm in politics because there are things I want to do. I want a low inflation economy, I want this country back in growth, I want wider manufacturing industry, I want to see our health reforms carried through, our education reforms carried through. I want to see what we can do over time, over the general standards of life in this country, I think there is a greater intolerance from one citizen against another citizen. I think these are things that it's legitimate for a Tory government to address and perhaps above all, in the minds of the public at the moment, we are currently engaged in one of the most serious attacks on the problems of crime and law and order that we've had for a long time. There's been a series of legislation gone through in the last year, we've taken decisions to take previous convictions into account which I think will be welcomed by the public. We've decided to crack down much harder on people who offend while on bail. The centre piece of next year's parliamentary programme will be Home Office bills and in particular a very large Criminal Justice Bill that will deal with squatters, raiders, new age travellers and a whole range of other issues like that, so these are matters that are important to me and I propose to continue with those and not worry about extraneous chatter. DIMBLEBY: Given that you must be extremely hopeful that that extraneous chatter doesn't turn into a leadership challenge. MAJOR: Well I don't think that that is remotely likely. When one looks at what has happened over the past twelve months
look at the economic circumstances we were in twelve months ago, look at the economic prospects as we move increasingly into recovery day after day, there is a lag between reality and perception and I understand that, people are still smarting from the difficulties of the recession, but we've come out of that, we're coming back into growth, people are getting back into overtime, they are getting back into work - I believe we can reignite the confidence that this country wants to move ahead and I passionately want to see that through. DIMBLEBY: Prime Minister, thank you very much for sharing those thoughts with us. MAJOR: Thank you. ...oooOOOooo...