Below is the text of Mr Major’s speech at the North East Businessman of the Year Award Dinner in Newcastle on Tuesday 7th January 1992.
Today I have been able to see at first hand the continuing strength and the enormous diversity of the North East economy. This morning I visited Vickers – one of its oldest and most famous engineering firms. I spent a most enjoyable time clambering around Vickers’ new Challenger II tank. And inevitably my thoughts went back to the last occasion when I climbed on top of a Challenger tank. Just ten months ago in the desert in Kuwait.
Everyone who went through the Gulf War knows of the efforts made by the Vickers Gulf team. Their ingenuity, their persistence and their sheer hard work ensured our tanks, guns and equipment were ready for action at all times. It made a vital contribution to the war effort – and I was delighted to see that contribution suitably “honoured” last June. It was thoroughly well-deserved.
At Newcastle Business Park, I opened the new British Airways flight reservation centre. BA is, of course, just one of many enterprises attracted to the new Newcastle Business Park. With some £140 million in private investment, it is already 95 per cent sold or let. And by companies that read like a Who’s-Who of modern, innovative industry.
That demonstrates another vital feature of this region. An understanding of the need to diversify: an eagerness to use both the public and the private sector to create new facilities; and a determination to attract new enterprise and new firms that will ensure the future growth of the North East.
Finally, at Amec Offshore, or Press Offshore as many of you will know it, I had the opportunity to see the oil rig fabrication yard. In 7 years, the company’s turnover has increased 10 fold and its workforce by a factor of 4. Today, it has announced a further contract which will create 200 new jobs at Sunderland. Amec Offshore is surely a classic example of the way forward: building on our traditional engineering-based skills and applying them to a new and expanding sector.
This combination of enterprising incoming firms and traditional strong businesses has given the North East greater resilience in recent years. I know times are hard. I don’t pretend otherwise. But in many ways the North East has proved more robust than other areas in recent months; it has built on its long-standing record in the engineering-related industries and transformed it into a worldwide reputation for success.
And increasingly the North-East offers a greater diversity of enterprise and employment opportunities than ever before. Whole communities are no longer dependent on single industries; and that offers greater security to future generations than their predecessors ever enjoyed.
Perhaps that success is best demonstrated by the attraction of well-known Japanese inward investment – Nissan, Fujitsu and Hashimoto. They could have gone anywhere in Europe. But they chose Britain. Chose England. Chose the North East.
But the future for the North-East is also:
– about new investment by successful UK firms – Glaxo, MTM and British Airways;
– about the work of the Tyne and Wear Corporation to rehabilitate old industrial areas, and promote major commercial developments alongside the Tyne and Wear; and about the parallel activity of the Teeside Development Corporation alongside the Tees;
– about the development by ICI at the Belassis Technology Park to encourage and attract small technology-based businesses;
– and about the innovation centre at the Newcastle Science Park linked to the City’s university and polytechnic.
With such a record of innovation, diversification and growth, you may well wonder why this Government is sometimes accused of having no industrial strategy. Well it’s partly politics of course. But also, if by industrial strategy, you mean an obsession with regulation, with intervention, with Government interference, with excessive taxation, then certainly we have no such strategy. What we have is quite different and, I believe, better for our longer term interests.
Our industrial strategy is clear. It is based on creating the framework in which business and industry can flourish in a decade that will be more competitive than any we have previously known.
– That is why low inflation is our top priority. Without that our companies cannot compete;
– that is why we reward initiative and success through lowering taxes: we now have one of the lowest rates of corporation tax in the industrial world; we have cut income tax rates and our objective is a basic rate of 20 per cent;
– that is why we will continue to return nationalised industries to the private sector – we are already discussing the ways in which British Rail and British Coal can be privatised;
– and why we will continue to free up the labour market.
Mr. Chairman, we have no intention of adding £1,000 to the annual tax burden on the average family; or of setting a 59 per cent top tax rate.
And we have:
– no intention of creating a national investment bank with regional branches trying to second guess business and markets;
– no intention of introducing a minimum wage, thereby destroying the jobs of many lower-paid workers;
– no intention of introducing a statutory training programme with every company subject to a half per cent of payroll tax, whatever their size or profitability at the time;
– no intention of reversing the reforms that have transformed our industrial relations in this country.
That is also why I was not prepared to sign up to the new Social Chapter at Maastricht. We could not see decisions taken in Brussels that would have reversed the better balance between the two sides of industry that we have achieved.
Of course, that does not mean we are seeking lower standards for our workers; indeed, people know that in many areas standards in this country are higher than in other European countries. These are matters to be settled between individual employers and their employees – not by central government. And not by agreements at European level between trade unions and employers subsequently imposed by European directives – even though it might be opposed by the British Government, British management and workforce alike.
We are a trading nation. We cannot flourish unless we can compete on level terms with other countries. That is why we consider a successful outcome to the current GATT negotiations so vital. It is why we are working so hard for the successful completion of the Single Market. And it is why I fought at Maastricht to make sure that in future countries which sign up to Directives implement them in full – or face penalties if they do not do so.
Mr. Chairman, I recognise that for many sectors in our economy times are hard – in some cases very hard indeed. With growth faltering overseas in the world’s largest economies, our economy has not performed as well in the last year as had been hoped.
But let us not get these matters out of perspective. We are at a different stage of the economic cycle than many of our competitors. For while Germany and Japan will continue to slow in 1992, I do not doubt that we will see recovery here in Britain.
I know there is much speculation about the date of the turning point in the UK. Some economic pundits talk of little else. Yet in reality, there is no magic moment, no precise point when recession lies clearly in the past, while recovery stretches out into a better future. Inevitably economic data will show ups and downs and irregular patterns as recession ends and recovery begins.
Recent economic figures certainly do not support the sudden swing into pessimism which has overcome certain commentators. Of course, there is no point in excessive optimism or trying to talk up the economy. But there is equally a risk in going too far the other way. And I certainly believe that the recent pessimism has been overdone.
There are plenty of encouraging developments. If you listen to some of the dismal Johnnies you might never realise what has been achieved in the last year.
We have reduced inflation from almost 11 per cent to around 4 per cent; it is now firmly under control.
– We have cut interest rates eight times – faster and further than almost anyone expected: for some on annual mortgages, those cuts are only now feeding through into lower mortgage payments.
– Thanks to our ERM membership, we have been able to bring our interest rate differential against the deutschmark to its lowest level for decades. In the 1980s sterling rates were on average 5 per cent higher than DM rates – today that differential is around 1 per cent.
– Retail sales are higher than a year ago – and many stores are reporting record sales.
– The trend rate of increase in unemployment has now slowed substantially.
And real incomes are rising.
Too many people seem to be losing sight of the issues that really matter. Governments cannot – and should not – try to adjust the economy month by month, or week by week. Policy cannot – and should not – react to every monthly economic statistic that is released. Our job is to provide a stable and predictable economic framework, with responsible monetary and budgetary policies so that business and individuals can have the confidence to take the right decisions.
I believe we can look forward to 1992 with confidence. It is not just the Government but virtually every international, City and academic body that expects a return to growth. For we are getting the fundamentals of the British economy right. We have made clear our commitment to exchange rate stability through membership of the ERM. We have brought inflation down and will keep it down. We can look forward to growth founded on economic stability and low inflation.
But, while we can create the right climate for future growth, it is up to business to seize the opportunities and build our future prosperity.
What does that mean in present circumstances? Ultimately, at its very heart, business seizing opportunities is about the behaviour of individuals. About how they act. How they decide on their actions. About their skill; their foresight; their knowledge; and the sheer hard work, that they bring to decision-making.
And it is also often about an independence of thought – what you might term being “canny”. Persisting with a view based on the evidence that the individual believes to be right. Having the initiative to look at a problem in a different way – and thus perhaps seeing the solution and way forward that escaped everyone else. It is about being able to spot and assess opportunities. And then having the skill, foresight and the courage to take the risk and then turn those opportunities into realities.
And that of course is what tonight’s Businessman of the Year Award is all about. We are here to celebrate successful risk-taking, the very heart of a successful commercial economy. It was that spirit of enterprise which built the North-East in the first place. Now it is transforming the structure and diversity of its economy once again. It will enable that economy to grow and expand in the years ahead.
I am confident about our prospects for the 1990s. In the last decade the Government and business – working together – turned an uncompetitive, ramshackle, over-regulated economy into an enterprise economy that out-performed most of its competitors. Now, as we come out of our difficulties, we must build on that. We will come out of the recession as we need to – with low inflation, a stable exchange rate and the prospect of steady, sustainable growth.
If we build on that; if we ignore siren voices offering quack remedies; if we turn aside from re-regulation and higher taxation; if we build an enterprise partnership between Government and industry, then we can create a level of prosperity that exceeds anything we have known before.
That must be our objective for the 1990s.