John Major – 1989 Autumn Statement

Below is the text of Mr Major’s Autumn Statement, given in the House of Commons on 15th November 1989.


The Chancellor of the Exchequer (Mr. John Major) : With permission, Mr. Speaker, I should like to make a statement. Cabinet agreed the Government’s expenditure plans this morning. I am now able to inform the House of the public expenditure outturn for this year; the plans for the next three years; proposals for national insurance contributions in 1990-91; and the forecast of economic prospects for 1990 required by the Industry Act 1975. The main public expenditure figures, together with the full text of the economic forecast, will be available from the Vote Office as soon as I sit down. The printed Autumn Statement will be published next Wednesday.

Tight control of public expenditure remains a central element of the Government’s economic strategy. In the past seven years this has led to a sharp fall in the ratio of public spending, excluding privatisation proceeds, to national income. This fall has made it possible to improve dramatically the Government’s finances while still making substantial reductions in tax rates. The ratio of public spending to gross domestic product was nearly 47 per cent. in 1982-83. In the current year, it is likely to be 38.75 per cent., significantly below the level expected at the time of the last Autumn Statement. For the next two years the plans I am announcing today show ratios of 39 and 38.75 per cent. Those are unchanged from the ratios published in last year’s Autumn Statement, and permit a cash increase in general Government expenditure in 1990-91 of around £5.5 billion. By 1992-93 the ratio is expected to fall further to its lowest level since the mid-1960s.

For the current year, the outturn of expenditure is expected to be about £168 billion–£1 billion higher than the original planning total. This partly reflects a lower level of privatisation proceeds, but its principal cause is massive overspending by local authorities on both current and capital account. As the House knows, new arrangements for the finance and control of local authority expenditure in England and Wales are being introduced on 1 April 1990. This year’s outturn shows how necessary those new measures are. Central Government spending remains firmly under control. The plans for the next three years have been set on the new definition of the planning total which the Government announced in July last year and which was welcomed by the Treasury and Civil Service Select Committee.

This includes central Government support for local authorities, but excludes their self-financed expenditure. The composition of general Government expenditure remains unchanged. For 1990-91, the new planning total has been set at £179 billion and, in the following two years, at £192 billion and £203 billion respectively. Within that, the estimates of privatisation proceeds are unchanged, at £5 billion a year. There are also substantial reserves, rising from £3 billion in 1990-91 to £6 billion and £9 billion in the following two years.

The new plans also show continued real growth in spending on the Government’s priorities. Thus, between this year and next, spending on the National Health Service in the United Kingdom will rise by £2, 400 million. Taking account of income generation and cost savings, that is equivalent to a £2,600 million increase in resources, or 5.5 per cent. in real terms. These plans will finance the improvements in the management of the service outlined in the National Health Service review. They provide more than £200 million extra for hospital building and other capital expenditure next year ; and they will finance continuing growth in services for patients. They are the clearest possible evidence of the Government’s practical commitment to improving the care available in the National Health Service.

There will be substantial increases also for investment in transport. Spending on national roads is planned to double between 1988-89 and 1992-93. Extra financing of £400 million to £500 million a year is being made available for the railways and London Regional Transport, including upgrading the services on Network SouthEast and the London Underground, to relieve congestion and improve safety, and for rail services for the Channel tunnel. In total we have added £1.8 billion to the planned spending on transport in the next two years. The plans provide an extra £250 million over the next two years for a new initiative to tackle homelessness, to be announced today by my right hon. Friend the Secretary of State for the Environment. Central Government support for the provision of new homes by housing associations will more than double from £800 million in 1989-90 to £1,700 million in 1992-93.

My right hon. Friend the Secretary of State for Social Security has already announced real increases in benefits which will help 1.5 million families and 500,000 long-term sick and disabled people. There will be a further increase of over £500 million in the total resources available for higher education in 1990-91 compared with this year. It will provide for the continuing growth in the number of students, which has risen by 30 per cent. since 1979, and is now at a record level and it will cover the cost of the Government’s proposals on top-up loans. There is provision for more environmental research, including the new climate change centre and the doubling of our contribution to the United Nations environmental programme. About £1.5 billion has been added to planned capital spending by central Government and public corporations in 1990-91. That represents a real increase of around 10 per cent. compared with 1989-90.

Mr. Eric S. Heffer (Liverpool, Walton) : On a point of order, Mr. Speaker, I have been a Member for a long time, but I wish to know whether I am allowed to ask the Chancellor of the Exchequer a question. He is making a long statement. Am I allowed to ask a question and, if not, when can I ask him a question?

Mr. Speaker : Surely the hon. Member does not need to pose that question. If I call him later, he can ask the Chancellor a question then.

Mr. Major : The new plans include the money central Government provide to support local authority spending. The Government’s proposals for aggregate external finance in 1990-91 were announced to the House in July. Measures have also been announced which will ease the transition from rates to community charge. The cost to the taxpayer of these measures will be nearly £700 million in 1990-91, with further substantial sums in each of the following two years.

Capital grants and credit approvals will provide central Government support for local authority capital expenditure under the new arrangements. The new plans provide support for a sustained programme of school and college building and modernisation, for local authorities to contribute to the homelessness package, for transport projects, as well as capital spending on other local services, including local roads and environmental improvement. As in the past, these improvements have been possible only through a rigorous selection of priorities, substantial gains in value for money, and a very welcome reduction in the burden of debt interest. They have been found within an affordable level of total public spending. Overall public spending excluding privatisation proceeds is expected to grow on average by 1.75 per cent. a year in real terms throughout the period between 1988-89 and 1992-93. This was the rate of growth projected in last year’s Autumn Statement and we have stuck to it. Over the 1970s, a decade of high borrowing and high inflation, as well as high public spending, it grew not by 1.75 per cent. a year but by 3 per cent. a year.

The Government’s new plans demonstrate their continuing commitment to two vital principles : first, to maintain firm control over total spending; and secondly, to increase efficiency in order to provide more resources where they are most needed. I should like to congratulate my right hon. Friend the Chief Secretary on his skilful and successful conduct of the public spending round.

I turn next to national insurance contributions. As the House knows, we have now implemented the reform of employee contributions announced by my right hon. Friend the member for Blaby (Mr. Lawson) in the Budget. From last month, two of the three step increases in contribution rates have been abolished. This means that employees who get pay increases taking them just above these steps can no longer lose more in higher contributions than they gain in extra pay. And the initial step at earnings of £43 a week, where people first enter the contribution system, has been more than halved. These measures have reduced contributions by up to £3 a week for nearly 19 million employees and are of particular help to many employees on modest incomes ; they have also removed some important disincentives. The usual autumn review of contributions has been conducted in the light of advice from the Government Actuary on the prospective income and expenditure of the national insurance fund, and taking account of the statement on benefits made in October by my right hon. Friend the Secretary of State for Social Security.

Next year, the initial class 1 contribution rate payable on earnings up to the lower earnings limit will remain at only 2 per cent. This means that a payment of only 92p a week will buy entitlement to the basic pension and other contributory benefits for those who earn just enough to pay contributions. On additional earnings, up to the upper earnings limit, the rate will remain unchanged at 9 per cent. For employers, the main rate will also be unchanged at 10.45 per cent.

The lower earnings limit will be increased to £46 a week, in line with the single person’s pension, and the upper earnings limit will be raised to £350 a week. For employers, the upper limits for the three reduced bands will be increased broadly in line with prices. I am also publishing today the economic forecast required by the Industry Act 1975.

It is clear beyond doubt that the economy has greatly strengthened over the last decade. We have experienced eight years of strong and sustained growth with inflation at moderate levels. This has brought an increase in employment of about 2.75 million since March 1983 and a sustained rise in living standards. However, it is also clear that in the last two years, 1987 and 1988, demand, and with it output, rose at a rate which exceeded expectations and could not be sustained. That became apparent in increased inflationary pressures and the growth of the current account deficit.

These pressures had to be reduced and monetary policy was tightened accordingly. The effects of this tightening are already apparent in recent retail sales figures, and the turnaround in the housing market. The Government’s fiscal position is also very strong. I now expect this year’s fiscal surplus to be about £12.5 billion, equivalent to 2.5 per cent. of GDP. That represents a very tight fiscal stance by any standards. Both tax yield and expenditure are higher than forecast at Budget time, but lower proceeds from privatisation and the very high take-up of personal pensions mean that the public sector debt repayment will be slightly below the Budget projections.

Looking at the wider economy, as always, a great deal inevitably depends on the actions of companies and individuals. So there is bound to be uncertainty about the speed with which the economy will adjust to the present tight stance of policy. Our forecast is that growth in domestic demand will be a little over 3.5 per cent. in the current year–a sharp, but inevitable, slowdown from over 7 per cent. recorded in 1988.

Non-oil GDP is expected to grow by 3 per cent. this year. GDP growth as a whole for the current year looks like turning out at 2 per cent., a little below the forecast published at Budget time. This results from lower than expected North sea oil production, which is taking longer than expected to recover from the several serious accidents of the past two years.

Business investment is likely to increase by 9.25 per cent. this year, giving a total of over 40 per cent. in the three years to 1989. This is the largest-ever rise in business investment over a three-year period and is two and a half times as fast as the growth of personal consumption over the same period. This has inevitably contributed to strong import growth and a higher current account deficit in the short run. Notwithstanding this unwelcome effect, the resulting increase in productive capacity will help to sustain the growth of output and in due course bring the deficit down. Looking ahead to 1990, our tight fiscal and monetary policy will have an increasing impact both on household spending and on company spending, which typically reacts later than the personal sector. Investment should continue to grow, but it will do so more slowly. The slowdown in the economy means that GDP is forecast to increase by only 1.25 per cent. in 1990. This will bring the average growth in the four years to 1990 to 3 per cent. a year.

As domestic demand slows, import growth should moderate. At the same time, the strong rise in exports, which has been one of the most welcome developments in 1989, is forecast to continue. Non-oil visible exports are expected to rise by over 11 per cent. this year, the highest rate since 1973, and we expect a further substantial increase next year. As a result, we now forecast that the current account deficit will fall from some £20 billion in the current year to about £15 billion in 1990.

We will also see a further reduction in inflation. The headline measure of retail price inflation has already peaked at over 8 per cent. in May and June this year, and has since come down a little. Following the recent rise in mortgage rates, it will remain high for some months, but our forecast is for it to fall to 5.75 per cent. by the fourth quarter of 1990, and I expect to see it fall still further after that.

Our main priority must be to bring inflation decisively down, and keep it down. To achieve this, the economy must slow down for a while. This does mean that 1990 may not be an easy year, but the economy enters the 1990s in incomparably better shape than it entered the 1980s. The supply side reforms of the last decade have left business and industry better able to handle both the short-term difficulties before us and the longer-term opportunities to come. I have no doubt that we must stick to the policies that have turned the economy around, and that we are determined to do.

Douglas Hurd – 1989 Statement on Hillsborough Stadium Disaster


Below is the text of the speech made in the House of Commons by Douglas Hurd, the then Home Secretary, on 17 April 1989.

With permission, Mr. Speaker, I should like to make a statement about the disaster at the Sheffield Wednesday football club ground at Hillsborough on Saturday. Everyone has been horrified by this incredible tragedy in which 94 lost their lives and 174 were injured.
Shortly after the start of the match, there was a surge of spectators on the Leppings lane terrace, which crushed many at the front against the perimeter fence. This accounted for most of the deaths and injuries.

The match was due to start at 3 pm. To help ensure orderly access, the gates of the ground were opened at 12 noon. At 2.30 pm most of the Nottingham fans were in the ground, but many of the Liverpool supporters were still arriving. It was clear to the police officers in charge that there was ample capacity still to be filled in some parts of the enclosure allocated to Liverpool.

At about 2.45 pm there was a large crowd of Liverpool supporters at the turnstiles in Leppings lane behind the west stand. There was difficulty in coping with the pressure on the turnstiles, and the police used loud hailers to urge the crowd to be patient. At about 2.50, more Liverpool supporters arrived and the numbers in front of the turnstiles increased. Some supporters started to climb the walls and turnstiles, and those at the front of the crowd outside the stadium were under considerable pressure from those behind.

The senior police officer present considered that there was a possible danger to the lives of the spectators at the front of the crowd outside the stadium. In order to relieve the pressure, he arranged for an exit gate near the turnstiles to be opened to let a section of the crowd through. The relationship of that action to the disaster on the terrace shortly afterwards is clearly a central question to be investigated.

My right hon. Friend the Prime Minister and I yesterday visited the football ground and the two Sheffield hospitals which received casualties. I should like to pay tribute to all those involved in the rescue operations at the ground, including the many spectators who gave their help, and to those others, including the hospital staffs and voluntary agencies, who have since been working so hard treating the injured and consoling the bereaved. We heard many accounts of courage exerted on behalf of others.

I have asked for further factual reports from the police and other services, the local authority and the Football Association. Inquests will be held in due course. But over and above this, there is clearly need for a full and independent inquiry to identify the causes of the disaster and to examine what needs to be done to prevent such an accident happening again. I have therefore asked Lord Justice Taylor to carry out an inquiry with the following terms of reference: To inquire into the events at Sheffield Wednesday football ground on 15 April 1989 and to make recommendations about the needs of crowd control and safety at sports grounds. Mr. Brian Johnson, the chief constable of Lancashire, has agreed to assist the inquiry as an assessor, and arrangements will be made as necessary for other qualified assessors to be appointed and for the inquiry to be provided with technical advice and support. I am asking that the inquiry should proceed with all possible speed. Lord Justice Taylor will visit Sheffield tomorrow to begin his investigation. I am grateful to him for agreeing to undertake this task.

However, we need also to take a wider view. The Government believe that the future of football in this country lies in a national membership scheme in designated grounds and now, it seems, also in providing all-seated accommodation at major football clubs. This would involve the disappearance of terraces at those grounds. It might also involve amendments to strengthen the Football Spectators Bill so that its provision for the licensing of grounds matched this concept. We shall be considering these matters urgently.

An appeal fund is being set up by the civic authorities of Liverpool, Nottingham and Sheffield. The Government will be contributing £500,000 immediately towards this fund.

This was a devastating tragedy. Our deep sympathy goes to the families of those who died, to those recovering, and—particularly moving yesterday—to those young people who are still fighting for life and health. We owe a duty, it seems to us, to these passionate supporters of football to examine urgently and thoroughly the causes and the background, and to do all in our power to prevent such a thing from happening again. We have to set our sights high and find a better way for British football.

Michael Heseltine – 1989 Speech on Science

Below is the text of a speech made by Michael Heseltine at the Cavendish Conference Centre in London on 23rd November 1989.

I would not pretend to be a scientist. But there are very few ministerial positions in government in which one is not brought face to face with the government’s role in research and development.

I have been fortunate in having held several such positions. At the Department of the Environment in the early 1970’s, I saw something of the work of the Road Research Laboratory in the furtherance of safety measures. As Minister of Aerospace I took over responsibility for the crisis surrounding Rolls Royce, the last development phase of Concorde, and I initiated the fusion of ELDO and ESRO into the European Space Agency.

I was responsible for Britain’s part in the European Airbus and had the task of setting up many of the Industrial Requirements Boards designed to give effect to the Rothschild principle of customer-contractor relationships. As Secretary of State for the Environment in the 1980’s and then as Secretary of State for Defence, I was responsible for the research programmes in a variety of different fields: in nuclear waste, disposal of toxic wastes, the construction industry and many others. As for Britain’s contribution to research and development in the defence field, that is a major source of controversy, perceived as pre-empting a disproportionately large share of our available scientific and technological resources.

Although I have never held responsibilities directly for the university or educational world, it is, I think, reasonable to claim that I have seen, both at home and abroad many of the complex issues which fall to Ministers to address. And I recognise that, for all the brave words, the range of government support and the means by which it is administered look markedly similar today to those that I first encountered.

I would like to thank you for inviting me to make this speech because it has provided me with an opportunity to think back over those earlier experience and to address, in the light of them, the implication behind your invitation: that British science needs saving.

Saving British Science?

The first question that occurs to me is, why should we be pre-occupied to save British science? If in the market place, people move into non-scientific activities, if people choose to pursue their careers in the arts, literature, or languages, if people are content to gravitate increasingly to the service industries – using other people’s scientific abilities, purchased in the market place – why should we be concerned about that?

There are, I believe, ready answers to these questions. First of all, because of the value of increasing knowledge and understanding for their own sake: mankind is inherently driven by curiosity and must be free to explore the limits of his mind and experience

Secondly, there is wider social purpose. An ever-widening base of knowledge is the hallmark of a civilised and civilising society in a very practical sense – diseases, disasters help for the disabled, safeguards for the environment, a whole raft of ever-emerging problems – require scientific knowledge. And I would say to our young people, reluctant – as it seems – to persevere with science at school or university, the pursuit of science and scientific research is not just the foundation of our future wealth as a nation but is the source of the safety of the planet at large.

In the final analysis, the advanced nations of the world are more than ever dependent on science-based industry. Investment in science, the training of their most talented young people in science, and the enhancement of the technological base of industry, are to all of them national priorities of the first order. To be part of the technological revolution sweeping through the modern world necessitates a strong science base.

So, if the arguments are conclusive and we come to the same conclusions as all other similar, advanced nations that we will compete in this arena, where should the emphasis of policy lie? There is, of course, a chicken and egg situation. If you have not got facilities of the first order, if you cannot demonstrate achievements at the exciting frontiers of knowledge, you will not attract new generations of young people by example. And it follows, if you do not attract the talented new generations, you will not develop a scientific base from which excellence can emerge.

The international context

We have to cut into this circular arrangement. It is obvious that, if we do not educate and train our young people to the standards of our competitors, the likelihood of decline is greatly increased. There can be no argument that the British are incapable of scientific excellence. For over a hundred years we have been at the forefront of the scientific revolution that has transformed peoples lives. Only the United States surpasses us in the number of Nobel prizes. Where we have been less successful is in the exploitation of our knowledge. There is no substitute but that we educate and train on the scale that will enable us to remain in the race.

Sadly, of all the OECD nations, the numbers in the UK involved in research have for some years been in decline. Not enough of our best brains pursue science at school or in higher education. Applications for science and engineering places are falling, with a serious knock-on effect on the pool for top rate post-graduates. The latest official forecast of science and engineering graduates and post-graduates contained in the January 1989 public expenditure White Paper projects an increase of only 2,000 to 46,000 by 1991-92. Thereafter, numbers are expected to level off before rising again towards the end of the 1990’s. Clearly there will be intense competition for this limited pool of talent.

After twenty years of debate, Britain is at last adopting a core national curriculum. The significance of this reform should not be underestimated in providing a deeper grounding in science and technology for all young people. But at the route of the problem must surely be the shortage of inspiring science teachers who could pass on their enthusiasm to future generations. We shall need to recognise the market value of such people. We shall have to consider what salaries will be needed if we are to ever to address this problem seriously. Too many who can teach science can rapidly move into more lucrative areas of business.

Sir Monty Finniston vividly identified a mare basic failing in his Royal Commission Report, “Engineering:  All our Future”, that there has been in this country, for many generations, a cultural hang-up about all things technical. But I also suspect that a basic distrust of science is engendered from an early age. There has long been a British prejudice in favour of the arts, grounded in the early traditions of classical education. In Japan, Germany and France technologists assume a more significant role in business and government.

It must follow that for us to devote resources to achieving the highest standard of skills is not with the philanthropic intention that Britain shall export our talent to other nations’ industries or universities with our talent. We are doing it, not just four our citizens as young people, but because we believe that by investing in them in their formative years, they will deliver the wealth and stimulus from which we can all benefit.

Spending and infrastructure

So the next step follows: that in a free society, the market place will buy the talent. And the talent will be attracted by both the financial rewards on offer, but also by the quality of scientific opportunity on offer. You simply will not keep top-class scientists by doubling their money and halving their research budgets.

You will not attract the best academic minds to work in the worst scientific conditions. So the facilities matter and we therefore need to ask whether, in both the public and private sector, the opportunities for young British people, hopefully educated and trained to the highest standards are such as to persuade them to fulfil themselves in our laboratories, universities and companies. And how best can we direct public and private resources to that end, for staying on the frontiers of research cannot be done on  the cheap.

A growth economy needs to invest in its intellectual assets. Though from the mid-1970’s we went through a period when university laboratories were, in large measure, living off the 10% annual growth of the 1960’s, the government has now given new importance to the funding of basic and strategic science. The Science Budget over the next three years is now planned to increase by £178m more than in previous projections. By 1990/91 it will be 27% higher in real terms than it was in 1988/89.

The turn-around is dramatic when one considers that in 1987 the forecast was for a 4% annual reduction up to 1991. Sixteen government departments, other than the Ministry of Defence, contribute £1.1bn directly to the nation’s research effort; the MOD’s expenditure is over £2.25bn; the five Research Councils pay out £641m in addition to the contribution of the University Funding Council. This is by any standard a major and influential commitment by the British government.

I draw a conclusion from all of this. It is that common sense prevails. The larger the pool of scientific resources you create, the larger the fish that will swim in that pool. There is, of course, a caveat. It is no use simply throwing money at the problem.

What should be the disciplines? Indeed, are there practical disciplines which can apply to the frontiers of scientific knowledge? Is not blue-sky research desirable of itself: the right to know, the right to explore, the right to pursue the unknown? You cannot put a price tag on so amorphous an objective. You cannot measure the returns in terms of dividends or wealth-increase. In many cases there is more gamble than risk. There may be no returns at all.

But the pool, of course, is not infinite. The government must define the scale of the public’s contribution to it, while companies are limited by the scope of their balance sheets. Judgements are unavoidable. Priorities have to be established.

And there is yet another dimension. For we do not live or trade on a desert island. But the closer one examines the realities, the more one discovers the relationships between mighty companies and the public procurement programmes of the governments behind them. Competition there certainly is. But the idea that it is competition on the level playing fields of the corporate sector is unrealistic, as it is foolish to behave as though it is the case.

Slowly, by patience – as the European Commission is attempting to do – we may change the rules. But we must be very clear that we do not in the meantime put our industry where, by the time the rules have been brought to common form, the strength of our industry has been eroded

We need to understand the scale of British expenditure.

UK research investment

The first fact is that gross expenditure on research and development has risen by over £1bn since 1981. The latest figures available to me show that in 1987 we spent £8,703m compared with £7,677m in the earlier year.

Can it be argued that by international comparison this is too low? In 1987, the last year for which I have complete statistics, Britain spent the same proportion of her GDP on research as France at 2.29% and considerably more than Italy at 1.19%. We do not, however, match the Americans at 2.71%, the Germans at 2.81% or the Japanese at 2.87%.

But of course these figures do not reveal the full picture. They ignore the critical factor: the size of the respective gross national products. Then the investment gap becomes evident.

OECD figures reveal that in 1987 Britain and France spent virtually the same at £9.4 and £9.5 billion. Germany spent £13.3bn, Japan £26.7bn and the United States £70.3bn.

Whereas in the case of our competitors, the percentage of GDP devoted to research has steadily risen (for example, in France from 1.97 in 1981 to 2.29, and in Germany from 2.42 to 2.81) the UK percentage has fallen from 2.42% to 2.29%.

As a result – as you know only too well – half of the “alpha” research proposals submitted to most of the Research Councils in 1987 and 1988 were underfunded. Britain’s output of scientific achievement remains outstanding, but the truth is that others are catching up.

There is, of course, the question  of why we have not been very effective at moving research results into product development, but it is no solution to that problem to reduce the level of fundamental research.

Industrial R&D

Higher profits in recent years have been reflected in higher R&D spending in the private sector in the last two years but there is a sizable leeway to make up.

These figures throw out their own questions.

What philosophy should the government adopt to the money it does spend?

Has the government got the balance right between military and civil expenditure?

How do medium-size countries such as ours give the sort of support to their industries as is available to our overseas competitors?

I do not see how it is possible to argue that the government’s withdrawal from near market research and the transfer of responsibility for this to the private sector can be questioned in theory. That is not to say that industry should not be encouraged to sub-contracting to our universities and polytechnics. The private sector will be more disciplined in the use of resources, will cut off false trails more quickly and exploit new developments more effectively. And quite frankly they are more likely to exploit them in their own plants and laboratories than public research organisations who can be more orientated to the publication and dissemination of ideas than their exploitation.

I do not say this as a matter of doctrine because I know enough of the workings of government to know that in practice most governments are deeply involved in making judgements every day about the use of public funds in support of specific projects, though certainly automatic grants are today the creatures of the past.

The requirement for government support is now invariably a large private sector commitment, and preferably collaborative projects.

Industrial strategies

Across the world this trend to “privatise” the research and development programmes in the new market is discernible. But no one should confuse privatised research and development with a genuine market place. The United States, with far and away the largest commitment, operates a protected market for its hi-tech industries, offering generous partnerships for co-operation where an overseas partner has the technological lead but rigidly imposing the technology transfer provisions of national legislation in all other circumstances.

Japan has transferred much of the former government funding of MITI to its private sector but just look for examples of where any overseas company is allowed to gain access to the ownership of one of those companies and you will see a protected market at work.

It is within this real world of industrial politics that any British government must assess its priorities. But the real world contains another dynamic. The decade ahead is going to see the completion of the regional market of Western Europe. Its precise form or scale is secondary to the consequence for industry and our research programmes. The consequence will be mergers on a European scale. They may be driven by American partnerships pr they may be furthered by Japanese investment but ten years from now Europe will not think of national research programmes, for the simple reason that such programmes will not be able to match in scale or sophistication the American or Japanese challenges.

The more we continue to duplicate or triplicate our invention of the wheel in the nation states of Europe, the less competitive we will be with the two giants.

So company merger in Europe will bring together the research resources of the European countries. Competition for scarce national scientific resources will lead to collaborating but also specialisation at the academic level across the universities and research laboratories of Europe. Governments will be forced by the logic of the market place to follow this pattern.

I have set out my support for the view that industry is best trusted with the application and exploitation of research. It is the servant of the market place and its disciplines.

Government as a customer

But what of the circumstances where governments are themselves the market? The scientific and technological consequences in such cases can be profound. It is not so much a case of the jobs involved, rather the attainment of a technological base and the ability to set standards that flow from the availability of public procurement funds.

It is here that governments cannot avoid decisions about their role in support of their industry. And none of them, in practice, do.

Let me give five examples where in the pursuit of public policy, the government – as customer or in the discharge of its own responsibilities – has opportunities to enhance the technological base of our industry:

1)      Euro-control for the management of our airspace. An area in which British industry has a direct stake in the British Government taking a lead is in the creation of a Europe-wide air traffic control system. As the largest single source and destination of all flights in Europe this is a major national interest. It won’t be easy, as the system must go wider than the twelve and countries over which planes fly have different priorities from those like us where they begin and end their flights – which is why only governments can create the necessary frame work.

But the prize is great. And not just in terms of quicker flights and less delays. A whole new market at the leading edge of technology, in the telecommunications, computer and other equipment industries would be opened up. The potential fillip to European industry is enormous. The Americans and japans will certainly challenge for the contracts. The French, Italians and Dutch, with the support of their governments, are gearing up. If the British Government plays its hand skilfully, British companies could have a major role as well.

2)      The European Space Agency. There has been much questioning of Britain’s role in space. I believe we are wrong to remain apparently detached as our competitors commit growing resources. There is an unquantifiable but inescapable message in such a policy. Younger generations need not just the prospect of financial reward in their choice of career, they also need intellectual stimulus and vision. If we want them to see the broad field of engineering and scientific research as the outlet for their energies, the exploration and conquest of space offers a unequalled challenge for the enquiring mind.

But Britain cannot afford such a journey alone. Indeed, it would be a massive waster of our resources to explore what others already know. The European Space Agency was a British initiative. We secured, from its creation, a European lead in communications satellites. We achieved in partnership what, alone, the limitations of our resources would have denied us.

3)      The management systems of government. I have long been one of those pre-occupied to improve the efficiency and effectiveness of management in government. In a recent report, published by P.A. Management, we argued how far there is to go in converting Whitehall’s paper-based management information systems into the state of the art technology. Better value for money and improved public accountability are now on offer, but only following an investment in the latest equipment and programmes. As a parliamentarian, I am interested in how we use the taxpayers’ resources and account for them. Pace-setting contracts to equip Whitehall with the sophistication that a major multi-national company would take for granted, could present industry with a turn-key to world markets.

4)      The relocation of civil servants. Decisions about the siting of head offices, the location of staff, where they are to live and work affect the distribution of wealth. We should disperse the civil servants from the South-East, not in a mean and penny-pinching way to the backstreets of provincial Britain, but to offices built as models, as exemplars of what dispersed and decentralised offices can be like – equipped for the space age rather than the steam age.

5)      The relocation of our public sector research laboratories. There are no government research laboratories in the North West, yet the growth potential that centres around research laboratories is enormous. In March the government announced its plans to move the MOD Quality Assurance Division from Woolwich to Teeside by 1995. The Division is going north before companies it monitors move south. Some 1500 jobs are involved, of which 650 would be scientific and engineering post and 250 would be apprentices. But is had taken five years just to get the decision announced. And it is taking another five years to implement it.

I would like to see the use of the proceeds of the sale of expensive land in the south to build centres of excellence in the North. North West is the heart today of Britain’s booming aerospace industry. The heart, that is, of Britain’s private sector aerospace industry. But think what we could do to build on that. Why does Farnborough have to be in the road-congested, air-congested South East? Why not use that site for activities that have to be in the South and move Farnborough to the North West? Why not encourage local universities and polytechnics to direct more of their courses towards the pursuit of such technical excellence? Industry-sponsored science parks located near to universities would benefit enormously from the academic input. Why not, indeed, go further? Britain could encourage its space industries to locate around a Space Centre in the North West. Far and away the most important contribution to all this would be a dynamic private sector. But the concept and its initiation would have to involve a partnership in which the government, as the most important customer, recognised an enabling and sponsoring role.


In each of the examples I have given the government’s interest is an improved service or a more effective economy.

In each case the private sector has a massive role to play.

In each case government can improve our competitive ability and achieve better value for money.

Our scientific values would be enriched, our citizens better served, our industry strengthened.

William Hague – 1989 Maiden Speech in the House of Commons


Below is the text of the maiden speech made by William Hague in the House of Commons on 20th March 1989.

I wish to speak briefly on the Budget, as my first and modest contribution to the proceedings of the House. Before I do so, I pay tribute to my predecessor as Member for Richmond, Sir Leon Brittan, and will say a few words about the constituency that he represented so well. I am fortunate to be able to do both with uninhibited pleasure.

Most new Members elected at by-elections speak of a predecessor who was distinguished but is sadly deceased, but I am delighted that my predecessor, who made such a major contribution to the House and who was so highly regarded by his constituents, is very much alive and well and is by all accounts doing an extremely good job as a European Commissioner. There is no doubt that he will be sorely missed in Richmond—a constituency that he served with extreme thoroughness and attention to detail. Even when he was Home Secretary, he never missed a weekend surgery and never failed to involve himself in as many aspects as possible of life in north Yorkshire. He set the highest standards of service to his constituency, and I will be doing well if I can live up to them.

All I can say is that, over the coming months, I shall try to be inspired by Sir Leon’s example, rather than being intimidated by it. It would be all too easy for the new Member of Parliament for Richmond to be intimidated by the past. I number among my constituents not only Sir Leon Brittan but his predecessor Sir Timothy Kitson and my noble Friend Lord Tranmire, the former Sir Robin Turton, who sat in this House for 45 years for Thirsk and Malton, part of which is now included in my constituency.

Those former Members will be very valuable sources of advice. Some might observe that they will also he rather varied sources of advice. However, the fact that they remain deeply rooted in the area says something about the strong attachment of Members of Parliament to Richmond and its surrounding area, because of both the natural appeal of its countryside and the independent character of its people.

It is almost unnecessary for me to tell the House about my constituency, because many right hon. and hon. Members are already surprisingly familiar with it. I am one of the few Members of Parliament, along with those representing constituencies in the east end of London, who has a regular television series about his constituency. Also, many right hon. and hon. Members have spent more time in my constituency in the past few months than I have spent in the House. Right hon. and hon. Members could be forgiven for believing that the right hon. Members for Plymouth, Devonport (Dr. Owen) and for Yeovil (Mr. Ashdown) had taken up permanent residence in my constituency. They certainly provided a valuable off-season boost to the local tourist trade. They will always be welcomed back, though perhaps they are the only two tourists in the whole nation who I hope will spend less money on their next visits than they did on their last.

I hope that all those who visited Richmond during the by-election had an opportunity to enjoy the diverse nature of the region. Although always associated with the magnificent hillside town of Richmond itself and with the splendid dales to the west of it, my constituency embraces a rich breadth of physical geography and human activity —from the hill farmers in the dales and on the edges of the moors, to the lowland arable farmers around Northallerton and Thirsk; from the 20 industrial estates that have brought a growing sense of enterprise and availability of employment to the area, to the commuters in the north-east who work on Teesside and to the large number of people who come to the area to retire. Richmond’s variety defies simple description.

In addition, my constituency has a huge military presence. The area is proud to host one of the country’s largest Army garrisons at Catterick, and now we also have a major air defence base at RAF Leeming. That variety, and the popularity of north Yorkshire as a place to live, means that behind the idyllic image are mounting stresses and strains, both economic and social. Much has been said about the plight of the inner cities in the 1980s, but I fear that much will have to be said in the 1990s about the strains of rural life.

Although my constituency, like the rest of the country, has grown more prosperous in the past 10 years, and although unemployment has fallen by 40 per cent. over the past three years, one must not overlook the depressed incomes of the farming community, the shortage of housing for local people—ironically coinciding with housing development on a scale that threatens traditional village life—the tendency for younger people to move elsewhere, and the appalling and increasing pollution of some of the nation’s most beautiful rivers. Those are not the subjects of today’s debate. Nevertheless, I hope to help ensure that they will not go unnoticed or unaddressed in the House.

My constituents are interested in all those matters, but they are interested also in the Budget—despite all the efforts of the media to convince us that it was boring. Like me, my constituents approve of the Budget because of its most obvious characteristic—that my right hon. Friend the Chancellor of the Exchequer used what room for manoeuvre he had to help those people whose efforts were most unfairly penalised by the existing tax structure. I strongly welcome the changes my right hon. Friend made to national insurance contributions and his abolition of the hated pensioners’ earnings rule. I believe that right hon. and hon. Members in all parts of the House believe that the Chancellor did the right thing in the circumstances, and they should have the good grace to say so.

Much of the debate about the economic situation has been taken up with discussing the direction of and the explanations for inflation, interest rates and the public sector surplus. However, that debate has been concerned mainly with the short term—with this year and next year. When I look at the economic background to the Budget, what I find interesting are some of the other economic indicators whose improvement has been strong and marked over a sufficiently long period to become an established trend.

Today, companies’ real rate of return is at its highest since the 1960s. Investment has risen twice as fast as consumption for the past seven years. Labour productivity has risen faster in the 1980s even than in the 1960s. That should bring home to us the fact that, whatever the arguments about last year’s or this year’s forecast, the fundamental indicators of the economy’s future performance and output are better than they have been within the political lifetime of most right hon. and hon. Members, and within the entire lifetime of some of them.

Maintaining that progress requires lower levels of inflation and of short-term interest rates—otherwise, the increased confidence that is at the centre of all those improvements will disappear. However, no one has argued convincingly that there is a better policy for bringing inflation down than that which the Chancellor is pursuing. Most criticism has been of the “We wouldn’t have started from here” variety, but it is incumbent on those who would do the Chancellor’s job for him to say what they would do if they had to start from here.

Nevertheless, it must be recognised that we face over the next year inflation at a higher level than we would have wished. Some people are less able than others to cope with that inflation, and some are particularly worried about it. Foremost among them are elderly people who are wholly or largely dependent on their basic state pension. The Government have done a great deal to help many pensioners in several ways. The abolition of the earnings rule will help many who are still able to earn, and lower inflation over the lifetime of the Government has helped those with savings.

Last autumn’s announcement of an additional increase this year for the oldest pensioners will help those in that category. Huge numbers, however, still depend heavily on the basic state pension. In the coming year, they face a pension increase indexed to, but lagging behind, RPI inflation—which may in any case understate the inflation that they experience, as their own expenditure is disproportionately weighted towards some large items such as household rates and basic utilities, the cost of which for most people is rising faster than the retail price index.

I hope that in the coming year the Government will have the pensioner in the forefront of their collective mind and, as far as the economy permits, will feel able by some means to help still more pensioners by doing somewhat more than simply indexing their basic pensions to the RPI. If they can do that, they will avoid much dissatisfaction and some genuine hardship.

That is the point that I wanted to make—within the context of strong and whole-hearted support for the economic and budgetary policies of Her Maesty’s Government. I thank the House for its indulgence, and hope that there will be many more occasions, Madam Deputy Speaker, on which I may try to catch your eye.