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  • Nigel Lawson – 1988 Autumn Statement

    Nigel Lawson – 1988 Autumn Statement

    The Autumn Statement read by Nigel Lawson, the then Chancellor of the Exchequer, in the House of Commons on 1 November 1988.

    With permission, Mr. Speaker, I should like to make a statement.

    Cabinet today agreed the Government’s public expenditure plans for the next three years. I am therefore taking the earliest opportunity of informing the House of the contents of the Autumn Statement: that is to say, the public expenditure plans for the next three years, and the expected outturn for this year; proposals for national insurance contributions for 1989–90; and the forecast of economic prospects for 1989 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 have sat down. They will also appear in the printed Autumn Statement, which will be published next Tuesday.

    I turn first to public expenditure. For the current financial year, 1988–89, the public expenditure planning total now looks likely to amount to some £153½ billion, or some £3¼ billion less than was allowed for in the last public expenditure White Paper. In other words, only around £¼ billion of the £3½ billion reserve I provided for is in fact likely to be needed.

    The main reasons for this shortfall are an extra £1 billion in privatisation proceeds, a reduction in social security spending of almost £1 billion as a direct result of the sharper than expected fall in unemployment and a saving of some £¾ billion largely due to extra housing receipts under the right-to-buy programme. Taken together with the strong growth in the economy this year, and the containment of debt interest now that the Budget is in surplus, this means that total public spending this year, even excluding privatisation proceeds, will be less than 40 per cent. of national income—the first time this has happened for over 20 years.

    Not so long ago, the share of national income spent by the state seemed to rise inexorably. Over the past six years, that trend has been decisively reversed. Since 1982–83, public expenditure, excluding privatisation proceeds, expressed as a share of national income has fallen by seven percentage points—the largest and longest sustained fall since the wartime economy was unwound. Over the whole decade since this Government first took office, from 1978–79 to 1988–89, public expenditure has grown by under 1½ per cent. a year in real terms. This is exactly half the rate at which it grew over the whole of the immediately preceding decade.

    Looking ahead, Cabinet agreed in July that public spending over the next three years should keep as close as possible to the existing planning totals, and should continue to fall as a share of national income. The plans I am about to announce meet both those objectives.

    For 1989–90, the planning total published in the last public expenditure White Paper was £167 billion. It will remain at £167 billion. This important outcome has been made possible, despite the many claims for increased public spending, by a rigorous reassessment of priorities, coupled with the continuation of two of the factors that have contributed to this year’s shortfall; that is to say, benefit savings from lower unemployment and increased receipts from council house sales.

    For 1990–91, however, though these two factors will persist, the planning total has been set at £179½ billion, some £3¼ billion more than the previously published figure. For 1991–92, the planning total has been set at £191½ billion. These totals all include the same level of reserves as in last year’s plans; that is to say, £3½ billion in the first year, £7 billion in the second year, and £10½ billion in the third. They also incorporate an unchanged estimate of privatisation proceeds of £5 billion a year.

    Over the three survey years as a whole, the real growth in spending on programmes will be over 3 per cent. a year. This can be afforded only because of the fall in the burden of debt interest brought about by the dramatic improvement in the Government’s finances from Budget deficit to Budget surplus. As a result, overall public spending, excluding privatisation proceeds, will rise by less than 2 per cent. a year, well within the prospective growth of the economy as a whole. In other words, total public spending, excluding privatisation proceeds, will continue to decline as a proportion of national income. At the same time, substantial additional funds have been made available for the Government’s most important public expenditure priorities.

    The figures which I am about to give all represent increases over the plans in the last public expenditure White Paper.

    First, health. An extra £1¼ billion—£1¾ billion—is—[Interruption.] An extra £1¼ billion—[Interruption.]

    Mr. Speaker

    Order. This is a very important statement, and I am sure that the House wishes to hear it.

    Mr. Lawson

    An extra £l¼ billion is being provided for the National Health Service in England in 1989–90—[Interruption.] The Opposition may not be interested in the National Health Service, but we on this side of the House are interested in it and are providing a lot more money for it.

    An extra £1¼ billion is being provided for the National Health Service in England in 1989–90, and an extra £1½ billion the following year. There will be corresponding increases in Scotland, Wales, and Northern Ireland. On top of that, health authorities are expected to receive an extra £100 million a year from sales of surplus land. Continuing the rate of cost improvement savings achieved in recent years will produce an extra £150 million in 1989–90 and an extra £300 million the following year.

    In addition, the Government are accepting the recommendation of the Government Actuary, in a report published today, that NHS employers’ superannuation contributions in England and Wales should be reduced, which will save the Health Service a further £300 million a year.

    In total, the increases for the Health Service in the United Kingdom as a whole will be over £2 billion in 1989–90 and over £2½ billion in 1990–91. These are by far the largest increases the Health Service has ever received. Comparing next year with this year, the increase in real resources for the NHS should amount to some 4½ per cent.

    Second, roads. An extra £220 million is being provided next year for building and repairing motorways and trunk roads, and for strengthening bridges, with a further £250 million the following year.

    Third, housing. Gross provision for public sector housing investment is being increased by around £440 million in 1989–90 and £340 million the following year. But thanks to the success of the Government’s right-to-buy policy, this is more than financed by extra receipts.

    Fourth, law and order. An extra £290 million has been made available in 1989–90 and £430 million in 1990–91, principally for a further expansion in the prison building programme. This will provide a further 3,000 places by 1991–92. Provision for local authority spending on the police has been increased by £240 million.

    Defence spending is to be increased by £150 million in 1989–90 and by £600 million in 1990–91. These significant increases are designed to provide a firm framework for the next three years within which our defence programme can be planned with confidence.

    So far as the massive social security budget is concerned, lower unemployment has saved more than £1½ billion in both 1989–90 and 1990–91. But substantial increases in planned spending on other benefits, particularly for the disabled, mean that the social security programme will be only marginally reduced in 1989–90 compared with previous plans, and some £1·7 billion higher in 1990–91.

    On science and technology, we have altered the balance of public support within an increased total. In particular, provision for spending by the Department of Education and Science has been increased by £120 million a year, with the DES science budget up by 16 per cent. in 1989–90 compared with 1988–89. This reflects the importance the Government attach to basic and strategic research.

    The new plans imply an overall increase of £2¼ billion in public sector capital spending in 1989–90. This includes extra investment in hospitals, housing, prisons, and roads. There is provision, too, for higher investment by the nationalised industries, including further anti-pollution investment by the water authorities.

    That the Government have been able to strengthen their priority programmes within an unchanged planning total for 1989–90 is, in large measure, a reflection of the success of their policies. The improved performance of the economy has eased pressures on a number of programmes, giving the Government more scope than ever before to shift resources where their own priorities, rather than circumstances, dictate. The details of these and other changes are provided in the material in the Vote Office and more details will be published in the printed Autumn Statement next week.

    I turn next to national insurance contributions. The Government have conducted the usual autumn review of contributions 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 which my right hon. Friend the Secretary of State for Social Security made last week.

    The lower earnings limit will be increased next April to £43 a week, in line with the single person’s pension, and the upper earnings limit will be raised to £325 a week. The upper limits for the 5 per cent. and 7 per cent. reduced rate bands will also be increased, to £75 a week and £115 a week respectively. The upper limit for the 9 per cent. rate for employers will be raised to £165 a week.

    Over recent years, we have steadily reduced the Treasury supplement, the taxpayer’s contribution to the national insurance fund. From 18 per cent. in 1979, it now stands at 5 per cent. My right hon. Friend and I now propose to carry this policy to its logical conclusion and to abolish the supplement altogether. The necessary legislation will be introduced early in the new Session.

    However, because of the healthy state of the national insurance fund, this decision will not require any increase in contribution rates. Thus, the main class I contribution rates will remain unchanged at 9 per cent. for employees and 10·45 per cent. for employers.

    Finally, I turn to the Industry Act forecast. Growth this year looks to be turning out at 4½ per cent. compared with the 3 per cent. growth forecast at the time of the Budget. Investment is particularly strong, growing twice as fast as consumption, with manufacturing investment expected to show the biggest rise of all, at 18 per cent. Indeed, it is striking that total investment has grown almost twice as fast as total consumption over the whole of the past five years.

    The continuing vigour of the British economy is testimony to the transformation that has taken place in the supply side of the economy, a transformation which has enabled the seven years to 1988 to record a combination of strong and steady growth unmatched since the war.

    As a result, unemployment has been falling rapidly. Since the middle of 1986, it has fallen by very nearly 1 million—the largest fall on record.

    Over the past year, unemployment has fallen faster in the United Kingdom than in any other major country.

    Inflation, as measured by the retail prices index, is likely to be a little over 6 per cent. in the fourth quarter of this year. Part of the rise in recorded inflation reflects the impact on mortgage payments of the higher interest rates needed to tighten monetary policy and thus get inflation firmly back on a downward trend. Excluding mortgage interest payments, the RPI in the fourth quarter is likely to be around 5 per cent., compared with the 4 per cent. rise in the RPI forecast at the time of the Budget.

    Exports have continued to perform well, with manufactured exports up 7½ per cent. over the past year. Over the past seven years, the United Kingdom’s share of world trade in manufactured goods has remained steady after decades of decline. However, with investment booming, and consumer spending increasing fast, total imports have grown even faster than exports, rising by 13 per cent. in the year to the third quarter. This has led to a substantially greater current account deficit than forecast at the time of the Budget. For 1988 as a whole, this now looks like turning out at some £13 billion, equivalent to 2¾ per cent. of GDP. The stronger than expected economic growth this year means that total tax revenues are likely to exceed the Budget forecast by £3½ billion. Both income tax and VAT have been particularly buoyant.

    In the Budget, I set a public sector debt repayment—or PSDR—for 1988–89 of £3 billion, equivalent to around ¾ per cent. of GDP. With higher than expected Government revenues and lower than expected public expenditure, this year’s PSDR now looks likely to turn out at some £10 billion, equivalent to over 2 per cent. of GDP.

    This will be the second successive year of debt repayment, something that has not hitherto been achieved since records began in the early 1950s. Moreover, this year, the Budget would still be in surplus, by some £4 billion, even if there had been no privatisation proceeds at all. No other major economy has such sound public finances.

    Looking ahead to 1989, the economy is forecast to grow by a further 3 per cent., with domestic demand also up by 3 per cent. Once again, investment is expected to grow considerably faster than consumption, and once again unemployment is expected to fall.

    The slower growth forecast for 1989 inevitably implies a marked deceleration during the course of the year, particularly so far as domestic demand is concerned. Thus, comparing the second half of next year with the second half of this year, overall growth is forecast at 2½ per cent., and growth in domestic demand at only 1½ per cent.

    The current account deficit is likely to fall only slightly, to some £11 billion, or 2¼ per cent. of GDP.

    Inflation, while it will inevitably continue to edge up for some months to come, is forecast to peak at some point in the middle of next year before falling back again to 5 per cent. by the fourth quarter.

    In short, after two years of unexpectedly rapid expansion, growth next year is forecast to return to a sustainable level, and one which compares well with the economic performance of the 1970s, while inflation will resume its downward path.

    The public finances are in substantial surplus and will remain so, with public spending on priority programmes continuing to increase, while overall public spending continues to fall as a share of GDP, to a level in 1991–92 not seen for a quarter of a century.

    The prospect that lies before us is yet further testimony to the success of the policies we have been pursuing these past nine and a half years and will continue to pursue, and to the economic transformation that those policies have wrought.

  • Nigel Lawson – 1985 Autumn Statement Speech

    Below is the text of the Autumn Statement speech made by Nigel Lawson, the then Chancellor of the Exchequer, in the House of Commons on 12 November 1985.

    With permission, Mr. Speaker, I should like to make a statement.

    I am laying before the House today an autumn statement which brings together the Government’s outline public expenditure plans, proposals for national insurance contributions next year, and the forecast of economic prospects for 1986 required by the Industry Act 1975.

    This year’s autumn statement contains considerably more information than its predecessors. It breaks new ground by providing a forecast of the public expenditure outturn for 1985–86 for each Department, and the plans not just for the year immediately ahead but for each of the next three years. Both these innovations meet specific requests from the Select Committee on the Treasury Civil Service and I hope that they will be welcomed by hon. Members.

    The outturn for this financial year is expected to be the same as set out in the Budget, that is, £134 billion. After allowing for inflation, this is lower than last year, which bore the brunt of the public expenditure cost of the coal strike.
    The Government will continue to maintain firm control over public spending.

    Following this year’s review, the planning totals for 1986–87 and 1987–88 will be held to the levels set out in the Budget —£139 billion and £144 billion, respectively. For 1988–89 the total has been set at £149 billion. Over these three years public spending in real terms is expected to be broadly flat at very slightly below this year’s level. As a percentage of national output it will continue to decline as it has since 1982–83. By 1988–89 it should be back to its lowest percentage since 1972–73.

    In order to meet contingencies, the plans contain large reserves, rising from £4½ billion in 1986–87 to £8 billion in 1988–89. The reduction in the reserve for 1986–87 as compared with the provisional reserve for that year, which I announced at the time of the Budget, chiefly reflects the fact that the passage of time allows part of the reserve in any given year to be allocated to individual expenditure programmes as their costs become known more accurately. But the £4½ billion reserve for the year immediately ahead remains a substantial figure.

    Although I expect the planning total for 1985–86 to be the same as I did at the time of the Budget, the public sector borrowing requirement—subject to the usual margin of uncertainty at this time of year—is forecast to be about £ 1 billion higher—some £8 billion rather than £7 billion. This is due to lower sterling oil revenues. But even at £8 billion the PSBR would be the smallest that it has been as a percentage of GDP since 1971–72.

    The PSBR would, of course, have been running at a higher level than this were it not for the proceeds from privatisation, to which I will turn in a moment. But even without the privatisation proceeds, this year’s forecast PSBR would still be the smallest as a percentage of GDP since 1971–72.

    The Government’s privatisation programme is now getting into top gear and will continue for many years to come. [Interruption.] I am glad to see that the Opposition welcome that. I cannot stress so strongly the importance of this programme—now being emulated throughout the world—as a fundamental objective of Government policy. The transfer of state-owned businesses to the free ​ enterprise sector of the economy brings enormous long-term benefits to the nation as a whole in terms of greater concern for the customer and increased efficiency. It also provides the opportunity for a massive boost to wider share ownership, among both the public in general and the employees of those great enterprises in particular.

    The increased pace of privatisation means that the proceeds from this programme will rise substantially from £2½ billion this year to £4¾ billion in each of the next three years. In particular, the planned flotation of the British Gas Corporation is included for the first time. At the same time, however, there have been increases in a number of public expenditure programmes, so that the overall planning totals have remained unchanged.

    However, this needs to be seen in perspective. Even if the proceeds from privatisation were to be ignored altogether, the public expenditure planning total would still be broadly flat in real terms, at less than 1 per cent. above this year’s total, and public spending would still be on a steadily declining path as a percentage of GDP, reaching by 1988–89 its lowest level since 1972–73.

    The annual review of public spending provides an opportunity to reconsider priorities and adjust the balance between programmes. While some programmes this year have been held back, it has been possible to make significant additions to others.

    There will be increased spending on the National Health Service over previous plans of £250 million in 1986–87 and £300 million in 1987–88. On top of this, health authorities are able to spend the savings from their cost improvement programmes, which are expected to amount to £150 million this year and still more in future years. This should enable health authorities to meet demographic pressures and to deliver improvements in services as well.

    Total public sector provision for housing is being increased by £220 million net of receipts in 1986–87 and £200 million in 1987–88, and the housing plans now provide for some £3¼ billion of capital spending next year. Within this total, the Government believe that there should be a substantial shift in priorities in favour of renovation of the existing public sector housing stock.
    An extra £54 million in 1986–87 and £71 million in 1987–88 is being made available for capital expenditure on national and local roads.

    Just over £1 billion is being added to the social security programme for 1986–87, largely as a result of the 7 per cent. increase in benefits taking effect this month. Expenditure in the subsequent years of the survey period is subject to decisions on the Government’s social security review, on which a White Paper will be published shortly.

    Additional provision has been made under the law and order programme to allow local authorities to direct extra spending towards the police.
    For defence, the provision is unchanged. After the substantial real increases in spending since 1978–79, from which the defence programme will continue to benefit, the emphasis must now switch to improving our defence capability through greater efficiency and value for money, especially in procurement.

    On employment, there were large additions in the Budget to fund an expansion of the youth training scheme and the community programme. In this survey, a number of new initiatives have been agreed, but savings are to be made by a reduction in payments from the redundancy ​ fund. My right hon. and learned Friend the Paymaster General will be making a statement giving further details later today.

    There have been significant improvements in efficiency and value for money in many programmes. It is a great mistake to fall into the trap of measuring public expenditure programmes solely in terms of the money put into them: it is improved output that matters.

    Further details of these and other changes are contained in the autumn statement itself, and of course full details, together with information on running costs and manpower, will be given in the public expenditure White Paper to be published early in the new year.

    I now turn to national insurance contributions. The Government have conducted the usual autumn review of contributions in the light of advice from the Government Actuary on the prospective income and expenditure of the national insurance fund.

    The lower earnings limit will be increased next April to £38 a week, in line with the single person’s pension, and the upper earnings limit will be similarly increased to £285 a week, broadly in line with earnings.

    I announced in the Budget reduced rates of contribution for the lower paid and their employers—5 per cent. for those earning up to £55 a week, 7 per cent. for those earning up to £90 a week and 9 per cent. for employers of workers earning up to £130 a week. These took effect at the beginning of last month and are already starting to provide welcome assistance to the low paid and their employers, and a stimulus to the employment of the young and unskilled.

    The limits for these reduced rate bands will also be increased from April, in line with the lower and upper earnings limits, to £60, £95 and £140 a week, respectively.

    There will be no change in the main class 1 contribution rates, which will remain at 9 per cent. for employees and 10·45 per cent. for employers. This is the third year running in which national insurance contribution rates have been held constant, despite a growing number of pensioners and the substantial uprating of benefits taking effect later this month.

    My right hon. Friend the Secretary of State for Social Services will this afternoon announce details of these proposals, and will lay before Parliament the necessary order and the accompanying report by the Government Actuary.

    Finally, I turn to the Industry Act forecast. The economy is progressing very much as I envisaged at the time of the Budget. Inflation is falling again, after the predicted temporary rise in the spring, although I now expect inflation in the fourth quarter of this year to be slightly above the Budget forecast: 5½ per cent. rather than 5 per cent.

    The overall growth of the economy this year still looks like turning out at 3½ per cent.—the highest rate of growth since 1973.

    The pattern of growth, too, has been much as envisaged. Exports and business investment, as expected, were the fastest growing elements in demand in 1985. The rise in total investment is now put at 4 per cent. in 1985; within this figure business investment is expected to be up by 7 to 8 per cent., to yet another all-time record.

    As a result of this steady progress, there has been a substantial growth in the number of people in work since ​ 1983. This has now been reflected in a levelling out in unemployment—albeit still at a sadly high level, not least because of the rapid growth in the total labour force. The prospect here is for some further improvement, assisted by the measures I announced in the Budget to help on the jobs front, which will have their main effect in 1986. But that improvement could easily be put at risk by excessive pay settlements.

    The prospect for 1986 is one of continued growth and still lower inflation. The composition of growth is likely to change somewhat, with consumer spending taking up the running as exports—which had an exceptional rise of 7 per cent. this year—grow more slowly. The current account balance of payments surplus is forecast at £4 billion, compared with £3 billion in 1985. Fixed investment is expected to grow, once again, slightly faster than the economy as a whole.

    Overall, the economy in 1986 is expected to grow by a further 3 per cent.—the fifth successive year of growth at an average of 3 per cent. a year, and into the sixth, the best performance since before the first oil shock. At the same time, inflation is expected to fall further, to 3¾ per cent. in the fourth quarter of 1986.

    Indeed, if the forecast is correct—and I am the first to admit its inevitable fallibility—1986 promises to be the first year since the ‘sixties when inflation and growth will be within one point of each other. What is beyond doubt is that we are now achieving the steady growth with low inflation which successive Governments have sought in vain for a generation.

    All in all, Mr. Speaker, the progress and prospects I have described amount to the clearest possible vindication of the policies we have been following these past six years, and will continue to follow.

    The autumn statement is now available from the Vote Office, and the House will no doubt wish to take it into account when we debate the economy tomorrow. The framework of public expenditure control which it sets out should allow scope for considered and justified reductions in the burden of taxation; and these in turn will further reinforce the economy’s flexibility and dynamism. It is on that prospect that the future prosperity of all our people depends.

  • Nigel Lawson – 1993 Maiden Speech in the House of Lords

    Below is the text of the maiden speech made by Nigel Lawson in the House of Lords on 14 July 1993.

    My Lords, I am most grateful to the noble Lord, Lord Jenkins—who has just sat down—for his expression of interest in what I am about to say. I shall try not to take too long in saying it. I suspect it is somewhat unusual, although I believe by no means unprecedented, to make one’s maiden speech during the course of the Report stage of a Bill. To those of your Lordships who feel affronted by my departure from custom, I can only apologise but perhaps plead in mitigation that this is no ordinary Bill and that this amendment is no ordinary amendment; not to mention the fact that, having had the privilege of being a Member of your Lordships’ House for a year, it was probably about time that I broke my cluck anyway.

    It is a particular pleasure to speak in a debate initiated by my noble friend Lord Blake. My noble friend was my politics tutor when I was an undergraduate at Oxford some 40 years ago. I may say that he survived the experience remarkably well. As a result, I always pay particular heed to what he has to say.

    It seems to me that at the heart of this debate lie two distinct questions. The first is whether a consultative referendum has any part in our constitution; the second is whether, if so, this Bill provides one of those rare occasions on which such a referendum is called for.

    As to the first of those questions, I am happy to agree with my noble friend Lord Blake. The precedent that has to some extent inadvertently been set in recent years, that fundamental constitutional change be put to the people in a referendum, is one that I welcome. I welcome it because it buttresses a constitution that is badly in need of buttressing. But I have to agree with my noble friend the Leader of the House that those who advocate a referendum on Maastricht do not strengthen their case by praying in aid the fact that at the last general election all three political parties were in favour of Maastricht, thus depriving the electorate of the possibility of casting a vote against it. Even if that had not been so, a general election is not an occasion on which a single isolated issue can be put to the people, as Mr. Heath discovered in 1974.

    But much more importantly, all-party agreement is not the only way in which the people can be deprived of the opportunity to vote against a proposal. It happens all the time. The people had no opportunity, for example, to vote against the Single European Act, which was ushered through Parliament under the leadership of my noble friend Lady Thatcher. As an issue it was not even in contemplation at the time of the 1983 general election and by the 1987 election it was already a fait accompli.

    No, the question—it is an important question—is simply whether, unlike the Single European Act, the Maastricht Treaty involves such a fundamental change to our constitution and such a grave loss of national and parliamentary sovereignty that it should, on those grounds and those grounds alone, be put to the people in a referendum first before final ratification can be contemplated.

    Those who claim that the objective of the architects of the Maastricht Treaty is to replace the European Community of nation states by a single European superstate are clearly right. There is nothing disreputable about such an objective, although for my part, as a longstanding proponent of European unity, I believe it to be profoundly mistaken and, if it were ever to be imposed on the peoples of Europe, a blueprint for disaster. But I repeat: there is nothing disreputable about it. All that might perhaps be considered disreputable would be to deny that that is the objective of the architects of the Maastricht Treaty, since it manifestly is so.

    But the question to which we have to address ourselves is whether the Maastricht Treaty in fact achieves or can be expected to achieve that objective. The heart of the Maastricht Treaty and the means by which its federalist architects seek to achieve their political objective is monetary union, the replacement of the individual European currencies and central banks by a single European currency and a single European central bank. That is the heart of it.

    I believe that there are two distinct constitutional dimensions to it. In the first place the loss of one’s national currency and of the ability to possess a national monetary policy is in itself a constitutional change and a loss of national autonomy of the first importance. But it does not stop there. It is envisaged that monetary policy ‘would be conducted by a European central bank which is politically independent.

    The idea of central bank independence has aroused increasing interest in recent years. I myself have long made clear that I favour conferring independence, within an appropriate statutory framework, on the Bank of England. But what is agreed on all sides—and the Prime Minister recently made this point in another place—is that in a democracy independence must be accompanied, as indeed it is in all those countries that already possess an independent central bank, by accountability. That involves both co-operation with the elected government of the day and open accountability to Parliament. So long as there is no single European government and no genuine Single European Parliament, a European central bank, which would arguably be the most powerful entity in the entire Community, would be effectively unaccountable and thus democratically unacceptable.

    As the architects of Maastricht are doubtless aware, the only way in which that dilemma could be resolved would be to create the European political institutions of a genuine European Parliament, a European finance ministry and a European government that democracy itself would then demand. Thus would the superstate be born. However, in regard to this country, none of that is in the treaty before us today, containing as it does a protocol specifying that the United Kingdom shall not be obliged or committed to move to the third stage of economic and monetary union without a separate decision to do so by its government and Parliament. It is of course only at the third stage that the single European currency and European central bank are planned to come into being.

    It is clear that Her Majesty’s Government, by negotiating that protocol, recognised the special political and constitutional significance of monetary union. Without monetary union the Maastricht Treaty is not, in my judgment, of any greater constitutional importance than the Single European Act (in the preamble to which, incidentally, the objective of monetary union was for the first time brought back to life from the grave in which it had lain since the collapse of the Werner plan in the mid-1970s).

    However, should there come a time when this or any future British Government are so unwise as to conclude that this country should participate in a European monetary union, with all its political consequences, that would be a decision of such momentous constitutional significance as to warrant not merely the separate approval of Parliament at a time as provided for in the treaty before us, but also a prior referendum of the British people. Unless and until that time arrives—and for a number of reasons I rather doubt that it ever will—I do not believe that the case for a referendum is made and I shall vote tonight accordingly.

  • Nigel Lawson – 1974 Maiden Speech in the House of Commons

    Below is the text of the maiden speech made by Nigel Lawson, the then Conservative MP for Blaby, in the House of Commons on 1 April 1974.

    Thank you, Mr. Deputy Speaker, for allowing me to catch your eye for the first time, on All Fool’s Day, too—a date whose appropriateness to the occasion of a maiden speech needs no underlining.

    This has been a wide-ranging debate, and I could not pretend to be able to follow all its twists and turns, but I am particularly glad to have had the opportunity of speaking after the hon. Member for Blyth (Mr. Milne), whose presence here is a symbol of a form of security of tenure which all of us have deeply at heart, although he has perhaps caused a lot of trouble at the United Nations.

    The new constituency of Blaby, which I have the honour to represent, is in South Leicestershire. It is roughly 60 per cent. of the old Harborough division, whose Member, happily, continues to serve here as Member for the new Harborough division. Therefore, for me to pay the customary tribute to my predecessor would in the circumstances perhaps be in questionable taste—rather like publishing an obituary of the living. Therefore, I shall simply say that it is my ambition to serve my constituents as well as my hon. Friend did when they were his constituents.

    Blaby is in a real sense the centre and heart of England. It is there that those two great Roman roads, Watling Street and the Fosse Way, cross. To come to the present day, it is in Blaby that the M6 meets the M1. As hon. Members of a monetarist persuasion will instantly recognise, that leads me logically to the subject of the Budget.

    As a former professional Budget-watcher it was easy for me to recognise the parentage of this beast. It is by the TUC cart horse out of the Treasury grey mare. Therefore, I was not in the least surprised to hear the Chancellor of the Exchequer say that later in the year he intends to introduce a Budget of his own. In view of the speeches made earlier today, many of us on the Opposition side of the House would rather it was the Chancellor of the Duchy of Lancaster who introduced the subsequent Budget. However, I have always believed that every Chancellor should be allowed at least one Budget of his own. I am sure that will be the case on this occasion.

    In his Budget speech the Chancellor said: Unless we can somehow halt the accelerating inflationary trends in our economy, the resulting political and social strains may be too violent for the fabric of our democratic institutions to withstand.”—[OFFICIAL REPORT, 26th March 1974; Vol. 871, c. 290.] Those were sombre words, but I fear that the right hon. Gentleman did not exaggerate. Yet there was nothing in that long and complex Budget which did anything to halt the Gadarene stampede to which he referred. Indeed, some measures in it may actively make matters worse. It seems that everything has been staked, indeed gambled, on the success or failure of the so-called social contract between the Government and the trade unions—the philosophy, we are told, on which the Budget has been based.

    A social contract is all very well, but, like my right hon. Friend the Member for Worcester (Mr. Walker), I found it difficult, in looking at the Budget in detail, not to be a trifle sceptical about it. Are we supposed to believe that the stony heart of the militant shop steward will melt at the thought of paying more for his cigarettes, petrol and beer in order to allow his wife to pay a little less for bread and milk? Perhaps this rather touching picture of male altruism is well founded, but I doubt it. It seems to me more likely that the Labour Party, which has always had a strange predilection for sacred cows, has gone one step further and now believes in sacred milk, too. Are we to believe that the great mass of trade unionists will suddenly be reconciled to the paths of moderation in wage claims by the knowledge that in future 33 per cent., and not 30 per cent., of any wage increase will be taken from them in tax? That applies to a married man, with two small children, earning as little as £25 a week. If hon. Gentlemen do not believe it, they should look at Table 17 in the Red Book.

    Are we meant to suppose that trade union activists will feel that an extra 2½ per cent. rise in the cost of living imposed by the Chancellor of the Exchequer “at a stroke” is a small price to pay for the promise that one day there will be a wealth tax?

    The social psychology of clobbering the rich is a subject deserving of study. As one close student has written, there is a curious tendency within the Labour Party towards a suspicious, militant, class-conscious Leftism. That is the observation of the right hon. Gentleman the Secretary of State for the Environment in that classic work, “The Future of Socialism”. Can it be that fostering this suspicious, militant, class-conscious Leftism is compatible with the stirring cry for national unity which the Chancellor made the theme of his peroration in his Budget speech?

    Perhaps, after all that, it is not to the Budget that we should look for the key to the so-called social contract, the sop to the trade unions. Perhaps, instead, that key, that sop, is to be found elsewhere—in the repeal of the Industrial Relations Act and the “Footwork” that we are told will replace it. At first sight, that seems to be a more plausible candidate, but, even so, there is something curious about it.

    When I was listening recently to the eloquent oration of the Secretary of State for Employment, I was struck by the passage in his speech in which he accused the previous Conservative Government of having conceived of the statutory incomes policy as a kind of blunderbuss to brandish in the face of the Trades Union Congress and say to it ‘Stand and deliver’.”—[OFFICIAL REPORT, 18th March 1974; Vol. 870, c. 697.] Most people in the country, and certainly the great majority of my constituents in Blaby, would say that if there is anyone these days who is inclined to say “Stand and deliver”, it is the big trade unions. One of the more endearing characteristics of the right hon. Member for Ebbw Vale (Mr. Foot) is that he is inclined to live in the past. No doubt he imagines, even today, that he is marching alongside the Tolpuddle Martyrs or fighting the Taff Vale decision. But the rest of us know that times have changed and with them the balance of industrial power—and the balance of weaponry, as some of his right hon. Friends can testify. Some of us recall, during the celebrated “In Place of Strife” saga, the plaintive cry addressed by the Prime Minister to Mr. Scanlon, “Get your tanks off my lawn, Hughie”. I am afraid that Hughie’s tanks are still on the Prime Minister’s lawn and, in the light of that, the present Government’s intentions towards trade union law in general and picketing in particularly are thoroughly alarming.

    If I may draw an analogy following the “blunderbuss” of the right hon. Member for Ebbw Vale, there is in the United States considerable concern over the constitutional right of every citizen to bear firearms and the violence and bloodshed that result from it. Sensible people there are campaigning to try to get the right limited by law. The position of the Government in a similar situation boils down to saying, “Of course people will be frustrated if they have only rifles, and this will lead to violence. For real peace and good order you should let them have machine-guns, or even bazookas.” That is a serious point. The central problem of our time, however much hon. Members on the Government benches may try to hide away from it, is the problem of the abuse of trade union power. If a social contract is to mean anything, it must mean that that power has to be used responsibly, but we will not ensure that by enlarging that power, or making its abuse still easier.

    The link between trade union power and wage inflation sheds a spotlight on the basic fallacy that underlies the social contract/egalitarian approach. The mechanism of wage inflation rests on two simple and unequivocal facts. First, there are more groups of workers who feel strongly that their relative pay in relation to that of other groups of workers should be improved than there are groups who feel that their relative position should be allowed to deteriorate. Secondly, many of these groups—not all—have the economic and industrial power to be able, at least in the short term, to force the relative improvement they seek.

    No amount of egalitarianism—of clobbering the so-called rich in the sacred name of the social contract—can make the slightest difference to this central issue. The right hon. Gentleman the Chancellor of the Exchequer can have Mr. Harry Hyams hanged in public—and drawn and quartered, if he so wishes—but it will not make a jot of difference to the differing views of ASLEF and the NUR on the relative standing of their respective members. Why should it? Again, the right hon. Gentleman can, if he likes, impose a 90 per cent. capital levy on second, third, fourth or even fifth homes, but it will not make the slightest difference to the view taken by mineworkers about their position in the industrial league table. Again, why should it?

    Let us suppose that it made sense for the Government to base all their hopes on the all-important struggle against inflation on the social contract. The crucial fact remains that there can be no such thing as a contract, social or otherwise, unless there are sanctions against those who break it. The question is—and this is the crux of the matter—what are the sanctions to be against the TUC or its member unions if they break the social contract which the Government are currently endeavouring to negotiate?

    There are three, and only three, possible answers. The first is that the Government could stand by and allow the strongest groups to grab what they can, but refuse to increase the money supply accordingly. They could let events take their course so that there are bankruptcies, falling real wages and large scale unemployment among the groups which are less strong. The second possible sanction is to take the “free” out of free collective bargaining, which would envisage a return to the statutory incomes policy and all that—assuming we ever leave it. The third possibility is to take the “collective” out of free collective bargaining, and move to curb trade union monopoly power—which sooner or later is bound to happen.

    The question to which we want an answer is which of those three possibilities is to be chosen by the Government. It must be one of those three choices. What is to be the sanction against breach of the social contract? Trade union members have a right to know the small print of the contract which they are being asked to enter into. But, above all, we in this House and the country have a right to know, and I trust that we shall be given the answer before this debate draws to a close tonight.

    Before entering the Chamber tonight, I took the trouble to read an essay which appeared in the Spectator on the subject of maiden speeches. It was written by my predecessor as editor—Iain Macleod, whose loss to this House, to the Conservative Party and to the country is still deeply felt by all of us. His principal piece of advice—indeed his only practical advice—was that a maiden speech should on no account exceed 15 minutes. I apologise to the House, for I fear that I may have transgressed that advice, but I shall try to do better next time.

    Mrs. Renée Short (Wolverhampton, North-East) The conventions of the House require that I congratulate the hon. Member for Blaby (Mr. Lawson) on his maiden speech. He delivered it very well and was rather witty at the expense of trade unions. He talked about militant shop stewards. But his view of the trade union movement is as inaccurate as his recollection of the figures contained in my right hon. Friend’s Budget speech. I do not recognise the trade unionist whom the hon. Gentleman described as being the militant trade unionist who would not be prepared to sit back while some of the lower paid and weaker elements in our society got a rather better deal such as that which my right hon. Friend has offered them. Nor do I congratulate the hon. Gentleman on the accuracy of the figures which he quoted. He said that a married man with two children and an income of about £30 a week would pay more in income tax. He is wrong—

    Mr. Lawson rose—

    Mrs. Short I am not giving way.

    Mr. Lawson The hon. Lady is wrong—

    Mrs. Short I repeat, I have not given way to the hon. Gentleman. A married man with two children earning that sum will pay £47 per annum less in income tax. In fact, he can earn £3,000 a year and still pay less tax—

    Mr. Lawson rose—

    Mrs. Short No. I will not give way.

    Mr. Peter Rees Give way to a maiden.

    Mrs. Short I hope that the hon. Member for Blaby will be a little more accurate in future when he quotes figures—

    Mr. Lawson rose—

    Mr. Deputy-Speaker (Mr. George Thomas) Order. If the hon. Member for Wolverhampton, North-East (Mrs. Renée Short) does not give way, the hon. Member for Blaby (Mr. Lawson) must himself give way.