"If it doesn't hurt, it doesn't work." The management of John Major at the head of the British Government has been marked by this sentence, which he effectively pronounced on more than one occasion, even though his context gave it the nuance that history has erased. Although more than due to his successes, very relative to him, the young Minister of the Economy in Margaret Thatcher's Cabinet made a fortune due to his firm management skills.
His political career was meteoric thanks both to his constant determination, the same one that led him to obtain a degree in financial management by correspondence, and to the opportunities that he always found along the way. And especially to his connection, when he was already a deputy in the House of Commons, with the prime minister whom he would end up replacing.
It was precisely Thatcher who promoted him as a parliamentary private secretary – a kind of second – in the Ministry of the Interior, a position that soon led him to occupy the Secretary of the Treasury and Foreign Affairs. He until he took over the Economy portfolio after the resignation of Nigel Lawson, faced with the premier, in October 1989. All this in a period of just two years.
The minister made the banner of the fight against inflation and for this he did not hesitate to adopt a pragmatic position and rely on the stability that the European Union could offer, even though it clearly contrasted with the Eurosceptic positions of the Executive. He went so far as to include the pound in the European Exchange Rate Mechanism. A decision that would end up leading to Black Wednesday in September 1992, when the currency sank despite the fact that the then Minister of Economy, Norman Lamont, changed interest rates up to four times in one day to try to save it from the debacle.
However, Major managed to maintain economic stability and was once again there to stand up for the most conservative sector of the party. Especially when Margaret Thatcher was forced to respond to the resignation of her first deputy minister, Geoffrey Howe, in November 1990, given the drift that the Conservative Party and the Government had taken. Thatcher did not hide and accepted the challenge of submitting to a vote for the leadership of her party against Michael Heseltine, Secretary of the Environment.
Although she won comfortably, the prime minister did not obtain the absolute majority required by the party's electoral mechanism and was forced to go to a second round. She did not do it. In this she resigned in favor of Major, to whom she offered her support. On the verge of an absolute majority, but without the need to achieve it, the candidate from the most conservative sector ended up prevailing.
This is how on November 28, 1990, at the age of 47, John Major assumed the position of Prime Minister and formed a new Government endorsed by his management at the head of the Ministry of Economy. Barely a month earlier, at the Conservative Party Congress that elected him as the new leader, he offered the keys to the economic policy that would mark his mandate in a speech that we offer in excerpts.
The premier revalidated his position in the elections he called by surprise in 1992, achieving a record 14 million votes and the fourth consecutive victory for the Tories. However, although he managed to see how his prescriptions worked by restoring economic growth in 1993, the weight of the crisis and the adjustment measures ended up becoming the best ally of Labor.
In the opposition, the figure of another young politician, Tony Blair, unexpected leader of labor after the death due to a heart attack of John Smith in 1994, had just burst in. It was he who ended up putting an end to 18 years of government in the 1997 elections conservative.
“Let me immediately move on to the concern that I know is on most people's minds. Two years ago inflation seemed defeated. Continued growth, falling taxes, rising prosperity... That was what people expected.
”So we ran into difficulties. In essence, the case was simple. We grew up too fast. We spend too much. We save very little. And a lot of what we spent was borrowed. The result was domestic inflation and a trade deficit.
”Our goal must be to get back on track: most importantly, reduce inflation; and then delete it. And we must close that trade gap. Right now we import far too much of what could and should be made here in the UK.
“Too often, our industry, especially manufacturing, is portrayed as the weak link in our economy, constantly in need of a crutch. That image is an insult to the industry, because it's simply not true. The manufacturing industry is fitter and more competitive than it was years ago. It is attracting more and more of the best and brightest of our young
”An independent report recently argued that the UK has the potential to become Europe's manufacturing dynamo in the 1990s. We have provided the right tax regime, the best in Europe. We have provided the appropriate labor relations framework, the best in Europe. Now we have to combine that with the right low-inflation economy and make it the best in Europe.
“On Monday this week we took a historic step when sterling joined the European Exchange Rate Mechanism. No one should think that this will be an easy option. Or soft. It is not a quick fix. And it was not intended as such. It will not eliminate the need for strong internal policies. But it will help us lower our rate of inflation and keep it low.
”Belonging to this mechanism will not overnight make it easier for our industry to compete in Europe. But it will help keep the exchange rate stable and provide the certainty of which industry you need to plan for the future. And we have entered a pace at which the industry can compete. Now it's up to them to stay competitive by keeping costs low.
But let me correct a misconception that seems to have surfaced. Joining the European Exchange Rate Mechanism does not mean that we are now on a path that leads inexorably to a single currency. It shows once again that we take our commitment to Europe seriously. But we also mean seriously that we cannot accept the Delors plan and we will continue to push our own alternative which we believe will better promote European integration and keep the Community together.
”Joining was not a light or casual decision. But it was the right thing. And it will allow us to fight inflation as the poison in the economy that must be destroyed. Only then can we take further steps to reduce interest rates and mortgage rates. I fully understand the difficulties faced by many individuals and many small businesses. But I also know that the countries that achieve the lowest inflation rates are the countries that will enjoy the lowest interest rates.
”The problem with inflation is that the good news comes first: more money, cheap goods, increased production. But the undesired consequences happen: skyrocketing prices, companies going under, jobs lost...
”But the cure works the other way around: high interest rates, bankruptcies and belt tightening come first. And it is from then on that we already obtain stable prices, competitive businesses and a growing economy. In the last few months we have been right at the unpleasant end of the cycle: feeling the pain, but not yet seeing any of the benefits.
”Although oil prices have not been fully reflected in the retail price index, I now have no doubt that inflation will fall sharply over the next year. That will be next year's reward thanks to this year's policy.
”And there is one more point. The first time I addressed this Conference was as Minister of Social Security. Then I realized that many retirees were recipients of aid. Not because they were irresponsible. They were not. Not because they hadn't saved. They needed these benefits because the runaway inflation of the 1970s destroyed the value of their savings. I think that was inexcusable; we must never allow it to happen again.
“In recent weeks we have heard very little of these realities from the Labor Party. One of the main causes of our current difficulties is that, after the stock market crash in 1987, we lowered interest rates too quickly. In retrospect, it was a mistake. But we did it because we feared the recession. It was the same thing that was raised by everyone at the time: economists, businessmen, pundits, even – God help us – the Labor Party.
”We have always had a long-term vision, to make fundamental changes, often controversial at the time. Deregulate, denationalize, allow businesses to flourish and encourage people to take responsibility for their own lives. This approach is usually less expensive than promising that the government will do everything for everyone. But, in eleven years, it has improved future prospects beyond all recognition.
”The changes we've introduced bring options and opportunities to millions of people who never had them before. That is what we have achieved in the last eleven years. It is a truly remarkable achievement. And it could not have happened without the leadership of Margaret Thatcher.
”And that is what we must continue to build in the future. In doing so, the Labor Party will accuse us of being materialistic. I plead guilty. In that position they admit the dramatic improvements in living standards that we have achieved. Of course, the accusation is meant to make us look selfish. But he gets it.
”What such materialism means to many people is that they are better fed, better clothed and better housed than ever before. They own houses, cars, washing machines and televisions, on a scale that previous generations never dreamed of. They live in a society where literature, art and music are available in abundance. In which political and personal freedom are taken for granted. In which the class barriers that previously strangled social mobility disappear.
”And what our opponents cannot stand is that they live in a society that knows that it is the free market and capitalism that have achieved this improvement. Because here, as everywhere, the market economy has won the political, social and economic argument and socialism has lost.
”Since 1979 we have rebuilt a market economy; we have untangled the bureaucracy, we have denationalized the industries and reformed the unions. And it has worked. We entered the 1990s in incomparably better shape than the 1980s.
”Investment is much higher, there are more people working, the real take-home pay is higher, strikes have been drastically reduced and half of the state sector is privately owned again. And the prizes before us now are enormous. The 1990s will be a period of immense opportunity. Increased trade will flow from the completion of the Single Market and the opening of the Eastern European economies.
”I have no time for misery mongers without faith in our future. It's about time people stop talking bad about this country and start doing it right. For much of the 1980s, the British economy outperformed the rest of Europe.
”Foreign investors have shown their trust in our country and our workers, and that is why we attract more domestic investment than any other European country. We should have more faith in ourselves. And that should be one of our goals for the 1990s.
”And when inflation goes down, as it will; when interest rates can be prudently lowered, as they can be done in due time; when the eleven-year improvement in the economy brings more prosperity, as it should, the electorate will know which way to go.
”Once again, you will put your trust in a government that delivers. He keeps his word and stays calm. Who knows what we should aim for and plans how to achieve it. A Government, above all, with the will, the authority and the strength to succeed.”
