Major rejects Thatcher view on manufacturing: PM criticises economic inheritance and highlights honours reform in an interview with Andrew Marr

THE PRIME Minister has repudiated the Eighties view that manufacturing industry is not economically essential, and criticised the economic inheritance left him by Margaret Thatcher.

In an interview with the Independent, John Major said he 'passionately believed' Britain needed a bigger industrial base: 'services aren't enough.'

Questioned on the Thatcherite orthodoxy that emphasised the service sector, he retorted: 'I don't agree with it. I didn't agree with it in the Eighties. I was a minority view in the Eighties; I am not a minority view now and, anyway, I am in a better position to expound my views.'

Asked what he was going to do to boost engineering, he replied: 'I think you have to consider firstly the inheritance I had when I became Prime Minister: we had 15 per cent interest rates, inflation just under 11 per cent; there was no certainty interest rates wouldn't go up and no certainty that inflation wouldn't go up.'

He also sees his planned changes to the honours system as part of a wider agenda of Whitehall reforms, privatisations and deregulation, answering the charge that his Government lacks radical fire. On manufacturing, he called for 'a different attitude to industry and commerce'. Britain had undervalued engineering skills.

There was a danger that, as Britain emerged from the recession, exporters would forget the overseas market and turn back to the soft domestic market: 'we dare not do that' because unless the country remained at the leading edge of technology, 'we will not grow and thrive throughout the Nineties; so we have to change our attitudes'.

He listed government measures on training, education and exports: 'There is a revolution going on, and people can't see it.' He argued the parliamentary battle over Maastricht was, above all, about the ability of exporters to do business in Europe.

Mr Major's comments on the importance of manufacturing exports were welcomed by Howard Davies, director general of the Confederation of British Industry: 'I am delighted that the Prime Minister has acknowledged the force of the arguments our National Manufacturing Council and others have been putting over.

'It must be right that we need an export and production-led recovery otherwise we will quickly run up against a balance of payments constraint, as the Prime Minister now recognises. I hope the Treasury is listening. What we need now is some action on export support, in particular, to ensure that the Prime Minister's aims become a reality.'

But Lord Prior, the chairman of GEC, warned last night that there would be no short cuts to rebuilding Britain's manufacturing base. In evidence to the Commons Select Committee on Employment, he said: 'Manufacturing industry is no longer there and therefore we have to source a lot of our components from other countries.'

Lord Prior added the 'penny has dropped' in many ways with the Government, but the question was whether it had done so soon enough. 'It will require a sustained effort over 20 years to get our manufacturing base back to the levels we want to see. To say that as oil goes down manufacturing will go up shows a lack of knowledge of the true facts of manufacturing industries.'

(Photograph omitted)