Major sets out his revolutionary credentials: The Prime Minister tells Andrew Marr he is making radical changes but people are too distracted by the Maastricht furore to see them

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THERE ARE times when John Major's hands say more than his words. For more than an hour he argued, with great passion and fluency, that he was engaged on a radical and long-term revolution which had been misunderstood, ignored, obscured. He counted out initiatives on the fingers of one hand, then worked his way across the other hand, then started again. His hands punched the air, sawed it, kneaded it. They banged the table.

We started by talking about whether or not there was some kind of national malaise, which could be separated from the effects of the recession. The Prime Minister was clear that the recession was a large part of the problem. It had gone on for a wearyingly long time and had debilitated millions of people: 'I think we are coming out of it now but we will dance on the table when it is absolutely clear.' Growth, he said, was 'the happiest word in the English language'.

Beyond that, 'the person sitting in Middle England' found events moving at a dizzying speed, and exaggerated by the media. All the institutions of the country had been under attack - the Monarchy, Parliament, the Church: 'They are the pillars of stability that have seen this country through all sorts of turmoil over the past 100 years or so and now at the moment all of them have been under attack, and that is destabilising.'

The second great problem was crime. So what had Mr Major meant by his much-criticised phrase that people should understand a little less, and condemn a little more? He meant that 'there is less restraint on bad behaviour, less peer pressure about it than there used to be'. He was talking about a moral language. He was not saying that politicians should not try to understand the roots or causes of crime.

But, for Mr Major, the roots of crime have nothing to do with the soil of social deprivation. Asked about the apparent agreement between the Home Secretary, Kenneth Clarke, and the Labour home affairs spokesman, Tony Blair, that crime was caused by a mixture of individual wickedness and by social factors such as high unemployment, Mr Major gave no ground: 'I think it is deeply unfair to categorise people who are unemployed, either short-term or longer term, as being more likely to be criminal. I do not accept that, it has not been the case when we have had large-scale unemployment in the past and I believe it is a very damaging proposition to advance at the present moment. I do not, in short, accept it.'

Not all unemployed people, I said, but surely for some, the lack of earning-power, and the demoralisation of having no structure to the day . . .? 'Well would everyone draw that fine distinction? If it becomes a fashionable instinct that the propensity to commit crime is higher amongst people without work, would every body draw the fine distinction that you would draw in your mind? I think that is a dangerous general proposition that I would not subscribe to.' Afterwards, I could not decide whether I was listening to a Tory diehard playing a defensive stroke, or a sensitive man who had been unemployed himself.

Mr Major certainly used un-Thatcherite language when he welcomed the involvement of church leaders in a national debate about public morality: 'I do not want hell-fire preaching, I think that is now out-dated, but I do think the moral lead must come from the Bishops. I am not shoving off the responsibility, I want the Bishops to give a moral lead. That is why I am happy to hear the Archbishop speak out and I do not mind if the other Bishops speak out and disagree with me. They have a legitimate part in this debate.' But, I said, so few people went to church. 'Perhaps people want to hear a moral message clearly, I believe lots of people do.'

Later, I asked whether he was not a little uneasy about the personal behaviour of figures in public life? A pause, then: 'I think people have got a little embarrassed almost to either talk about morality or to overtly practise it. I don't believe that they should be and what is more, I believe there is a great hunger out there for that sort of leadership.'

We then moved on to the economy itself. What worried many people, I suggested, was that the fragile signs of recovery in Britain would be blasted away by the economic downturn on the Continent. Mr Major replied: 'What we are now seeing is that Germany is going into a deep recession; Spain is going into a deep recession; Japan is having its biggest turn-down for two generations; and France is about to go through three million unemployed and through a recession and maybe all sorts of turmoil. I take no pleasure in that but what that does indicate is that the recessionary impulse we have had in the United Kingdom is not the result of unique laboratory experiments carried out by the British government, or indeed unique mistakes by the British government. It is a recession that has swept across the world and because we came off the top of the boom we had the problem more virulently and earlier. We are coming out of the recession, they are going into it.

'I think we will recover, we would have recovered faster if our markets had been booming as well. But we are now uniquely competitive in a way we have not been in my lifetime.' We would not have believed 18 months ago that in early March 1993 retail price inflation would be at 1.7 per cent, interest rates would be at 6 per cent, lower than anywhere else in the European Community, and that the pound ('and this did not come about as a deliberate act of policy') was fiercely competitive. That combination of circumstances meant that 'even now we are penetrating deep into the German market in a way we never did before. Even though their market has temporarily shrunk, we are establishing a foothold in it of a sort we did not get.' Enough for us to be in recovery when the Continent was in recession? 'Yes, I do believe that.'

This led us on to the importance of exports for Britain and the clearest repudiation of the Thatcher-Lawson thinking on economics that Mr Major has publicly made. His argument needs to be seen at length.

'The danger we have is this: every time we have had a down-turn in the past we have expanded exports; as we have come out of the down-turn and the domestic market has improved British exporters have gone back to the soft domestic market and forgotten the export market. We dare not do that on this occasion for two reasons: firstly, because the domestic market won't support the widening and expanding industrial base that I personally passionately believe that we need and secondly, because the fierce competitiveness that we are going to face right the way through the 1990s in a decade of remarkable changes means that unless we remain at the edge of technology and as a fiercely competitive nation we will not grow and thrive throughout the 1990s: so we have to change our attitudes.

'That is what I am on about when I go on about the classless society and blue collar and white collar. We have undervalued manual skill, engineering skills. People have left university and what have their parents said to them? 'Well, you go for a jolly good job in the City or in Fleet Street or somewhere like that - or on the Independent'. . .'

But, what, I asked, of the Thatcherite idea that the service sector was the thing, that making things was becoming less important to this country? '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. I don't agree with that. Services are very important . . . but services aren't enough because services in a recession are the first thing you cut so we need the manufacturing base both as import substitution and as part of the continuing export drive.' This was a stark break with the old rhetoric. But when I asked about how the country's industrial base would be expanded, there was an even sharper assessment of where Margaret Thatcher had left the economy: '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 that interest rates wouldn't go up and no certainty inflation wouldn't go up.' Ouch]

Hence the importance of his anti-inflationary rigour: 'If we had been soft, we would still have inflationary tendencies.' What, then, I asked later, of sterling's exit from the exchange rate mechanism, which had been the anti-inflationary anchor. It might have been pulled up by tempests in the money markets, but since then, he had managed pretty well without that indispensable anchor?

Well, Mr Major said, it was by no means clear that inflation would have come down so far without the ERM. But the system changed after sterling joined, becoming part of the process towards monetary union: 'We tried to get the policy changes, by Heavens we tried to get other people to shift their interest rates and make the changes] It is very easy for people to say now 'You should have come out]' but all that was politically unrealistic and people actually know that.'

Now, he was 'stone cold certain' that monetary union was a long way off: 'The European economies have diverged, they have not converged, and it is pie in the sky for anyone to suggest there is going to be general Economic and Monetary Union in 1996, 1997 or for some years after that. It is no problem for me because we are not signed up to it.' So, was he prepared to carry on through the Nineties outside any fixed exchange rate system, relying on the seat of the Chancellor's pants? 'I know where you are leading me, but you are going too far. What I am saying is that I can't go back into the ERM I left.'

Beyond the macro-economic picture, Mr Major's economic message was nearer to Michael Heseltine than to Nigel Lawson: 'I think you needed a different attitude to industry and commerce; you needed to encourage people to believe that making things mattered; you needed the Government physically behind our exporters, taking them to India, taking them to Japan . . .' Beyond that, he listed other initiatives, ranging from changes on export credit guarantees to greater emphasis in the education system on the sciences, better skill training and 'the extra quarter of a million young people going into further education, which is what we will have in the next three years.

'That begins to add up to quite a package. We have got the biggest selection of assistance for people who are unemployed, in terms of skill training, that we have ever had. We have now got a minister in the Cabinet responsible for research and development. We are starting reforms in government to shrink back government as well.' And here his frustration broke through: 'There is a revolution going on and people can't see it] They are so bedazzled by this squabble we have been having over one Bill and one or two high-profile events that they have missed the whole panorama of things that are going through Parliament and the changes that are being made. 'What are all these piecemeal changes?', they say; 'What is the vision?', they say; 'Where are we going?', they say. Well if they had eyes to see or to read the speeches that I made right the way through the election and beyond, they would see.' (Thump on table.)

And so, finally, to the endless warfare on Europe inside the Tory party: the 'squabble' that bedazzles Westminster. Mr Major argued vehemently against a referendum, while refusing to rule one out.

He was concerned to send relatively friendly public messages to the rebels, whatever private ones the whips are sending. He said he understood the 'instinctive patriotism' of opponents of some European developments and was no 'Europhiliac' himself. He felt passionately about the importance of Europe, though, to Britain's economic future: 'I disagree with the people who oppose the Bill . . . but if I feel passionately like that, I can't object to other people who feel passionately the other way.'

Mr Major argued that if the Bill was not passed, his government would be unable to make the alliances with other EC governments that it needed to. The promised expansion of the Community to the Nordic and central European countries would not have happened without Britain: 'We would not have got that expansion if we had sidelined ourselves in the European Community and with that expansion, ask yourself this question: Is it more or less likely that we will have a centralised federal Europe if we have a bigger Europe than if we have a smaller Europe? And ask yourself whether our policy is wise.'

Then he continued, with more passion than he had shown on any other subject: 'And then lift your eyes a bit further] 'No vision in Europe]' people say. Well what they are talking about in the European Community is a fragment of Europe as a community. I don't want a fragment of Europe as a community; I am looking at something much bigger than that. The time will come - not in my political lifetime - when we have a European Community right from Britain up to the doorsteps of Russia and that will mean several things: firstly, it will mean the biggest free market for goods and services we have seen, maybe for our children, maybe not before; secondly, one thing the European Community has undeniably done: it has stopped the prospect of wars between nations in Western Europe, where twice a world war has started in this century.

'What a prize if we could actually set in train events now that stretched right the way across from one end of Europe to the other end of Europe. We would have enshrined all those countries in the former Soviet Empire right in the heart of a democratic Europe with a free-enterprise system, with democratic governments and that would be the biggest prize for the next generation but two that any series of governments had ever delivered. That is what I want to see, that is what I am arguing for and I am not going to sit back and be told that that is not a vision worth fighting for because I happen to believe that it is.' By this stage, the table was rocking.

I ended the interview by asking about the state of his government's morale, after the battering of recent months. Did he look battered? he asked. (When Prime Ministers ask you that, you're not allowed to say, actually, yes. And in fact, he looked rather well.) 'Exhaustion? No. Too far away from people's views? I don't believe so. More so, I think, than any of my predecessors, if I can just speak personally, I actually get out into the country and talk to people and find out what is going on to a far greater extent than you have any idea. I bring in businessmen and other groups to talk around the table here and bring the same people back so that they will tell me the truth. One of the advantages of being fairly relaxed with people is that they will tell you the truth so I don't believe we are in danger of getting out of touch.'

And with that, the dancing, air-chopping hands came to rest.

(Photograph omitted)