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Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)Lord Mayor's Trade and Industry dinner |
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CHECK AGAINST DELIVERY My Lord Mayor, my Lords, Ministers, Aldermen, Sheriffs, Ladies and Gentlemen. It is a great pleasure to be with you for this my third Trade and Industry dinner at the Mansion House as Secretary of State. As we gather this evening we are at a significant stage in the economic development of the United Kingdom. Because of the decisions we have taken, and choices made, our economy is strong. That does not mean we should standstill. Instead we must push forward with our agenda of modernisation and reform. Not only in Britain but in Europe. We do so not just in the interests of social justice. But to ensure the continued strengthening of our economy. Two years ago - at my first Mansion House Trade and Industry dinner - I emphasised that the Government was pro-business and pro-enterprise. That we recognise the importance of wealth creation and are committed to helping business, large and small, to succeed. I take the view that for far too long in Britain people have been given a false choice. That if you believe in the importance of business you must also take the view that there's no such thing as society. That the public sector is an unnecessary burden on the economy. Or that if you believe in a fair and caring society underpinned by high quality public services you must be anti-business. Certainly our political system has been divided between these two positions. As a consequence our people and our businesses have been held back by such a false choice. The truth is you can achieve enterprise and fairness. Business opportunity and security for the vulnerable. The reality is we simply won't be able to build a strong economy if we have a weak and divided society. What's bad for business will in the long run be bad for our communities and the people of our country. At a time of globalisation and the rapid pace of change that is going on all around us. There are important questions that need to be raised about the role of government. It is clear to me that we have to move beyond the dogmatic distinctions that were made in the past. When government were either interventionist - dictating to businesses and often standing in the way of growth and prosperity - or simply relied on market forces and a laissez-faire approach which didn't serve the national interest. The plain truth is that businesses should run business. Whether a business succeeds or not cannot depend on government. It is determined by hard work and the strength of the business itself. However there are steps that governments can take that will help create an environment that allows business to prosper. Tonight I want to highlight three areas in which I believe government has a clear role. Providing economic stability. Investing in our infrastructure. Engaging internationally especially in Europe. Economic stability First, to provide economic stability. For years we have had violent swings of the economic cycle. Almost four years ago now, we reformed the whole basis of economic policy-making. We took tough decisions early on to make the Bank of England independent, to put in place a proper fiscal framework, and to pay back the national debt. As a result, inflation is now at a 30-year low, the lowest in Europe. Long-term UK interest rates are around their lowest levels for over 35 years, converging with those of Germany. Over 1 million more people in work than when we took office. Employment at its highest level ever. We have been able to cut annual government borrowing by £44 billion, saving around £3 billion in debt interest payments and the same again in reduced welfare payments through strong employment. The economy is new enjoying its longest period of uninterrupted growth since the war. This is not coincidence or luck, however. It happened not by chance but through the deliberate choices we took. It can only be sustained if we hold firm to the financial disciplines we have imposed and run fiscal and monetary policy in tandem together. Our recent history shows all too clearly what can go wrong if risks are taken with the economy. It is businesses and people who suffer. Let's turn the clock back ten years to this week in February 1991. Inflation was over 8%. Interest rates were over 13%. Thousands of small businessmen and women were beginning to feel the consequences. There were over 47,000 bankruptcies in 1991. And GDP fell by one and a half per cent. Business suffered. So did millions of people. Hard pressed homeowners. At least one million with negative equity. With around a quarter of a million homes repossessed between 1990 and 1993. Over one million lost their jobs in manufacturing in the early 1990s. This was a vicious circle which trapped businesses and individuals. It was a traumatic period and one which must never be repeated. Investment Secondly, investment. As we cut the costs of economic failure we are freeing up the finance necessary to invest in the infrastructure and high quality public services that our country so badly needs. Investment that can be made without risking the stability we have achieved. Investment which strengthens the economy as well as building a stronger society. Which provides the seed corn of economic prosperity and social renewal. So we are investing in reform but insisting on results. Education is central to any modern industrial policy. It is fundamental to our economic performance - and not just an aspect of social policy, as it was too often seen in the 20th century. People change jobs more often. Skills are at a premium. There are fewer decent jobs for those who lack qualifications and training. Since coming to office we have focused on improving general standards of education, as well as increasing the skills that a successful modern economy requires. Our priority in this Parliament has been getting the basics right in primary schools. Nothing is more important to the life chances of our children. Test results are up sharply. Infant class sizes of more than 30 have been virtually eliminated. And the literacy and numeracy hours have transformed the quality of teaching school by school. So we have put in place the foundations. Our mission is to replicate this success throughout the education system. Secondary education is the next priority - moving beyond the traditional comprehensive to secondary schools better able to develop the full potential of each individual. We have also established the Learning and Skills Council for post-16 education and learning. A big drive has begun on adult skills, including the launch of a potentially life-changing on-line teaching resource through the University for Industry. The learning options in the New Deal have also made an impact. So in this area we have made good progress under David Blunkett's leadership. And we will go further. We also need a transport system that is fit for the 21st century. I know how important transport is for our economy. To get people to work and goods to market. Yet much of this infrastructure is increasingly old and unreliable, the victim of years of under-investment. Last year, in the 10 year Plan for Transport, we set out a £180 billion programme for modernising the nation's transport infrastructure. I am acutely aware of the difficulties of the last few months, how deeply frustrating it is and how unreal it can sound to talk of improvement. Yet the plans announced do offer real hope for the future. Yes, it will take time, but it can and, if the investment stays in place, it will be done. The health of the science and engineering base is also crucial to the economic future of this country. Two and a half years ago the Government announced increases in science spending in partnership with the Wellcome Trust of £1.4 billion over three years. And over the next three years the science budget will grow by nearly another £1 billion, with £252 million going to research in the high-technology sectors upon which the future of manufacturing depends. It was British science that underpinned many of the advances that we saw in the 19th and 20th centuries. Once again it can be British science that leads the way in the 21st century. Turning scientific excellence into jobs for our people. Europe and International Thirdly, the Government has a key role to help and partner British business on the international stage. That means supporting reforms in the World Trade Organisation and pushing for the launch of a new trade round later this year. It means supporting companies through our export promotion work now led by Trade Partners UK. It means engaging constructively with the G8 and perhaps above everything else it means being engaged and playing a full part in Europe. The business case for Europe is strong and powerful. It is clear to me that Britain's full engagement in the European Union is vital to British business interests. The European Union is now the home market for Britain. We export more to the European Union than the rest of the world combined. Our exports to Germany are about the same as those to the whole of the United States. Our exports to Belgium are over twice what they are to Japan. Europe has become our home market not by chance but as a direct result of the European Union. Successive British Governments of differing political views have recognised that our national interest is served by being part of the European Union. Those of us who believe in the importance of Europe must be the first to recognise and accept that the Europe we have today has to change. Its institutions, its working practices, and its policy priorities need to be reformed in order to meet the challenge of the global economy and the needs and aspirations of the people of Europe. In terms of working practices and the institutions of the European Union, Neil Kinnock's proposals for reform show that at long last something is being done. His White Paper is a major first step in what will be a long term process, requiring real commitment from the whole Commission. Reform in this area is crucial. The public will rightly expect nothing less than the highest standards. The reforms needed to fundamentally change the way the Commission works are now clear. They need to be service-orientated, they need to be guided by the principles of accountability, efficiency and transparency. In addition to those fundamental changes needed in working practices and the institutions of the EU, we also need to look at the policies and the programmes. They must be able to meet the challenges of the global economy in the 21st century. Last year in Lisbon a comprehensive programme of action was agreed to enable the European Union to become the most successful knowledge based economy in the world by 2010. The outcome at Lisbon represented a revolution in European thinking. Moving away from the old approach based on regulation and overprescriptive directives. To be replaced by targets, benchmarking and best practice. The task ahead is now to turn those commitments into action. But economic reform will only work if it reflects the needs of business. Later this month I am hosting, with the Swedish Presidency, an informal summit in Manchester. This will bring together business people and industry ministers from across the European Union, ahead of the next economic reform summit in Stockholm. Focusing on how we can encourage entrepreneurship in Europe. At the Stockholm summit we want to see a further, decisive step taken towards full liberalisation. We must make sure the single market is working properly. That our businesses are able to make the most of this vast market. We need to do more to ensure that we make a reality of the single market and do so in a way that benefits British business. That is why the Chancellor of the Exchequer and myself will be holding a series of seminars over the next few weeks to identify the further steps that need to be taken to deliver the single market. In particular we will be considering the action necessary to achieve a single market in energy; the extent to which qualifications can be recognised throughout Europe; how we can open up and liberalise the telecoms market and the further action needed in the area of financial services. We shall ensure that the outcome of these seminars informs the approach we take to the Stockholm Council. We should see the billions of pounds of trade and the 3 million jobs that come from the single market as only a beginning. Instead of seeing Britain posed against Europe we should see ourselves working constructively in order to complete the single market. In this lies more business and more jobs for Britain and the rest of Europe. We will continue to build support for further economic reform in Europe and demonstrate that instead of Britain having to choose between Europe and America the way ahead is closer co-operation between the continents of Europe and America in the interests of greater prosperity for both. One area where closer co-operation is clearly needed is that of trade. Over recent years there have been too many trade disputes between Europe and the United States. Whether over bananas, foreign sales corporations, hushkits in aeroplanes or hormone treated beef, we cannot allow the benefits of trade to be lost. So we need to look again at how we might avoid these disputes developing. It is early days for the new Bush administration in the United States. The new President has spoken forcibly about his belief in free trade. I believe the time is right for the European Union and the United States to put the disputes of the past behind them, and work together to settle disputes quickly, soon after they arise, and not just send every issue away to be dealt with the WTO's dispute settlement mechanisms. And of course there is the question of the single European currency. We remain committed to joining a successful single currency in principle. In practice the five economic tests must be met. As the Chancellor said in October 1997 "the potential benefits are obvious - in terms of trade, transparency of costs and currency stability." 50% of our trade is now with the euro area and the UK and euro zone countries are each others' largest trade and investment partners. So in principle we would join but the economic conditions have to be right because this is essential to membership being in the national interest. Only then would we make a recommendation to the British people to join. That is why we have set the five economic tests. First - sustainable convergence between Britain and the economies of the single currency. Second - whether there is sufficient flexibility to cope with economic change. Third - the effect on investment. Fourth - the impact on our financial services industry; and Fifth - whether it is good for employment. We are committed early in the next Parliament to assess whether or not these tests have been met. If they have been met then the final decision will be for the British people in a referendum. That is our policy - it has not been changed and will not change. It is a policy which is understood by business. It is clear to me that had we ruled out joining then investment decisions which have recently been made would not have been taken in favour of the United Kingdom. Conclusion Lord Mayor this is an astonishing age of possibilities. It is not a time for complacency. Not a time to stand still. There is a process of transformation taking place in Britain. As we move away from the stop-go economy to one of stability. And tackle chronic under investment which has held us back for far too long. This provides great opportunities. For all our people to benefit from improvements in living standards. For all to share in the increased prosperity in our country. This may be a bold and ambitious vision. But it is one that together we can achieve. |
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Other speeches by Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)
(the following are available from the archive) |
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