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Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)British Chambers of Commerce Annual Conference |
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I want to start by taking this opportunity to thank Chris Humphries for the vision, commitment and energy he has put in to the BCC over the last two and a half years. I speak for everyone in Government in wishing him well in his future post as Director General of City and Guilds. Chris hasn't given me - or other Ministers - an easy time. He's been a challenging and provocative voice for business. And I wouldn't want it any other way. It is essential that business challenges Government and voices its concerns. That is the only way we can engage in a frank debate which can form the basis for building a better environment for business success in this country. Today I want to look at what we have done in government to achieve this over the last four years. And to respond to the points raised earlier today by Digby, George and Chris. I was looking at a few newspaper cuttings the other day. Digby was quoted as saying that the Government had to "get its eye back on the ball". The director-general of the CBI accused the Government of "dancing in the dark". And the President of the BCC suggested that business concerns did not seem to be high in the minds of Government Ministers. Sounds familiar - In fact statements made about the last government between 1992 and 1997. Business complains about Government - whatever its political colour. But it is important that we do listen and we act. Since 1997 the total number of businesses has grown by 170,000. In the last 12 days we've seen four major investment decisions - by AMEC in the North East, Insight in Sheffield, Matsushita in Berkshire, and S&A Foods today in Newcastle Under Lyme- creating a total of nearly 7,200 jobs. In those same 12 days we estimate there will have been nearly 1,400 more businesses started in Britain. Arthur Anderson analysed the business environment in 9 European countries and the USA in January 2001. They found that "the UK is the country that overall provides the most entrepreneur friendly environment." But you and I know that there's still a good deal more to be done. Of course the plain truth is that businesses should run business. Whether a business succeeds or not cannot depend on government. It is determined by the strategy, 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. Stability Above all else, businesses need a stable economy. That's what the BCC and the rest of the business community told us in 1997. For years we 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. Having achieved economic stability we will take no risks. Recent history shows what can happen when politicians gamble with our economic well being. In the early 1990s inflation reached over 10%. Interest rates at 15%. Thousands of small businessmen and women felt the consequences. There were over 47,000 bankruptcies in 1991. And GDP fell by one and a half per cent. At least one million with negative equity. Around a quarter of a million homes repossessed between 1990 and 1993. And over one million manufacturing jobs lost. This was a vicious circle which trapped businesses and individuals. It was a traumatic period and one which must never be repeated. We have moved away from this 'stop go' economy. We also need a tax system which supports companies large and small. Corporation tax is at a record low level. We cut small company tax cut from 23 pence to 20 pence. And introduced a new starting rate of just 10 pence in the pound. In the new knowledge based economy we need a tax regime which reflects the nature of this new economy. That's why we are proposing to introduce a new tax relief for intellectual property and goodwill. And we are consulting on relieving tax when companies sell substantial shareholdings. Enhanced capital allowances since 1997 and new tax credits to encourage investment and innovation have already saved business over £1 billion with a third of a billion pounds being saved by manufacturing. We are now consulting on proposals for a new tax credit aimed at boosting R&D and innovation in larger companies. This will complement the R&D tax credit for small companies introduced last April. And we made enhanced first year capital allowances permanent - something which business has been lobbying Governments to do since they were abolished in 1986. We are also simplifying the taxation system. In the Budget we announced a new regime to simplify VAT for up to half a million small businesses. We are also consulting on taking a radical new look at the tax treatment of small companies. These proposals would end the current administrative burden of having to submit to Inland Revenue a tax calculation in addition to their return of accounts. I also accept that due to our commitment to make work pay with financial support coming through the pay packet and due to other measures as well, payroll administration has been made more complex and time consuming for hard pressed employers. I know this has been a matter of real concern for members of the British Chambers of Commerce. Government has been looking at this whole area very carefully and I hope we will be able to announce a new approach in the near future. Regulation I am aware of business worries on regulation. I wasn't surprised that Digby, George and Chris raised concern about regulation. A 1994 BCC publication warned that "the war on red tape will never be over". Business is always concerned that there's too much regulation. I'm concerned about regulation too. At last year's conference a number of delegates, including Anthony Goldstone, told me that their biggest concern was the cost of employment tribunal cases and the number of vexatious cases brought by employees. I agreed to review this issue. Having consulted BCC and others, I came to the view that the situation we had was unacceptable. There are too many weak cases in the system, placing unacceptable burdens on businesses. That's why today I am laying new regulations in Parliament amending employment tribunal rules of procedure. This package of reforms includes a power to strike out weak cases - enabling the tribunal to strike out a case at any stage in the proceedings on the grounds that it has no real prospect of success. The maximum deposit to continue with a case will rise from £150 to £500. People who try it on and look to pursue ill founded claims will be liable for costs of not £500 as present. But £10,000. These new arrangements will help the situation. My aim is to get back to what tribunals were originally set up to be: quick, non-legalistic and fair. It's clear that we had moved a long way from that. We need to restore the balance. Whenever there is a balance to be had between decent rights and maintaining the competitive position of business, we must get that balance right. When the working time regulations were first introduced, we didn't get them right - the guidelines were too complicated and had to be rewritten. We've learnt from that mistake. We are committed to ensuring that fair standards for people at work don't get muddled up with unnecessary bureaucracy. Of course there is also a culture of regulation in Whitehall, which is nothing to do with whatever party is in power. We have to get every part of the government machine to 'think small first'. We have radically improved our structures for looking at proposed and existing regulations. The Regulatory Reform Bill currently going through Parliament will give us a powerful and flexible tool to strike down or change unnecessary or over-complex regulation. The Bill passed its second reading in the House of Commons last week. So we are making good progress. We have already identified over fifty reforms that can be delivered using new powers in the Bill. And I invite you to tell us what the next fifty should be. Suggestions for reform can be made on the Cabinet Office Regulatory Impact Unit's website. We issued the first five consultation documents on prospective Regulatory Reform Orders last week. These reforms alone could save industry up to £40 million a year. We are also reforming regulation to remove barriers to enterprise. To encourage more business people to start or re-start businesses after failure, we are radically reforming Insolvency Law. Today I can announce another reform which will eliminate unnecessary bureaucratic burdens for business. At present all companies are required to pay merger fees of between £5,000 and £15,000 to the Director General of Fair Trading when they acquire another company. I have decided that these rules impose unnecessary burdens on smaller companies. Having consulted on this issue, today I have laid before Parliament an order to exempt smaller businesses from the requirement to pay merger fees. From 1 June this year, small and medium sized companies will no longer be liable to pay merger fees. Small Business Service One of the concerns business raised with us before 1997 was the cost of late payments. The BCC conference in 1993 called for a statutory right to interest on unpaid bills. We delivered that in the first Parliamentary session after the election. In 1997 we said that we would provide better support for small businesses. That's why we introduced the Small Business Service. Later this week the SBS is launching a 24 hour advice service for small firms. And we are improving the quality of Business Links - with the launch this week of a new Business Link network. I welcome the valuable contribution which local chambers have made to the existing network of Business Links. And that a significant number will be key partners in the new Small Business Service network of Business Links. Skills As well as world class business support, you need skilled labour. In the modern economy, competitive advantage comes from applying skills and knowledge to develop new products and services. Since coming to office we have focused on improving general standards of education, as well as increasing workforce skills. Our priority in this Parliament has been getting the basics right in primary schools. Test results are up sharply. And infant class sizes of more than 30 have been virtually eliminated. Secondary education is the next priority - moving beyond the traditional comprehensive to secondary schools better able to develop the full potential of each individual. A big drive has also begun on adult skills, including the new Learning and Skills Council for post-16 education and learning and the on-line University for Industry. So in this area we have made good progress under David Blunkett's leadership. And we will go further. Transport 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. But we inherited a situation where our transport systems were suffering from two fundamental problems. A lack of strategic direction and, crucially, years of underinvestment. We have been tackling both problems. First investment. Much of our transport 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. Second, there was no strategic direction. That's why we published the first transport white paper for twenty years. And that's why last year we delivered the most comprehensive transport legislation for a generation - the Transport Act 2000 - to provide the necessary powers. This included the establishment of the Strategic Rail Authority, which is now taking forward the task of developing a safer, bigger and better railway system. And for the first time we have taken an integrated approach to our local and national transport. Ensuring that airports, railways and the road network are effectively linked. I am acutely aware of the difficulties of the last few months, how deeply frustrating it is. 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. Regions Business, especially smaller firms, depend on a healthy regional economy - for your local customers, suppliers, and labour force. That's why its important to have an active regional policy which supports economic regeneration and job creation. With economic stability we have an opportunity to make a real difference in every part of the country. To make sure that all parts of Britain share in rising prosperity. Over the last four years we have made a start in giving the regions the tools they need to realise their full potential. We established regional development agencies. We're substantially increasing their funding. And we're giving them greater financial flexibility to tackle the priorities in their region. In the budget we announced new fiscal incentives to extend the opportunities for enterprise in run down areas. In total we are introducing six new tax cuts targeted at enterprise and worth - over the next five years - one billion pounds. In addition and in order to encourage more business start-ups and growth firms in all regions, we are launching a new £75 million incubator fund operated by the Small Business Service, with the Regional Development Agencies. And in a recent White Paper on enterprise, skills and innovation we set out a wide range of measures for building manufacturing excellence in every region. We are establishing a new Manufacturing Advisory Service to provide practical, "hands on" help for smaller manufacturing firms who want to introduce world class manufacturing practices and technologies. In order to give an additional boost to smaller manufacturing businesses, I can announce today that we will expand the scope of the Small Firms Loan Guarantee scheme, which since April 1997 has guaranteed nearly 18,000 loans - to a value of around £800 million. I am increasing the turnover limit for manufacturing businesses from £3 million to £5 million - extending the scheme to an extra 4,400 manufacturing firms. Of course at the moment the foot and mouth disease is having a profound impact on people across a number of regions. The Government's top priority is to ensure foot and mouth is contained and eradicated as quickly as possible. We are supporting those farmers who are dealing daily with the disease and we are determined to help them recover from its effects. But the Government also recognises that it is not just farmers who are affected and that is why, last week, Michael Meacher announced a package of measures to help rural businesses. Through relief on business rates, deferred payment of taxes and working with the Small Business Service and the banks on how best to ensure continuing credit for small businesses affected by the disease, we hope that we can alleviate some of the problems that rural businesses are facing now. And we will continue to take more measures as necessary. Conclusion We will continue to make economic stability our top priority, so that businesses can benefit from low inflation and low interest rates. Upon this foundation of economic strength, we are now building the conditions for sustained business success. Easier access to finance. Low taxes. Simpler regulation. Skilled people. And world-class business support. We have already achieved much. But there is still more to do to achieve our goal - to make the UK the best place in the world to start and grow a business. Our vision is for an Enterprise Britain where all can prosper. An Opportunity Britain where all can realise their potential to the full. This is a Britain worth fighting for. It is a Britain 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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