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Rt. Hon. Peter Mandelson - Former Secretary of State for Trade and Industry (Jul 1998 - Dec 1998)CBI Annual Conference |
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I am delighted to be here today. Although my pleasure at being with you is nothing to my happiness at being Secretary of State for Trade and Industry. For me there are no self-doubts about the DTI's role. It is the department for the future. And it is the future that I want to talk about today. Let's be quite clear. We will not have the quality of life we want, the high standards of public services we demand ? unless we change radically the way we do business. It is not enough for us to make step changes in productivity, important as those are. I fully endorse the Chancellor's words earlier this morning. Increasing workforce productivity through more efficient methods, greater flexibility and reducing costs is essential. Especially as firms face pressure on their order books in the current downturn. It means working smarter as well as harder. And it means people at every level of society taking responsibility all round for the pay increases they demand and, in some cases, award themselves. But if we are not just going to make a step change, if, instead, we are going to achieve the leap into the future that's required, then it is a deeper and more profound revolution we need. A revolution in attitudes. And a revolution in ambition. For that is the real weakness in industry. Lack of ambition. Compounded by attitudes to wealth creation in this country that border on the apologetic. And Governments must join this revolution. Business has to be central to this government's agenda. Let me give you some examples. The promotion of enterprise must be at the heart of our approach to science, turning the universities from ivory towers into business partners. Enterprise must inform our approach to taxation, providing both incentives and rewards. It must drive our approach to pay and profits. To how we reform pensions to support changes in working practices. To housing mobility. To our approach to planning and regional development, and how these support business, and so I could go on. And if you think I am making these points just because I am speaking to the CBI, you're wrong. They are exactly what I said to the Labour Party conference in September. I did so then and do so now because I am clear about my task. It was spelled out to me by the Prime Minister in a personal minute when I was appointed. "Your job", he said, "is to act as a vocal and tenacious advocate of the needs of wealth creation and business in Whitehall and with other public agencies". So, if business needs to draw my attention to actions in central government that are holding back enterprise, my postal address is 1 Victoria Street, London, SW1H OET. And mark it urgent. President, the paramount responsibilities of government to business are clear: the creation of a stable economy and a first rate education system. That's why the Government's first act was to give the Bank of England independence in setting interest rates. I recognise that business has its problems at present. None of us could expect to avoid the turmoil in world markets. But those who grumble about the Bank's decisions should remember what used to happen before. Interest rates at 15% and manipulated for short term political purposes. Now long term interest rates are at their lowest for 35 years and we have achieved the inflation target set by the Chancellor. And our commitment to education was why within weeks of coming to office we embarked on the most radical programme in history to drive up standards in schools and why this year we agreed the largest single investment in education ever. Building stability for the future. Equipping our people with the skills and education they need for the future. Above all, creating the conditions in which the people of this country can look forward to the future as an opportunity not a threat. For the one thing we can be certain about in an uncertain world is that the future will be one of rapid change. We are entering the era of the Knowledge Driven Economy. Evidence of it is all around us. The world has done more scientific research in the past decade than the rest of human history combined. The benefits of this age of discovery are flowing ever more quickly into how we work and the products we consume. The computer I used to write this speech is five times more powerful than the computer I used five years ago. It is made of the same materials: plastic, metal, silicon. But the additional power has come from human intelligence. There were 6bn computer chips in the world last year. By the end of next year there will be 10bn. Ten years ago it was still a novelty to transmit data over telephone lines. Soon telephone lines will be carrying more data than conversations. The Knowledge Driven Economy is not some far distant dream. It is here. And knowledge is the only source of competitive advantage, for manufacturing and success alike, new industries and mature ones. Brainpower is more important than brawn; intelligence more powerful than energy; creativity more critical than raw materials; efficiency has to be combined with innovation. We are in an age of discovery and creativity, which opens up new possibilities for advancement and well being. That is the opportunity we must grasp. But how can Government help Britain meet this challenge? One thing is certain. Not by reverting to the interventionist instincts of the past. In the 1960s to be modern was to believe in planning. To be modern now, as we face the Millennium, is to make markets work better. That is why we introduced the Competition Bill ? legislation over which our predecessors had dithered and stalled for ten years. Competition drives innovation, customer service, competitiveness. It underpins British business success. This is one message I took from last week's report from the McKinsey Global Institute. That the reasons why competition is blunted vary from sector to sector. The deeprooted causes lie in each sector's market structure and regulatory framework. Only government can ensure those barriers to more vigorous competition are broken down sector by sector. And my belief in the supreme economic importance of allowing markets to work better strengthens my conviction that Britain must be a committed partner in Europe. Europe needs our influence. Europe is on the verge of creating the largest economic area in the world ? an integrated market so big that any growing business with a good idea and a strong product will find a market big enough to grow rapidly. If it follows the right course ? and I say if - this large European market has the potential over the next decade to replicate and match the dynamism and vibrancy that has been the basis of the United States' economic success. That is why it is economic lunacy, for the sake of Eurosceptic ideology, to marginalise British business on the sidelines of what should be its home market, as official Conservative policy on the single currency threatens to do. We have made it clear that we will join the single currency when it is in Britain's economic interests to do so. But we must use our new and, I believe, increasing influence in Europe to push for greater labour market flexibility, tougher product market competition and increasing capital market liberalisation. That is the way to create growth and sustainable jobs and ensure the long run success of the single currency. And it is why I am not simply pro-Europe but pro-change and pro-reform in Europe too. President, let me say this, too. Competitive markets will only deliver more prosperity and jobs if we breed the entrepreneurs with the vision and drive to seize the opportunities that competitive markets offer. We must recognise that small and medium sized businesses are the main engine of job creation in the economy. In 1997 there were 3.7million firms in Britain. 99% of them had fewer than 50 employees. We will only succeed in effecting the revolution we require if we generate the new engineering businesses of the knowledge driven economy. We must encourage the creation of the new software companies of the Information Age. The pioneers of electronic commerce. The new science-based businesses which must not only put Britain ahead in the race for scientific discovery but give us a lead in scientific enterprise as well. In future, Britain must not only maintain its position as a reliable base for inward investment, we must create an environment in which indigenous enterprise thrives. The government has an important role to play. We have invested over £1bn in the science base. We must ensure that regulatory frameworks promote rather than impede the development of enterprise and we must improve access for growing high tech companies to venture capital. Just as Britain led the way on the telecoms liberalisation in the 1980s and 1990s, I am determined that for the development of electronic commerce we will create the most business friendly environment in the world. In the forthcoming Competitiveness White Paper, I will spell out a package of measures to achieve this. But government's responsibilities to promote enterprise go far wider than detailed regulations or specific policy decisions. We need a culture change in Britain's attitude to enterprise in which government must give a lead. Tony Blair has said it many times before. But it is so crucial it bears repeating. New Labour want entrepreneurs to succeed. We have no guilt-ridden hang ups about people making themselves rich as a result of genuine entrepreneurial success. We want a society that celebrates and values its business heroes as much as it does its pop stars and footballers. So we must remove the barriers to enterprise in this country. Reward risk taking. Encourage innovation and creativity. Seek to emulate the successful formula of the United States' dynamism and enterprise. We have already begun by reducing tax on long term capital gains to 10%. But I believe that we must in particular tackle the stigma of failure. In the US, some of the most successful entrepreneurs are those who have failed once or twice. Banks and society as a whole don't write people off as failures. They see them as people who have learned. People who are worth backing again. That is why the Government needs to carry out two reviews. One looking at corporate rescue procedures, including the position of the Crown as a creditor, and the second looking at whether the law can be changed to reduce the stigma of financial failure. This is not a rogues charter. We want to ensure that we do not place undue obstacles in the way of those who have had the courage and vision to try and want to try again. And there?s another point, too. The creation of an enterprise culture in Britain requires not only a government that backs it, but also workforces that are committed to it, and believe in it. That is why the government is passionately committed to partnership at work. The "us and them" culture almost destroyed British industry in the post war era. The persistence of class-dividing rather class unifying attitudes - long after their historical rationale had disappeared - almost destroyed the Labour Party in the 1970s and 1980s. This government is determined that "us and them" will never return. And if we are to seize the opportunities of the knowledge driven economy, it never must. Partnerships at work are in the interest of employers and employees alike. Employers who want to get the most out of their employees will be companies who develop employees' potential to the full; who take employees into their confidence ? setting high standards of information and consultation in the way most appropriate to our own country's needs; and offer employees a legitimate share in the rewards of success. That is why I look to the CBI to develop its own clear code of conduct for employers on partnerships at work. And as I said to the TUC, modern trade unions can be valuable partners in securing business success. But it is the job of trade unions to prove their relevance to potential members ? not the job of government to bolster their position in the workplace by artificial means. That is why my Fairness at Work proposals will strike a scrupulously fair balance. They will provide the trade unions with enforceable recognition rights where this is supported by a clear majority of the workforce but they will not force trade unions on companies where neither management nor the workforce sees any real need. Enterprise will flourish best if we can build real partnerships at work. But it also requires an active partnership between business and the government. The partnership I want to build is one where business and government are clear about their respective responsibilities, both to each other and the wider community, including the ethnic minorities and disabled of our society. Businesses' overriding responsibilities are to win markets and make profits. Government's is to concentrate on getting the conditions right. Setting the right regulatory framework. Bolstering competitiveness. Concentrating on the tasks where only Government can deliver. There is also a role for Government in delivering tailored, high quality business support, both at home and overseas. Here I want the DTI to sharpen up its act. We must be world class in what we do. Make best use of limited resources. Offer support which is flexible, accessible, proactive, and enabling. We must do more to help start-ups in their early difficult days. We must facilitate effective exchange of ideas and expertise with universities. We must concentrate on dissemination of best practice. I fully support the campaign the CBI will shortly launch to bring the practices of the average up to those of the best - Fit for the Future. I promise you will have my full backing. I urge every company to participate fully in the campaign. And the creation of the Regional Development Agencies is another opportunity we must get right. These will be business led - they must be business like. They will bring a coherence to regional policy that has been sadly lacking for too long. Providing vital economic leadership for all the regions. President, my ambition at DTI is simple - to create a world class environment for business. Providing the support business wants, when and where it wants it. Bringing business into the heart of policy making in Whitehall, in the regions, in Europe. It is an ambition I want business to share. Promoting enterprise and dynamism. Encouraging innovation and risk taking. Paving the way to create the products and wealth of the future, state of the art products like those receiving the Millennium accolade I am announcing today. The future is before us. We need to take up the challenge. Only business can deliver prosperity and jobs. Government must know when to act, and when to keep out of the way. That's my way - the new Labour way. Together I believe we can and will make the difference. |
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Other speeches by Rt. Hon. Peter Mandelson - Former Secretary of State for Trade and Industry (Jul 1998 - Dec 1998)
(the following are available from the archive) |
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