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The Rt. Hon. Patricia HewittBritish Chambers of Commerce Annual Conference |
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Mr President, Ladies and Gentlemen I am delighted to be here for one of the important events in the business calendar. A strong, stable economy I'm going to concentrate on three issues in my remarks. The economy and the Budget. Red tape. And the relationship between government and business. I will also be glad to take questions at the end. This Government's most important responsibility is to ensure we have a strong, stable economy. Low inflation, low interest rates, and low public sector borrowing. We can all see the results of doing just that…over 1 ¼ million more people in work ago, and around 75,000 more businesses than five years ago. Getting the economy right also means getting taxes right. I'm glad that the BCC, and other business organisations, welcomed the cuts in corporation tax and capital gains tax, the new R&D tax credit as well as the proposed new training tax credit in last weeks budget. Now I know that the Government's decision on employers' national insurance contributions came as an unwelcome surprise to some. But I think almost everyone in Britain agrees that as a country we're need to put more investment – and reform - into health care. You in the Chambers have estimated that over 200 million working days are lost through illness each year in Britain – that's around 400 times more than the number of days lost due to strikes last year. And others agree with you. The IoD say that 'an efficient healthcare sector is as vital a part of the infrastructure for business to survive as education and transport'. And last year the CBI estimated that absence from work due to sickness costs UK businesses nearly £11billion a year. So the question is not whether we pay more, but how we pay more. Now some people think we should pay more through private insurance, as they do in the USA. For the average family, that's a premium of £100 a week – devastating for businesses who often pick up the cost – and a far worse service for people who can't afford private insurance. Others say let's have a social insurance system like France, where employers pay it all. That's an average for business of £60 per week per employee. So we believe it's much fairer – and better for business too – to have an NHS that's funded largely out of general taxation, with the extra funding that we need to secure the long-term future of the NHS coming out of this 1% rise on national insurance – with all sections of our society and our economy paying their share. Of course it's going to mean a rise in wage costs. But you know how much the whole business loses out if someone goes ill and has to wait for the right treatment. And I don't want to see more firms feeling that in order to attract staff, they have to pay for private medical insurance. This year, OECD, the IMF and other major forecasters all expect the UK to be the fastest growing major European economy in 2002. Next year – when these national insurance increases come into effect – our economy will be growing at over 3%. And I'm confident that by then, the problem for job creation and business expansion won't be national insurance contributions, it will be a shortage of skilled people – which is why what we are doing to raise workforce skills is so important. Above all, we know that having asked business and workers to pay more, government has to deliver. We have to reform the NHS, so that all this investment pays off. We have to sort out transport – and I note your report today on the cost to business of late trains. We have to keep raising schools standards and create a proper vocational education system. Just like you, we know we'll be judged on our results. Red tape I know many of you here are concerned about unnecessary red tape. So the second issue I want to mention is regulation. I've been working on this problem for the last three years – first as Small Business Minister, now as Secretary of State. The BCC told us two years ago that you were increasingly unhappy about the growing number of employment tribunal cases. Like you, I have no doubt that there's a minority of people abusing the system. Take the woman who recently left her firm under seemingly normal and happy circumstances. She had a leaving party and was presented with a card and gift from colleagues. 24hours before the deadline for filing a claim her company received an IT1 telling them they were being taken to an employment tribunal. The company were mystified and the woman was uncontactable – except for a letter from her lawyers suggesting it would be better for all parties if they settled the issue with a £2000 pay-off. Astonishing, and unacceptable. But it works both ways. It is also quite wrong that a mother-to-be, who was working in a shop in Lancashire should be dismissed with one month's notice after informing her employer of her pregnancy, on the grounds that 'a pregnant woman is not an attractive sight to customers'. We listened to you, and others – and we're acting. This year we're putting a new Employment Bill through Parliament to make sure that people can't bring a grievance to a tribunal without first of all raising it with the employer. It will also change the way tribunals compensate parties who are on the receiving end of cases like those I have just mentioned. We know that payroll administration is getting too complicated. We're acting on that too. So we are implementing the Carter review recommendations to encourage smaller firms to file electronically, with all employers e-filing by 2010 and cash incentives for employers with less than 50 staff. We know that bank charges are too high for smaller businesses. So we referred the banks to the Competition Commission – and last month we accepted the Commission's recommendations to fundamentally change banking practice and deliver savings that will return millions to small businesses. We know that VAT administration can be a pain in the neck. And last week's Budget included a dramatic simplification of VAT that will benefit 700,000 million businesses and keep our VAT threshold the highest in Europe. In fact, in the Regulatory Reform Plan that the Prime Minister announced in February, there are 250 reforms to simplify the mass of regulation that has built up over decades. It's easy to get headlines by demanding a bonfire of regulation. But we all know that we need regulations too. Dealing with rogue traders. Stopping dangerous products. Protecting health and safety and setting fair standards for employees. Giving small businesses a chance against the big monopolist. Regulations that are fair to consumers and employees, but also stop the good business being undercut by the bad – and prevent the actions of a few damaging the reputations of business as a whole. Most of the time, I suspect, we're agreed on what we're trying to achieve. But we need to work together even more effectively on getting the how right as well. That's why I'm requiring every senior official at the DTI to spend a week each year with a business so that, next time they're looking at a proposed regulation, they've got an idea of what it's like at the sharp end. And it's why we've asked William Sargent, chair of the Small Business Council, to take on a special brief for tackling unnecessary regulation – and I've asked Martin Wyn Griffith, the new Chief Executive of the Small Business Service, to sharpen up delivery to provide simpler, more focussed services to small business. Today there are around 1 and a half million people actively trying to set up a new business. The UK is already a great place to start a business. But there is still more we can do to make the process simpler and make our support more accessible. So I will shortly be consulting on a national strategy for business start-ups to encourage more entrepreneurs to start and grow new businesses. So I hope you'll work very closely the SBC and SBS, as well as with Nigel Griffiths and myself, to keep us up to the mark. The relationship between government and business Finally, just a few words about the relationship between government and business. I don't have any problem with a healthy degree of scepticism, even cynicism, about government. That's part of a strong democracy. But some parts of the media seem determined to turn every normal encounter between government and business into a story about sleaze. Let's be quite clear. It's our responsibility in government to listen to business – just as it's our job to listen to consumers, and the unions, and all the other stakeholders in our economy. So Anthony, we'll go on listening to the Chambers of Commerce – and valuing what you tell us. It's our job to back British exports abroad – and to open up markets in Europe and across the world for the benefit of our businesses. It's our job to promote enterprise, back entrepreneurs and celebrate success – and I hope many of you here will agree, if you're not already doing it, to go into schools and share the excitement and satisfaction, as well as the sheer hard work, that goes with running your own business. It's also our job to get our own house in order. You've told me often enough that although some of our Business Link services are excellent – and I'm glad the Chambers are involved in so many of the Business Link partnerships – we have far too many business support schemes. So as part of creating the new DTI, we will be radically simplifying business support schemes – and making it much easier for you to get the support you need, when you start up in business for the first time and when you deal with your local Business Link. In other words, we want a grown-up relationship between government and business, a relationship based on fairness, not favours. We want a partnership. Where we try and provide the best environment for business to flourish – and you go on becoming even more efficient, more innovative and more successful. Because that's the only way that we can all enjoy higher standards of living. So I look forward to working in an even closer partnership with the individual Chambers and the BCC - a partnership that will help make Britain better for all of us. |
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Other speeches by The Rt. Hon. Patricia Hewitt
(the following are available from the archive) |
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