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The Rt. Hon. Patricia HewittTrade & Industry Dinner |
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| Lord Mayor and Lady Mayoress, my Lords, Ladies and gentlemen, it is a great pleasure for me and my Ministerial team to be here this evening. Thank you for giving me this opportunity to speak at this year's Trade and Industry dinner - and thank you Lord Mayor and the Corporation of London for your magnificent hospitality.
This evening is a chance to celebrate British business – the entrepreneurial flair, the dedication and the success of the millions of people working in our economy. It is also an opportunity to celebrate our partnership – the partnership between business and government that serves, not just the private interest, but the national interest. And it is this partnership between us that I want to take as my theme this evening. I don't have to tell you that the relationship between government and business has been in the news recently. This media feeding frenzy is damaging to politics. I'm not here to ask for your sympathy - we all choose our own trade – although we should all be worried about what happens to the health of our democracy if such cynicism takes hold. But the kind of cynicism we've seen recently is also damaging to business. What does it say to young people considering their future career when there is a continuous suggestion that business people who talk to politicians must be up to no good? How do repeated, unfounded allegations help to create the dynamic, entrepreneurial economy that we all want to see? Government – and the public - needs to hear the views of business about public policy, just as we need to hear the views of trade unions, consumer groups and all the other stakeholders in our economy. Yet in the current climate, I can see why many business-people might feel it simply isn't worth the hassle. Of course, the problem of public and media attitudes towards wealth creation isn't new. Britain was already suffering more than a century ago from snobbishness towards people in business. It was Oscar Wilde who once said "work is a refuge of people who have nothing else better to do." I sometimes think that if you spend £1 on a lottery ticket and, by sheer good luck, win millions, you'll get more public adulation than if you build up a business through sheer hard work – and make millions for yourself and your staff and investors. But those attitudes are changing. And since all of us here want business to succeed, it's up to us to make sure that we do get the relationship between business and government right. Every family, every community, every part of our country depends upon the success of our businesses. We have the 4th largest economy in the world - because we have good businesses. Just over four fifths of the UK GDP is derived from the private sector. We have record numbers of people in work – because private sector employment increased by 1 ¼ million over the last 5 years. We're stronger in Europe because Europe respects British business. And working together, we are helping to improve the lives of people who have been left out and left behind for too long. Take the National Minimum wage. We knew the minimum wage was right in principle, but we were determined to make it work in practice. Through the Low Pay Commission, we built a consensus between business, unions and government – and we can be proud of the fact that we have delivered a pay rise to over a million men and women – and, in doing so, protected good businesses against the bad. Or take the New Deal. It has helped nearly 600,000 people to find work and nearly 90,000 firms have considered it in their interests to take part. We need business, too, if we are going to regenerate disadvantaged neighbourhoods. I see it in my own constituency, in west Leicester, where I represent one of the most deprived wards in the country. But we have companies like Advantica Technologies, the Co-op, the Alliance and Leicester, backing local people to lead regeneration through the New Deal for Communities, and supporting radical educational reform. I saw it a few weeks ago in West Belfast when I met a company described as Northern Ireland's best kept secret – F G Wilson, Europe's largest manufacturer of diesel generating equipment, who decided to build their new factory in a bitterly divided and damaged community – and who have created an intensely loyal, skilled and productive workforce. Don't misunderstand me. I'm not asking business to become charities, or to forget the bottom line. Quite the contrary, I am reflecting the fact that more and more business leaders are now recognising that by helping to build a strong community, you are developing new markets, creating your future employees and customers. I remember the old politics where business leaders and Labour politicians wouldn't dream of talking to each other. We're not going back to that. We will go on talking, and listening, to you in business - it's part of my job as Secretary of State, just as it is part of the job of my ministers and my officials. And of course, we will go on championing the interests of British exporters and British business abroad. We're not going to go back either to the days when one major political party believed 'public good, private bad', while the other – with equal conviction – told us 'private good, public bad'. It is simply a fact that a strong private sector is essential to create the type of country we want. It is business, not government, that creates wealth, generates new jobs and creates the tax revenues we need to invest in public services. We all need strong, successful businesses, just as much as we need flourishing public services – and a partnership between them, to get the best of both. That is why business will stay at the heart of our government's plans for national renewal. And we will continue to build a grown-up relationship between government and business. Straight talking. Recognising we won't always agree, but we will always listen. A relationship that works in the national interest - based on fairness, not favours. Championing British business Part of Government's responsibility is, quite simply, to champion your success. And it's not hard to do. Our world-class businesses come in different sectors and sizes. But they all have in common a passionate commitment to quality, to innovation, to the people they employ. Last week, in Oxford, I drove a new version of the Mini – a design classic and British icon - that has been revolutionized by cutting edge technology, engineering expertise and workplace partnership. And the new Range Rover model and the x-type 'Baby Jag' - both being built in Britain - are reminders that, although competition is intense, and although the weak euro makes life very tough for many of our manufacturers, we are still one of the most successful car producing nations in Europe. As Hiroyuki Yoshino, President of Honda, said recently: "We believe the UK is a great place to build cars." And it is not just the automotive sector. Aerospace. Pharmaceuticals – and a fast-growing biotechnology sector that scarcely existed ten years ago. Food production. Who would have thought thirty years ago that Britain would have one of the most dynamic food production industries in the world – traditional food, health foods, and of course the big winner, British Indian cooking. The creative industries. Sometimes wrongly treated as ephemeral, but – following last week's London Fashion Show, the Brits and the BAFTA awards – let's remember they're worth over £100 billion in revenue and employ some 1.3 million people. All reminders that – contrary to what we're always hearing about the death of manufacturing – the fact is that the best of British industry is the best in the world. So when a company like Dyson takes the decision to move some of its production to a country where wage rates are one-tenth of those in the UK, that's not another nail in the coffin of British manufacturing. It's a reflection of today's global economic reality and we've got to deal with it. Earlier this week, I was talking to Dennis Mendoros, an entrepreneur who has devoted the last fourteen years to building up an aerospace company, Euravia Ltd, in Lancashire – one of the many entrepreneurs named in the New Year's Honours List. He told me something I hear over and over again: 'We can't compete on the basis of low wages. We can only compete by being better. We have to have new products, better technology, great engineers. It's all about innovation.' And he's doing something about it – by leading the North West Aerospace Alliance that has joined up with the 8 universities to create a centre for aerospace innovation, backed by government and the Regional Development Agency. Innovation. Constant improvement. Moving up the value chain. It's the same message in the textile and clothing sector – one of our oldest industries, vital in my own region of the East Midlands. A sector that has lost thousands of jobs in recent years, partly because of foreign competition but also because of decades of under-investment in skills and technology and design. And of course we're not going to make a living in Britain trying to compete at the bottom end of the market, by producing basic cotton t-shirts. But we can and do make a very good living producing highly sophisticated fabrics, innovative technical textiles, and leading fashions. Look at Ramon Knitting Company in Leicester – winners of a Leicestershire business award last year – who have been manufacturing in Britain for 50 years and remain at the cutting edge of hygiene products and cleaning systems. And look at businesses like Web Dynamics which I visited in Bolton in July. They manufacture environmentally friendly, high performance fabrics and although they only started commercial production 3 years ago - now they're employing 50 people and are world leaders in their market. And of course, let's not forget the continuing success of the UK financial services sector, particularly here in The City. London now accounts for almost half of the trading in foreign equities around the world and more foreign banks are located here than in any other city in the world. I see the excitement of what is going on in our businesses and our economy today – and I try to share it with everyone I talk to. But I also know that change at this speed – and we have to change very fast to stay competitive – is incredibly hard. Above all, it's hard for the people whose jobs and whose businesses don't survive. So our task in government is to help people to adapt and get new jobs … and to make sure that, for every job and every business that disappears, there are new companies springing up, small companies growing – all offering new opportunities to our people. Creating the conditions for business success In our first term in government, we started by putting economic stability as our first priority. We will do nothing to put that at risk, because nothing is more important to business success and long-term investment. We have the lowest unemployment rate since the 1970s, the lowest inflation - and the lowest interest rates - since the 1960s. 20 years ago our long-term interest rates were five per cent higher than in Germany and three per cent above those in the US, now ours, and theirs, have come down. We remain the number 1 destination for foreign direction investment into Europe – and we're determined to keep it that way. No country is immune from the global economic slowdown. But as the IMF and the OECD have recently confirmed, the UK is better placed than any other industrialised country to withstand these difficult times. I don't say that in any spirit of complacency, but to remind us that we were right to put stability and sound public finances first. Now, in our second term, the challenge is to build upon that foundation of economic stability – and secure the rise in productivity, in the public and private sectors, that is the only way to raise our living standards and improve our quality of life. We all know what the agenda is. Skills. An education system that understands business. Top quality transport and telecommunications. A planning system that protects our beautiful countryside - but doesn't hold up vital development for years on end. Sensible regulation and legal frameworks - not only here in the UK, but in Europe, and - through the World Trade Organisation - across the world. Simpler, streamlined business support - particularly for smaller businesses. I'm not going to go through everything we're doing on all these issues. You've heard it before – and in any case, many of you are directly involved in making it happen. But I do want to mention one issue that is sometimes overlooked. In the modern economy, an effective partnership between industry and universities is central to business success. And I worry that too few of our businesses have any involvement in R&D with our universities. We have a world-class science base in Britain. With only 1% of the world's population the United Kingdom funds 4.5% of the world's science, produces 8% of the world's scientific papers and receives 9% of the world's scientific citations. Now we have to match the investment in science by redoubling our efforts to get business and industry using the best technology, and turning 'invented in Britain' into 'Made in Britain'. That is why I have made innovation and technology transfer central to the reorganisation of my Department. Good business, bad business I am determined that, under my leadership, the DTI will be a powerful voice for business, and for employees and consumers, right across government. I don't have to tell you that I am unashamedly pro-business. Pro 'good' business. And the vast majority of businesses are good – doing their best by their customers, their employees, their investors, and the community and environment around them. But we also know that there is a minority of bad businesses. There is unacceptable business practice – whether it's injuring workers because of shoddy health and safety, or dumping waste in rivers, or shredding documents. That kind of behaviour damages all of us – and it damages the reputation of business. So it's right for government to set fair standards, to promote the best business practice, and where it's necessary, to deal with the worst. Directors' pay Take the issue of directors' pay. I will always support – and this government will always support – big rewards for big success. But big rewards for big failure are an insult to employees who are losing their jobs – and damaging to the reputation of business as a whole. That's why I'm taking steps to strengthen the accountability of boards to their shareholders. Auditors All of us here this evening, I have no doubt, were appalled by the collapse of Enron. As a British prime minister once said of the Lonrho affair, "the unpleasant and unacceptable face of capitalism". But as Edward Heath also went on to say, "one should not suggest that the whole of industry consists of practices of this kind" and I couldn't agree more. But the collapse of Enron is of such a scale that it requires us carefully to review our arrangements for financial reporting and auditing. This is why I have set up a group jointly with the Treasury, Financial Services Authority and the Accountancy Foundation to co-ordinate our response to the issues raised by Enron's collapse. While the accounting and regulatory requirements in the US are significantly different to the UK it is crucial that we act to address issues which may question the integrity of markets. I am equally determined that the outcome should be measured, thought through and carefully judged. Non-executive directors We know too that businesses with strong, effective non-executive directors produce superior performance. British business can only benefit if we recruit non-executives from a wider pool of talent, if we make sure they understand their responsibilities properly – and have the skill and time to fulfil them. This is why I am pleased to announce today a review to examine the role and effectiveness of non-executives directors in the UK. It will build on the work of the Company Law review, last years Myners Review and of the CBI, IoD and others. The review will primarily focus on what is possible through best practice, and will report to the Chancellor and myself. Gender But the issue that is number 1 for almost every business leader I meet is people. The war for talent is real. So I was a bit surprised last year when an extremely senior member of corporate Britain asked me publicly whether being Cabinet Minister for Women had anything to do with being Secretary of State of Trade and Industry. I have to say that when women are one in three of our business owner-managers, nearly half the workforce, and make the majority of decisions as consumers, equal opportunities and economic success go hand-in-hand. We need to take a hard look at our record in promoting women to senior positions in business. I'm not going to patronise the women here or lecture the men. But I see the gap in men and women's representation in business every day. There must be something wrong when I look back at my diary and see that out of some 20 business meetings I've had over the last 4 weeks there have been around 100 men but only 12 women. And for every woman on a FTSE 100 board, there are seventeen men. This isn't about some silly political correctness. If we're only recruiting from half the human talent pool, it's not surprising we've got skills shortages. So smart companies recognize that diversity and family-friendly working are good for the bottom line. This is the country we all want to see. Sustainable wealth creation hand in hand with social inclusion. Prosperity and opportunity for everyone. It is the right thing to do – and it is an economic necessity. To get there, we have to carry on working as partners - and not be distracted from our goal. It is in that spirit that I have been speaking to you here tonight, and very much look forward to working with you in the future. |
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Other speeches by The Rt. Hon. Patricia Hewitt
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