8 June 2004

SPEECH BY THE CHANCELLOR OF THE EXCHEQUER, GORDON BROWN MP, AT THE LAUNCH OF UK BUSINESS WEEK

I am delighted to be here to launch UK Business Week and to have the opportunity to address this business conference here in the QEII Centre today on the theme of ‘Enterprising Britain’ at a time when we are not only enjoying an upturn in the world economy but our eyes are also fixed on both the challenges and opportunities of an increasingly competitive global economy.

And having come through a world downturn which caused recession in America, Japan and the rest of Europe, I want to thank all in business for the way you have been meeting the new challenges of the global economy – challenges that have required resilience, fresh thinking and the courage to change.

For companies like yourselves, there is hardly a product you produce, or increasingly many services, that do not face global competitors. And we are not just witnessing increasing speed in innovation but the rise of new market economies:

the rise of China - its growth today contributing more output to the world economy than all G7 countries put together; consuming, for example, half the worlds cement, over a quarter of the world’s steel and a third of the world’s iron ore;
the rise of Asia - to whom 5 million European and US jobs could be outsourced in the next fifteen years; and
the rise of developing countries - who in twenty years time could themselves account for 50 per cent of all manufacturing exports.

But while the challenges are great, the opportunities for us are still greater. And I believe that British businesses are not only well placed to meet these challenges but that we have the opportunity, by opening up enterprise to all, to experience a British enterprise renaissance.

The nations that will succeed in this new global economy are those that entrench stability and do nothing to put it at risk; that invest in the means to success - our science, our education and infrastructure; and that are open and outward looking, supporting free trade and not protectionism.

And of all the great historic British qualities – our stability, the work ethic, our outward looking internationalism, our creativity, adaptability and fair play – that are vital to that success in the global economy, none is more important than rediscovering one of the greatest qualities that shone though in the years Britain created the first industrial revolution – a strong and vibrant spirit of enterprise.

It is the British spirit of enterprise that made us one of the most inventive and creative industrial nations in the world.

And it is the British spirit of enterprise that made us look outwards to become one of the great trading nations of the world.

Now today most people would rightly associate enterprise with America and point to its rate of new business creation; its get up and go business acumen with its openness to risk; and in the last years of the last century its great leap forward in productivity growth - in recent years the feature of American entrepreneurial success most identified by the Chairman of the Federal Reserve Alan Greenspan.

But in this new century I want people who look round the world at leaders in enterprise to think also of Britain as one of the great global success stories for enterprise.

And I believe that just as here in Britain we have built, after years of stop go, a consensus around the importance of economic stability - and the sacrifices necessary to achieve that economic stability – a consensus that now stretches across all regions and social groups in our country – we can, in the time to come, build an ever stronger and deeper consensus, a shared sense of national economic purpose around the importance of - and the difficult decisions that need to be made to deepen and widen – our entrepreneurial culture.

Just as Britain has moved from the stop go economy of the industrialised world to one of the more stable, so too Britain can complete its transition from being seen twenty years ago as one of the most corporatist economies of the industrialised world to in the 21st century being seen as truly enterprising.

That is why we I believe the Sunday Times should be congratulated on making enterprise the theme of this conference:

that is why you should be congratulated on your business coverage of the drivers of new enterprise in our country; and
and that is why the Sunday Times’ regular focus on new business creation, on innovation, on tackling red tape and regulation is to be welcomed.

Let me tell you how as a Government we propose to build on this new and welcome focus on enterprise:

driving forward national awareness of enterprise opportunities for all, Britain will hold the first ever national enterprise week - focused on inspiring the young to be enterprising - in November;
we are launching a new National Council for Graduate Entrepreneurship;
there will be an annual competition for the British town or city of enterprise;
for the first time, all pupils before they leave school will have the opportunity to enjoy not just work experience but 5 days of enterprise education too;
we are in discussions with the palace about how a new Queen’s Award for enterprise promotion could reinforce the whole country’s support for the best of British business;
and in our high unemployment areas we have put in place 2000 new Enterprise Areas as zones for new business opportunities with fast track planning, community investment tax relief, the abolition of stamp duty, and the prospect of enhanced capital allowances for renovating business premises.

To a large extent it is Government letting business get on with its job of developing new and better products and processes – so I have ended all permanent ongoing industrial subsidies in coal, steel and ship-building, resolved to sell off all remaining Government shareholdings in private utilities and, in Europe, we are demanding a reform of wasteful state aids ending the old failed corporatist policies of picking winners and loss-making subsidies.

But Government policy can also contribute by doing what it should do well – and we must continue to lock in stability.

In the last Parliament Tony Blair and I took tough decisions not only to make the Bank of England independent but to put in place a wholly new long term fiscal and monetary discipline and framework:

by radically cutting the national debt;
imposing new fiscal policies over the economic cycle which allowed us to invest through a world recession; and
introducing a symmetrical inflation target that targeted deflation as much as inflation.

For the future, we will entrench the stability we have created. And I pledge that in all our decisions stability will come first. There will be no return to the quick fixes or short cuts of the past, no resort to the short-termism of the easy options: nothing we will do will put our anti-inflation discipline at risk and we will pursue stability yesterday, today and tomorrow.

And just as we have put in place an independent regime for monetary decision-making – essential for enterprise – we have put in place – also essential for enterprise – an independent regime for competition policy – taking Ministers out of the decision-making process, removing politicians from day to day control of key competition matters, strengthening the independent Office of Fair Trading and the Competition Commission, and launching a series of enquiries into market abuse.

In 1997 we had key priorities - to finance health, to support schools, to employ more police, to improve our infrastructure, to reverse decades of under-investment. But, even with all these priorities, we also set aside resources to cut capital gains tax.

To send out a message about the importance we attach to enterprise we have cut capital gains for long term business assets from 40 pence down to 10 pence

And while we have had to finance health care expenditure through national insurance, we have cut corporation tax from 33 pence to 30 pence and for small companies from 23 pence to 19 pence; introduced an exemption from tax for the first £10,000 of reinvested profits; and to reduce the costs of failure just as we’ve boosted the rewards from success, we have eased our insolvency laws.

And I believe that Britain is now ready for the next round of enterprise reforms and a step change in creating a more dynamic enterprise culture.

We know that if we had the same proportion of people starting businesses as the United States, we would have 1.8 million more businessmen and women in Britain. So I want to do more to encourage the risk taker and those with ambition to turn their ideas into reality and make the most of their talents. And for those already in business, I want to encourage their ingenuity, innovation and flexibility as the keys to success in the new global economy.

Our aim must be to remove all the old barriers holding the enterprising back and create an environment in which businesses - whether companies starting up, investing, hiring, training, seeking equity, exporting - can grow and thrive.

Let me give a few examples.

Planning: Britain must make our planning laws quicker, more flexible and more responsive - and I can tell you that we will.

Pay: Britain must do more to encourage local and regional pay flexibility – and we will.

Transport: we must work with you - private and public sectors together - to tackle the massive backlog in infrastructure investment. And with £180 billion of investment over ten years we will.

Innovation: we are offering long term incentives to encourage firms to invest in R and D; and we will shortly be announcing a long-term plan for science funding to encourage investment in the new technologies of the future.

Skills: we are already helping over 1 million more adults to learn today than seven years ago and are determined to continue to take the tough decisions necessary – in our schools, colleges, and workplaces – to ensure that Britain has the best educated, most skilled, most technically proficient workforce.

Tax: I promise we will continue to look with you at the business tax regime so that we make and keep the UK as the most competitive place for international business.

Now bureaucracy and red tape are challenges in every industrial country in the world and business – supported by the Sunday Times - have rightly campaigned for an end to wasteful and unnecessary regulation.

Business asked if we could look at VAT. And instead of having to account for every transaction we have introduced a simple flat rate VAT calculation for small businesses which lifts the burden of VAT red tape off the shoulders of hundreds of thousand of companies. And we have more small companies taken out of VAT from a more generous threshold than any country in Europe.

Business asked us if we could look at red tape in auditing – and we have exempted 69,000 more small businesses – over 200,000 now in total – from the requirement to submit an independent audit.

Business asked us if we could look at the system of inspections and enforcement and its costs – and we have set up a review to minimise and reduce duplication in the inspection system and enforcement regimes.

Business asked us if we could look at the administration of the Working Tax Credit – the British tax credit akin to the American Earned Income Credit – and having accepted the case for the Inland Revenue paying the credit directly to employees, we are now consulting with employers on detailed implementation.

Business asked us if we could look at the way new regulations were examined and from now on, the Regulatory Impact Unit will prevent the implementation of new policies if no proper assessment of the regulatory impact on business has been done. For the chemicals, construction and retail industries we have established industry forums to give business early warning of new regulations and allow you to express your views on them. And just as legislation can only be is only approved after a Cabinet process chaired by the Prime Minister so too from now on new regulations with a major impact on business will only be allowed to go ahead after being submitted to a cabinet route, with a strengthened Panel for Regulatory Accountability.

And because 40 per cent of new regulation comes from Europe we have resisted inflexible barriers being added into European Directives like the Working Time Directive and Agency Workers Directive, the Investment Services Directive and the Transparency Directive – showing that the best contribution we pro Europeans can make to Europe’s future is to lead the reforms that will make it more competitive. And Britain has agreed with Ireland, the Netherlands and Luxembourg to put regulatory reform at the heart of our four EU presidencies through to 2005, ensuring that any proposed regulation and every costly and wasteful existing regulation is put to a competitiveness test.

We also know that working together we can do more to enhance Britain’s great entrepreneurial culture – ensuring there is no no-go area for enterprise in any part of Britain.

Gone for ever must be the days of sheltering uncompetitive industries, picking winners of loss making subsidies.

Gone for ever too must be the old cynicism, complacency and them-and-us confrontation culture.

Instead, we should celebrate the entrepreneur, opening up enterprise to everyone who works hard and has the talent.

We know how much stronger our economy and our society will be if we see released all the dynamism, creativity and potential of all our people. So we now want to see a dynamic business culture which makes people feel that enterprise is not for an elite but potentially for them too.

It is easily within our reach that anyone, whatever their background, should not just feel they could start up in business but also be better equipped to do so – in the same way that people in any business in any sector can feel they can increase the value of their contribution to their own company

And that is why UK Business Week is so important:

celebrating the successes of our country’s businessmen and women and inspiring them towards still greater innovation and growth;
giving those with ideas and ambition the confidence and know-how to start up their own businesses;
and challenging Government to do more to break down the barriers to enterprise.

And through this partnership, working together, I believe we can build on our hard won economic stability to foster a British enterprise renaissance that will benefit us all.