I'm delighted to be here. To see so many distinguished guests. In particular, Lord Heseltine and Kenneth Clarke.
The fact we've come from across the political spectrum to celebrate your tenth birthday shows the wide and deep support for the Quoted Companies Alliance – and the way you've successfully represented SQC interests to successive governments for 10 years now.
Tonight I want to talk about the importance of SQCs to our economy. And address two points I know are important to you:-
Regulation - The equity gap – how we improve access to finance.
I won't talk for too long. I'm aware I'm standing between you and your dinner – an uncomfortable place for any politician to be.
The importance of smaller quoted companies
SQCs are vital to our economy.
Many of our best businesses are SQCs – high growth, high value added, high wage. The innovators and changers. The entrepreneurs.
Take Bob Holt of Mears Group – Bob the Builder - who's here tonight. The AIM Entrepreneur of the Year in 2001.
Mears was formed in 1986 and floated on AIM in 1996. The group has grown very successfully, providing maintenance services to the local authority, social housing and Ministry of Defence sectors.
Mears's latest profits were up 31%. Turnover by 8%.
Many SQCs go on to become the biggest and best British companies of tomorrow.
In 2001, 55 small quoted companies moved up to the FTSE 350. So far this year, 24 have followed - including QCA members Holidaybreak Plc and Northgate Plc.
Your success is vital to the overall health the economy. Providing jobs, wealth and opportunities.
That is why we are committed to working with you to help you succeed.
It is not our role to try and run business for you. Our role is to work with you to make sure the business environment allows you to thrive.
In the first term, we created the conditions for macro-economic stability. We now have the lowest interest rates and inflation in over forty years.
Our priority now is to work with you to improve our competitiveness and raise productivity.
We know what drives productivity - investment, competition, enterprise, innovation and skills.
Every Government department - from Treasury to Transport, Education to Industry - is working to push these drivers along.
Improving Regulation
This takes me to my first theme - regulation.
Some say enterprise and regulation have to be in conflict. I don't accept this.
Competition law plays a vital role in promoting enterprise. Intellectual property law encourages innovation. Company law promotes market confidence – attracting investment.
All of them are inherently regulatory, yet all of them play a key role in promoting productive, high value, high wage businesses – and the sort of economy, society and world we want to live in.
There is, after all, a huge difference between a system of corporate law that protects monopolies and cosy cartels, or leaves executives to determine their own rewards - and one that energetically protects new entrants and market challengers, whilst giving share-holders the information and power to shape executive pay.
A labour market can operate with or without a minimum wage, or decent standards of health and safety or employment protection. But we want – for the sake of our society and our economy - workplaces that treat people with respect, build people's skills and support effective team-working.
Workplaces that encourage people to make a greater contribution – in a virtuous circle of better services and products, higher wages and higher profits or value for money.
I'm not saying regulation is always desirable and I know it represents a cost for all businesses.
But it can play a crucial role in raising productivity – promoting skills, enterprise, investment, competition and innovation.
We will only regulate where it is necessary. Where it is the only way of achieving our desired outcomes – where best practice and voluntary measures are not enough.
And where we regulate, it will be light touch.
To do this, we need to listen to and understand business better. I know we don't always get it right. Our first attempt at the working time regulations was a mess. But we listened – and changed them.
We've got to get it right first time more often. My Department is looking at the way we consult to make sure it is as effective as possible.
Effective consultation leads to effective policy making.
The Enterprise Bill has been warmly and widely welcomed by all sides of industry. And the Company Law Reform proposals. Both these were subject to excellent consultations.
You have said you want someone to take overaIl charge of regulation.
We already have someone. Gus MacDonald, at the Cabinet Office, is an eagle eyed warrior on regulation - watching every Department like a hawk.
The other way to get better at regulation is to get better at lobbying international fora together – particularly the EU.
The way we've worked together (Treasury, DTI, QCA, wider finance and business community) in putting forward the case for amendments to the Prospectus Directive shows what can be achieved.
The revised directive indicates smaller and mid sized enterprises will be regulated with a lighter touch. A major victory.
But there's still some way to go. There are significant concerns. We'll continue to work with you to ensure those concerns are fully exposed.
Closing the Equity Gap – improving access to finance
The second theme I want to cover is how we are working to improve access to finance - closing the equity gap.
The equity gap is not a new phenomenon The "MacMillan" gap was first identified in 1931 – and led to the creation of 3i. The size and nature of the gap though has probably changed over time and is still the subject of much debate.
If we are to close the productivity gap, companies must have access to the finance they need to reach their full potential.
In an ideal world, there would be a seamless stream of funding for each stage of a company's development. From start–up to growth stage to successful global company. Provided that the business proposition being put forward is sound and viable.
But it's not an ideal world. And the fact is that finance is not always readily available throughout the business cycle.
I want all companies to be able to reach their full potential. But the issues are different at different stages – and we are recognising this in the way we are tackling it.
SQCs
I am aware that concerns have been raised about a lack of institutional investor enthusiasm for SQCs – exacerbated by current difficult market conditions. My Department is monitoring this area very closely.
But competition for funding has always been keen. SQCs need to be pro-active at marketing themselves to the widest possible investor audience. To help this, my Department produced, with help from QCA members, two reports – "Creating Quality Dialogue" and "Improving Share Liquidity" – setting out best practice in this area.
We are working actively with City Organisations to examine the feasibility of improving access to the debt market for smaller quoted companies. To provide a welcome additional source of finance.
We're also now undertaking research into the crucial Middle Market sector of the economy, of which SQCs are a part. I look forward to seeing the outcome of this research – and whether there is more we should do.
Smaller companies
As well as SQCs, we're also improving access to finance for smaller businesses – the SQCs of tomorrow.
We've increased support for business angels via the National Business Angels Network.
We're supporting small companies through the Small Firms Loan Guarantee Scheme and grants such as the SMART Awards.
We've introduced the Regional Venture Capital Funds. Filling the equity gap below £500k - and providing up to £270m of investment in the crucial early growth stages.
The DTI is encouraging a number of organisations who are in the process of establishing local equity markets aimed at improving access to finance for small regional companies – and acting as a feeder to senior markets.
If successful, this will help close the equity gap by complementing existing markets, and offering a further financial mechanism to support UK companies.
Thank you for inviting me to be your guest of honour and to lead tributes to you on your tenth birthday.
You are crucial to our economy. Crucial to Government.
I look forward to continuing to work with all of you, making sure we address the concerns of SQCs.
Thank you.
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