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Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)British Chambers of Commerce Conference |
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I?m pleased to be addressing the British Chambers of Commerce conference in the week that the Small Business Service was launched. If you look at the history of the Small Business Service, it was an idea that came from the British Chambers of Commerce. Nearly two years ago, the BCC made the case for a dedicated body, to give small firms a strong voice at the heart of Government. Since then the BCC and Chris Humphries have played a significant role in helping us to shape and develop the SBS and making sure the SBS meets business needs. I am sure that this process will continue over the coming months and years. The SBS will be a strong advocate of business at the heart of Government. But it won?t replace the role of the BCC in focusing business concerns. Last Wednesday I picked up the FT and saw Chris Humphries? smiling face looking me in the eye, and telling me about the concerns of business. There will be times when the BCC criticises Government policies. Today I want to explain what we are doing to meet your concerns, to create an environment which enables business to meet the challenges of the modern global economy - here in the UK, in Europe and throughout the world. I am also able to announce details of a reform to company law which will create significant savings for small companies. Reducing the burden of regulation is central to building a better business environment. But regulation is not the only area where Government must act. We now live in a knowledge driven, global economy where information and finance shoots around the world at the click of a switch. This affects the way we do business. We must make sure business can take advantage of the new opportunities which arise quickly but can fade just as quickly. In this modern economy we need to create a framework in which business can flourish. An environment which supports all sectors ? manufacturing as well as dot.com services. That means providing economic stability, introducing fiscal measures which encourage enterprise and investment, promoting fair competition, investing in skills, encouraging innovation and removing barriers to finance. Above all else, Government must provide a stable macro-economic framework. Because, more than ever, businesses need to plan ahead with confidence so that they can invest in knowledge ? through R&D or through training ? as well as taking reasonable risks in a fast moving market. If the confidence isn?t there, the investment won?t take place. We can ill-afford this vital investment to be put off through fears about the economy and its long-term stability. Through fiscal and monetary reforms we have created a sound and credible platform of stability and long term economic growth. Now, with both the lowest corporate tax rates for businesses ever and the lowest ever capital gains tax rates for long term investors, Britain is becoming one of the best places for companies to start, to invest, to grow and to expand. This is why we are seeing so much inward investment to the UK at the present time. And cuts in capital gains tax, including permanent 40% allowances for smaller firms ? one of the measures advocated in representations from the BCC - and the R&D tax credit for smaller firms, will also make a big difference to investment.
Opening up markets has to be one of our top priorities. Not for reasons of theory, but because it is good for business. That is why this Government has put in place, with the Competition Act, the most open and effective competition policy ever seen in this country. Strong competition stimulates innovation and encourages improved productivity. But also when it works well it reduces costs for small firms. The package of reforms which we are taking through Parliament with the Utilities Bill will result in reductions of at least 10% in wholesale electricity prices. This will reduce costs for businesses ? especially manufacturing firms. And last month Gordon Brown and I ordered an investigation into competition in the provision of banking services, to see whether the market is working effectively and whether it is serving the interests of smaller firms in the UK. This is one of the issues the BCC has raised on a number of occasions. As I said when I spoke to you in Glasgow last year, getting regulation right is a major priority for this Government. That means appropriate market regulation where competition is not fully developed. It also means ensuring that enterprise is not stifled by regulations. The Small Business Service will make sure we ?think small first?. As I am sure he has already mentioned, David Irwin has a specific mandate to examine new and existing regulations. As I shall show later, David is already making his voice heard. David is one of the members of the new group, chaired by the Minister for the Cabinet Office, Mo Mowlam, to call Ministers to account for the regulatory performance of their department. To make it easier to remove the burden of regulation, we are introducing a Bill which will enable changes to be made without having to wait for space in the main legislative programme. We?re also looking at ways of building on these initiatives to improve the environment. Later this year we will be looking at proposals from Lord Haskins? Better Regulation Task Force, on regulatory reforms that will help businesses to grow. As I promised last year, where my department does introduce regulation, I want to ensure that it is as simple and user friendly as possible. We have introduced exemptions for small firms in relation to trade union recognition, EU requirements on unit pricing in shops, and rules on stakeholder pensions. Last year I announced that I was considering "sunsetting" for some regulations ? setting an expiry date in the legislation. We have done so in the Electronic Communications Bill, where the provisions for a statutory scheme for e-commerce expire after 5 years if they have not been used. We shall be adopting this approach in other areas as well. The BCC has been particularly vocal in criticising the impact of employment legislation. I know from conversations with employers that most would agree that we need decent minimum standards in the workplace. But we must also give employers flexibility and keep administrative costs to a minimum. That is the approach we have taken with our proposals on part-time work: ensuring that individuals and businesses can reap the full benefits of part-time work, without imposing unnecessary new bureaucratic burdens on business. We are still considering the responses to our consultation on these proposals. I know there has been a concern about the delay in implementing them. What I can tell you today is that we will shortly be publishing the final regulations, but I want to ensure that business has proper notice before these come into force. Last year I said that I would give business six weeks between publication and entry into force of regulations. When the part time work regulations are published I intend to allow at least eight weeks for business to prepare before they come into force. At last year?s conference I announced that we would amend the Working Time Regulations. We recognised that the regulations were unnecessarily complex. We have now amended them ? eliminating most of the administrative costs by cutting back on the record keeping requirements. In response to concerns from business, we also amended our proposals for administering the national minimum wage ? as a result of which it imposes very small administrative costs on business. Our parental leave scheme also takes a light touch ? giving employers and employees flexibility to come to their own agreements in the workplace. Whilst improving on the basic maternity leave scheme, we have simplified complex legislation. As announced two weeks ago, I shall shortly be consulting on the issues faced by working parents and businesses across all sectors. This review, which will consider maternity pay and parental leave, will take account of the needs of individuals and businesses. I want to look at how family friendly policies can help companies reduce recruitment costs, increase staff retention and produce even higher productivity. We all stand to gain from such an initiative. Today I can announce a significant reform which will save business up to £180 million a year. At last year?s BCC conference I questioned whether it was right that all companies with a turnover of more that £350,000 should be legally required not just to produce their annual accounts but also to have these accounts subject to a full independent audit. I said then that we would consult widely. That consultation is now complete. Today I can announce major changes to the thresholds below which companies are exempt from the statutory audit requirement. After discussing this issue with David Irwin, I have decided that we should remove the statutory audit requirement for all companies with a turnover of up to £4.8 million - the maximum level allowed. This will be achieved in two stages. Subject to Parliamentary approval for financial periods ending after 31 July this year I will raise the threshold to £1 million. This will bring the benefits to the majority of small companies as soon as possible this year. Relieving up to 150,000 small companies from statutory audit, with potential savings of up to £180 million a year. Following this, I intend to raise the threshold further to £4.8 million. This will benefit a further 75,000 companies. The independent Company Law Review is considering whether, for companies with a turnover of between £1 million and £4.8 million, the audit should be replaced by a lighter, less costly form of assurance. I shall take their final recommendations into account before proposing what, if any, new statutory requirement should be put in place. In addition I have decided to simplify and reform the law on dormant companies. In particular, I shall remove the requirement for such companies to pass a special resolution each year to gain audit exemption. These changes are ones which, I know, the BCC have been calling for. I?m pleased we have been able to respond in a positive way. This underlines the importance of the BCC ? in challenging policies and regulations and expressing the concerns of business. A Government which listens but also responds to concerns expressed by business. If we are to exploit the potential of our companies and our people to the full we also need to create an environment in which enterprise is more highly valued and can flourish. That?s why my Department is supporting the National Enterprise Campaign, in which the British Chambers of Commerce is a major partner. Even before the official launch in May, the Campaign has already signed up 200 entrepreneurs and business people. Their experience and knowledge will be invaluable in helping the Campaign change attitudes towards enterprise, develop entrepreneurial skills and encourage the growth of business. Over the next year I shall be looking at what more we can do to encourage a strong culture of entrepreneurship in all its diverse forms. We need a better understanding of why people do not consider setting up their own business and what we can do to encourage them. I believe we must create a social environment in which enterprise is valued and responsible risk taking is supported. To address the fear and stigma of business failure we need to look carefully at our outdated bankruptcy and insolvency rules. I shall be announcing reforms in the near future. It is not just here in the United Kingdom that we need to see a change of attitude - it applies to Europe as well. Just over a week ago, leaders of the European Union agreed a major programme of economic reform at a special summit in Lisbon. The programme has a clear strategic goal for the European Union for the next ten years: to become the most competitive and dynamic knowledge-based economy. This represents a sea-change in European Union economic thinking. There is now a new direction for Europe away from the social regulation agenda of the '80s and instead focused on enterprise, innovation, competition and employment. The summit recognised that small firms will be the main engines for job creation and economic growth in Europe. It agreed to draw up a European Charter for small firms within the European Union to focus on measures to help small business and to take forward a programme of action to break down barriers to enterprise - reducing the costs of doing business and cutting red tape. Now that the principle has been agreed ? and a Charter is to be drawn up - the challenge is to get a Charter that meets business needs. The BCC has already provided valuable guidance on this initiative, and I hope you will continue to do so as the Charter shapes up. In our dealings with Europe we must always act in the national interest. This must also be our approach to the single currency. Our policy is clear. It was stated by the Chancellor in October 1997 and by the Prime Minister early in 1999. The determining factor underpinning any government decision is whether the economic benefits from the UK joining are clear and unambiguous. Britain should be part of a successful single currency provided the economic conditions have been met and the people give their consent in a referendum. But the five economic tests have to be met. We will consider if the five tests have been met early in the next Parliament. If the economic tests are satisfied then we should join a successful single currency if that is what the Government, Parliament and the people decide. I understand that Michael Portillo argued this morning that joining should be ruled out for a period even if during that time it would be in the national interest to join. We won?t allow political dogma to triumph over the national interest. We want to put the interests of our country first and provide the British people with the opportunity of exercising a genuine choice in this important area. And that?s exactly what this Government will do. In the meantime, the reality of the situation is that Government and business should make active preparations to give the UK the genuine option to join the euro early in the next Parliament. It is therefore encouraging to see from the BCC business survey how much preparation is taking place. We need to be prepared and ready for change, if it is in the national interest to do so and has the support of the British people. Conclusion As the decisions taken by BMW about Rover show, in a time of globalisation we face two choices. A choice between uncontrolled change, forced by the markets and commercial pressures, or a process of economic reform that delivers economic efficiency and social justice and involves people and their communities. I believe that government and business learning from each other can meet this great challenge of change. Not through protectionism but through open markets and competition. Not by resisting change but by equipping people with the skills they need to cope with change and creating an environment which helps and does not hinder enterprise. To make sure that the global knowledge based economy is a bringer of opportunity and not a threat. We can not stop change; we can not hold back global forces. What we must do is to lead people through the process of change. Building from a platform of stability, creating a framework that opens up innovation, competition, and enterprise. This Government and business share a common agenda. There may be disagreements about the speed of implementation, the order of priorities. All of course hyped up by the media. The important point is that we listen to each other, maintain a dialogue and develop policies which support our objectives of fairness and enterprise. Together we can meet the challenges ahead. |
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Other speeches by Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)
(the following are available from the archive) |
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