Check against delivery
The Manufacturing sector is making steady progress.
Yes, these are tough times but surveys are showing positive signs and jobs are slowly returning.
Here in the historic heart of the automotive industry, I would like to pay tribute to the impressive achievements in the auto sector.
More cars exported last year than ever before. The UK now a net exporter of cars for the first time since 1976. The future of the industry is looking bright.
Last May, GM announced £125m of investment in Ellesmere Port to build the new Astra, and Tata agreed that Jaguar Land Rover will build its new engine plant near Wolverhampton. Later today Vince and I will be visiting Aston Martin to celebrate the return of the Rapide S to the UK. Very significant developments that will secure jobs for years to come.
I would like to thank the Business Secretary and his department who I know worked tirelessly to secure these investments.
But they also demonstrate how this Government is doing things differently. I want to focus today on two areas where we are doing that: creating the right business conditions and leveraging investment.
The economic conditions are challenging - this is still a very difficult business climate - but there are siren voices who loudly argue that we should follow a different course.
On the left, that we should forget about the massive deficit this Government inherited and spend big and borrow more. Or on the right, urging us to slash public spending in order to cut taxes.
But we have always been crystal clear. This is not a Government that would gamble Britain’s future for the sake of some short term headlines. We will not throw ourselves at the mercy of the markets to curry a few votes. That would be the easy option.
Instead, we must stay the course, and avoid lurching this way or that. We are not here to pull off a short term patch up job.
This is a Government that is doing things differently, limited by the circumstances we inherited, driven by our mission to build a stronger economy in a fairer society for the long term.
The facts speak for themselves. More companies were set up in 2011 than ever before. Our changes to employment law mean we have one of the most flexible employment frameworks in Europe. We are reducing Corporation tax to 21%, the lowest of any major Western economy. We are cutting the costs of investing in new plant and machinery through more generous capital allowances. And we are making it easier to borrow. That is why we introduced ‘Funding for Lending’ and the National loan Guarantee scheme, which is already offering more than 19,000 loans.
We have cut red tape with our one in one out policy and moving further with one in two out policy challenging ourselves on what is really necessary. As a result we are now ranked 7th by the World Bank for ease of doing business, ahead of most of our competitors.
We are making it easier to develop business partnerships. Our industrial strategy is working across government, trying to strike the right balance, neither micro-managing nor stepping back.
We are working sector by sector, helping companies to collaborate. Creating an environment where companies can cooperate and pool their resources in areas like research and development. To boost these efforts we protected the science budget in the last Spending Review and increased science spending by £600m in last year’s Autumn Statement.
And we are winning praise from international organisations. The World Economic forum ranks us third for quality of scientific research institutes and second for collaboration between universities and industry.
It is fundamental we get the conditions right because, as you know, there is less money. That means we have to be creative and smart with the money we have. Rather than throw good money after bad, and prop up failing projects, we have targeted investment and backed success, helping good businesses to grow and expand with new projects.
Our Regional Growth Fund has allocated £2.4 billion to more than 360 projects, all forecast to deliver and safeguard 500,000 jobs and £13 billion of private investment. The Fund works because we carefully scrutinise every project for maximum value. That is how we are able to leverage up to £6 of private sector investment for every £1 of Government money. Most importantly we are creating or safeguarding thousands of jobs: sustainable jobs that will last. And the good news is the next round, worth £350m, is open to bidders until 20 March.
A crucial element of regional growth is the revival of supply chains.
Many companies have talked to me about wanting to use local suppliers to simplify the supply chain, about the advantages of quality, lead times, a common language and the chance to boost the local economy and create skilled jobs. That is why today’s announcement is so significant.
As Vince has explained, the second round of the Advanced Manufacturing Supply Chain Initiative will mean £220 million of Government and industry investment to strengthen UK advanced manufacturing supply chains, creating and safeguarding over 16,000 jobs. These include aerospace, luxury cars, construction, printed plastics and 3D fibres.
We know that strong supply chains bring confidence and jobs back to local communities. Most importantly they provide the best guarantee for continued investment and long term success. An industry with a strong supply chain is like a tree with deep roots: very hard to dig up and plant somewhere else.
I realise that many of you are most focused on the big value contracts of the future and the need fill up the order book for the years ahead. Likewise, the Government has taken the bold, long-term decisions on infrastructure investment, so you know what projects are on the horizon and can plan for them.
And if government doesn’t have the money it once had to spend on infrastructure, then we are determined to provide the certainty necessary to leverage private sector investment, notably providing up to £40 billion of Treasury guarantees to support major infrastructure projects, enabling investors to benefit from low financing costs. And these guarantees can be used flexibly to support projects from a range of sectors, including energy, communications, transport and even health and education facilities.
We have a National Infrastructure Plan that prioritises a list of the top 40 projects critical to the future of our economy. There are now more than £310 billion worth of projects in the investment pipeline: long overdue investment in our motorways and roads, High Speed 2 worth £32 billion, super-fast broadband investment to give us the best network in Europe by 2015, and our Energy Bill will bring forward up to £110 billion of investment in new energy infrastructure, much of it in the renewable sector.
This means we can invest to create jobs now, increasing the productive capacity of our economy for future decades. Together with our work on the industrial strategy and supply chains, this means we can for example invest in offshore wind and build the pylons, blades and gear boxes here in the UK.
I have talked about targeted investment in business, boosting the supply chain and infrastructure, but I also want to talk about local growth. Growth that matters to you in this room, your firms, the SMEs in your supply chains. Growth that leads to jobs locally.
For too long, budgets have been controlled by ministers and mandarins in Whitehall. But there is a very significant, quiet revolution taking place.
I am leading our efforts to hand back budgets to some of our biggest cities. We have provided local areas with new borrowing powers - tax increment financing - to boost local investment in capital projects. And from April local authorities will keep around half of local business rate revenues, creating a new incentive for them to go for growth.
A radical policy that is reviving industries and building momentum. A decentralisation that puts Manchester in the driving seat, deciding Manchester’s future. A decentralisation that gives Birmingham the freedom to innovate, compete and grow. A decentralisation that puts Sheffield in charge of its skills.
That lay at the heart of the city deals we signed with the largest eight cities outside the South East and is now being extended to the next twenty cities and areas.
And I am determined that by 2015 every part of Britain should be more decentralised, with more powers to raise and spend money locally.
This is as much about you as it is about Government. We have stripped away RDAs, the long arm of Whitehall that didn’t always provide the local leadership needed to boost local growth, and put in place Local Enterprise Partnerships with you, the private sector in the lead.
And as we prepare our response to the Heseltine review it is clear to me that we need to be brave enough to take the logical next step towards greater economic localism. Regional growth, localising business rates, city deals, new freedoms - we have let the decentralising genie out of the bottle, there is no turning back.
No-one asked Lord Heseltine to set out the local vision he did. He saw it as the best way to foster local growth and stimulate the economy.
We should give all local communities the power to design the workforce that fits their local economy. We should give every area control over local infrastructure and housing. And by empowering them we will give local leaders a vested interest to boost growth and help their local businesses become global players.
Finally, from the local to the global.
I would urge you to set your sights wherever you can on emerging markets across the globe. I know there are some global players in the room who have signed some very large deals in the last year, but still only 20% of SMEs in the UK are exporting. That has to change.
The harsh truth is that our domestic market cannot be the sole engine of growth for the foreseeable future. We know that exporting businesses are more likely to increase profits and productivity. We have focused our foreign policy on trade. The Prime Minister and I have led large trade delegations to the most important emerging markets, and this has reaped dividends.
We exported £300 billion worth of goods in 2011, 12.4% more than the previous year, but there is more we can do. UK Trade and Investment now has offices in 100 markets, expanding its offer to support businesses across the country with expertise and advice across the world.
So: creating the right conditions for your business to thrive, encouraging investment for your business to grow, supporting you to sell abroad. This is how we are taking a different approach.
Lowering corporation tax, direct investment for firms outside of London, cutting red tape, a government not just determined to deal with the deficit and maintain stability but pulling out all the stops to create the conditions for jobs and growth.
We need to create an economy that doesn’t rely so heavily on one sector in one part of the country, where growth is driven by a much more diverse private sector filled with entrepreneurs and small and medium sized firms, spread across the country.
An economy where people with good ideas have a real chance of starting a business.
Everything this Coalition does is geared towards that vision.