David Cameron announced plans to create a publicly accessible central registry of information on beneficial ownership.
Thank you very much, Francis, and thank you for that welcome. It’s great to be here this morning because, like Francis, I agree that the Open Government Partnership is helping to drive this transparency revolution around the world. I’m enormously proud that Britain has been at its heart since its foundation, pushed along every step of the way, of course, by Francis, who you’ve just heard from.
Now, some people say that open government is quite an abstract topic: it’s something for academics; it’s something for think tanks; it’s a good thing to do. But where’s the urgency? Where’s the relevance? So, today, I want to explain why I believe this is all so important. Why open government isn’t some sort of optional add on, some sort of ‘nice to have’, but why it’s absolutely fundamental to a nation’s potential success in the 21st century. About why, in the global race that we’re all in today, it is a vital part of any country’s plan for prosperity.
Now, to make this argument at its starkest, though, we can’t really begin in this room. We’ve got to travel 5,500 miles around the world to the 38th parallel on the Korean Peninsula. It’s currently early evening there, and I want you to picture the scene as the sun goes down. Look one way and you see South Korea, whose president I am delighted is coming to the United Kingdom next week. South Korea is a beacon of light, literally and metaphorically. The fourth largest economy in Asia. Its teenagers second in the world for reading. It’s a hub for global business and average life expectancy is a staggering 81.
Now turn the other way, and look to its northern neighbour. It is dark as far as you can see. Living standards amongst the lowest in the world, disease is rife, almost a quarter of its children severely malnourished and an average life expectancy almost 15 years lower.
Two countries, side by side, but who couldn’t be further apart today. And we know why this difference exists. One is an open, vibrant market economy that is underpinned by an open, vibrant successful democracy. A place where people have a say in the future of their nation. The other, of course, is a closed, backward economy, and that is underpinned by a closed, corrupt, secretive dictatorship. Decisions taken behind closed doors, mostly by the grandsons of those who were taking them 70 years ago.
It was Amartya Sen who wrote of the remarkable empirical connection between political freedoms and economic prosperity. And, more recently, Daron Acemoglu and James Robinson have argued that open political institutions are critical to whether nations succeed or fail. And I believe they are absolutely right.
Take another example. Look at the difference between Equatorial Guinea and Botswana. Both blessed with bountiful, precious natural resources. For years, payments for Botswana’s diamonds have been managed by transparent institutions, and that wealth has been shared with the nation. Whereas for decades in Equatorial Guinea, that country has seen its mineral wealth siphoned off by a corrupt elite, all under a veil of secrecy. A few people have got rich, but the majority have stayed gut-wrenchingly poor. A tragic result of broken institutions and a closed, secretive government.
The truth is this: closed governments breed poverty. Look at Cuba and look at the United States. Which way do the boats go? Look at Zimbabwe and South Africa, people crawling on their hands and knees to go from one to the other. Look at the people who, so tragically, have lost their lives crossing from the tip of Africa to Europe.
Now, for years I’ve argued that there is a golden thread of conditions which allow countries to thrive: the rule of law, the absence of conflict, the absence of corruption, the presence of strong property rights and institutions. And open government should be woven deep into the heart of this thread.
Now, there are those who say a nation’s prosperity is determined by its geography, or its climate, its religion. I say nonsense. As the 2 Koreas show, and as all those examples show, countries rise and fall depending on the economic system they adopt. And an open, inclusive economic system backed by open, political inclusive institutions - that is the best guarantor of success. The connection between the economic and the political systems of a nation can be absolutely crucial.
Of course, there are market economies in closed political systems. But the best way to ensure that an economy delivers long term success, and that success is felt by all of its people, is to have it overseen by political institutions in which everyone can share. Where governments are the servants of the people, not the masters. Where close tabs are kept on the powerful and where the powerful are forced to act in the interest of the whole people, not a narrow clique. That is why the transparency agenda is so important.
Now, in Britain we know this to be true from our own history. We weren’t the world’s first industrial power just because of the coal and the iron ore beneath our soil. It was because we had secure property rights, relatively open and flexible markets for labour and capital, and a system in which innovation, investment and enterprise could thrive. And crucially, this was then all underpinned by relative political stability and the beginnings of a parliamentary democracy. We’d closed the door on feudal economics and we’d built political institutions that were capable of sharing power.
Now, of course, we must accept that one size will never fit all. Different countries face different circumstances and different challenges. But the fundamental principle still remains. Open governments backing open economies make for successful nations. So that’s the argument.
And the question facing us at this summit is: what should we do about it? It’s a question for all of us: leaders, politicians, businesses, civil society and transparency activists. And in the time I’ve got left to speak to you this morning, I want to tell you the 4 big things that I think we need to do.
First, we’ve got to get out there and really make the argument for open government. We can’t just sit there and assume there’s some great, inexorable trend towards political freedom. History isn’t written for us, it is written by us. When people tell us that all this is self-satisfied lecturing and pie in the sky nation building – we’ve got to say, ‘No, it is people who are demanding open government’, from anti-corruption campaigners in India, to the popular uprisings in the Arab world.
When people say that pushing this agenda is an alternative to giving aid, we’ve got to say, ‘No, we’ve got to do both.’ Aid and open government can and should reinforce each other.
And when people say, ‘Well, look at all those successful examples of authoritarian capitalism around the world,’ we should say, ‘No, let’s have the confidence and the guts to say that democracy, property rights, equality before the law and a proper rule of law: those things will win the day in the end.’ Together, we’ve got to make open inclusive institutions the international norm.
Now, as the Millennium Development Goals (MDGs) come to be replaced, I believe that open government must be at the heart of our efforts to eradicate extreme poverty. Things like health, education, nutrition: they’re all absolutely vital. But so is open government. The recent high level panel on development, which I co-chaired with the presidents of Indonesia and Liberia – in that report we did, we make this very clear. We proposed concrete goals on the rule of law, on property rights, on free speech, on media, open political choice, access to justice and tackling corruption. All these things should be at the heart of what we replace the MDGs with.
As the UN Secretary General himself has said, ‘Peace and stability, human rights and effective governance, based on the rule of law, and transparent institutions are outcomes and enablers of development.’ So, now we’ve got to press ahead, and make sure we get these kinds of goals embraced by everyone in the international community. So, that’s the first thing we have to do.
Second, we’ve got to translate words into deeds. We can’t just talk about open government, we’ve got to deliver. Now, during Britain’s presidency of the G8 this year, we promised a big push on transparency: in payments for natural resources, in open data and in property rights. We got world leaders to sign up to a declaration which, in clear and plain language, commits us to action in all of these areas.
Not least, property rights. This is an area where we shouldn’t be nervous about pushing our agenda. As a country, you can’t do open institutions without dong property rights as well. They are hugely important; they are the very bridge between open institutions and economic prosperity. It’s only if people know that their wealth won’t be stolen away by corrupt officials, or anyone else, that they’ll actually press ahead and create that wealth in the first place.
So, this year at the G8, we agreed to help on the ground. The G8 countries are going to work with developing nations to strengthen their land policies and institutions, and this is going to mean that people have clear rights to the land they live, farm and work on. Britain is going to work specifically with the Tanzanian government, creating a new land tenure unit, setting out who owns what right across the country. And I want to pay tribute to President Kikwete of Tanzania, who’s here today, who’s doing so much to make this project a success. So that’s the second thing - words into deeds.
Third, in developed countries we’ve got to practice what we preach. When we talk about transparency elsewhere, we’ve got to show it at home too. Over the last 3 and a half years the government I lead has been unprecedented in the amount of information we’ve released. You can now map the crime on your streets, the standards in your schools, the performance of your hospitals. You can see the businesses and the people who governments meet with, the names and roles of senior civil servants, not to mention the pay of most of our top officials. And I want us to go even further. Throughout this conference you will hear a raft of new commitments, not least on the National Health Service.
But this transparency needs to extend beyond the public sector and into the private sector, too. We need to know who really owns and controls our companies, not just who owns them legally, but who really benefits financially from their existence. For too long a small minority have hidden their business dealings behind a complicated web of shell companies, and this cloak of secrecy has fuelled all manners of questionable practice and downright illegality. Illegality that is bad for the developing world, as corrupt regimes can stash their money abroad under different identities, but illegality that is bad for Britain’s economy too, as people evade their taxes through untraceable trails of paperwork.
Not only is this hugely unfair to the millions of hard working people in Britain who pay their taxes, it is also bad for business. To keep corporate taxes low, you’ve got to keep corporate taxes coming in. As I’ve put it, if you don’t have a tax base you will never have a low tax case. So that’s why we need to shine a spotlight on who owns what and where money is really flowing. This summer at the G8 we committed to do just that: to establish a central register of company beneficial ownership. And today I’m delighted to announce that not only is that register going to go ahead, but it’s also going to be open to the public.
Now some people will question whether it is right to make this register public. Surely we can get the same effect just by compiling the information and using it within government and sharing it between governments? Now of course, we in government will use this data to pursue those who break the rules, and we’re going to do that relentlessly, but there are also many wider benefits to making this information available to everyone. It’s better for businesses here, who’ll be better able to identify who really owns the companies they’re trading with. It’s better for developing countries, who’ll have easy access to all this data without having to submit endless requests for each line of inquiry. And it’s better for us all to have an open system which everyone has access to, because the more eyes that look at this information the more accurate it will be.
This is, I believe, a complete world first on transparency and I’m proud that Britain is leading the way. And today I call on the rest of the world to join us on this journey. Together we can make an even bigger difference. And together we can close the door on the shadowy, corrupt, illegal practices once and for all.
So making the argument, words into deeds, practising what we preach, those are the things we’ve got to do. But there is one more thing. We’ve got to give our full-throated support for the groups that support and promote transparency, not least the Open Government Partnership. This is a truly exciting institution. Rather than getting bogged down in endless communiques, the Open Government Partnership is about concrete reform.
If you look around the room, we have 61 members, over 1,000 specific commitments between us in just 2 years. We’ve got the Liberian government here, who’ve pioneered citizens’ budgets, giving people a greater say on how their money is spent. We’ve got representatives from the Philippines, who are letting the public audit major government projects. We’ve got people here from Brazil and Croatia, who’ve introduced their first freedom of information laws. These are huge practical steps.
And as Francis has said these steps are not always easy, they’re not always convenient for politicians to make, and that’s all the more reason to group together in a partnership where we can support each other. And I’m pleased to welcome this morning Vice-President Boediono of Indonesia and Rakesh Rajani of Twaweza who are taking over as the organisation’s lead co‑chairs. Rest assured you’ll be able to count on Britain’s full support in the battles ahead.
So I want to finish by saying this: none of what I’ve outlined today is easy for us politicians. Transparency brings risks – indeed we often find that out here on a day‑to‑day basis – but it is absolutely critical. Time and again, history has shown us that open governments make for successful nations. From the children across Africa who depend on it, to the pensioners in this country who rely on this, it matters. So let’s keep the momentum up, let’s keep going, and when history comes to be written let us make sure that this generation was not found wanting. Thank you very much indeed for listening.
Right, thank you very much. Thank you. Right, well it wouldn’t be open and transparent without some questions and answers, so who wants to kick off?
Prime Minister thank you so much for your historic announcement today, it’s fantastic that you’re going to shine a light on company ownership.
In the spirit of the G8 effort you led, and the strong language in that communique on companies and trusts, can you take this fight to Europe, can you ensure there will be no loopholes and can you therefore ensure that trusts are also covered? Thank you very much.
Well thank you very much. I do think it’s important as we try and raise levels of prosperity, particularly in the poorest countries in our world, that we make arguments about aid and development. But we ally those with arguments about transparency and institutions and the rule of law.
On the first bit of your question, taking this to Europe, yes absolutely. Britain now is taking a leadership step in terms of this register of beneficial ownership and openness. What we agreed at the G8 is that everyone should have an action plan to move in this direction and we’ll be encouraging other European countries to do the same thing.
The issue of trusts comes up a lot in the consultation. Trusts are different to companies. Companies are more public institutions, trusts more private. So we’re happy to listen to the arguments as we go ahead, but what we’re starting with today is companies and company ownership, but it will certainly make the arguments around the rest of the world about everyone moving on to this agenda.
Good morning Prime Minister, thank you very much. I’ve been working with you, with Francis Maude and your officials on the national action plan, so the announcements today about beneficial ownership is wonderful as are a number of other commitments.
And my question to you is a little bit unfair, but it’s if we were to look forward to 2 years to the summit in 2015, where – how – what will success look like then? How do we stretch ourselves as a movement, and as the UK, for open government?
Right. An international point and a domestic point. I think on the international front, I think openness and transparency on tax, trade and ownership. I think those issues that were in the Lough Erne Declaration, which I put a lot of time and effort in to try and write this declaration in clear readable English, you can really get to grips with the commitments that those so countries made around the table. And what I’d like to do in the next 2 years is try and roll that declaration out into action across the world. I think it is simple and straight forward enough for everyone to get to grips with.
I think that’s the international agenda. I think the domestic agenda, where I’m particularly focused now, because it’s so important to get our public services working as well as they can, the focus here in the UK will be quite a lot on healthcare, education, publishing information so that consumers, citizens, patients and parents can make good choices. I think it’s an enormous tool for improving our public services.
And frankly we all face the same challenge across the world: big budget deficits; governments we’re finding difficult to afford as it were. So if we want to improve public services, transparency’s got a big role to play.
There’s a third point I’d make as well, which has struck me while doing this transparency work, which is a pro-enterprise point. I was very struck quite recently when I was handing out an award for who had created the best app while at university for iPads and mobile phones. And I was very struck that almost all the best apps were actually based on the release of data. So someone had one for which is the safest street to live on in Britain. Another had one where the hospital had the shortest queue or which is the school with the best results in my neighbourhood. This just struck me – a very simple point – you all know this, but I’m a simple guy– the release of data is an enormous wealth creator. A lot of businesses are based on information, and so the more data we make available, the more businesses that can grow, and the greater success our economy will be.
So I think those are the priorities: an international agenda about tax, trade and transparency; a national agenda here in Britain about public services, which I know many will want to adopt; and this wealth creation point, which we shouldn’t lose because I think it helps to make this whole issue of open government relevant to the economic challenges that we face as nations, as well.
[Translated] My name is Reynaldo Castro Melgarejo. I come from Papantla, Veracruz, Mexico. Since 1985 I have worked for transparency in my country. I have promoted the preventive combat of corruption from municipalities. My experience as a municipal treasurer made me commit to transparency. Corruption harms us in all aspects. I appreciate that you have the broad view that there are no possible patterns.
Mexico has serious problems, like other countries. I think we’re in the country where economy was invented, where we have proved that there is no invisible hand and we have to help bring new ideas so support can be effective, strengthening our economic systems with transparency and the preventive combat of corruption, let this be the vaccine against corruption. I hope this is a result of London 2013. Thank you.
Thank you very much. I think saying transparency is a vaccine against corruption is a brilliant phrase, which I’m going to steal for all my future speeches.
I’ll just make 2 points in response to what you said. One is, when we did the research for the UN report that the Presidents of Liberia, Indonesia and I were commissioned to chair, we did a lot of research about what people wanted in terms of a replacement to the Millennium Development Goals. And the issue that came up again and again was justice and anti-corruption. It almost came up more than some of the material issues around poverty, health and development. I mean, it was incredibly powerful, this cry coming from people in countries all around the world.
And that’s why the transparency agenda is so important, because it is, as you say, it is the vaccine against corruption. And that leads to the second point. What I was trying to say in my speech is what is it that determines whether a country’s institutions and politicians govern for the public good and share wealth, strength and power or whether they extract from the country, or are corrupt and feather their own nests? You know is there some magic move that makes institutions good rather than bad? Well, there’s no magic bullets anywhere in this world but, arguably, transparency is the key, because it makes it far more likely with transparent institutions that you get people involved in those institutions that want to be inclusive rather than taking money out of a country. So I think it’s hard to overestimate the importance of the issue that we’re discussing today.
In my speech I was very struck by what those 2 academics that I mentioned – James Robertson being one of them – wrote about why nations succeed and why nations fail. I think it is an incredibly powerful argument, and absolutely at its heart is the behaviour of institutions, and at the heart of how institutions behave is how transparent they are.
So thank you for your vaccine quote I’m going to use from now on.
My concern – and I’d like to know your thoughts about the sustainability and survivability of the Open Government Partnership vis-à-vis elections. Many of the 61 countries, at some point in time, will have elections; say within the next 3 to 5 years. What happens if, for example, if a reformer who is a president is, say, not elected? What is the survivability and the prospect for the Open Government Partnership? Thank you very much.
The sustainability of the Open Government Partnership – well, it’ll depend on all of us. It’ll depend on the politicians making their promises and keeping their promises. It will depend on the non-governmental organisations, charities, voluntary bodies and campaigners.
Why I think it will work and it will be sustained is a couple of pretty good reasons. One is, I think as Francis argued very persuasively and as I hope I argued, this is an idea whose time has come. This is a very powerful idea in terms of how we generate and create wealth that is properly shared. That’s the first point.
The second point is the campaigners and the NGOs and charities have a very powerful role in this, and quite rightly too. And what I find so heartening is that the NGOs are focused on eradicating extreme poverty. On continuing to make sure we vaccinate the world’s children against diseases. To make sure we help countries with their development. But they’re very focused, rightly, on the connections between that development and the things that the Open Government Partnership stands for: transparency, strong institutions, property rights, proper registers of ownership, and all the rest of it. And as long as there are people alive who are making the connection between those 2 things – combating poverty and transparency and good and proper governance and open institutions – an organisation like this should have a very strong future.
So I’m very confident that we’ll meet again at the UN General Assembly next year. I’m sure that in Jakarta we’ll have a tremendous meeting there. And I think we’ll have more members, more commitments, more enthusiasm, because this is absolutely an idea – not only whose time has come – but has the real transformative potential to help poor countries get richer and to help wealthier countries sustain their advances, and make sure, as I said, that wealth and power in countries is properly shared. And that is something that we all want to see happen.
So please enjoy the rest of the conference, thank you very much for the welcome you’ve given me. Thanks.