Introduction Good morning. It’s a real pleasure to be here in Manchester and to have the chance to speak at this conference. The question…
Good morning. It’s a real pleasure to be here in Manchester and to have the chance to speak at this conference.
The question I have been challenged to answer today is ‘Can the Government rebalance the economy?’. The answer is an emphatic ‘yes’.
It is essential we diversify the economy and develop our competitive edge in new sectors and industries, so we are more resilient to future shocks.
But this broader based model of economic growth is not a zero-sum game.
Strong industries will have greater demand for professional and business services. Indeed the two are already intimately linked, and those bonds will only grow.
So our plans to rebalance the UK economy are good news for companies like your, boosting your growth in the years ahead.
Importance of business services
Professional and business services are already the largest sector of the economy, generating nearly £170 billion annually after several years of strong growth.
Today, this country is the largest net exporter of business services in the G7, outstripping the US, France and Germany.
UK lawyers, accountants and consultants set the standards for professionalism and integrity around the world. Our professional qualifications enjoy a strong reputation internationally and are highly regarded in the top echelons of business.
We played a key role in setting up the UK-based International Accounting Standards Board, which has developed accounting standards now used by around 120 countries. We also have a unique legal system, recognised around the world for its standards of transparency and independence.
That world-beating performance is down to businesses like yours. Manchester rightfully has a reputation as a leading centre of professional and financial services and this city is a hub for leading banks, law firms, accountancy firms and the like. They are not just winning business locally but regionally, nationally and internationally.
The vital role the sector plays is seen across the wider economy, working with the public sector to improve performance, advising manufacturers on every aspect of the operations and buying and selling between each other, so this government values your sector as a crucial engine of economic growth.
Professional and business services underpin competitiveness right across the UK economy.
So this Government values the sector as a crucial engine of future economic growth, for the North West and for Britain.
Now, you are all aware that the Chancellor will be unveiling the Budget next Wednesday. No doubt you are hoping for an early glimpse of what’s in it. So am I.
I can’t tell you its contents today. But I can tell you that it will be the most pro-growth, pro-enterprise Budget this country has seen for a generation.
And it will be underscored by our belief that our role is to create a stable long term framework. One that gives business and investors the confidence to start a business, and invest in it for growth.
Not to tinker and meddle, but instead to be an effective partner so that business - large and small - can get on with creating wealth.
Last year we started with firm action to tackle the record public sector budget deficit and restore confidence in UK Plc - because confidence is the bedrock of economic growth. But our plans are carefully designed to protect vital investments in Britain’s economic fabric.
Corporate taxes are being overhauled so they are lower and simpler, and reward endeavour. The headline rate of Corporation tax will fall to 24% by 2014, one of the most competitive in the G20.
And we are getting a grip on the unnecessary red tape and bureaucracy that weighs so heavily on business in this country, choking innovation and stifling growth.
But this is just the beginning. In recent years business has been held back by barriers that stymie growth.
That’s why we launched the Growth Review, a root-and-branch analysis of the obstacles to growth, and the structural reforms needed to encourage a balanced, sustainable economy. It’s a rolling programme, which will be the basis of the Government’s agenda over the lifetime of the parliament.
The review has been focusing on immediate priorities for business: improving the competition regime; increasing exports; reforming the planning system; and cutting red tape and regulation - building on the work we are already doing.
We have also been examining different sectors of the economy to identify the specific barriers and challenges they face. Business and professional services is one of the first six key economic sectors the Review has been focusing on.
In taking this work forward we have been talking to the Professional and Business Services Group, led by Sir Michael Snyder.
We have also been having an animated conversation with the sector, talking to well over 100 individual businesses, trade associations and professional bodies.
A number of clear themes have already emerged.
Many firms have identified regulation as a major issue, with arguing that the impact of general regulation needs to be reduced for the sector.
For example, businesses have been telling us that the rules on money laundering are having an impact way beyond the original intentions of the regulations.
We have also heard your concerns over the Bribery Act. The arguments are well document so I shan’t rehearse them here - but the Government is sensitive to the need to strike the right balance.
You have also highlighted the time and expense associated with Employment Tribunals. We know this is a real problem for business, especially SMEs, so we are consulting on measures to streamline the system, including doubling the qualifying period for unfair dismissal claims from one to two years.
Elsewhere, we are putting a stop to the UK’s historic tendency to gold-plate European Union legislation, and striving to reduce the onerous burden of EU rules on companies with international exposure.
But businesses have also made the point that some regulation and the heavy-handed approach to its enforcement just do not take sufficient account of the reputation and ethos of professions within the sector.
The overall picture is one of burdensome regulation leading to unnecessary administration and costs, which in turn hampers firms’ abilities to serve their clients.
We are determined to get to grips with the problem and ensure UK companies are not at a competitive disadvantage, so there is a level playing field with our international rivals.
Employability of graduates
Another issue services firms have raised in discussions is the employability of UK graduates.
Firms in the sector are committed to recruiting and developing new talent. But there are reservations in some quarters about the skills of some of the young people who apply -in terms of both hard skills like foreign languages, and softer skills like readiness for the working world.
We have been having productive discussions about how the education system can better prepare young people for their working lives - and how professional services firms can communicate their requirements to schools and universities.
It’s a priority for this Government. Education Secretary, Michael Gove is leading efforts to drive up literacy and numeracy standards, so young people start university equipped with the skills they will need later in the workplace. But I would be interested to hear your experiences in this area.
Trade and exports
There is also a clear desire for stronger Government support in selling the UK’s business services expertise and know-how around the world.
A crucial issue here is tackling the trade and investment barriers where these are met in overseas markets - such as barriers to entry for foreign professions.
That is an issue that must be dealt with at the national level. So we are taking a co-ordinated, cross-Government approach to trade and exports promotion, which involves Ministers from every department with an interest in this area.
The Trade Policy White Paper, published last month, outlines a package of measures to support firms as they grasp new opportunities in overseas markets.
It includes an Export Enterprise Finance Guarantee scheme, which will make available finance worth up to £1 million for individual small firms.
We will also press strongly for completion of the EU single market. Removing these trade barriers will substantially benefit the professional and business services, which currently face an estimated 3,000 regulatory requirements.
And UK Trade and Investment is also being given an expanded role, to strengthen support for businesses moving into overseas markets.
So in all these vital areas - cutting red tape; improving employability; boosting trade and exports - this Government is committed to helping your sector grow and compete.
The Chancellor will be charting a course towards sustainable, long-term growth in next week’s Budget.
But as I said at the beginning, the services sector will not lose out as we build a more diverse, resilient economy. Indeed, British professional and business services firms will benefit from our increased international competitiveness.
You have a deserved reputation for innovation and creativity, for quality and probity - so we want to see many more UK businesses like yours sell their knowledge to the world.
This Government will back you all the way as you do. Clearing hurdles out of the way wherever we can, and working hard to open up new opportunities, so you may grow and flourish in the future.