Secretary of State for Wales, FSB Annual Dinner

Speech given at the Federation of Small Businesses Annual Dinner, Thistle Hotel, Cardiff.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Cheryl Gillan


Noswaith, dda.

Mae gen i bleser i fod yma heno.

Thank you for inviting me to speak this evening.

It is a pleasure to be here amongst so many people from different backgrounds, from the business, academic and political world.

It is unsurprising that the FSB dinner attracts so many influential guests as it carries out invaluable work not only for its members but for government as well.

It provides a place where concerns can be raised, where support and guidance can be sought, and a place for people doing business to network and share best practice.

Our FSB in Wales also gives its members an effective voice with government and I am delighted that they sit on the Wales Office Business Advisory Group which provides direct feedback to policy makers.

It is also a pleasure to be here on the day we have launched our Trade and Investment white paper. I will talk a little more about this later.

Emerging from difficult times

I want to talk to you this evening about the key role SMEs [small and medium sized businesses] can play in promoting economic growth.

I know times have been tough for businesses over the last few years.

The recession meant tough choices for many FSB members. And for too many, it meant the end of good, viable businesses that they had dedicated time, energy and money towards.

With my own business background I know how heart-breaking it is when recession puts all of that at risk.

No one really wants to see the insolvency practices growing.

But it is this energy and commitment which we in government want to harness as a driving force for economic recovery and growth.

We want SME owners to do what you do best - to put everything into building and growing your businesses.

We want to create advantageous conditions for small businesses to thrive and prosper which in turn can secure strong and sustainable growth.

In Wales this is particularly important given that small and medium size firms employ nearly 60% of all private sector workers. In fact SMEs make up 99.9% of all British businesses and employ around 23 million people.

Government policies

So what have we already done to help small business growth.

From day one we have prioritised facilitating growth.

In the Emergency Budget last June, we cancelled the much criticised jobs tax, proposed by the last government, and instead raised the employers National Insurance threshold by £21 per week.

In Wales this will produce around £140million of savings for businesses.

Simultaneously, we started corporation tax reform with the ambitious goal of making it one of the most competitive in the G20.

So, in four years time, through annual decreases of 1%, the UK will have one of the most competitive rates in the G7. 


Regulations can be the enemy of business as many of you will agree.

The current cost of regulation to business in the UK is around £88 billion.

So we are introducing a “one in, one out” rule for new regulations and sunset clauses for existing ones.

At the same time, we are ending the so-called ‘gold-plating’ of EU rules and maximising the influence we bring to bear on the European Commission before it adopts new rules. 


Entrepreneurship is also one of the keys to growing our private sector so to encourage this we’ve also extended the 10 per cent entrepreneurs’ relief rate from the first £2million to the first £5million of gains made over a lifetime.

And today we have secured a lending deal with the five biggest banks in the UK under Project Merlin to lend £190 billion to businesses - £76 billion of that to small firms

Government priorities - growth

So what of our immediate priorities.

We have set out three key priorities for the first 6 months of 2011 - growth, aspiration and the modernising of public services.

Firstly, on growth, supporting people in work, helping people into work, and encouraging business growth are central to our economic agenda.

But in order to promote a stable, sustainable economy we also have to tackle the deficit we inherited.

We are determined to become the most pro-growth government in living memory. And over the coming weeks and months we will drive forward a programme with one focus - to help business create and sustain jobs.

We will show businesses such as those represented here tonight that if you are committed to being enterprising and innovative then we are on your side.  We will not stand in your way.

Our Growth Review launched last year will form a key part of this and will dominate all that we do over the next four years.

The review will look at everything government does, and how we do it and then examine how it can be more focussed on helping our businesses grow.

But we need your input.

The review calls on businesses and industry to challenge government departments on the measures they are taking to allow the private sector to flourish. 

We want to work with you, the private sector, to create a business friendly environment and remove any barriers that are preventing you from reaching your full potential.

The review’s initial stages will focus on two elements; structural reform, looking into areas such as planning, trade and investment, regulation and access to finance; and removing barriers to growth in key sectors like construction, retail, advanced manufacturing and digital and creative industries. 

Progress on each of these areas will be reported in the March budget.

Trade and Investment white paper

As I have mentioned we launched our Trade and Investment white paper today and the figures published earlier showing a record UK trade deficit emphasise the need for an overarching strategy that includes urgent action to address our balance of trade.

This is important because it sets out our strategy for creating the best environment in the UK for trade and inward investment.

It confirms that removing the barriers that can sometimes prevent smaller businesses from accessing overseas markets will be at the heart of our drive for trade driven economic growth.

We are determined when we say that we will re-balance the economy.  We can no longer rely on the public sector, or people getting into debt to drive growth.  We’ve seen where that leads us.  Instead, this government wants to raise the contribution that trade makes to our economy: that way we achieve the sustainable growth we all need.

That is great news for businesses like yours. The economy cannot develop in a vacuum and Wales cannot prosper by looking inwards.

Rather, we need to look outwards to seize the opportunities of the global market and we want to work with you to make sure you can do just that.

The White Paper focuses strongly on supporting the expansion of SMEs through measures such as improving the finance and insurance products you can access when you seek to export and an online service that will give you access to sales leads around the world.

According to a recent FSB member survey, just under a quarter export their goods or services overseas - and 50% of these are to Europe. We want to help more of you to access the global marketplace.

This is just the start; the focus on growth will continue to form the basis of this government’s agenda for the rest of Parliament.

Government priorities - aspiration

Another priority for government is “aspiration”.

This government is on the side of the people who want to get ahead - those who are willing and able and want the best for themselves and their families. Small business owners invariably fall into this category for the reasons I have outlined.

We are already focussing on supporting those most in need of help.

But we must also help working families and people struggling to find work.

We are encouraging more people to get into work through comprehensive welfare reform and we are supporting those basic rate taxpayers who struggle to make ends meet.

For far too long, too many people, many in Wales, have been reliant on state handouts. This coalition government will try to turn back this trend - through our comprehensive welfare reform and we will ensure that it is always better off to be in work or indeed to run a small business than not.

Government priorities - modernising public services

But we must also make changes to our public services so this government has launched a major programme of public sector modernisation.

In Wales, of course, a large part of the public sector is the responsibility of the Welsh Assembly government.

While decisions in those areas are rightly the responsibility of Labour and Plaid Cymru Assembly ministers in Cardiff, there are many areas where Westminster has a role to play.

Many of our public services are in need of change. So we are cutting out waste and also bringing choice, encouraging competition and opening up services to new providers.

Just as the private sector had to make tough choices during the recession, so must the public sector now we are in a period of recovery.

As many small businesses have had to do in recent years, we in the public sector have to reduce spending budgets.

We also need to move away from a tick-box, process driven culture to one that is based on results.

We have to ask for more to be done for less.

Business has done that and the public sector cannot be immune.

Future Entrepreneurs

I have talked a lot about growth and creating better conditions for business prosperity but beyond that, we want more people to start their own businesses in Wales.

Some have accused us of lacking a certain amount of entrepreneurial spirit in Wales.  I disagree.

As if the FSB membership were not evidence enough, I would ask anyone to look at Jonathan Morgan’s book Rags to Riches for evidence of Wales’s strong pedigree of entrepreneurship.

He traces the roots of the families behind global brands such as Lloyds Bank and JP Morgan back to Wales. This should be an inspiration to any entrepreneur. We have innovation in our DNA!

We want more home-grown businesses that can become the world-players of the future.

That is why we have made a start through the National Insurance Holiday for the first ten employees of new businesses set up outside London and the South East.

In November, as part of Global Entrepreneurship Week, the Business Secretary announced the creation of our 40,000 strong network of business mentors.

From the Summer of this year, there will be a single online gateway for both mentors and those seeking mentors. As you, in the FSB well know, the best people to advise new entrepreneurs are those who have already started and run successful enterprises.

We are also encouraging those who are out of work to start up small businesses through the New Enterprise Allowance and Enterprise Clubs what will help people access support to achieve their ambition of starting their own business. 

The benefits of small business growth are there for all to see. You form the bulk of the private sector employers in Wales and are at the forefront of building a strong and sustainable recovery.

In the last 6 months, 300,000 private sector jobs have already been created in the UK and more jobs will and must follow.

Role of the Wales Office

I have talked a lot about creating the right conditions for business growth but before I finish, I want to acknowledge the role that many of my fellow politicians in the room must play in this.

Devolution means that the levers that will ensure business prosperity and future growth lie with both Cardiff and Whitehall and also with Europe.

From the first day of my appointment as Secretary of State I have been committed to working with the Welsh Assembly government.

My office like you is small but we are well placed in Whitehall to promote a coherent approach between our policies as a government and those of the Welsh Assembly government.

We are working closely with officials and Ministers across both administrations on legislation and on key issues such as broadband, rail infrastructure and trade and inward investment.

I know how importantly you regard projects like High Speed Broadband, the electrification of the Great Western Mainline to Wales’s future.  I am with you on this and have been spearheading the case for a positive decision to be made.

However, ask yourselves if it had been an easy decision then why in 13 years of the last government was not a single inch of track electrified?

We have to make sure our infrastructure keeps pace with the rest of the world if our businesses are to compete in the global marketplace and indeed compete with the rest of the UK.

We must make doing business in Wales an attractive and comparatively easy option. And we must never forget we are in competition to attract jobs and retain our businesses.

Businesses made to deal with more regulation or backdated taxes in Wales will look at whether they want to remain located here. That is a simple fact of a free market and so I would encourage for example the Welsh Assembly government to look again at its decision on business rates in ports 

I would like to ensure that all Welsh Politics work together in the interests of Wales and I remain committed to mature and adult politics with Westminster and Whitehall and working with the Welsh Assembly government and critical friends to deliver sustainable growth and success for Wales.


To close, the messages for me that I want you to take away from here tonight are that this government is listening to you; this government is on your side; and this government wants small businesses to grow and prosper as you do.

Wales needs more entrepreneurs, driving forward their business as you do. This is what will create the growth we need, which will form the key to a strong and stable recovery.

Once again thank you for providing me with the opportunity to speak this evening, I hope that we can work together to make this year and every year a successful one for Wales.

Thank you.

For a link to the press notice on the White Paper for trade and investment, go to:


Published 10 February 2011