Speech by the Chancellor of the Exchequer, Rt Hon George Osborne MP, at the British Chambers of Commerce Annual Conference, in London
Speech by the Chancellor of the Exchequer.
Good morning.
Let me start by thanking Sue for the very kind introduction and also David Frost for inviting me to speak at your annual conference today.
David is a great advocate for Britain’s businesses community and a tireless campaigner for the issues that matter to your members.
In fact, this is the third time I have addressed this annual conference.
I know just how important the network of local Chambers of Commerce is in providing support and advice to so many small and medium businesses.
My message to all of you today is simple - this Government is unashamedly pro-enterprise, pro-business and pro-aspiration.
We are going to put you - the job creators of Britain - centre-stage.
It is also a message of optimism, tempered with realism.
Let’s start with a dose of the realism.
We are recovering from the biggest banking crisis in the entire history of our country.
We have been through the longest and deepest recession since the 1930s.
And next week, when I go to the G7 meetings in Washington, I will represent the country with the single biggest structural budget deficit - indeed the largest deficit in the peacetime history of Britain.
This is the new Government’s inheritance.
So it is no surprise, as both the Bank of England Governor and I warned last year, that the recovery is proving choppy.
But that realism comes now with optimism that Britain is putting its house in order.
We have put in place a credible deficit reduction plan which is now taking effect.
That has provided a crucial bedrock of stability at home and commanded near universal confidence abroad.
I say this to people in Britain.
If you hear the stories about the cuts and still wonder why our country needs to take these difficult decisions, then look at what is happening around us.
First Greece, then Ireland, today Portugal.
All of them countries that did not convince the world they could pay their debts.
Two of them countries with smaller budget deficits than Britain.
Now all of them being bailed out, at huge costs to their populations.
Today of all days we can see the risks that would face Britain, if we were not dealing with our debts and paying off our national credit card.
These risks are not imaginary - they are very, very real.
Those in our country who deny the urgent need to deal with our deficit are playing Russian roulette with Britain’s national sovereignty.
I will not do that.
We have brought credibility where there was doubt - and stability where there was none.
The real practical economic benefits of this Government’s policy are there for businesses and families every day.
We now have almost the same market interest rates as Germany, despite having a bigger budget deficit than Portugal, Greece and Spain.
And I want to thank the British Chambers of Commerce for their steadfast support.
You are absolutely right, David, when you say that our “decisive moves to cut the deficit will have positive effects on business and investor confidence”.
So the measures we have taken to rescue our economy from the financial danger-zone should give us grounds for optimism.
But stability on its own is not enough, we have to do more.
You and other business organisations welcomed our plan to deal with the deficit, but you rightly asked “where is your plan for growth?”
In this year’s Budget we have answered those questions - and the response to our plan for growth has been very positive.
Let me remind you why we had to act.
Over the past decade Britain fell behind, our economy became too unbalanced, while other countries made themselves more competitive.
Too much debt, not enough savings. In many regions, too big a public sector and too small a private sector. Too many imports compared to too few exports.
The household savings ratio plummeted.
Manufacturing halved as a share of our economy.
Between 2000 and 2009 Britain’s share of world exports fell by a third, while Germany’s share actually rose.
We need to step up a gear.
Britain needs to out-compete, out-smart and out-pace the rest of the world.
That is now a central objective of this Government.
And so in the Budget we set four economic ambitions for Britain.
The first ambition is that we should have the most competitive tax system in the G20.
In the late 1990s, we had the third lowest corporate tax rate in Europe. By last year, we had the sixth highest.
That had to change - and in last year’s Budget and this year’s, we took action.
On Friday, the UK’s main rate of corporation tax came down from 28% to 26%.
It will keep coming down each of the next three years to reach 23% in 2014 - the lowest rate ever and the lowest in the G7.
Instead of going through with the last government’s planned increase in the small companies rate to 22%, we have cut it to 20%.
Three years ago I announced to the BCC annual conference in Liverpool that we would do that - and we have delivered.
And let me tell you, when you’re a democratically elected politician with such a high budget deficit, the easiest thing is to increase taxes on business - because businesses don’t vote.
So not only have we avoided that temptation, we are actually cutting your taxes.
We have made our taxation of international profits more competitive too.
Instead of leaving Britain, businesses are moving back.
We’ve introduced a patent box.
And we have also started the enormous task of simplifying the tax system.
We’ve made a start by abolishing over 40 complex tax reliefs in the Budget.
But let me be honest, I am going to need your help to go further.
For other reforms - like merging the operation of income tax and national insurance - will need to be done in step with organisations like yours - so that we reduce the burdens on business instead of increasing them.
Our second ambition is that Britain should be the best place in Europe to start, finance and grow a business.
Over the last decade the UK sank in the Global Competitiveness Index from 4th in 1998 to 12th in 2010.
So what are we going to do about it?
On regulation, in the Budget we removed £350m of costly business regulations.
As Vince Cable will tell you later, we are imposing a moratorium on new domestic regulations for the smallest businesses.
But many new regulations still come from Europe.
So we are building new alliances.
Last week David Cameron and eight other European prime ministers wrote to the Commission asking for a reduction in the burden of EU regulation.
And I would urge all of you to make links with other Chambers of Commerce across Europe, so that together you can win the argument that we shouldn’t be pricing our continent out of the world economy.
On planning, one of the great obstacles to growth that no government has had the courage to tackle, we are now shifting the balance from delay and objection towards development and expansion - and I know this is something that the BCC has been campaigning for this year.
On research and development, we have just increased the support available to small companies through R&D tax credits from 175% to 200%. Next year it will go up again to 225%.
On finance for start-ups, I have made it easier to attract investment capital, including with an increase in income tax relief from 20% to 30%, which came into effect yesterday.
We have also delivered on our pre-election promise to scrap the most damaging part of the planned increase in employer’s National Insurance.
Since yesterday it has now actually become cheaper for businesses to employ anyone earning under £21,000 a year.
And when the day comes when you want to sell your business, we have doubled and then doubled again the level of entrepreneurs’ relief.
My third ambition is for Britain to become a more balanced economy, by encouraging exports and investment.
Here is one shocking fact. During the decade before the recession, private sector employment actually fell in a region as important as the West Midlands.
Our country needs to see growth across every region.
The BCC knows precisely how important this is, because your members cover the whole of the country - and I welcome your involvement in the new national network for local enterprise partnerships.
We are also going to need your help in making a success of the 21 new Enterprise Zones we are establishing to help parts of our country that need an extra boost.
Next week, we will launch the new £400m Regional Growth Fund, which will provide finance for regional capital projects and support private sector job creation.
But a more balanced economy also means more exports and investment across every sector of our economy.
In our Plan for Growth, published at the Budget, we set out a host of specific measures to do that in sectors like advanced manufacturing, tourism and life sciences.
Let me tell you today that that work does not stop.
I can announce that we are launching the next phase of our Growth Review, to be published at the time of the Autumn Statement, looking at new issues and new sectors.
Work with us through this year on new measures so that we can become more competitive still.
Our fourth ambition is to have a more educated workforce that can be the most flexible in Europe.
Between 2000 and 2009, Britain fell from 4th to 16th place in the world league tables of science, 8th to 28th place in mathematics. That is unacceptable.
So not only are we undertaking radical reforms to education - opening up schools, supporting poorer pupils, reforming the curriculum, and increasing the participation age to 18.
But we are now also addressing the long-standing issue of vocational training.
We will do that with 100,000 work experience places for young people and at least 24 University Technical Colleges.
And also 250,000 new apprenticeships over the next four years - the largest apprenticeship programme ever.
More competitive taxes. More support for businesses. More balanced growth. And a better educated workforce.
That is our Plan for Growth.
But let me tell you - as I have said before - there are forces out there who will try to stand in our way.
Forces of stagnation who will try to stop the forces of enterprise.
And let me give you just one example.
Over the years one of the issues that businesses keep raising with me is the burdensome effect of our employment tribunal regime.
And all those years no Minister has been willing to stand up and say - yes, employees have rights and they should be protected, but what about the right to get a job and not be priced out of the market?
What about the right to start a business and not be sued out of existence by vexatious claims and unreasonable costs?
Well, this Government has had the courage to answer those questions.
We’ve said that there will be fees to deter vexatious claims; compulsory arbitration; and the right to seek redress only after two years of employment, rather than one year.
These are controversial measures. The unions and others oppose them.
So I say to you - to the business community - don’t stand on the sidelines.
Get involved and help us make the argument for enterprise.
An enterprising Britain cannot be built by government alone.
An enterprising Britain comes about when its businesses say ‘we won’t be held back any more’.
An enterprising Britain comes when its business people believe that their aspirations in life are shaped by the fruits of their labours.
An enterprising Britain is a Britain open for business.
That is what I want to build.
And I need your help to do it.
Thank you.