Speech by the Chancellor of the Exchequer, Rt Hon George Osborne MP, Yorkshire Post Business Excellence Awards dinner, Queen’s Hotel, Leeds
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Speech by the Chancellor of the Exchequer.
Thank you for the kind introduction.
It is a great shame that Peter Charlton cannot be here with us tonight.
Peter is a truly inspiring editor of the Yorkshire Post and I am sure everyone here would like to join me in wishing him a very speedy recovery.
There is little doubt that the Yorkshire Post is one of England’s most important regional papers.
It is the oldest continuously-produced newspaper in the United Kingdom, with a history that dates back to the mid 18th Century.
But what makes papers like the Yorkshire Post so relevant today is that they play a central role in the social and economic life of the regions.
So for me it is a great honour to have been invited to speak here tonight.
It is also a pleasure to be in Leeds for this Excellence in Business Awards Dinner.
I know the recession has been deeply felt across the North of England.
But I also know that Yorkshire has a vibrant and enterprising business community.
As you know we are less than a week away from the Spending Review - and this will be the last major speech I do before the event.
On Wednesday I will set out in Parliament the Government’s spending plans for the next four years.
The Spending Review is likely to be the coalition’s biggest announcement to date - picked over and analysed for days after the event.
Tonight let me tell you what the Government is going to do to help businesses like yours grow over the next few years.
Let me explain our growth strategy.
At its heart is the belief that we cannot go on building an economy on excessive debt - whether it’s overburdened banks, overburdened households, or overburdened government.
We need an economy that exports and invests long-term.
We need a Government that supports this by living within its means.
So how do we achieve this?
There are four key components.
The first part of any growth strategy must be macroeconomic stability.
We all know that stable public finances are the only way to prevent higher interest rates, rising inflation and more taxes.
And that, in turn, allows the private sector to plan and invest for the future.
When we came into Government in May we inherited the largest budget deficit in our entire peacetime history.
Britain was borrowing proportionally more than any major economy in the world.
In the year to April we borrowed £155bn - that is almost twice the total annual economic production of the whole of Yorkshire and the Humber.
As a result national debt doubled since 1997.
Our economy’s credit rating was at risk.
Warnings were issued by the international watchdogs like the IMF and the OECD.
Britain was on the brink. So we had to act and act fast.
Within days of forming a Government we identified and cancelled over £6bn of wasteful spending in this current year.
Within a month we had set up an independent Office for Budget Responsibility to restore confidence in official forecasts for the economy.
And within 50 days I delivered an Emergency Budget setting out our a clear plan to eliminate the structural deficit.
Since then we have received the support of the international community.
Our nation’s credit rating has been reaffirmed.
The IMF has said that the Government’s “deficit reduction plan is essential”.
The CBI said that the alternative “would have damaged the economy for years to come”.
This is not some abstract issue about government debt. It has a real impact on every business in this region.
The interest rates British businesses pay have come down by about one percentage point, more than in most European countries - that is a huge monetary stimulus.
And let me take on this genuinely false argument that delaying the cuts will somehow make them smaller and easier.
In fact, the truth is the exact opposite.
The longer you leave it, the worse it gets - because you have to pay more interest on your debts.
We are already paying £120 million of interest each day.
So delay now means pay more later.
Every business and every family knows that.
The next step is delivering the Spending Review.
The markets, the international institutions and the credit rating agencies are all watching to see if we deliver next week.
If we were to fail or to lose our nerve and divert from our course, that would be an economic calamity.
You all know very well how important macroeconomic stability is to the corporate sector.
But that alone it is not enough.
You also need a business environment where taxes do not weigh you down.
So the second element of our strategy for growth is a competitive and stable tax system.
Let me be frank. The easiest option for a Chancellor in my situation would have been to hike up business taxes - because businesses don’t vote.
We have not only resisted that, we have done the exact opposite and reduced taxes.
In the end, government is about choices.
I chose not to impose new and higher taxes on the very businesses which will drive the recovery.
Instead my choice has been to cut corporation tax each year for the next four years.
That will help businesses invest and grow, while also giving us the most attractive tax rate of any major industrialised economy.
My choice has been to give a tax break to new businesses created here in Yorkshire.
I don’t want to see an economy where most of the growth is in just one part of the country.
In the ten years to 2008, for every private sector job created in the North and the Midlands, 10 were created in London and the South.
So anyone setting up a business outside the south east of England will now be exempt from paying thousands of pounds in national insurance for the first few employees they hire.
Only a few weeks since its introduction I can tell you today that over 50 firms in Yorkshire have already taken up this scheme.
My other choice was to reverse the most damaging part of the previous Government’s jobs tax.
I want to thank the business community across Yorkshire - including many of you here tonight - who joined us in fighting and winning the argument against the jobs tax.
Because we all know that you can’t tax your way to a private sector recovery.
Now we want to go further and create an ever simpler, more competitive tax regime so you can compete against the best in the world.
The third part of any growth strategy is sensible regulation.
You need a Government that interferes as little as possible.
Where we do have to regulate private activity, we should do so in a predictable and reasonable way.
That’s why we are bearing down on red tape.
We have cut unnecessary regulations like Home Information Packs, abolished Comprehensive Area Assessments, and we are reviewing health and safety rules.
And we have also introduced a “one in one out” rule on all new business regulation.
In other words, for every new piece of regulation at least one old one has to be scrapped.
But let us be honest with ourselves.
If we are to reduce the burden of regulation we also need to bear down on those doing the regulating.
There are simply too many quangos and arm’s-length-bodies keen to justify their existence by creating unnecessary barriers to business.
Today the Government has brought the era of the quangocracy to an end.
192 public bodies are to be scrapped, 118 will be merged, and 171 will be substantially reformed.
Infrastructure and skills
But let’s be clear. There is a role for Government in supporting the private sector to help your businesses grow.
The fourth thing Government has to do is provide the infrastructure that you all depend on.
The new roads.
The rail links and port facilities.
The modern communication highways.
The school leavers equipped for the marketplace.
The students and the apprentices with the learning to be the most highly skilled workforce in the world.
The overseas embassies and trade promotion to support exporters.
Government, frankly, is essential to all these things.
This week we took the historic decision to reform our higher education system so it has the resources to keep pace with not just American universities but the new universities of China and India.
Just imagine how easy it would have been to duck the challenge - and in the process consign Britain to the economic backwater.
And because we need to stay of the competition, even in this difficult time, I have already decided to protect the capital budget from any further cuts.
In the Spending Review next week we will focus our limited resources on those areas that best support growth in the economy.
Next week I will announce over £150 billion of capital allocations.
We have looked at every potential capital project.
We have ruthlessly prioritised those with the highest economic impact.
We will target investment in green energy and low-carbon technologies.
We will fund many key transport projects.
We are committed to building a high-speed rail network - going from London to Birmingham.
And last week we decided that the high-speed railway should extend from Birmingham to Leeds.
I know this is something many of you have called for - and I am glad that tonight I can tell you that it will go ahead.
Still, day to day most people travel only a short distance to their place of work.
And as a Member of Parliament in the North West of England I know how congested the transport links on both sides of the Pennines have become.
So tonight I want to tell you about a couple of the projects that will go ahead here locally.
We will build a new southern entrance for Leeds station, creating a faster and more accessible route to the south of the city centre.
And this will go alongside another project worth £150 million to relieve congestion on the M62, between junctions 25 and 30.
Together these investments will improve capacity and reduce journey times.
Making sure Leeds and Yorkshire are well-connected with the rest of the country.
And there will be other capital projects in this region announced next week.
I want to make sure we are investing in Yorkshire’s future.
So these are some of the key ingredients of my growth strategy:
- providing economic stability by dealing with the deficit
- reducing business taxes so you can compete and expand
- reducing regulation and, for the future, cutting the regulators
- and investing in the country’s key economic infrastructure.
I know things have been hard for many of your businesses over the past few years.
But I know we can be optimistic about the future.
Provided we say loud and clear to the rest of the world that Britain is open for business.
And loud and clear that Yorkshire is open for business too.