Boris Johnson – 2012 Speech to the London Assembly over the Budget

borisjohnson

Below is the text of the speech made by the Mayor of London, Boris Johnson, on the draft budget.

Value for money and freezing the precept

Good morning. This administration has been dedicated to delivering value for Londoners’ money, and to leading the city to a strong economic recovery. You must remember that in the last four years we have not only been dealing with the deepest recession for 50 years.We have had to overturn and reform a culture of waste in City Hall.I might mention the £37000 spent on first class tickets to Havana, the £10,000 spent on a subscription to the Morning Star.These were the just the symptoms of a regime that could casually spend £34 m on architects drawings and consultancy for a west London tram that had no chance of happening. A regime that was happy to squander tens if not hundreds of millions on LDA projects, some of which verged on the dodgy.

We have delivered sound finance to London government, with a 25 per cent reduction in managers at TFL, which now has 3500 fewer staff and which will have vacated 23 buildings by March.We have secured £2bn in savings already, and those savings would have been unthinkable under the previous administration. This budget delivers a further £1.5 bn of savings. And it is those savings that have allowed us to concentrate scarcer resources on the priorities of Londoners.

We promised a 24 hour freedom pass – and we delivered it and will protect it.We promised a booze ban on public transport. We delivered it and with the help of hundreds of extra crime fighters we have made the tube network the safest in Europe and brought bus crime down by 30 per cent.I scrapped the vindictive £25 charge on family cars, and I kept my promise and listened to what Londoners really thought of the western extension zone of the C charge. I promised the world’s best cycle hire scheme, and it has been so successful that there are demands for it to be extended to other areas.

We didn’t rage pointlessly at the Train Operating Companies – we persuaded them to take oyster on the overground, with the result that millions of Londoners not only have that convenience but cheaper oyster fares.It is under this administration that the east London line was completed, on time and on budget – and it was this administration that drove forward its second phase, to Clapham junction, to finish London’s first orbital railway. We were the first administration to introduce a roadworks permit scheme, which now has 27 of the 33 boroughs signed up to and the rest shortly to come on board. This is now beginning to control the number of roadworks. They are now down a quarter on the TLRN from their peak. And when we get lane rental the war on roadworks will have a new and formidable weapon.

Transport investment

This budget builds on our success in securing – despite the tightest spending round in generations – funding to deliver in full Crossrail and the Tube upgrades. When we arrived in City Hall we found a creaking public transport system that had suffered from decades of under-investment. It was obvious that the PPP contracts were not delivering upgrades and were wasting hundreds of millions of pounds. It was this administration that ended that madness – and will allow us to ensure that we save Londoners hundreds of millions of pounds, and deliver the upgrades on time and on budget and in a way that suits the needs of the London travelling public.

We know that TFL staff are dealing with antiquated assets – and that when a 1920s signal box goes wrong at Edgware road it can disrupt 250,000 journeys. The hole punch signalling technology at Earl’s Court and the 40 percent of the Tube’s rolling stock past its expected lifespan. If the upgrades didn’t happen these assets would fail more frequently, resulting in a 30 percent reduction in capacity. Londoners will be asking as they make their decision what will be cut by those who call for a £1.2 billion reduction in TfL’s revenue. Perhaps it’s the Bank station congestion relief work, or the upgrades on the Piccadilly and Bakerloo lines. Or perhaps the sub-surface lines. Or congestion relief works at Victoria, Tottenham Court Road and Bond Street stations. Or cutting the Safer Transport Teams and the bus network. Which would it be? I know we will be rehearsing these arguments over and over again and I understand the politics of it. As has my predecessor who has made the same promise in 2000, 2004 and 2008 and yet has never actually delivered on that promise.

Policing and Crime

Turning now to the MPS budget. It is the first priority of the Mayor to keep Londoners safe and I believe in keeping numbers high. That is why I am re-balancing the precept towards the police to maintain those numbers. And of course again I understand the politically motivated but frankly false claims made by some about “police cuts”. There will be around 1,000 more fully warranted police officers on London’s streets at the end of this term than I inherited. That along with more than doubling the number of specials from 2,500 to over 5,000 and single patrolling has meant that there will be one million more visible police patrols at the end of this term than at the beginning. All of this has meant an overall reduction in crime over this Mayoral term of over 10 percent.

Youth violence is down over 15 percent, robberies down almost 17 percent. Remember back in 2007 the numbers of teenage homicides. Just one is one too many but programmes like Operation Blunt 2, which has taken 11,000 knives off the streets and Time for Action has had a genuine effect with the number of violent teenage deaths, with the number halved. This budget builds on the successes of this term and there will be NO police cuts while I am Mayor. We will keep numbers at what I believe to be a safe level, which is around 32,000. Safer Neighbourhood Teams are sacrosanct under me. They will all retain their structure of at least 2 PCs and 3 PCSOs overseen by a sergeant.I would like to take this opportunity to pay tribute to all of those who served on the MPA the past 12 years. And to Kit Malthouse for his excellent chairing of that body and now leading the MOPC through difficult negotiations to deliver this excellent budget for the Met.

LFEPA

LFEPA has had real success over the last 4 years with the fire brigade engaging much more with the community, increasing the number of home fire safety visits by over 80 percent and the incidences of arsons has halved. This budget builds on the success delivering more savings to a total of £48 million during this Mayoral term. This year saw some of the busiest nights in the Fire Brigade’s recent history and I pay tribute to all of London’s firefighters for managing the situation with their usual professionalism and incredible bravery. The London Fire Brigade has been an exemplar of the public sector doing more for less and sensible investment for long-term savings. In this budget we are using £4.469 million in ear-marked reserves to buy-out outdated terms and conditions, which will save £1.362 million every year hereafter. Under this Mayor there will be absolutely no reduction in fire cover and we will continue to make London a safer city.

City Hall (LDA + HCA)

The last year has seen the LDA and the HCA successfully integrated into the GLA. My budget cements that ensuring full delivery of their programmes. I promised that I would deliver 50,000 new affordable homes – the most in any single Mayoral term. And despite the terrible economic conditions of the past few years by May they be. And during the next investment round, over 2011 – 2015, we will deliver a record breaking 55,000 affordable homes, which will not only house London’s workers but will also create 100,000 jobs.

The apprenticeships programme has succeeded well beyond our expectations, surpassing our original targets with 40,000 already underway. The budget gives us the means to deliver our new target of 100,000 by the end of this year. This budget allows us to complete the delivery of £216 million to regenerate the capital coming from my Regeneration and Outer London Funds and the Growing Places Fund. Together, these are helping to give our high streets a real boost. Some traders in Orpington and Bromley have seen a significant increase in footfall and sales following investment from round one of the Outer London Fund. And I know we all look forward to the delivery of round 2, which will see 23 projects across 18 boroughs. This budget allows these investments without any extra borrowing – again showing how this administration’s careful stewardship of the public finances will not burden future generations in debt – in stark contrast to the former Labour government.

Olympics

Last but not least this budget delivers, through the new Mayoral Development Corporation, a true legacy for the Olympic and Paralympic Games, on time and on budget.And this budget delivers the legacy that had been promised. There will be 10,000 new homes – 40 percent of them family sized – and 10,000 permanent jobs in addition to all those already created by Westfield and other regenerated parts of east London. We are carrying forward a £30m programme in grass roots sport – with more to come – to deliver a sporting and health legacy. For young and older Londoners ; and I thank Kate Hoey for everything she is doing on this.

Growing the economy

This is a budget that builds on this administration’s achievements over the last 45 months. It delivers the promises I made four years ago and is a budget to grow London’s economy. London has a fantastic future. We are in the right time zone, speak the right language, and unlike virtually any other city in western Europe we have a young and growing population. But that dynamic and growing city needs investment if it is to compete. We need new river crossings. We need to extend and improve the tube network. We need to continue to improve reliability, and to end the scandal of overcrowding on a scale that would not be tolerated for the carriage of livestock.

We have a choice. We could go for a short-term political swindle that will cut more than a billion from our investments – and which would simply drive fares even higher in the future. Or we can keep going with our programme of driving down crime, investing in transport, and growing the London economy.We can go back to the politics of waste and division and posturing. Or we can get on with the work of improving the lives of Londoners. I want to get on with that work, and I commend this budget to the assembly.

Boris Johnson – 2007 Conservative Party Conference Speech

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Below is the text of the speech made by Boris Johnson at the 2007 Conservative Party Conference in Blackpool on 30th September 2007.

I stand before you proud to be your candidate, proud to be given the chance to represent the greatest city on earth, but what gives me the greatest pride of all is that from day one I have provoked such gibbering squeals of denunciation from King Newt and his allies that I know they are scared and they can see all too clearly that we Conservatives are launching a fightback in London that will recapture the capital for common sense government for the first time in a generation.

And when people ask me are you serious about this I can tell them that I can think of nothing more serious than the security and prosperity of the powerhouse of the British economy and whose booming service industries are the best possible vindication of the revolutions brought in by Conservative governments.

That’s why in the last weeks and months I have been travelling through all 32 boroughs, sometimes in a Routemaster bus, sometimes at the wheel of that bus.

And in the hundreds of miles I travelled, I marvelled at the diversity of this city and I met hundreds of people who offered me all sorts of opinions not all of them fit to be repeated; and of all the conversations I had, there is one that sticks in my mind with a 14 year old young offender in Wandsworth who looked me in the eye and said in the tones of one who knows all there is to know about growing up in 21st century London: “The trouble is these days that adults are scared of kids”.

I have to tell you conference that I felt a certain challenge in his gaze and we both knew that he was saying something that was both sad and true about Britain today, and one of the reasons I want to be Mayor is that I want to help change that feeling on the streets of London.

Believe you me, the Mayor of London does have the power to end the climate of intimidation on too many bus routes and take away free travel from the minority of young people who are abusing their privilege and turning buses into glorified getaway cars and when they are caught we want to give the Community Support Officers real powers to make a difference. Because I have been out with the Safer Neighbourhood teams and I have seen how they do not even have an incentive to detain a shoplifter because that means summoning a Police Constable who then has to spend 4 and a half hours processing the case when he should be out on the beat deterring more serious crimes. And that, conference, is criminal.

Above all I want to work with the people in London who are tackling the most fundamental problem of all the tragedy that these kids are themselves afraid, afraid that THEY will be stabbed, and who see the gang and the gang culture as the only real source in their lives of authority and community and esteem.

That is why I want to support the work of people like Ray Lewis of Eastside Young Leaders Academy and Camila Batmangeligh of Kids Company who in a completely non-ideological way are helping our most disadvantaged young people to see that there is another future and to raise their aspirations and to give them hope because I believe Conservatives win when we enable people to fulfil their aspirations.

As Mayor I want to give hope to the tens of thousands of people in London who do not have a place they can call home. There is so much scope for more imaginative shared ownership schemes and backing David Cameron’s plans to lift the stamp duty threshold for first time buyers and using mayoral power to encourage more social housing and more rented housing; but not in the counter-productive and anti-democratic way of Gordon Brown’s new friend the Labour candidate who seeks to wreck the skyline of London’s boroughs, by going against the wishes of local communities and their leaders.

With rabbit-hutch tower blocks containing some of the smallest rooms in Europe and a blind repetition of the mistakes of the 1960s Conference, let’s stop this ego-fuelled civil war in London and let’s build homes that will still be loved and valued and conserved in 100 years time so that future generations will look back on our generation with admiration and respect for our foresight, and not blame us for the ghettoes of tomorrow.

I want to give hope to all those who feel they have lost the basic right to get to work on time by building Crossrail now, getting the Underground repaired and improved, bringing an end to the jack-knifing, traffic-blocking, self-combusting, cyclist-crushing bendy buses, and yes, I want a greener London; a London where more trees are being planted than are being cut down and I want us all to have the confidence to cycle.

My friends, people say the mayor has no power. They say he is just a figurehead. Well I say nonsense. They have not studied the enormous budgets he wields. Ken Livingstone and Gordon Brown have got to realise that they can’t keep taxing and bullying and delivering so little in return.

It’s time to build on the record of Conservative councils across London who have found savings and shown there is another way.

They have kept council tax low while they have created safer, cleaner and greener streets. If they can do it, so can I, and over the next few months, that will mean a policy lockdown and crunching the numbers so that when the election begins in 2008 we will have a winning manifesto that is based on Conservative principles of freedom and democracy and taxpayer value.

On May 1st join me in winning back London not for you and me but because our nation’s capital deserves more.

Alan Johnson – 2005 Speech at IPPR Conference

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Below is the text of the speech made by Alan Johnson, the then Work and Pensions Secretary, at the IPPR Conference on 7th February 2005.

I’m very pleased to be here and grateful to the ippr for organising this afternoon’s event.

The support that we give to help people into work and the security that we provide for those who can’t work is one of the most important responsibilities placed upon Government.

It’s a responsibility that Government can only fulfil in partnership:

– with employers – to fill their vacancies and ensure good occupational health in the workplace.

– with the medical profession – to encourage patients to see work as a route back to good health; and

– with the individuals concerned – and their representative organisations – to understand their problems and learn from their experiences.

Change and reform is necessary for two main reasons.

Firstly because of the position we found ourselves in when we came to office in 1997.

Over the previous 18 years, boom and bust had seen unemployment twice hit 3 million, whilst the numbers on Incapacity Benefits trebled to 2.6 million.

By 1997, one in five families had no-one in work and one in three children were growing up in poverty. Radical measures were necessary to tackle this inheritance.

But more importantly, reform was necessary because the welfare state had to evolve to meet the needs of modern society.

It’s a very different society with very different problems than those which Beveridge tackled so adroitly in 1945. The security provided by the old monolithic state institutions has vanished and the world of work has changed beyond recognition.

That is why, since 1997, we have begun to transform the welfare state from the passive one-size-fits-all inheritance to an active service that tailors help to the individual and enables people to acquire the skills and confidence to move from welfare to work.

There are now more people in jobs than ever before. Unemployment is at its lowest level for 30 years – with long-term youth unemployment 90% lower than in 1997. And with almost three-quarters of the working age population in work, our employment rate is the highest of any of the G8 countries.

But there is more to do. Last week I launched our Five Year Strategy: “Opportunity and security throughout life.” Central to which is a reform of Incapacity Benefit that builds on our investment in the New Deal and Jobcentre Plus and focuses on what people can do rather than what they can’t.

Our goal is genuine inclusion, stamping out the discrimination and disadvantage that prevents people from fulfilling their potential – and denies society the skills and contributions of those who want to work, but who remain outside the labour market.

We know that perhaps a million Incapacity Benefit claimants would like to work if they were given the right help and support. Indeed, nine out of ten people coming onto IB expect to get back to work in due course.

What’s more, there is growing medical evidence that for many conditions working is much healthier than being inactive.

Take back pain for example. We used to think that rest was the best response. But now, as Gordon Waddell’s work has shown, rest might actually delay recovery. In contrast, by advising patients to stay active, they can expect a faster recovery and a speedier return to work.

The same is also true for mental health, where periods of unemployment or inactivity can be even more damaging. Suicide rates are 35 times higher among the long-term unemployed than the employed.

One piece of research from the mid-1990s – found that being unemployed has a higher mortality risk than any occupation – even the most dangerous ones. And it stated that – and I quote – “so heightened is the risk of death, that being unemployed is equivalent to smoking 10 packs of cigarettes a day!”

What is clear is that failing to help those on Incapacity Benefit who want and expect to get back to work is not just bad for the economy but bad for the people on IB themselves.

We already know that early active intervention works. The ground-breaking Pathways to Work pilots have achieved extraordinary success and we are now rolling them out to a third of the country.

Already in the pilot areas, we’ve seen six times as many people getting back to work help and twice as many people recorded as entering jobs, compared with the rest of the country.

But the problems with the current Incapacity Benefit have been well documented – not least by our hosts today.

It focuses on what people can’t do and incentivises them to stay on the benefit by increasing it with time. These mixed messages mean confusion, uncertainty and risk aversion for both individuals and potential employers.

What’s more, Incapacity Benefit classifies those receiving it as incapable of working, even before they have had a formal medical examination.

And when they’ve had this examination – the Personal Capability Assessment – those who are entitled get no appraisal of their likely future ability to return to work. It makes no distinction between whether the case is one of terminal cancer or back pain.

It was to tackle these problems, that I announced last week that, when we have the extra support of Pathways in place, we will implement a radically reformed version of Incapacity Benefit.

This will provide a basic benefit below which no-one should fall. A speedy medical assessment linked with an employment and support assessment. Increased financial security for the most chronically sick; and more money than now for those who take up the extra help on offer.

For the first time ever we will differentiate between those with the most severe functional limitations – who will get more money without having to do anything extra – and those with potentially more manageable conditions.

We’re not writing anyone off – we’d encourage those on the new Disability and Sickness Allowance to engage in some work-focussed interviews.

But for those who can and want to work these reforms -with conditional payments for engagement in Work Focussed Interviews – and further conditional payments for fulfilling an action plan personally tailored to the circumstances and ambitions of the individual – offer clear support and rewards for seeking the path back to work.

We will need to shape these reforms on the basis of the evidence of what works – with piloting playing an important role. And we will consult carefully and thoroughly with all of you.

We need to work through the detail of linking rules so that people can try out a job safe in the knowledge that if it doesn’t work out they can rapidly go back to benefit on exactly the same terms as they were on before.

We’ve introduced and strengthened Permitted Work Rules to make part-time work an option. For at least the first year individuals can now work up to 16 hours a week on the minimum wage and keep their benefit in full.

And if beyond this year they work just 16 hours a week then the Working Tax Credit guarantees a take-home pay of at least £150 a week.

For many part-time work can be a stepping-stone towards a full-time return to the labour market. And for those for whom full-time work will never be possible but for whom some work would still be good – our reforms to Permitted Work are going to expand the right to part-time working on an ongoing basis to those for whom a return to full time work is least feasible.

Our full package of reforms will transform the experience of new claimants. But we are also determined to help those who have been on IB for some time.

Already in Pathways areas where involvement has only been mandatory for new claimants, over 10% of those taking part and 18% of recorded job entries are for those on IB for longer than 12 months who volunteered to take part.

Today we are extending Pathways to existing customers in seven of the pilot areas.

This means the introduction of mandatory Work Focused Interviews with those existing customers who started their claim in the two years prior to the date the pilots commenced.

As important as the role of Incapacity Benefit itself, is the backdrop against which it operates – the workplaces, the doctor’s surgeries and the society that disabled people have to live within.

We need employers to create healthier workplaces and play a more active role in the rehabilitation of their employees. Early and on-going communication enables employers to support employees who are off sick and to agree a return-to-work plan.

Take for example, the case of a street lighting co-ordinator who had to have his leg amputated because of a long-term medical condition. His employer was quick to consider how to assist him to return to work. They made adjustments to his working environment including altering the height of his desk, allocated him a company car with automatic transmission that enabled him to fulfil his driving duties; and modified his hours to allow a structured return to work 3 months after his operation.

It’s not just a social issue – it’s an economic issue. The benefits to business are very clear: Retaining trained and experienced employees and avoiding unnecessary recruitment and training costs.

So employer involvement in helping individuals to recover is not just socially responsible but actually makes business sense.

With around 120,000 people on average moving from Statutory Sick Pay to Incapacity Benefit each year, I’m interested in whether we might be able to reform SSP to ensure that the information and incentives for employers, the NHS and individuals make this a step back to work, rather than a slide onto benefit.

The role of medical professionals is also crucial. I look forward to hearing Gordon and Roy speak later.

For now, let me say that the success of our whole approach hinges on GPs and other health professionals re-enforcing the message that work is a route back to health – and not something that people need to be protected from. And we see from the success of Tomorrow’s People, how effective the combination of workplace and health advice can be.

We will continue to fight discrimination on all fronts; especially for disabled people. This is the last great emancipation issue of our time. In years to come, I believe that the mis-treatment of disabled people typical of the last century – and still too often the case today – will be seen as the affront to humanity that it is.

Ultimately real social security means more than a benefits system. It comes from the relationships that we have with each other. Working in partnership with employers, the medical profession, and individuals themselves, we can deliver a welfare to work system that enables everyone to fulfil their true potential – with an Incapacity Benefit that is fit for purpose because it offers a tailored route to employment for all those that can work and financial security for those that can’t.

Alan Johnson – 2005 Speech at Chartered Institute of Personnel and Development Conference

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Below is the text of the speech made by Alan Johnson, the then Work and Pensions Secretary, to the Chartered Institute of Personnel and Development conference on 9th February 2005.

It’s a pleasure to be back here again at the CIPD for this Annual Reward Conference. Now in its sixteenth year, it’s a tremendous forum for all those involved in managing and developing people, and I’m delighted to have this opportunity to talk to you today.

Over the past seven years welfare to work policies have driven a transformation in the UK’s employment market.

In 1997, one in five families had no-one in work and one in three children were growing up in poverty. And over the previous 18 years, unemployment had twice hit 3 million, whilst the numbers on Incapacity Benefits trebled to 2.6 million.

But since 1997, we have begun to transform the welfare state from a passive one-size-fits-all system to an active service that tailors help to the individual and enables people to acquire the skills and confidence to move from welfare to work.

Thanks to a stable economy, and our investment in the New Deal and Jobcentre Plus, there are now more people in jobs than ever before. Unemployment is at its lowest level for 30 years – with long-term youth unemployment 90% lower than in 1997. And with almost three-quarters of the working age population in work, our employment rate is the highest of any of the G8 countries.

But we can and will go further. Today we face the welcome challenge of a healthier population that is living for longer.

As the baby boomers of yesterday become the pensioner plethora of tomorrow, it will produce dramatic changes in the dependency ratio.

In two years from now the number of people over State Pension Age will overtake the number of children. In just over 30 years, the proportion of the population aged 65 and over will have increased by 50% while the number of pensioners aged 80 and over will have doubled.

Society’s ability to meet this ageing challenge will hinge crucially on our ability to develop and deliver an evolving welfare state that supports ever greater numbers of people into work for longer.

Last week the DWP published its Five Year Strategy. At its heart is a new long-term aspiration of moving towards an employment rate equivalent to 80% of the working age population.

This takes us beyond just helping the unemployed to helping those who are further away from the labour market – who have more complex and substantial barriers to overcome.

Our goal is genuine inclusion – stamping out the discrimination and disadvantage that prevents people from fulfilling their true potential.

To reach our 80% aspiration could mean helping as many as 1 million people on Incapacity Benefit into work, as well as an extra 300,000 lone parents – and having a million more older workers in the labour force, including many who will choose to work beyond the traditional retirement age.

At the heart of our Five Year Plan is our proposed reform of Incapacity Benefit. These reforms will build on our investment in Jobcentre Plus and the New Deal.

Already our Pathways to Work pilots – which combine financial incentives to seek work, compulsory interviews with skilled personal advisers, and access to groundbreaking NHS rehabilitation support – are achieving startling results.

In the pilot areas we’re seeing six times as many people getting back to work help and twice as many people recorded as entering jobs, compared with the rest of the country.

And our reforms of IB will build on this platform with a new basic benefit below which no-one should fall.

There will also be a speedy medical assessment linked with an employment and support appraisal and increased financial security for the most chronically sick. Our reforms will mean more money than now for those who take up the extra help on offer; but less money for those who decline to co-operate.

For the first time ever we will differentiate between those with the most severe conditions – who will get more money without having to do anything extra – and those with potentially more manageable conditions who will receive tailored support and clear rewards for seeking a path back to work.

But this all needs to be accompanied by wider change – and employers have a key role to play in creating healthier workplaces and playing a more active role in the rehabilitation of their employees.

The benefits to business are very clear: Retaining skilled and experienced employees and avoiding unnecessary recruitment and training costs. Employer involvement in helping individuals to recover is not just socially responsible but is also good business sense.

As we move towards full employment, we can not afford to be denied the skills and contributions of those who can and want to work, but who remain outside the labour market.

And this goes beyond simply breaking down the barriers to getting a job – it means equality of opportunity within the workplace.

The role of HR professionals is crucial in helping employers to benefit fully from the skills of disadvantaged groups – but ultimately the progression of these workers can no longer be an issue solely for HR or any other individual part of a business. Instead, it must be mainstreamed into the heart of each organisation.

Together we must build on our progress in fighting discrimination, moving to a world where opportunity and security are not dependent on disability, ethnic background or age.

A key part of our framework for helping those on Incapacity Benefit is to stamp out discrimination against disabled people.

These are exciting times for Disability Rights. Last October saw the extension of full discrimination protection to 600,000 existing disabled workers. And it brought an additional 7 million jobs and 1 million employers within the scope of the employment provisions of the Disability Discrimination Act. And our new Disability Discrimination Bill currently going through Parliament will take us even further.

The New Deal for Disabled People has seen over 45,000 job entries since its launch in 2001. And our other New Deal initiatives – for lone parents and young people for instance – have also been effective.

Altogether, nearly 195,000 disabled people have been helped into work through the totality of our New Deal programmes.

All of this has contributed to the rise in the employment rate of disabled people – up 5 percentage points since 1998 and now crossing the rubicon of 50%. This really challenges the old preconceptions because now the majority of disabled people work.

Ethnic Minorities are another key group. We’ve already seen the Ethnic Minority employment gap fall from just under 17% to 15.4% – that’s around 50,000 more individuals of ethnic minority origin in employment.

But despite this progress, ethnic minorities are still twice as likely to be unemployed and one and a half times as likely to be economically inactive as the overall working age population.

And it’s not just in securing employment, that this differential exists. Ethnic minority staff earn an average of 7% less than other staff. And this in itself masks wide variations within ethnic minorities: For some groups – such as Bangladeshis – the average salary is as much as £7000 a year lower than the average for white employees.

So there is much further to go in this area and our Fair Cities initiative – working with employers in London, Bradford and Birmingham – will help us to understand what more we need to do.

A crucial part of the response to longer lives must be enabling people to choose to work for longer.

Some have suggested that we should raise the State Pension Age but part of the challenge that we face in the UK, is to help people to work up to the current State Pension Age rather than setting a higher one. For example, over 1/3 of men have left the labour market by the age of 60; 2/3 before age 65.

Our State Pension Deferral policy increases the rewards for choosing to work for longer – introducing an enhanced pension or a lump sum of up to £30,000 for people who decide to take their State Pension at 70 rather than 65.

And our tax simplification measures also mean that, for the first time, it’s possible to carry on working for the same employer whilst drawing an occupational pension.

The announcement we made on age equality at the end of last year also moved us further towards a culture where a single retirement age is no longer relevant.

We’re sweeping them away entirely for people under 65, and we’re giving those above that age a Right to Request which their employers will have to engage with seriously.

And the review in 2011 – which will look at whether to end the default retirement age – is to be tied to evidence on specific social trends all of which are showing a retirement age is increasingly outmoded.

Of course, the option of longer working is one part of the pensions equation. The other is saving more.

Here the role of the employer is even more crucial and we are very grateful to the CIPD for their work with our Employer Task Force.

In particular for publishing a “Good Practice Guide” focused on communications – alongside the Employer Task Force Report last December.

Next month, we will build on this guide by launching a single Government-sponsored website on Good Practice – which will draw together the CIPD’s work with similar material from other organisations.

Employer contributions will be crucial. ABI research shows what a difference this can make – where there is no employer contribution, pension take up stands at just 13%, but with a contribution of at least 5% it rockets to 69%.

But communicating the benefits of this pension provision is equally crucial – particularly against the backdrop of the increased security afforded by the Pension Protection Fund and other measures in our Pensions Act.

Last October’s Interim report by the Pensions Commission, shows that for the earnings bracket with the most people in it – namely those on £10,000 – £20,000 – there are more people with no pension working for employers that have a contributory scheme that they haven’t joined than there are workers who have no pension and no access to a scheme. Indeed there are some 4.6 million workers who are not taking advantage of contributory schemes that their employer provides.

If we could tackle this, we would go a long way towards meeting the pensions challenge. Effectively these workers are turning down the equivalent of a pay rise – and the evidence suggests that this isn’t an informed decision. Which is why an idea like auto-enrolement is so important. So instead of having to opt-in – people are automatically enrolled into the scheme but have the information they need to take an informed decision to opt-out.

I pay tribute to the CIPD’s commitment to creating a modern working environment. This no longer means simply equality of opportunity in the workplace – though this is crucial – now it also means meeting the challenge of an ageing society.

Neither individual employers nor society as a whole can afford to be without the skills and contributions of all those who are willing and able to work.

The failure to meet this challenge could threaten the future sustainability of our welfare system as well as the economic prosperity of British business.

But the success which is within our grasp will ensure that Britain remains a world leader – not just economically – but as a truly integrated and socially cohesive society, which is all the richer for its diversity.

Alan Johnson – 2005 Speech at CBI Pensions Breakfast

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Below is the text of the speech made by Alan Johnson, the then Work and Pensions Secretary, to the CBI Pensions Breakfast on 25th February 2005.

It’s a great pleasure to have this opportunity to talk to you this morning – and to be giving my second speech in under 12 hours here at the Birmingham International Convention Centre.

Last night I was presenting the awards for the Birmingham Employer Coalition, celebrating the achievements of jobseekers who had overcome barriers to work and employers who had recruited and developed Jobcentre Plus employees.

I talked about our aspiration to move towards an employment rate equivalent to 80% of the working age population – the progress we’ve made –- and the work that is still needed to break down the barriers that prevent disabled people, lone parents, ethnic minorities and older workers from fulfilling their aspirations in the workplace.

This isn’t just about the individuals themselves. Neither employers, nor society as a whole, can afford to be denied the skills and contributions of all those who are willing and able to work. It makes good business sense and of course, it’s crucial to our ability to meet the challenges of our ageing society.

These challenges are very real. In the UK today, centenarians are the fastest growing demographic group.

Two years from now the number of people over State Pension Age will overtake the number of children. In just over 30 years, the proportion of the population aged 65 and over will increase by 50% while the number of pensioners aged 80 and over will double.

Given this expanding longevity and a lower birth rate, we set up the independent Pensions Commission to identify the extent of the challenge we face.

Whilst making clear that there is no crisis today, they emphasised that we had been living in a fools’ paradise as far as pensions are concerned since the late 1970s – and that this would develop into a crisis in 20 to 25 years time, if we didn’t begin to plan for that future soon.

Yesterday, we published a document which sets out our principles for pension reform and which seeks to establish a national debate as a first step towards building a new consensus on the way forward.

I’d like to focus my remarks this morning on these principles for reform and to say a bit about how employers can work with us – by engaging in this national debate and joining us in forging this new consensus.

Reforming the system to meet the challenges of tomorrow does not mean discarding the strengths of a system that is today delivering better average retirement incomes than any previous generation has ever enjoyed.

Pensioners today are sharing in the growing prosperity of the nation. Between 1996/97 and 2002/03, average pensioner incomes grew by 19%, while average earnings grew by 12%.

Since 1997 we’ve taken radical action to tackle pensioner poverty – lifting 1.8 million pensioners out of abject poverty – and tackling the real pensions crisis that we faced when we came into office.

Over 3.2 million pensioners are now in receipt of Pension Credit – with take-up strongest amongst the very poorest. For those who would otherwise be below the Guarantee element, our best estimate is that take-up rates are running at over 80%. And for single women in this group, take-up could be as high as 90%.

We are starting to change what it means to be old in our society.

Since time immemorial, old age has been associated with poverty – from the workhouse, through the studies of William Booth, to the 1980s when many pensioners had to choose between heating and eating.

But figures from the Institute for Fiscal Studies show that we are now in an unprecedented position where pensioners are no more likely to be poor than any other group in society.

We believe that the prevention of poverty must be a fundamental role for the State – so tackling poverty is our first principle and we will not risk condemning pensioners to the poverty of the past.

The other great strength of today’s system is its sustainability. Sustainable public finances are a pre-requisite to achieving high and stable rates of long-term economic growth and to ensuring that spending and taxation impact fairly between generations.

Our current policies and projections see state pension expenditure remaining broadly stable as a percentage of GDP through to 2050.

This compares very favourably with a number of European countries – who face steep increases in public expenditure over the coming years.

So whilst engaging with ideas for reform, we must ensure that this principle of fiscal sustainability is maintained.

The third principle for pensions reform is coherence. The Pensions Commission observed that the UK has one of the most complex pensions systems in the world, reflecting the cumulative impact of many changes and decisions over the last few decades.

We’ve already made some progress in addressing this problem through the radical simplification of the tax system contained in the Finance Act.

In April 2006 we’ll sweep away today’s 8 separate tax systems for pensions, and replace them with a single regime based on a lifetime limit which will start at £1.5 million, and will rise in stages, faster than the rate of inflation over the next few years.

The layer-cake of regulation – baked in a very slow oven – creates real disincentives. Rights built up over the years need to be recorded and processed separately to reflect the regime in place at the time they were accrued.

This can be a nightmare for employers.

So we must go further with our simplification agenda – especially to make our pensions system easier for people to understand.

Our fourth principle is to seek a broad consensus.

The NAPF claimed a consensus for the idea of a Citizens’ Pension set at £105 a week, replacing the Basic State Pension and the Second State Pension.

But the CBI and many others oppose this – favouring less costly approaches and the maintenance of an earnings-related tier.

So we haven’t ever really had a lasting political consensus that gives people the ability to plan ahead with confidence.

The Pensions Commission provides an opportunity to start to build such a consensus – which we intend to grasp.

Politicians are squaring up for an election so consensus is perhaps a tad unlikely right now – but we can and should steer clear of unaffordable and ill-thought-out promises if we are to avoid a return to the fools’ paradise that the Pensions Commission so graphically described.

There are six principles which we believe should be at the heart of any future reform. I’ve covered four of them so far – tackling poverty, maintaining fiscal sustainability, achieving greater simplicity and building consensus.

The final two are perhaps the most challenging and definitely the most urgent.

Inclusiveness – the opportunity for all to build an adequate retirement income; and

Equitability – producing fair outcomes, in particular, for women.

We have already taken important steps forwards here. The State Second Pension means that nearly 6 million low earners – two-thirds of whom are women – as well as 2 million carers and over 2 million disabled people all have the chance to build up a decent second pension for the first time.

Through the Pension Protection Fund – and other measures in the Pensions Act last year – we have taken radical steps to bolster security and confidence in occupational pensions. This includes offering some financial assistance to those who have lost the most in the past.

Stakeholder pensions and the Sandler products mean more flexibility – for example, people are now free to change provider and to stop and start payments without suffering penalties – particularly important for women and carers.

And our Age Discrimination Legislation and improved terms for State Pension Deferral mean that people have greater opportunity and rewards for working longer.

But we need to do more to make it easier for people to save. We need to work with you, as employers, to explore ways to encourage greater employer pension contributions and sharing of good practice.

Next week I am launching a single Government-sponsored website on Good Practice – resulting from the work of our Employer Task Force.

There is much good practice and much that employers can be proud of in the way they have continued to provide decent occupational schemes in difficult times.

I’m also keen for us to develop auto-enrolment so that 4.6 million workers no longer miss out on the contributions of their employers, unless they actively decide to do so.

And that we should look at whether there is scope for developing more collective products using local or central collection mechanisms – for instance, using the machinery of the National Insurance system, possibly on an auto-enrolment basis, to help people save and to secure lower charges for savers.

Finally, we need to end the current bias against women in the Basic State Pension.

The National Insurance system has delivered poor pension outcomes for women – especially for those who have taken time off paid work to raise a family.

It is a national scandal that on average today’s single women pensioners have an income £24 a week lower than single male pensioners – with only 16% of newly retiring women today qualifying for a full Basic State Pension on the basis of their own contributions.

This can not be right. Beveridge’s vision was for a very different world where men had 50 year jobs and a 40 year marriage to a woman who they expected to provide for.

We need a radical improvement in womens’ entitlement to the Basic State Pension, particularly as pension ages for women are raised to age 65.

One of the key questions that we are asking in launching this national debate is whether the gains from a residency-based eligibility for the Basic State Pension would provide a cost-effective and practical alternative way of improving equity of entitlements.

There are a number of ways we can solve this problem, but solve it we must.

Tackling poverty, maintaining fiscal sustainability, greater simplicity, a new consensus, inclusiveness and equitability – these are the six principles that will be at the heart of any reform.

The Pensions Commission process represents a unique opportunity to establish a consensus behind pension reforms that will last for the long term. It’s an opportunity that we must seize.

The Commission will provide recommendations on private sector pensions in the Autumn.

All the Commission’s recommendations, will be best received in an environment of informed and considered debate.

Ahead of these recommendations, the Government will seek to engage with the public – and all our key stakeholders – over the principles we’ve set out. In this way we hope to achieve a shared framework of criteria within which the recommendations of the Commission and others can be assessed.

I know the CBI will be a major voice in this debate – and I thank you for your time this morning.

Alan Johnson – 2005 Speech at Age Concern Conference

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Below is the text of the speech made by Alan Johnson, the then Work and Pensions Secretary, to the Age Concern Conference on 1st March 2005.

I’m very pleased to have this opportunity to talk to you this afternoon – at a conference that really captures the full dimensions of the challenge of our ageing society.

We are all seeking to find a way through the welcome problems posed by this challenge. There’s no pre-existing road map for a world where pensioners outnumber children and where the dependency ratio will be 2 to 1.

It’s a world that can often seem strange to people today – because it challenges their assumptions and expectations.

Preparing to meet the new demands of healthier and longer lives is a challenge that has perhaps never been higher in the public consciousness.

Tomorrow’s pensioners will be very different from today’s. They will have lived through technological revolutions rather than World Wars. They will have had to cope with the Smart Card rather than the ration book. They’ll be independent, healthier and have very different political demands.

That we need to act today to build solutions for tomorrow has never been clearer. But the debate about demographic change too often focuses on purely financial issues. How to fund pensions for the longer term – how to enable people to save more for their retirement.

These are crucial questions and it’s absolutely right that pension reform should be key to this debate. But ultimately – as this conference and Age Concern’s report published today make clear – the Age Agenda must be wider than these financial issues. It’s about creating a comprehensive, strategic framework that captures employment and discrimination; healthcare and access to services.

It requires Government to think much more widely adopting a joined-up approach to help older people meet their needs: From Sports Centres – to care homes: From transport –- to the workplace.

And it requires all of us to work together to break down out-dated stereotypes and to explode the myth that ageing is a barrier to a positive contribution to the economy and society – by promoting and supporting work and active engagement in the community.

Much of the Government’s effort in the past seven years has been about protecting the most vulnerable.

Through Pension Credit we have revolutionised the targeting of state support to poorer pensioners. Over 3.2 million pensioners are now in receipt of Pension Credit – with take-up strongest amongst the very poorest.

For those who would otherwise be below the Guarantee element, our best estimate is that take-up rates are running at over 80%. And for single women in this group, take-up could be as high as 90%.

Delivering this change has only been possible because of the hard work on the ground by the Local Service working in partnership with those in the local community.

Effective partnerships need support and a unifying goal. After listening to our customers we launched Link-Age last summer – to build partnerships with local authorities and voluntary bodies around the deceptively simple objective that our customers should have to provide information only once to get their entitlement.

The Pension Service Partnership Fund provides £13 million to finance local initiatives to improve take-up of older people’s benefits – particularly those in hard to reach groups.

The support of Age Concern and other partners has been crucial with for example, Partnerships Against Poverty – in helping to improve the take up of benefits entitlements.

In some cases, improving take-up can make a huge difference. For example, a member of the Local Service in Norwich visited an 85-year-old lady who lived alone in her home to help her complete a Pension Credit application.

Because of a visual impairment she was in receipt of Attendance Allowance and had wrongly believed that this would count as income and prevent her being entitled to any Pension Credit.

Following the Local Service visit she was awarded over £64 a week Pension Credit and a backdated payment of over £3,300.

Many of you in this audience have helped to transform people’s lives through such experiences on a regular basis.

I believe that we are starting to change what it means to be old in our society.

Since time immemorial, old age has been associated with poverty – from the workhouse, through the studies of William Booth, to the 1980s when many pensioners had to choose between heating and eating.

But figures from the Institute for Fiscal Studies show that we are now in an unprecedented position where pensioners are no more likely to be poor than any other group in society.

The prevention of poverty will always be a fundamental role for the State and it’s one of the principles underpinning any future reform of pensions which I set out last week.

But we must go further and wider in our approach – moving beyond the old debates about how to manage dependence and looking to a new world of enabling independence. A world where we have the infrastructure to make ageing an opportunity rather than a threat – encouraging and supporting older people to play an ever greater role in our society.

This means:

– tackling discrimination;

– enabling older people to fulfil their aspirations in the workplace;

– helping them to save for retirement with confidence and in a pensions system that is fair, inclusive and more comprehensible;

– as well as promoting and supporting healthier and more active lives in old age

I’d like just to say a few more words about each.

Firstly, the Government is committed to stamping out discrimination. We will legislate on age discrimination to support our goal of higher employment for all ages.

And our recent announcement of the Equalities Review, examining Discrimination legislation demonstrates our commitment to breaking down the barriers to equality of opportunity in society.

But as with all forms of discrimination – legislation only takes us so far. We all need to work together to achieve a wider cultural change that banishes outmoded attitudes.

For example, generalised stereotypes of people past state pension age as dependent, incapable and vulnerable are a particularly pernicious form of age discrimination. They undervalue the capacities and potential contribution of millions of fit and able people. And by the same token they can inhibit service-providers from focussing properly on those who really need support.

The announcement we made on age equality at the end of last year also took us a long way forward in terms of moving us towards a culture where Retirement Ages are increasingly consigned to the past.

We’re abolishing them for people under 65, and we’re giving those above that age a Right to Request to work past 65 which their employers will have to engage with seriously.

And the review in 2011 – which will look at whether it is time to sweep retirement ages away entirely – is to be tied to evidence on specific social trends all of which are showing that retirement ages are increasingly outmoded.

Empowering older people in the workplace, enabling them to choose to work for longer must be a key part of any response to the ageing challenge. As a society, we can not afford to squander the skills and contributions of anyone who can and wants to work, but who remains outside the labour market.

This was a central theme of the DWP’s Five Year Strategy which was published at the beginning of last month, at the heart of which was a new long-term aspiration of moving towards an employment rate equivalent to 80% of the working age population.

It takes us beyond just helping the unemployed to help those who are even further away from the labour market – who have more complex and substantial barriers to overcome.

It could involve supporting as many as 1 million people on Incapacity Benefit into work, an extra 300,000 lone parents; and 1 million more older workers in the labour force, including many who will choose to work beyond the traditional retirement age.

Some have suggested that we should raise the State Pension Age but part of the challenge that we face in the UK, is to help people to work up to the current State Pension Age rather than setting a new one. For example, statistics show that over 1/3 of men are outside the labour market by the age of 60; 2/3 before age 65.

Our approach is to give people the flexibility and choice to work longer if they want to. State Pension Deferral increases the rewards for choosing to work for longer – introducing an enhanced pension 50% higher for life or a lump sum of up to £30,000 for people who decide to take their State Pension at 70 rather than 65.

And our tax simplification measures also mean that, for the first time, it’s possible to carry on working for the same employer whilst drawing an occupational pension.

Another key dimension, is giving individuals the information they need to enable them to save for their retirement. And we are delighted to be working with Age Concern and Citizens Advice on developing a partnership programme on Informed Choice and Financial Capability.

Through the Pension Protection Fund – and other measures in the Pensions Act last year – we have taken radical steps to bolster security and confidence in occupational pensions. This includes offering some financial assistance to those who have lost the most in the past.

Last week, we set out our principles for wider pensions reform, seeking to establish a national debate as a first step towards building a lasting consensus on the way forward.

It’s good to see this was welcomed by Age Concern, the CBI, TUC and many of our other partners.

As well as building this consensus and continuing to tackle pensioner poverty, we’re determined to ensure fiscal sustainability, while seeking greater coherence, inclusiveness and equitability.

Sustainable public finances are a pre-requisite to achieving high and stable rates of long-term economic growth and to ensure that spending and taxation impact fairly between generations.

In building a long-term solution, we must not be drawn into policies – however appealing today – which will ultimately place an unsustainable burden on future generations.

In respect of greater coherence, we’re seeking to make the system simpler to understand and to make it easier for employers to get on with running good schemes.

With inclusiveness and equitability, we’re seeking to provide the opportunity for everyone to build an adequate retirement income – whether they are low to medium earners; employed or self-employed; and to ensure fair outcomes for all, particularly women.

One of the key questions that we are asking in launching this national debate is whether the gains from a residency-based eligibility for the Basic State Pension would provide a cost-effective and practical alternative way of improving equity of entitlements.

Meeting the ageing challenge is also wider than saving more and working longer – it includes healthcare and access to services.

Good health is the key to a good quality of life and to fully-independent living. This also means continuing to invest in community services, particularly to support family members and other informal carers.

But it’s about more than just health and helping people secure the care they need. We need to tackle the fear of isolation and exclusion that comes from increasing numbers of older people living on their own and feeling unable to influence local decisions.

So achieving real engagement of older people in community decisions, will require enabling them to build alternative networks of support and interest and to contribute their wisdom and skills through voluntary activity.

All these themes will be drawn together in our national Strategy for an Ageing Society and I have been grateful to Age Concern and our other partners for their support with our work on this.

The Strategy will be the first of its kind pursuing the ambitious aim of transforming the challenges of demography into opportunities for our society.

It will look and plan ahead – seeking employment opportunities that are not dependent on age; longer life expectancy with better health; a practical vision of active ageing to support personal responsibility and engagement with the community; and independence and choice in older age with support for those who need it.

It will bring together plans for development and reform into a programme built around achievable outcomes.

It’s a truly cross-Government operation – but it’s far from restricted to Government alone.

Ultimately, delivering the cultural change that is needed to break down old stereotypes means working with Age Concern and all our partners to deliver real opportunity and security for all in later life.

Together we can empower older people and allow society to benefit from what is ultimately one of the greatest advances of our time – longer and healthier lives.

Alan Johnson – 2005 Speech to ABI Conference

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Below is the text of the speech made by Alan Johnson, the then Work and Pensions Secretary, to the ABI Conference on 9th March 2005.

It’s a great pleasure to have this opportunity to speak at the ABI Conference.

The UK insurance industry is a world leader –- the largest in Europe, the third-largest in the world. It has a crucial role to play in the UK economy not least as a major employer, with a third of all financial services jobs – nearly 350,000 people – and as a source of overseas earnings.

And it has a crucial role to play in our society. You only have to look at recent natural disasters such as the Tsunami (where the first life insurance payments were made last month) or the floods in Boscastle last Summer.

In today’s world, we are all more aware of the risks that we face and of the challenges of managing them. I’m grateful to the ABI not just for representing their members so well but for working in partnership with Government to help address so many of these challenges.

One of which is the reform of liability insurance where the ABI’s “Making the Market Work” initiative has helped trade associations and others to access the insurance market more easily. Earlier this week, an ABI survey revealed a dramatic slowdown in the rising cost to employers of liability insurance. And through the new Health and Safety Performance Indicator – which the ABI helped to develop – we’re making it easier for small businesses to improve their management of risks.

And, of course, the ABI’s support has been crucial in addressing the pensions and savings challenge that is now higher in the public consciousness than ever before.

The demographics are stark – two years from now, the number of people over State Pension Age will overtake the number of children. In just over 30 years, the proportion of the population aged 65 and over will increase by 50% while the number of pensioners aged 80 and over will double.

Given this expanding longevity and a lower birth rate, we set up the independent Pensions Commission to guage the extent of the problem we face.

In their first report the Commission said that we had all been living in a fools’ paradise as far as pensions are concerned since the late 1970s – and that whilst there is no crisis now this would develop into a crisis in 20 to 25 years time, if we didn’t begin to plan for that future soon.

The past few years have been a difficult time for all those involved in pensions:

– for the insurance industry re-building trust after pensions mis-selling;

– for companies facing rising costs and soaring pension scheme deficits as the stock market plummeted;

– for the thousands of employees who lost their pensions when their employer went bust, leaving the pension scheme underfunded;

– for Government trying to balance regulation to protect pensions with the need to make it easier for people to save.

The Pensions Commission’s second report will deal with the question of compulsion in occupational pensions. But while there’s still a long way to go to make a success of re-vitalised voluntarism, we’re beginning to see signs that, together, we are turning the corner.

Mis-selling is now increasingly a distant memory. Government and the industry has worked to create a new independent Financial Services Authority, restoring confidence and improving regulation.

Stakeholder pensions and the Sandler suite of products mean a choice of new, low charge products and more flexible and tailored ways in which people can save. Between April and October 2004, contributions to Stakeholder pensions went through the £1bn barrier for the second half-yearly period running.

We’ve lifted 1.8 million pensioners out of abject poverty since 1997.

Through the Pension Credit, we have revolutionised the targeting of state support to poorer pensioners. Over 3.2 million pensioners are now in receipt of Pension Credit – with take-up strongest amongst the very poorest.

For those who would otherwise be below the Guarantee element, our best estimate is that take-up rates are running at over 80%. And for single women in this group, take-up could be as high as 90%.

With an extra £10 billion a year spent on pensioners, we are starting to change what it means to be old in our society.

Since time immemorial, old age has been associated with poverty – from the workhouse, through the studies of William Booth, to the 1980s when many pensioners had to choose between heating and eating.

But figures from the Institute for Fiscal Studies show that we are now in an unprecedented position where pensioners are no more likely to be poor than any other group in society. And we’re beginning to see signs that we are turning the corner with occupational pensions. Company pension schemes are benefiting from a resurgent stock market and an increase in employer contributions.

The FTSE 100 is now back over 5000 points; one survey showed that employer contributions to defined benefit schemes in 2004 were up almost 50%; and other studies show that the value of pension funds last year grew on average by around 10%.

As one recent survey suggests, with over two years of steady growth now behind them, pension funds have recovered most of the losses they sustained during the savage bear market of 2000-02.

And over the longer-term, that stock market risk is actually producing positive real returns – over and above inflation – some 4% over the past 10 years.

But this doesn’t mean we can slip back into our fools’ paradise.

Last week I launched the new occupational pensions regime handing over the Pension Protection Fund and the new Pensions Regulator to the respective Chairs of the new bodies.

In April they will be up and running – moving from vision to reality.

The new flexible and pro-active Pensions Regulator will further bolster security by tackling the risks to members’ benefits while enabling well-administered and secure schemes to continue without unnecessary regulatory burden.

The Pension Protection Fund will mean bringing real security and peace of mind to over 10 million members of defined benefit schemes. For an average cost of £20 per head per year – roughly what one might pay for a fortnight’s holiday insurance – scheme members will get meaningful protection for life.

And through the Financial Assistance Scheme, we are offering some financial assistance to those who have lost the most in the past.

We’ve been able to make some progress in simplifying the system for employers with last year’s Finance Act untangling eight separate tax regimes which have been thrown on top of each other over the years and replacing them with one coherent system.

And the Pensions Act is freeing up the old Section 67, making it possible for businesses to rationalise pension rights into a single system retrospectively; As well as removing the requirement to index Defined Contribution Schemes, and reducing indexation for Defined Benefit Schemes.

There is much further to go – but gradually our joint working in informed choice and financial education is making a difference.

Today’s ABI research shows that people are starting to understand the need to work for longer in order to ensure an adequate income in retirement. And it suggests strong consumer support for our measures which increase choice and flexibility over longer working – whether through the new rule that will allow people to claim their occupational pension while continuing to work for the same employer; Or through improved terms for State Pension Deferral where people can for the first time choose between an enhanced pension 50% higher for life or a lump sum of up to £30,000 for taking their State Pension at 70 rather than 65.

These are small but important steps on the road to a long-term solution which avoids that much heralded crisis in 20 to 25 years time.

At the end of last month we set out our principles for wider pensions reform, seeking to establish a national debate as a first step towards building a lasting consensus on the way forward.

This was welcomed by the ABI, CBI, TUC and many of our other partners.

We’ve never really had a lasting political consensus that gives our citizens the ability to plan ahead with confidence.

The NAPF claimed a consensus for the idea of a Citizens’ Pension set at £105 a week, replacing the Basic State Pension and the Second State Pension.

But the ABI, CBI and many others say that this is too costly and far from the panacea that it is claimed to be.

The Pensions Commission report provides an opportunity to start to build a true consensus – and this is an opportunity we intend to grasp.

I disagree with the doomsayers and scaremongers who proclaim the end of the final salary scheme and claim to hear the death-knell for company pensions.

Last week I was with employers large and small as well as the CBI, TUC, ABI, CIPD and others, at the Employer Task Force launch of the new Good Practice Website –- showing how employers are adapting to the changing economic climate and maintaining their pension commitments. Many of them through innovative hybrid schemes.

We need to spread this best practice and to innovate further – which is why it was important that the ABI led the consortium on the Workplace Information Pilots and why I believe that auto-enrolement could be a powerful tool to be utilised much more widely.

Why is it that 4.6 million people aren’t taking advantage of contributory schemes that their employer provides?

Effectively these workers are turning down the equivalent of a pay rise – and the evidence suggests that this isn’t an informed decision.

Seeking to provide security in a risky world – is about being honest and open about those risks and doing all we can to control them. But the risks are linked to opportunities – whether in investment growth or, the greatest opportunity of them all – longer, healthier lives.

Government has to be prepared to take unpopular decisions and ask difficult questions in order to build the right long-term solutions.

Increasing the retirement age for public sector workers, set for civil servants at 60 around two hundred years ago is one necessary change.

And I believe we need radical reform in order to tackle the scandal of women’s pensions – where on average, today’s single women pensioners have an income £24 a week lower than single male pensioners – with only 16% of newly retiring women qualifying for a full Basic State Pension on the basis of their own contributions.

One of the key questions we are asking in launching the national debate is whether the gains from a residency-based eligibility for the Basic State Pension would provide a cost-effective and practical alternative way of improving equity of entitlement.

I know that an outbreak of political consensus is unlikely in the next few weeks, but we do need a national debate to try to build such a consensus rather than knee-jerk reactions; we do need radical long-term reform not one party solutions that will be altered by future Governments of other political colours; and we do need a mature debate that requires us all to work together to explore affordable, sustainable and innovative approaches that build on the progress we have made in tackling pensioner poverty.

The ABI have already played a crucial role – and I know that I can count on your support in shaping this debate; building this consensus and ensuring that today’s workers, tomorrow’s pensioners, can look forward to a secure, active, independent and less risky old age.

Alan Johnson – 2005 Speech at New Beginnings Symposium

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Below is the text of the speech made by Alan Johnson, the then Secretary of State for Work and Pensions, to the New Beginnings Symposium on 15th March 2005.

It’s a great pleasure to be here at the New Beginnings Symposium and to have this opportunity to talk to you on one of the most important political issues of our time.

Making the UK a World Leader in Disability means achieving three things:

– Building legislation that gives disabled people comprehensive and enforceable civil rights

– Creating employment opportunity with personal tailored support for those who want it; and

– Achieving a step-change in public attitudes that empowers disabled people to live independently and to be recognised and indeed respected as equal members of society.

I’d like to say a few words about each.

When we came into office in 1997 – despite 14 previous attempts to bring forward effective legislation – only the most outrageous forms of direct discrimination against disabled people had been outlawed and there was no protection at all for the disabled employees of small firms.

The 1995 Act lounged on the statute book doing very little and with no champion to help people to enforce their rights, or to provide advice and guidance to employers about how to meet their duties.

We’ve created that champion – The hugely successful Disability Rights Commission – and we are now working to ensure that the DRC’s championing of disability remains at the core of the new Commission for Equality and Human Rights.

We’ve also set about implementing the most profound extension of disability civil rights this country has ever seen.

Last October saw protection against discrimination given to an additional 600,000 disabled workers. And it saw a further 7 million jobs and 1 million employers brought within the scope of the employment provisions of the Disability Discrimination Act.

Our current Disability Discrimination Bill – which has its Second Reading in the Commons a week tomorrow – takes us even further. When enacted, the new Bill will extend the coverage of the DDA to at least another 175,000 people – and extend the definition of disabled people to a number of new groups by, for example, removing the requirement that mental illnesses must be “clinically well recognised.”

The Bill will end the anomaly of transport not counting as a service under the DDA and will allow us to set an end-date of 2020 for all rail vehicles to be made accessible to disabled people, including wheelchair users.

It will also place a duty on public authorities to promote equality of opportunity for disabled people. This will be vital in helping to eliminate the institutional disadvantage that many disabled people still face.

For the first time, disabled people can have confidence that their needs will be at the forefront rather than being considered as an afterthought.

For example, local authorities won’t be able to consider closing facilities like libraries or leisure services without thinking first about how disabled people in the area would be affected.

This promotion of equality is central to our vision of a truly fair society offering opportunities for all. And it underlies much of our efforts to empower disabled people to realise their ambitions in the workplace as well as in society as a whole.

Exclusion from the workplace has a damaging impact on individuals depreciating their skills and their self-esteem. It places a financial cost on society and a taxation burden on business – hitting both profitability and competitiveness.

New Beginnings has played an important role in joining together employers and disability organisations.

The business case is now so compelling that employing disabled people can no longer be seen as purely an ethical responsibility – but as a business imperative.

But disabled people need personal tailored support to fulfil their employment aspirations.

Since 1997, through our investment in Jobcentre Plus and the New Deal, we have begun to transform the welfare state from the passive one-size-fits-all inheritance to an active service that tailors help to the individual and enables people to acquire the skills and confidence to move from welfare to work.

The New Deal for Disabled People has seen nearly 55,000 job entries since its launch in 2001. But our other New Deal initiatives – for lone parents and young people for instance – have also been effective.

Altogether, nearly 200,000 disabled people have been helped into work through our total package of New Deal programmes.

And we are seeing very encouraging early results from our Pathways to Work Pilots – cutting edge proposals bringing together Jobcentre Plus, the Health service, GPs and employers to improve the package of support we offer to people on Incapacity Benefit.

The latest Pathways statistics show that the number of recorded job entries for people with a health condition or disability has almost doubled compared with the same period last year; and there are up to six times as many people taking steps to get back into work in Pathways areas compared with the rest of the country. On a national basis this early success would be equivalent to over 100,000 IB claimants being helped into work each year.

All of this has contributed to the rise in the employment rate of disabled people – up 5 percentage points since 1998 to 50.3%. This really challenges the old pre-conceptions because now more than half of disabled people work and therefore a disabled person is, for the first time, more likely to be in work than out of work.

But none of us can rest on our laurels. We believe that any individual who wants to work should have the personal tailored support to fulfil this aspiration.

As a society, if we are to meet the challenge of an ageing population with a falling birthrate, we can not afford to be denied the skills and contributions of those who want to work but who remain outside the labour market.

That’s why my Department’s recent Five-Year Strategy sought to build on the highest employment rate of any G8 country by establishing the aspiration of moving to a new employment rate equivalent to 80% of the working age population.

Central to this strategy, is a fundamental reform of Incapacity Benefit that builds on our investment in Pathways to Work, the New Deal and Jobcentre Plus and focuses on what people can do rather than what they can’t.

Let me make this clear – It’s not about cutting – or time-limiting – benefits. Neither is it about forcing anyone to apply for jobs they aren’t able to do.

It is about enabling people to fulfil their aspirations. We know that up to 1 million disabled people on benefits want to work – our reforms are about giving people a framework of health and employment support and a benefit structure that supports and incentivises them to return to work. It means radically changing the benefit to enable it to reflect all that we have learnt about work aspirations and supporting the needs of those on IB.

The new system will provide a basic benefit below which no-one should fall. A speedy medical assessment linked with an employment and support assessment. Back to work help available to all – with increased financial security for the most chronically sick; and more money than now for everyone else who takes up the extra help on offer.

Such change can only work against the backdrop of a nationally-rolled-out Pathways to Work programme and a ground-breaking partnership with employers and the medical profession:

With the medical profession increasingly seeing work as a route back to good health and encouraging their patients to do likewise; and with employers ensuring good occupational health in the workplace and thinking about the rehabilitation support they make available. We will need to shape these reforms on the basis of the evidence of what works – with piloting playing an important role. And we will consult carefully and thoroughly with all of you.

We intend to publish a Green Paper in July which will allow us to consult formally on our more detailed thoughts in areas such as:

How the new benefit system and the distinction between its different elements will operate

How we can best ensure the individual and their Personal Advisers can frame an action plan which is realistic for the individual and how the Employment and Support Assessment can facilitate this

What people will be required to do in the future to access the higher rates of benefit

What safeguards and appeals processes should be in the system to make sure that the new requirements operate fairly

But right from the start – i.e. today; I am keen to involve you in the shaping of these reforms. And I am particularly interested in starting to develop a consensus around 4 issues.

Firstly – what should be the content of the “return to work activities” that we recognise as beneficial in helping people to get back to work?

Secondly – how can we minimise the risks people face when they want to move into work and ensure people have every incentive possible to take the traumatic first step?

Thirdly, what can we do to signal that being on the Disability Sickness Allowance for the most chronically sick doesn’t mean someone is written off or has no interest in working – but does recognise the severity of their sickness or disability?

Fourthly – what key features does the system need to ensure that it works effectively for people with mental health conditions?

Although the formal consultation won’t begin until the Green Paper in July, I would appreciate people writing to me on these four issues – return to work activities; minimising the risk of moving into work; shaping the signals given by the Disability Sickness Allowance; and enabling the system to work effectively for people with mental health conditions.

Your views will be very helpful and will inform the writing of the Green Paper.

Improving the support and incentives for getting and staying in employment was a cornerstone of the Prime Minister’s Strategy Unit report earlier this year.

This set out an ambitious 20-year strategy to improve the life chances of disabled people by promoting independent living supported by individualised service delivery.

It recommended new ways of ensuring more co-ordinated policy making across Government, specifically through a new Office for Disability Issues, and it sought to enable disabled people to participate in policy design and service delivery.

Our commitment to advance the civil rights of disabled people is not confined to these shores but has an important EU and international dimension.

DWP will be making disabled people’s rights one of the key themes of our presidency of the EU later this year. We’ll be holding a conference here in London dedicated to making a reality of disability rights in all member states and we hope this can be a further stimulus to co-operation between disabled people’s organisations across the 25 countries of the EU.

But ultimately, no Government action, legislative or employment support programme will be sufficient unless it is accompanied by a step-change in public attitudes.

Empowering disabled people is about more than legislation. It’s about people’s equal worth as individuals so that they are not disabled by the preconceptions of others.

This is the great emancipation issue of our time. In years to come, I believe that the mis-treatment of disabled people typical of the last century – and still too often the case today – will be seen as the affront to humanity that it is.

We must all work to raise awareness of rights for disabled people; to promote equality and challenge individual and institutional attitudes that threaten our vision of a society of equal rights and opportunities for all.

This is a vision worth fighting for. It’s a vision that I believe we are making significant progress towards. And it’s a vision that together we can deliver. Making this vision a reality will truly make the UK a world leader in disability issues.

Roy Jenkins – 1978 Speech at the European League for Economic Co-operation

Below is the text of the speech made by the President of the EC Commission, Roy Jenkins, at a dinner held by the European League for Economic Co-operation at the Mansion House in London on 17th April 1978.

If the mechanisms of the European Community are economic its aims are political.  This statement, commonplace enough now, after twenty- five years of the Community’s existence is still likely, in Britain at least, to provoke from some quarters cries against federalism and resonant pronouncements reminiscent  of the books of A.V. Dicey about sovereignty.  But the economics of the Community involves jobs and declining industries  – monetary stability; regional policy; energy options – all these are the stuff of politics not of bureaucracy.  And, although there may be some who believe to the contrary, the institutions of the Community have been carefully constructed, and indeed adapted over time, to allow for the interplay of argument and its resolution at both technical and political level.  They are not perfect.  The enlargement of 1973 put them under strain.

The future enlargement from nine to twelve will require changes, but the framework for decision is there.

I make these introductory remarks because I firmly believe that there is at the present time an opportunity to use the Community machinery to begin to resolve the economic problems which face all Member States and so enhance the political and economic stature of Europe.  The size of the stakes we are now paying for in the world economic game is high.  I believe this at least is appreciated in the United Kingdom.  What I am less sure about is whether, here, there is a full enough or clear enough recognition of the common  nature of the problems and of the advantages of a common Community response to them.

Despite the real benefits of North Sea oil the economy of the United Kingdom remains as vulnerable, particularly given its special dependence on overseas trade, as other Community countries.  It has at least as much therefore to gain from common Community action as the stronger Community economies.

I would ask whether, despite the much- vaunted practicality of the British people, they do not find their view of the practical opportunities of the landscape before them obscured by drifting clouds of unreason, market ‘Beware – federalism’ – or ‘Warning: bureaucracy’.  I should therefore like this evening to try to set before you the main problems we face, the way in which I believe the Community can contribute to ease them, and could, indeed should, in my view, be the response in the United Kingdom.

There are three principal areas of difficulty: the internal Community economy, our external economic relations, and world monetary instability.  I take each in turn.

The average growth rate of the Community remains sluggish. We are well short of our target  for this year, and behind the other main industrial  units in the world.  The consequence of a persistence of present levels of performance would be depressing.

First, there would be no prospect of making an impact on unemployment.  It now stands at 6 1/2 million for the Community as a whole.  No Member State is unaffected.  40% of those out of work are under 25 years of age.  Other things being equal the situation will get worse and no better over the next few years, as 9 million more young people come onto the labour market than those who leave it.  Second, a sluggish economy breeds business hesitancy and trade union resentment.  It creates a bad climate in which to carry out the adaptation and restructuring of industry which is urgently necessary to restore any real chance of lasting competitiveness in many sectors.  Third, it slows down the full integration of the Community market, and puts at risk much of what has already been achieved.  Intra-Community trade grew by only 2% in 1977 compared with an annual average of 9% in the previous decade.

It may be tempting to argue that we are still witnessing a delayed response to the shock of the 1973 oil price rise.  But that is, in my view, self-deceiving.  That shock was severe but it has been a fact of life for nearly five years and if we were fundamentally healthy we should by now have absorbed it.

Nor, when the other main industrial countries are expanding faster than we are, can we put the major blame on the rest of the world.  As the world’s biggest trading bloc we have a major responsibility.  We must offer our own solutions and not simply press others to substitute for us.

Second, we face acute problems in relation to what is now becoming known as the “international division of labour”.  Beyond its intensive internal trade between the Member States the Community is more dependent upon external trade than either the United States or Japan; its interest, therefore, in the maintenance and development of an open world trading system is immense.  In addition, the Community, more than the other industrialised parts of the world, has an especially close interest in its relationship with the Third World.  This is true of trade and true of politics.  We have been in the lead in the North/South dialogue.  We have invested a lot of political, capital in this relationship, the Lomé Convention has been one of our major success.  We are the threshold of its renegotiation.

At the same time it is from the Third World, together with the non-Community countries of Europe, that our surpluses come.  Yet we are competitively very vulnerable not only to Japan and to other Far Eastern countries which have developed in its wake but also to the “industrialised pockets” in the Third World.  The impact of this competition on our industries is great.  The Community has had to undertake a series of difficult negotiations, notably in steel and textiles, to gain a breathing space for these industries.  But some of these actions give us only a short breathing space – time in which we have to restructure industry or face the alternative of growing and permanent uncompetitiveness.

Our lack of growth and the potential frailty of our external trading strength are two of our major continuing problems, but the most pressing is the interlocking crisis in the international monetary system – or rather the lack of system.  Since 1971 we have lived without the rules of Bretton Woods.  The experience of the last seven years, compared to that of the preceding decades, does not suggest that the absence of such rules is a rewarding national freedom.  But the one feature of Bretton Woods that remains is the monetary predominance of the dollar.  This is something separate from the weight and importance of the economy of the United States, which is necessarily great and will continue to be so.  But the weight of the dollar is still greater and more pervasive.  It remains the only effective medium of international exchange.  Its position greatly affects our intra-Community relationship and the nexus of the Euro-currency markets as well as our trading position with the rest of the world.  The present weakness of the dollar leaves Europe, and the world as a whole, unstable and vulnerable.  To say this is not to be hostile to the United States, any more than it was hostile to Britain to try to deal with the over-extended role of sterling in the Sixties.  I do not join with those who put the main blame on American policy.  It is much more that the system is out of joint, with a large part of the legacy of Bretton Woods remaining but its central mechanisms having been removed.

These are the central economic and monetary and, therefore political issues, which we have to tackle at the present time.

Alongside these is the fact that our problems have to be seen in the context of the imminent enlargement of the Community to ten member and in the not long delayed enlargement to twelve.  What is obvious is that such an enlargement will be a weakening factor for the Community unless, in advance, it is given greater internal coherence both economically and institutionally.  The need for Community resources is bound to be increased by the inclusion of three new relatively poor members.  At the same time, it would be quite unacceptable politically to treat the new applicants more favourably than parts of the existing Community where the need is equally great.  In this respect, there was an important but so far publicly neglected recognition by the European Council in Copenhagen that the pursuit of greater internal coherence in the Community implies the determined reduction of regional imbalances.  This is indeed in the words of the Council one of the key objectives of the Community enterprise.  The result is a commitment to deal not just with our existing regional differences but, if we are to make a success of enlargement, as we must, we have to think from here forward in terms of twelve and not of nine.

The prospect of enlargement has proved again, as did the enlargement of 1973, the Community’s power of attraction.  And that attraction is not just for membership but for relationship – especially from the Third World.  The problem is how to match that with equivalent internal strength.  I believe the opportunity is there to do so in the central economic and monetary field and that there are short-term steps and long-term strides which can be taken.

Let me first comment on the longer-term prospect for Community action.  From the autumn of last year, both in public speeches and private discussion, I have proclaimed and defended the thesis that an economic and monetary union of the Nine is not a distant academic dream but a necessary future reality.  The problem of monetary discrepancies within Europe threads its way through all our policies, disrupting the mechanism of the common agricultural policy through monetary compensatory amounts and weakening our external trade negotiating position.

What could our strength be if we had to currency stability between Hamburg, London and Rome, that there is between New York and San Francisco or Tokyo and Osaka?  It is no accident that of the three major industrial areas we are both the one with the weakest economic performance since monetary disorder became endemis, and the only one which suffers that disorder internally as well as externally.  The cost of disunion in terms of internal and international trade is becoming increasingly obvious and heavy.  On these two points at least the number of the converted now seems greater than the number of sceptics.

But there remains a good deal of scepticism about some of the internal effects of union and about its practicality – about the effects on prices, jobs, and standards of living.  I hope you will agree that as this is not an academic lecture but an after-dinner speec h I can proceed, at this stage, by assertion rather than argument.  First, the current economic situation places all our traditional assumptions in flux.  The old familiar relationships between reflation and employment and the balance of payments are like  navigational aids which have lost their validity as we sail into strange seas.  And their invalidity breeds intense discontent – in all countries.  But given the existing interdependence of the European economy, a break-out from the straight jacket of nationalist monetary policy could alter these relationships in our favour.  A single, homogeneous monetary policy could set, and maintain, a common high standard of price stability provided it were based on a well- prepared currency reform.  There are, of course, buried here a whole range of both political and technical issues.  All will have to be solved, but the prospect in their resolution would be a new economic environment, with stronger internal monetary disciplines and more relaxed external constraints.  The process of transition will require a mechanism for adjusting internal economic differences.  It would, therefore, have to be coupled to greater Community budgetary and financial powers, to give better geographical balance both, for example, in cyclical conditions and in the structural reconversion of declining industries.  The need for such action is already there within the Community in the disparities between its regions.  The prospect of enlargement underlines its importance.

The discussion of economic and monetary issues at Copenhagen was interesting and useful.  There we neither aimed at nor took decisions in this area.  But the common understanding of our problems was clear.  What we now need to do is to prepare with vigour proposals for common action.  Between now and the next European Council at Bremen we need to work out new dimensions of Community activity in the perspective of economic and monetary union.  President Giscard d’Estaing has pointed to our need in terms of a zone of monetary stability in Europe. In my view we can achieve this by seeking greater exchange rate stability between the currencies of Member States.  For this purpose it would in the judgment of the Commission be necessary to extend the Community exchange rate system beyond the snake; to create scope for the Community to develop new dimensions to the European Unit of Account – doing better service as a point of reference and a unit of account for credit and settlement in  our internal exchange rate relationship; and to increase the functions and resources of the European Monetary Co-operation Fund.

I hope the United Kingdom will be able to play a major part in producing achievement out of expectation, as much in its own interest as that of the Community.

Britain has now been in Europe for five years and the Community that now exists has been in part moulded by British influence.  Some of that influence has been beneficial.  For example, on the vexed question of the harmonisation of laws there is now a much greater recognition  than there was that the objective should not be as much as possible but as much as necessary.  But there is still in my view too great a tendency to concentrate attention on the minor issues and dodge political debate on the major ones.  There are historical reasons for this.  I know them better than most.  But to discuss Community policy we do not need to enter the realms of political theology although we do need a conception of what the Europe is about.  That view can be very simple.  The Community is, in part, a recognition that the economic conditions of coexistence in the late twentieth century are such that the scope and effect of decisions cannot be limited to a narrow national area.  We are interdependent, and that includes the world outside the Community as well as within.

Indeed, we work for an increasing degree of complementarity and common decision making on a worldwide scale.  Of course, the greater the scale, the greater the difficulties involved and often the greater the time that decisions can take to be realised.  But here in Western Europe we have been fortunate and intelligent enough to work out procedures and machinery for taking decisions in common on common problems.  It would be remarkably foolish to fail to co-operate fully in this established framework on the pretext of seeking wider solutions in a much vaguer framework.  Better European co-ordination should be the foundation and not the enemy of world advance.

I have put before you this evening what I believe some of these problems are and one major, systematic route of policy which could underpin our ability to deal with them all.  It is also a policy route along which real practical steps can now be taken.  It is time to think in these terms.  For too long Member States have tried  to grapple largely on their own with the most serious continuing economic situation we have know since the War.  We have wasted too much effort in arguing about whose responsibility it was to go for higher economic growth.  Let us now replace the outdated locomotive theory of economic advance with a plan for common action.  The four months which began with the Copenhagen European Council present the Community with an unusual combination o f test and opportunity.  We need to present a common and powerful front at the Western Economic Summit in July.  In order to avoid the confidence- weakening cynicism of a flabby outcome to that meeting, we need a clear sense of our own direction.  But that is an occasion and opportunity not the reason for advance.  The reasons exist already in our lack of growth, our need for external strength in a world of monetary instability and in the prospect of enlargement.  We can out of the present fragility of the European and world economy pluck a set of decisions which can lead to a strengthened European Community.  And that is in the interest of Britain in Europe.  The European League for Economic Co-operation has played that part in the past.  I hope that all of us here today will do so in the future.

Roy Jenkins – 1978 Speech to the Basle Society

Below is the text of a speech made by Roy Jenkins, then the President of the Commission of the European Communities, to the Basle Society of Statistics and Political Economy on Monday 13th November 1978.

This is the right place to talk about money, and in particular the monies of Europe. I intend to take full advantage of the opportunity you have given me today.

Next year it will be the 10th anniversary of the decision taken by the Heads of State and Government of the Community to work towards an economic and monetary union. The progress which has been made since then has been disappointing, but the objective remains intact. We are now making our second major effort to move towards it through the establishment of a zone of monetary stability in Europe to be achieved through the creation of the European Monetary System. If we succeed we shall give our Community the most creative impulse since the first achievements after the signature of the Treaty of Rome; if we fail we shall risk not just a minor seatback but the frustration of one of our fundamental purposes with all the political and economic consequences which that would entail.

Before looking at the choices which now face the Member States of the Community, I want to say a word or two about how and why we arrived where we are. Just over a year ago I tried to set out in a speech at Florence the reasons for re-examining the case for economic and monetary union. I wanted thus to take the issue out of the realm of academic debate and bring it back into that of live politics.

I do not need to rehearse the main arguments I then advanced but I will briefly mention them. I drew attention to the need for a more efficient and rationalized development of industry and commerce in Europe. I spoke of the so far unexercised ability of the Europeans to create a currency of their own, based on a spread of wealth and power comparable with those of the United States: in doing so I said that although I thought floating exchange rates were here to stay, they should be between continents rather than between the countries of Western Europe, all of which are intermingled in thickly populated half continent, and nine of which are united in a common market and pledged to political and economic integration. I said that control of a single European currency by a single European monetary authority could achieve a measure of anti-inflationary discipline beyond the reach of most individual Member States. I argued that policies which would favour stability and expansion, strengthen the demand on a broad geographical basis, and avoid exchange rate crises, would give a much needed new impulse on an historic scale to the European economy with the effect of reducing unemployment and creating new wealth throughout the system. I referred to the need for redistribution and transfer of resources within the system so that public finance could be channelled to poorer areas and the imbalances which continue to disfigure Community Europe could be counteracted. I called for decentralization in some fields to balance the centralization which would be necessary in a limited number of others. Finally I spoke of economic and monetary union as a means towards political integration and the ultimate European union to which the Members States of the Community are committed.

Since then things have moved further and faster than I – or I think anyone else – thought possible. Perhaps I should single out two main reasons for this change of climate. The first is that people became better aware that the differential movement of European currencies against each other was making nonsense of the notion of a common market, and still more that of a Community, and indeed affecting the ability of national governments to run their own economies alone or with other members of the Community. Those countries in surplus, most strongly export oriented, found that decline in demand from countries in deficit held back their ability to stimulate their economies; while those in deficit were frustrated in their efforts to achieve higher growth by a succession of exchange rate crises.

Hence in part the relatively poor productivity of Europe, the relatively poor rate of growth and the relatively high rate of unemployment, all of which stood in market contrast with what had been achieved in Europe in earlier decades of relative monetary stability. The United States and Japan, subject to intercontinental but not internal monetary upheavals, performed better.

The second major factor was the continuing weakness of the US dollar and the increasing precariousness of the international monetary system of which the dollar remains in practice, although not in theory (as under the Bretton Woods arrangement), the essential pivot. To keep some sort of system going and discharge their responsibilities in the common interest, the Europeans took in more dollars than they could conceivably want or need. This in turn had drastic effects on the ability of European governments to control their own money supply. In circumstances in which the world system was manifestly failing the Europeans not unnaturally felt that they should try to achieve some stability among themselves both for its own sake and in order to make a contribution to a new and better balanced international system in the future. I shall have a word or two more to say about this point later on.

Now we have been talking about the creation of a European Monetary System, and I hope – as is appropriate – that the birth is about to take place. Since the Copenhagen meeting of the European Council in April much work has been done, thanks in large measure to the impulse given by Chancellor Schmidt and President Giscard d’Estaing. The measure of agreement reached at the European Council at Bremen astonished the world and laid the basis for the detailed and technical work which is under way. As you know, we then envisaged that the European Council at Brussels next month should approve the creation of a European Monetary System to come into being on 1 January next year.

The creation of such a system would not of course be the same as European economic and monetary union, but it would be a major stride towards it. Success, while far from certain, is still well within our grasp. I want in the rest of my talk to consider some of the problems which have arisen and what might be done about them. First let me say as clearly and firmly as I can that there must be no back-sliding from what was envisaged at Bremen. There is a particular responsibility on those who then took the lead. The detailed and technical work to which I have just referred and which is of course essential if we are to achieve anything worthwhile, must not nevertheless be allowed to obscure or diminish the fundamental perspectives of Bremen. Let me recall what these were. First the European Council agreed that the creation of a zone of monetary stability in Europe was a highly desirable objective: the European Monetary System whose purpose was to bring it about must be durable and effective. Secondly the European Council agreed to work on the basis of a specific scheme for the creation of a European Monetary System although it naturally left this scheme open to amendment if necessary. Thirdly the European Council agreed that there should be concurrent studies of the action needed to be taken to strengthen the economies of the less prosperous member countries in the context of a European Monetary System, and stated that such measures would be essential if the zone of monetary stability was to succeed.

The essentials of the scheme on which all agreed to work can be stated as the creation of an ECU (or European Currency Unit) at the centre of the system and as a means of settlement between Community monetary authorities; the depositing of reserves for use among Community central banks (an illustrative but impact-making figure of 20 per cent of the gold and dollar reserves of Member States and 20 per cent of their national currencies was cited); the co-ordination of exchange rate policies with regard to third countries; and the eventual creation of a European Monetary Fund. I recall these points because they are in some danger of being buried beneath the leaves of an autumn of detailed discussion. But the decisions at Bremen and the essentials of the scheme on which all agreed to work are the indispensable basis of what we intend to set in place next year.

Some of the arguments which have taken place in and out of the Community institutions and between governments necessarily have a highly technical character. At the same time most cover points of underlying importance. First there has been the discussion about the choice of a numeraire for the new system. Should exchange rates be defined in terms of a parity grid, as in the present snake? Or should they be defined in terms of a basket of currencies, the basket in this case being the European Currency Unit whose composition would be the same as that of the present European unit of account? There are strong technical arguments for using the grid as the method of intervention but there has also been an underlying division between those countries at present in the snake who fear that the introduction of a basket system would impose unwanted responsibilities on them and promote inflation; and those at present outside who fear that the introduction of the parity grid would tilt the system in favour of creditor countries and impose an unwanted degree of deflation. I will not enter into the details of the argument, which I have no doubt are well known to you, but will simply draw attention to the so-called Belgian compromise which would define intervention obligations in terms of a parity grid, but use the basket as an indicator of divergence, that is to say would show whether creditor or debtor countries were getting out of line, and thus impose a certain symmetry of obligation. This argument is not resolved; but I have no doubt that it can and should be in the near future.

Second there has been discussion about the width of margins to each side of the numeraire, and the possibility of adjustment. Here again there is some conflict of interest between those who are happy to retain the present margins of the snake and those (one at any rate) who would prefer wider margins. This is an argument over percentages into which I shall not enter. The question of adjustment is more important. Any participant in the system must be able to change its central rate if its costs and prices move out of line with those of its competitors or if it has undergone a structural change in its balance of payments. This is already true of the existing snake arrangements. It would obviously be contrary to the spirit of the whole enterprise if certain countries, in particular those with relatively high rates of inflation, availed themselves too often and too easily of the possibility of change and made no sustained effort to bring their inflation rates down to the level of their partners. Nevertheless some flexibility must be built into the system, and some of the fears which have been expressed about its absence seem to me ill-founded.

Next there has been substantial discussion about the extent to the reserves on which members of the system can draw, and the conditions on which they could do so. The Commission’s position is clear: we support the arrangements set out in the scheme discussed at Bremen. This will take a good deal of time to work out.

There are a number of legal and even – in some countries – constitutional obstacles to be overcome but in order to ensure that when the new system comes into operation there will be sufficient financing to back it up we must at least agree substantially to strengthen the existing network of credit facilities. Here I think two improvements could be introduced: first the duration of the very short-term financing – the unlimited bilateral support that central banks can draw upon to finance their intervention operations – could be extended; and secondly the present network of short and medium-term credits should be increased in amount, from around 10 billion European units of account at the moment to around 25 billion.

Obviously the larger the credit facilities, the less they are likely to called upon. The more you have the less you need. There is no economy more self-defeating and short sighted than to fail to provide adequate reserves. The issues underlying the so-called technical points are obviously a great importance. But they must be seen in the wider context of our continuing and now more determined and successful efforts to bring about greater convergence in the economic policies of the Member States of the Community. Any arrangement for the future which was exclusively monetary would be bound to fail. The economies of the Community are now moving along more parallel paths than was the case a few years ago. Their trade with each other is immense. But the differences between them are still substantial. Inflation rates vary considerably. Resources are not evenly distributed. Growth rates are different. Budgetary and fiscal policies are different as well, with each government naturally doing what it finds best for its country’s particular circumstances and with only some regard for the interests of the Community as a whole. Clearly if the new European Monetary System is to be, in the words of Bremen, durable and effective, it must take account of the economic as well as monetary circumstances of each Member State, and be matched by a still greater effort of co-ordination on the part of member governments than any have been willing to attempt in the past. The Commission has made a series of proposals for such co-ordination, and has emphasised – as I do again today – the need for such co-ordination to be seen in the framework of an eventual economic and monetary union.

This general point was fully emphasised at Bremen. The specific argument which has since arisen is over the phrase then accepted which said that there would be “concurrent studies of the action needed to strengthen the economies of the less prosperous member countries”, all put clearly in the context of the European Monetary System. This is obviously of crucial importance to those countries which are less prosperous, and I betray no secret if I place in this category Ireland, Italy and the United Kingdom. What action should be taken to strengthen the economies of these countries is still under lively discussion. Some have talked of the need to produce a more rational transfer of resources inside the Community than arises out of such existing Community mechanisms as the Community budget and the Common Agricultural Policy. Others have spoken of the need for extension and reinforcement of such Community instruments as the Regional Fund and the Social Fund. Yet others have spoken of special loans at favourable rates of interest arranged through the European Investment Bank or other mechanisms. None of these questions is settled. The debate about them has opened up some pretty fundamental questions about the functioning of the Community and the equity of its present mechanisms. This is all to the good. But I think we all recognise that the problems of this magnitude cannot be fully settled very quickly with a speed sufficient to meet the stringest timetable – desirably stringent – for the setting up of a European Monetary System. But settled they must be if we are to have a Community which genuinely represents the common interests of Member States.

Before concluding I want to underline one fundamental point. The interests of our Member States are not in all cases the same. There is, for example, an obvious temptation for the existing members of the snake to conceive of a European Monetary System which would in many of its essentials be no more than the present snake writ large. There is another temptation to which my own country of Britain is subject: to see the system as yet another continental entanglement conceived in the interests of countries whose economic performance and problems are different from their own. My answer to those who would like the system simply to be a super snake is that it would simply be unworkable if it included, as it should, all or nearly all members of the Community. My answer to those who see it as a new entanglement in the interest of others is that first they should be less defensively suspicious (such suspicion has not served them well in the past); and second that if it should prove an entanglement it would mean that the system did not properly reflect the common interest and was for whatever reason badly designed. I appeal to all members of the Community to play a full and responsible part in the creation of a new institution in the interest of all.

I now give a warning. If it turns out that all members of the Community do not feel able to join, at least at the beginning, and we are obliged to work out ways of squaring some very uncomfortable circles, then I foresee the real danger of the evolution of a two-speed Europe, or perhaps even of a three-speed Europe when the Community is enlarged. In such circumstances the very sense of a Community would be imperilled. A European Monetary System must be to the benefit of all and take account of the circumstances of all. Responsibility for failure would not necessarily rest only with those who felt unable to join. It would rest also with those who insisted over-much on setting things in a mould which fitted some well, some not so well, and others not at all.

I conclude with a word on the international system of which the European Monetary System would be no more than a part. I repeat now what has been said many times before: that the European Monetary System is in no way directed against the international system nor against the US dollar. The health of the dollar is essential to the health of the international system, and we greatly welcome the measures recently taken by President Carter to strengthen the dollar. At the same time we must face the fact that the Bretton Woods system as we knew it after the war has broken down, and that we must gradually seek some new arrangements to take its place. No-one has suggested that the European Currency Unit should take the place of the dollar for which a leading role in the international monetary system remains necessary and unquestioned. But it is possible to envisage a system in which responsibility is more widely shared and in which both the European Currency Unit and of course the Japanese yen would play a more important part. This is to look further ahead than is perhaps now easy to do. Today I want simply to emphasise that we live in one interdependent world and that what we plan for Europe must from the beginning be seen as something which does not conflict with but assists the interests of the world as a whole.