Ed Miliband – 2011 Speech to British Chambers of Commerce

Below is the text made by Ed Miliband, the Leader of the Opposition, to the British Chambers of Commerce on 4th July 2011.

Let me start by thanking you for inviting me here to speak to you today.

It is a privilege to meet, and hear from, such a large and diverse group of Britain’s leading businesses.

And I want to pay tribute to your departing Director-General David Frost who has been such an eloquent champion of the work your chambers do.

I come here as a Leader of the Opposition who knows that the things that brought me into politics, the wish for a fairer, more prosperous country, can only be achieved if the businesses represented by the BCC are able to thrive.

As befits a Party that lost an election less than a year ago I’m here to listen to you, and say how important that dialogue is for us.

I recently spent time with one of your members, Gordon Yates, who runs a firm in my constituency called Sentry Doors, employ ing over 60 people.

And what I know most of all is that he, and the people in this room, are doing what they do not just to make a living.

But because of the pride you have in your work.

The sense of responsibility you feel to your employees.

And your commitment to your local communities.

It is you who represent the best of businesses in Britain.

Success based not on short term speculation, but on hard work, productive investment and enterprise.

In the 1990s New Labour’s core insight was that a successful and dynamic market economy is the foundation on which a strong and just society must be built.

I am determined that Labour will be continue to be a pro-business party, celebrating enterprise and wealth creation.

Being pro-business today means confronting challenges very different from the ones we faced in the 1990s.

My argument is that we must learn the right lessons from before and after the financial crisis.

Three stand out:

First we need an economic policy that sustains growth and cuts the deficit.

Second, a narrow economy is not a healthy economy – we need a more balanced industrial base in the future.

Third we need a new, safer, banking system, but also one that will support not hinder the changed economy we need.

First let me talk about growth and cutting the deficit.

Clearly attention today is focused on events in Portugal.

And we are right to be concerned about problems in parts of Europe, our largest trading partner, at a time when growth is so important here at home.

What we know from across the world is that all economies need a credible plan to cut the deficit, but also a plan which means the economy can grow and pay its way.

If we were in Government we would have halved the deficit over four years.

Let me say plainly to you, that would have meant some difficult cuts to public spending.

The Government have set out a different approach to cutting the deficit.

I will not rehearse today the details of that argument.

I want to make just one point.

Our argument with the Government is about the scale and pace of their plans, and the implications for the health of the UK economy.

It is driven by a different view about how we can achieve the strong growth and lower deficit we need as a country.

Let me put it this way.

The lower growth forecasts and higher inflation presented in the Budget mean an extra £12bn spent on social security over the next five years.

They mean borrowing being £46bn higher in total over the same period.

And why is our economy suffering from sluggish growth?

Underneath the headlines is the reality of squeezed living standards and weakened consumer confidence.

And we saw the impact of that on business confidence in this week’s BCC’s survey.

I know it is smaller businesses that get hit first and worst when growth slows.

I hope that the economy will return to strong growth this year, but I hope also that the Government will show flexibility if circumstances require it.

But if we are to build the economy we need for the future, we need to do a lot more than get the macro-economic policy right.

Being pro-business in this decade means learning the deeper lessons of the crisis.

So second, we need growth rooted in a much more diverse economic base.

That means a broader range of sectors, in every part of Britain.

And it means understanding the contribution of small and medium sized businesses to the future of our economy.

The financial services industry will always be important.

But what we discovered at the end of the financial crisis is that we were too exposed as an economy to the instability of that industry.

With Labour having been in Government I take our share of responsibility for that.

Part of the answer is of course better bank regulation.

But part of it is also broadening the sectors which succeed in our country.

In many of these there is a global race, and the danger for us is that we find ourselves left behind.

Take the green economy as an example.

I saw as Energy Secretary the potential this sector had to be a source of jobs and growth for Britain.

But that won’t happen by accident.

It will happen because private and public sector together establish a coherent vision for success.

And government needs to do its bit.

Creating a stable domestic market.

Providing the right incentives.

And giving business the assurance it needs that we will have the skilled workforce it can rely upon.

Nearly one year on from our period in Government, as I look at the green sector in particular I see warning signals.

When a pioneering company at the cutting-edge of electric vehicle production like Modec in Coventry goes into administration we need to ask, is the right support in place to ensure we succeed as a country?

In particular I urge the Government to provide as much certainty as it can to you about the incentives and support that are available.

And just as succeeding in green industry requires this vision, focus, and certainty, so too in other key sectors.

Biotech, higher education, advanced manufacturing and the creative industries – in all these areas we need to seize the opportunities that the global market provides.

That means a coherent and active approach across Government policy.

Just as we need to diversify the sectors in which we succeed, so too in ensuring balanced growth across our country.

My local experience as a Member of Parliament was that Yorkshire Forward, our RDA, did make a difference in bringing together businesses, universities, local government t ogether to help businesses start and grow.

We need to ensure that Local Enterprise Partnerships are able to continue that work:

In our view they should be able to take over the RDAs assets to drive economic development, should have the right influence over local skill and planning decisions so they can be properly matched to business needs.

I believe that broadening our economic base, must not simply mean success in more sector and regions, but also recognising that growth for the future will come not from a small number of large businesses but from a large number of small and medium sized enterprises.

That it why, in our Budget representations, we urged the Government to use funds from repeating the bank bonus tax to expand the Regional Growth Fund so that it could be opened to small businesses, which are currently locked out.

I also know that for you to succeed, Government must be a better partner with you.

We have a shared commitment t o fairness in our country.

And you want to do the best for your employees.

But we also know that regulation places the greatest burden on small rather than large businesses.

I’m not going to make you promises I cannot keep, or pretend there are easy answers.

But I do want to say that we understand the need for balance, because of the costs that change can impose upon you.

That applies both to the number of regulations that are introduced, and the way they are implemented.

We also need a competitive, simple, tax environment.

And an approach to procurement which supports your success.

To give one practical example, Government was right to promise that suppliers would be paid within five days – because cash flow matters.

But we need to recognise that these suppliers are too often our very largest firms.

As well as giving SMEs more access to government procurement, we should go further and require those la rge firms to pass 5-day prompt payment terms down the supply chain.

So we need to see a broader economy in all respects, more able to withstand the shocks the world economy brings.

A banking sector that works for business

And that takes me to the third lesson we must learn.

It’s about the deal you get from the banking system.

Next Monday the Banking Commission will set out its interim findings.

The issue with the banks goes much deeper than regulation.

Particularly for small and medium sized business.

British industry has been failed by the banking system for too long.

When everybody up to and including Mervyn King says that banks are exploiting their customers, there clearly is a problem.

We all know of sound businesses that have had credit withdrawn– despite being loyal customers for years.

We need to restore the primary role of banks as intermediaries between savers and productive investment i n the economy, rather than as institutions that derive massive profits from speculation.

Britain’s banking sector has become just too disconnected from the communities and businesses it serves.

We are seeing too much evidence that the banks are simply going back to business as usual before the crisis hit.

We see it for example in the complaints from small businesses about their banks.

That isn’t good enough for our businesses.

We need to move from call centre banking to relationship banking.

It just doesn’t make sense that hugely important decisions about credit, that can make the difference between a business succeeding or failing, are taken by someone hundreds of miles away who knows nothing about the business involved.

The owner of a small music industry business recently told about applying for a loan from his own bank.

It took a year for the head office to say no to that loan application – an application which an other bank approved after just 2 weeks.

Just as you believe in your responsibility to the communities you serve, Britain’s banks need to take seriously their responsibilities to you, their customers.

A small business is not and should not be treated as a set of numbers on a spreadsheet.

Key to changing the way our banks work with businesses is the greater competition we need in the banking sector.

I urge the Government to be bold in implementing the recommendations of the Banking Commission.

We also need to ensure there is proper funding in place for businesses at every stage of their growth – from bank loans, to export finance, to equity.

To do that we can’t leave financing of businesses simply to the banks to do it on their own.

I think here Britain can learn lessons from abroad.

The Small Business Investment Company in the US has used government-backed guarantees to provide critical, early stage finance to some phe nomenal business success stories, like Apple and Intel.

And in both France and Germany firms have long been able to access state-backed finance for exports – an area in which I know the Chamber have done a substantial amount of work.

As part of our policy review I want us to look at whether we can make public-private financing models work here, building on schemes we introduced like the Enterprise Finance Guarantee and the Working Capital Scheme for exporters.

So I believe we need to learn the right lessons from the financial crisis.

Cutting the deficit at the same time as understanding that growth matters.

Building a new economy which is more broadly based than what went before.

And reforming our banking sector.

As we look ahead to our next manifesto, our relationship with business is hugely important to me.

To get policy right we need your input.

It is why our Shadow Business Secretary has written to every Chamber to ask for their views on our policy review.

I am very grateful for the response we have had so far.

We all believe in a more prosperous and fairer country.

I look forward to working with you to help make that happen.