The speech made by Gordon Brown, the then Chancellor of the Exchequer, on 12 September 2000.

My theme today, is to build through growth and productivity full employment for all in our generation.

For twenty years all of us here in this hall, all of us have marched for jobs, we have rallied for jobs, campaigned and petitioned for jobs, demonstrated for jobs.

For twenty years you, the TUC and trades unions, have rightly said, we have all said to each other, that unemployment is the central economic and social, indeed moral, issue of our time.

But for nearly twenty years we could only protest about unemployment.

Twenty years ago, ten years ago, even five years ago young people tried as hard as now to find work.

• they were applying for jobs;
• they were training for jobs.

Don’t tell me these generations of young people didn’t have talent or potential, couldn’t learn or hold down a job.

What they needed was a government on their side.

If only one young person had got a job from the New Deal. Then that would have been worthwhile in itself.

But there are now, since 1997, 500,000 benefiting from the New Deal. And nearly 250,000 are already in jobs.

And every time a young person denied a job under the previous Government gets a job now we should be proud of the New Deal, that this is what can happen when we work together.

So I believe it was right, even under fierce opposition, to take the decision to tax the excess profits of the privatised utilities to the tune of 5.2 billion pounds – and then to put that money to use in the poorest high unemployment areas of Britain, in the poorest communities of the country.

I can report to you today that together we have created one million and 35,000 jobs since May 1997.

• unemployment among men, the lowest since 1980;
• unemployment among women the lowest since 1976;
• long term unemployment now the lowest since the 1970’s.

But as long as there is unemployment we will not be complacent . so from April with 300 million pounds we are extending the New Deal so that every one of the long term unemployed in all parts of the country can have the opportunity to work .

Unemployment among young people is now the lowest since 1975.

But none of us should be satisfied. With 400 million pounds a year allocated to help those people and places still left behind – those with literacy problems , drugs problems – we will now intensify the New Deal. So that in future no teenager is without training or work.

Unemployment among single parents now falling for the first time ever, but not good enough. From April with 300 pounds allocated for four years a new programme of choices – our aim: training, jobs and – yes and at last – a national child care strategy to help all parents who want it.

Unemployment rates among the disabled falling for the first time in decades. I want every person with disabilities empowered to use their abilities as they wish . From April we are extending the New Deal so that disabled men and women have the right to work too.

Unemployment in Scotland, Wales, Northern Ireland and the regions, the North, the South West – the lowest for more than twenty years.

But that is not good enough. With 500 million pounds for regional development agencies our aim is full employment not just in one region but in every region of the country.

Unemployment among the over 50s rising for decades – a scandal that in the 80s and 90s thousands of men and women who lost their job over 50 were thrown on the employment scrapheap – now falling, half a million more over 50s in jobs since 1997. But we want to do more. To end the scandal of age discrimination. Hence a guaranteed minimum income of 180 pounds for the unemployed over 50 returning to work.

And building from this starting point of one million more jobs. And the strength to take the tough decisions to achieve stability, this is a moment not for complacency but a moment of challenge and opportunity for our country – and the prize for all of us great, not just full employment for a year or two but full employment for our generation.

So first, we must entrench an anti-inflation culture of stability to achieve full employment.

Second, a tougher New Deal, rights and responsibilities, to strengthen full employment.

Third, far higher productivity to sustain full employment.

Fourth, a new unionism to underpin full employment.

And fifth, new rights against discrimination and exclusion.

And our first task has been to escape from 18 years of boom and bust and to never go back.

Let us never forget that when we had the 15 per cent interest rates, one million homes repossessed and one million jobs destroyed in manufacturing – it was not the previous Government but Britain’s hard working people that bore the burden.

I remember a couple coming to see me, both in tears, who, having lost their jobs knew they would also lose their home.

I remember too the tragedy of the skilled craftsmen, miners in my constituency, steel workers, redundant in their forties who feared they would never work again.

After three years we can reflect on where we now are, and remember how we got here.

Remember those who said we could not achieve economic stability and growth.

Remember the predictions of a downturn made in Downing Street.

Let’s just say their forecasts have not aged well.

And let me explain why: it is because we rejected short-termist, take-what-you-can, irresponsibility – and it is because we put our faith in our values of economic responsibility – planning for the long term, building from solid foundations – that with the Bank of England independence and new fiscal rules we now in our country have inflation close to its lowest for 30 years.

And we cannot take it for granted.

It is not by accident but by taking action that we have steady sustainable growth and investment rising.

It is not by default but by design that we now have long term interest rates at historically low levels and are repaying the national debt.

It is not by chance but by choice that we now have 28 million in work. This is what happens when the British people and their Government work together.

Remember also those who opposed Bank of England independence and said our policies would mean a future of higher unemployment and lower public spending.

Remember those who resisted our fiscal rules when we insisted on fiscal discipline and said we would never be able to spend on health and education and public investment.

Time has not looked well on these forecasts either.

Unemployment is down and because our prudence is not the barrier to spending but its pre-condition, spending on services is rising by 5 per cent in real terms for the next four years.

And it is because we have tackled the levels of debt and the levels of unemployment that instead of 42 pence in every extra pound spent going to unemployment and debt repayments, it is now only 17 pence – leaving 83 pence in every pound to go to health, education and the vital services.

Health spending rising this year by 7 per cent in real terms, education by 10 per cent , and public investment by 30 per cent.

But our task is even bigger than creating stability for a year or two. It is – and this is the next and critical stage – to entrench a culture of long term stability so that people no longer expect that every period of growth will be followed by an inflationary and wages spiral and boom-bust recession.

And every event tests our resolve to end short termism and steer a course of long term stability, the real foundation for full employment

Now I understand the concerns about the exchange rate with the euro and we will continue to do more to support manufacturing.

And I understand the concerns about world oil prices and petrol prices too

But we will not return to short termism in any respect and put at risk our hard won stabiltiy

No short term lurches in spending policy or tax policy, no irresponsible spending increases or inflationary pay rises that put youth jobs at risk, no quick fixes or soft options that would put long term stability public services and our policy for full employment at risk. We will not return to the stop go of the past.

Governments have to deal with both national and international events and oil raises the issues of both.

When we came to power in 1997 the deficit was 28 billion pounds.

Yes – we had to face up to that deficit and we dealt with that deficit immediately.

And so we retained and extended the fuel duty escalator that had been operated by the previous Government in successive years since 1993.

And there were good environmental reasons as Kyoto proved for doing so.

But last November – immediately – I had cut the deficit and was able to put in place new environmental measures. I said we would end the escalator, and we froze – and for 4 million cars have reduced – car licence fees, a March Budget that was welcomed by the motoring industry.

And today, now that the deficit is down, let us note that the existing fuel revenues are not being wasted but are paying for what the public wants and needs – now paying for rising investment in hospitals and schools- 10 billon more this year alone – an 18 billion increase in money this year for transport and our public services, money well invested in services for all the people.

Yes, we have higher excise duties than Europe but we also have just about the lowest tax rates on work, the lowest business tax rates, the lowest VAT rates.

And unlike America – and we should be proud to say so – we fund from these revenues a truly national health service for all the people.

Governments are of course subject not just to national pressures but to global pressures too.

And in our three years in Government we have had to deal not just with debt and deficits in Britain but like other governments we have been tested by financial crises in Korea, then Asia, then Russia and a slowdown in the international financial system.

And we are being tested too by an oil price that first fell from 19 to 11 dollars and then has risen above 30 dollars, trebling in 20 months.

Of course when the oil price shifts from 10 to over 30 every economy is affected, every country’s petrol price rises and I understand very acutely the pressures that manufacturers, hauliers, farmers and consumers face.

But it is precisely because there is volatility in oil prices that we should resist any lurches in policy or return to the old short-termism of the past – instead we should steer a course for long term stability.

Our first duty is to ensure internationally – as we are pressing in world counsels – and in Britain – that oil flows from the wells to the refineries and to the petrol stations to the consumer and this we will do without interruption by barricades or blockades.

Our second duty is to ensure that with our inetrnational partners we maintain a course of stability to ensure international growth and this we will do.

I tell you this week among every one of Europe’s 15 governments as in America, in face of oil price volatility, it is not shifts in oil tax rates that are now being considered – it is pressure on the oil producing countries to cut prices.

And I say that when OPEC countries have themselves stated their sustainable oil price rate is not 34 dollars but 22-28 dollars, none of us will relax in our representations until they ensure levels of oil production that bring the price at least to the levels they themselves plan.

And moreover, because cartels should not exercise such power anywhere we will look even more intently at how to diversify energy supplies.

And the third lesson I learn, I tell the country honestly, it is precisely because of volatility of oil prices that we should refuse to lurch between budgets from one policy quick fix or soft option to another – lurches that would inevitably be based on uncertain prices and unknown revenues – and instead we should steer a course of stability.

Such short termism is the old way that brought us the stop go, boom bust economy, the ups and downs, of the past and this I will not endorse.

Let me tell people that when the oil price was 10 dollars experts advised our Government we should let close every coal mine in our country and this I and my colleagues refused to do and instead for long term stabiltiy of supply we rightly sought a level playing field ended the discrimination against coal investing also 100 million in coal, a policy I believe the British people support.

And it would be equally wrong and short termist to tie tax rates to what could be a temporary rise in oil prices as it would be wrong to lurch in the other direction between budgets to suddenly tie tax and other policies to a temporary oil price fall.

And let me say also it would be the worst of short- termism to make a lasting cut in fuel duty-as some propose today – which would have to be paid for year on year, because of a one off- change in oil profits and thus oil revenues that might never be repeated.

So we will listen, but we will not fall for the quick fix and the irresponsible short termism of making tax policy this afternoon because of blockades this morning.

I say – we will continue to make policy as we have done – in Budgets and at Budget time, and I believe the British people value long term stability and it does nothing for full employment or growth to return to the short termism of policy lurches that brought us boom and bust in the past.

And we will not change our European policy either – in principle our support for the single currency, in practice the five economic tests that have to be met.

So we will continue to reject policies that pander to those who urge isolation and even withdrawal, something which would put jobs and stability at risk.

Yes there is greater stability.

But yes too there is still a 30 per cent productivity gap with our competitors, which must be bridged if we are to achieve full employment and long term prosperity for all.

So when I listen also to those who say we can relax our efforts, return to the old ways, and ignore long-term challenges, I say I will not fall for that complacency either.

Instead, from the platform of our new found stability and employment growth I want today to challenge the whole of Britain – British industry, British management, the British public sector, British trades unions – all of us to join together in seizing not squandering this hard won time of opportunity.

• not ever again to retreat back as we have done in every previous economic cycle into the complacent short-termism and stop go or quick-fixes of the past;
• -not to fight yesterday’s battles;
• but – free of complacency – to address tomorrow’s challenges and to use our new found stability and growing strength in a national productivity drive to achieve a rise in productivity and thus prosperity that outpaces that of our competitors;
• and to do this we must, day by day, week by week, year by year, have the discipline to address and overcome the old british problems of short termism and under investment, low productivity and inadequate skills, over-complacency in the boardroom and restrictive practices wherever and whenever they exist – and use this time of opportunity to remove all the old barriers to employment and prosperity for all.

And I can tell you today what Government will contribute to this productivity drive.

We are doubling public investment to 19 billion pounds, with permanent capital allowances and R and D credit, investing more in manufacturing, investing one billion pounds more in science so that British inventions can lead to British manufacturing products and British jobs. For the first time ensuring an employee share ownership plan that gives most benefit not just to a few employees in a firm but all.

And making the biggest investment in education and skills in our country’s history, ten billion more by 2004.

But winning at work – the theme of the Congress – is not simply making promises about what Government can do, but setting goals we can all meet together.

In the old days, management said it was all up to the unions.

Unions said it was up to management.

Both said it was up to Government.

I say it is up to all of us together.

So I am here not so much to make new pledges as to summon all of us to new challenges.

All the evidence shows that when unions win at work on a productivity agenda, prosperity and employment increase. And so we must be honest with each other.

Just as prosperity for all is undermined by the wrong kind of Government, so too in the past the wrong kind of management and the wrong kind of unionism have failed us as surely as the wrong kind of Government.

And when we know that in some plants our productivity is the best in the world and in other plants even in the same industry it is only half as good, our challenge is plant by plant, firm by firm, sector by sector, managers and union members, free from complacency, to address the barriers to productivity:

• the levels of our skills;
• and levels of investment;
• standards of management and industrial relations all round;
• barriers to the introduction of modern technology and questions of best practice and who does what in the workplace.

Our challenge is to work together to ensure that the benefits go – not, as in the past, to a few – but – as they should always have done – the benefits go to all who play their part.

We, the Government, will accept our responsibilities in the public sector, inviting trades unions to work with us to improve both conditions of service and the condition of each service.

And in an environment of continuously low inflation I ask unions across industry to consider seriously the benefits of moving from the annual cycle and extending multi year pay deals.

Friends, great historical changes are at work, even more dramatic than the changes a century ago when craft unionism transformed itself into new industrial unionism.

Now in this new century, old industrial unionism is transforming itself into a new unionism:

• our enduring values, justice and just rewards for all the same;
• our objectives bolder than defending our members against the threat of poverty, now about ensuring all our members have the chance to realise their potential to the full;
• and the surest way – the great drive of twenty first century unionism – to meet that age old aim of enhancing the value of labour is directly through education and training to enhance the value of each of our skills.

So it is not only because the key to future levels of productivity and pay is in the level of our skills but because our strength and security lies in our skills.

That this Government will work with you as you bargain for skills – the right to one million individual learning accounts at 150 pounds each and another 750,000 able to benefit from adult literacy courses by 2004 and the new University for Industry.

And let me tell you the scale of our ambitions – what, from the 1970s the Open University achieved for thousands in second chances in higher education through TV and distance learning, we are now ready to achieve for millions in lifelong learning through the University for Industry – recurrent, permanent educational opportunity through cable satellite and interactive media and learning direct in workplaces and homes.

Let me be clear. Our aim is any course of study – at any age, at any grade.

We start with 1000 Learndirect Centres, open to all in every part of the country.

And we will support every trades union as you bargain with employers for access to learning direct in every workplace and to advance training – I can tell you – the Union Learning Fund on which every union can draw which started at two million pounds a year will be 4.5 million pounds this year.

And no one should be left out.

And because we believe a fair society is essential to a productive economy we are ensuring new rights for working people.

• because never again do we want mothers or fathers refused time off to see their sick child through a hospital operation, the right to time off when a family member is ill. This is what a good family policy is all about;
• the right to four weeks paid holiday pay;
• from last month the right to maternity pay extended to all low paid workers;
• the right of recognition for trades unionists;
• and from may 1997 the right to be a member of a trades union, a hard won right that no future Government will now ever dare take away;
• and yes, we are now asking the low pay commission to report next year on a further rise in the minimum wage;
• because in no part of our society should there ever be institutionalised racism again, we are removing barriers of prejudice, discrimination and racism.

And having lifted the first million pensioners out of poverty, cut vat on fuel, introduced free tv licences for those over 75 and a 150 pounds winter allowance for all, our next challenge as Alistair Darling said yesterday is to ensure that all pensioners who need it – our priority those on modest occupational pensions and modest savings – are helped not penalised for their thrift. Our aim . Yes, to end pensioner poverty. Yes, to reward pensioners with savings. Yes, to ensure that not some but all pensioners gain more from the rising prosperity of the nation.

And as we raise health service spending from 49 billion pounds to 54, to 58, to 63, to 68 billions by 2003, we will demonstrate by our actions that the best health service for each of us is not a private one that favours the few, but a public service run in the public sector by dedicated public servants in the public interest for all.

They said that in one term we could never simultaneously abolish 800 hereditary Peers, introduce devolution to Scotland and Wales, ban hand guns, legislate new working rights, including a minimum wage and lead the world to start tackling world poverty and world debt. Now under Tony Blair we have.

Now they will say we cannot achieve full employment, abolish child and pensioner poverty, build world class public services in education and health. Meeting the productivity challenge, we can and we will.

And the fruits of working together will be not just for some but for all.

The test of our country’s advance, judged not by the heights reached by a few individuals, but by the benefits to everyone when all of us work together.

The test of national success to be judged not just as the successes of a few, but how success can be shared by the whole country.

Our national progress – all of us as a family moving up together, with the strong helping the weak and, as a result, making us all stronger.

Not selfishness but sharing.

Realising our enduring values, the same yesterday, today and tomorrow – an opportunity and prosperity that enriches not just a few but everyone.

This is our vision. It is our task.

Have confidence that working together employment and prosperity for all can be our achievement.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, on 6 November 2000.

PRODUCTIVITY AND PRUDENCE: THE ROAD TO LOWER INTEREST RATES FOR THE LONG TERM

I am delighted to join you once again in Birmingham on the first full day of your first conference of the new century:

I am grateful for the opportunity to pay tribute to the contribution you and your companies make to the prosperity of Britain; and today to welcome Digby Jones to his first conference as Director General and Iain Vallance to the position of President;

and grateful for the chance to share with you my thoughts about the stability as a country we are achieving and about the productivity growth we have yet to achieve.

And today I want to concentrate on the opportunity our new-won and hard-won stability can now give Britain: how from that stability our country can achieve American levels of productivity growth; the challenges we have to meet to do so; the measures we, in Budgets, can take; more important the role all of us can play in meeting the productivity challenge and the first steps we must now take on the way.

Now today I want to share with you the long term choice our country faces.

Every time in recent decades when the British economy has started to grow, Governments of both parties have taken short-term decisions on tax and spending which:

• have put stability at risk;
• sacrificed monetary and fiscal prudence;
• created unsustainable consumer booms; and
• let the economy get out of control.

And everyone here will remember how quickly and easily boom turned to bust in the early nineties.

So, as a country the choice is clear: we can either retreat into the old short termist ways, fail to take seriously the need for constant monetary and fiscal discipline, fail to invest for our future, fail to tackle our productivity gap and eventually put at risk the very stability all of you have rightly urged us to pursue.

Or we can, by prudence and financial discipline, make stability our platform at this time of restructuring for building long term economic strength: entrench in our country for the first time in a generation a long term culture favouring low inflation and low interest rates, invest for the future – and not squander surpluses on unsustainable consumer booms. And – even more important – modernise and achieve high levels of productivity growth, so that we can have even more profitable and successful British companies and rising living standards for all.

Great challenges that we can either seize or squander. Very real choices that I believe the British people, too often let down by boom and bust, do understand and appreciate, including those businessmen and women most affected by the pressures of competition and industrial change.

What does this tell us about the way forward for Britain?

A few days ago I met with 70 or so business leaders, all senior members of the CBI, and from the discussions there emerged what I believe is increasingly a shared consensus about the next steps: that we must work through every barrier, whether it be fiscal, regulatory or cultural, to enterprise and productivity growth.

We must do it honestly, Government, workforces and managers prepared to admit where we have got it wrong in the past. In Government’s case sometimes the answer being that we should just get out of the way.

And there was a second message, one directly for Government: that we must never again, either through playing politics with interest rates, or taking risks with the public finances – or just through short termism – allow our hard won and newly won economic stability to be put at risk.

It is not by chance but by working together that we have inflation today at its lowest since the 1960s – but the bigger prize is to ensure that businesses can plan on continuously low inflation.

It is not an accident but by working together that we have our public finances under control – and on Wednesday I shall announce just how much national debt we are now repaying – but the bigger prize is that fiscal discipline once secured is sustained.

It is not a coincidence, it is by working together that we have long term interest rates – for 30 years around 3 per cent above Germany – now the same as those of Germany and below the USA. But the bigger prize is to keep interest rates low and stable for the long term.

So let me tell you where this Government stands.

We are resolute in our determination to maintain and entrench monetary discipline.

That is an unequivocal and unshakeable commitment to what was missing in the post war years – central bank independence. But more than that, maintaining a disciplined long term monetary framework – the symmetrical inflation target, the open letter system, the transparency – so that business can plan ahead in the knowledge that politicians will never again play short term politics with interest rates.

I am determined also that we entrench what is as important to economic stability and growth – not just monetary discipline but fiscal discipline – and our rules – again missing in the last cycle. Our two tough disciplines: a balanced current budget and debt reduced to a prudent and sustainable level.

Rules which required us to cut the deficit we inherited and also make us vigilant against the past mistakes ever happening again.

Rules that distinguish between current consumption and the needs of long term investment and prevent us – as happened in the ’80s – squandering short term surpluses on irresponsible tax cuts that cannot be afforded for the long term.

Rules that, within the prudent debt GDP ratio we have created, allow us to reverse the chronic under-investment in education, roads and rail and science that, if unaddressed, will leave the country run-down and ill-equipped for the future.

So, even when tested by events like rising oil prices and exchange rate pressures, we have a duty to maintain, as we promised, our long term approach:

• we will not abandon the inflation target;
• we will not relax our fiscal discipline;
• nor attempt the old quick fix short term irresponsible pre-election spree;
• no lurch from one opportunist tax or spending decision to another, no return to the mistaken monetary and fiscal policies of the 80s and 90s.

And we will not change our European policy either, – in principle our support for the single currency, in practice the five economic tests that have to be met.

And it was in 1997 that I first said that if membership was to be a realistic option then we must prepare and then decide. And we must prepare together – not one or two businesses, but Government and business working together. And today I am publishing our report on preparations so far.

Wednesday’s Pre-Budget Report will, of course, be the occasion to address in detail the issues of fuel, pensions and public services that concern us all.

And the Pre-Budget Report will show a Government that will never be complacent about the challenges we face, but also understands that there is a bigger opportunity for Britain: raising our levels of productivity growth to the best can give us low interest rates and thus long-term prosperity for all.

UK productivity

While we have world class companies represented here today, whose successes I congratulate and in which the whole of Britain takes pride, overall productivity in Britain – as the report published today shows – is far too low: today far behind the USA, still behind France, and Germany.

What is more, America has shown how, by combining economic stability with a culture favouring enterprise open to all and high levels of investment, particularly in the new information technologies, sustained productivity improvements can be achieved.

If we cannot secure that growth in productivity we lose out in the race for global investment.

We all know the prize from productivity growth:

• for companies, the opportunity for greater growth and opportunity for greater profits;
• for individuals, rising living standards;
• for the country, higher levels of growth and employment for all.

So, our aim for this decade should be to achieve the fastest rise in productivity of competitor countries.

So what is the best way forward?

Because productivity growth will come principally by managers and workforces addressing the obstacles to growth, the best thing Government can do in many areas is get out of the way. But there is a vital role for Government in the global market place: ensuring stability, a competitive environment and an infrastructure that provides opportunity for all.

Because it is the Government’s duty to end the under-investment of recent decades and invest in Britain’s future we are doubling transport investment, investing with the private sector 180 billion pounds in our ten year transport plan.

And to make best use of the 10 per cent more in real terms that we are investing in education this year alone, I urge managers and workforces to work together to examine how we can improve workplace learning and skills.

And to discharge our duty to science and innovation, a billion pounds upgrading our labs, a new R and D tax credit, the regional Centres of Enterprise and the University Challenge Fund, the new trans-Atlantic university partnerships, like the partnership with MIT, that we are encouraging.

To create the competitive environment, we are making the competition authority like the Bank of England independent of government. And to make Britain the best location for future investment, we have successively cut, for business, the rates of corporation tax from 33 to 30, small business tax from 23 to 20, and income tax from 23 to 22 with a new 10p rate.

Such is our commitment to encouraging enterprise and raising levels of investment that we have spent vital resources in cutting long term capital gains taxes from 40p to 10p.

To ensure a tax system where all employees can benefit from their company’s success, we have invested over 400 million pounds in the most generous employee share ownership scheme we have ever had and in new stock option incentives and I will say more of this and other tax matters including VAT simplification on Wednesday.

And after listening to you we have made permanent capital allowances – that help manufacturing most of all – and a 100 per cent allowance for introducing e-commerce technology, making Britain the best place for e commerce.

But it is business not government that creates wealth, profits, and jobs.

Productivity growth will come principally by managers and workforces addressing the barriers to growth, tackling skills and investment shortages, barriers to new technology and by bench-marking the best.

And as I told the TUC at this year’s Congress: when in some plants our productivity is the best in the world and in other plants it is only half as good, we have to conclude that just as the wrong kind of government had failed us in the past often the wrong kind of trades unionism and management has.

So I applaud Iain Vallance and Digby Jones for saying it is time to address obstacles to productivity that we may overcome together but sometimes each of us cannot solve on our own: the shortfall in skills; improving the quality as well as quantity of investment in the UK; speeding up the use and spread of technology and, of course, examining how Britain can more effectively adopt best practice and innovative techniques; how our management can be generally world class; and how our all-employee share ownership plans can help make British industrial relations better equipped for new times.

And we are determined that public sector productivity is improved: the public sector productivity panel, using private sector expertise to improve public sector performance, will now rigorously tackle all barriers to productivity growth ranging from incentives to absenteeism, new technology to industrial relations.

Higher levels of productivity growth all round can allow high non-inflationary growth at low interest rates.

But we will not achieve our goal of raising living standards with lower interest rates if we succumb to the short termism of our past and mistake a cyclical for structural surplus.

Nor will we achieve these long term goals if we make the past mistake of assuming productivity growth before it has been attained, running the economy at a higher capacity than it is capable of achieving and putting stability at risk.

So, the Government will be cautious in its fiscal policy and our fiscal projections are based on assuming only 2.25 per cent trend growth.

We know that the Monetary Policy Committee meets every month and is continuously examining how our trend growth rate is affected by evidence of productivity growth.

And if we can stick to the long term and together seize the productivity opportunity stability now offers us – and not squander it – we can both meet our inflation target with low and stable interest rates and at the same time see the rise in business profits and living standards we all want to achieve.

So we meet today at the beginning of an important week for the British economy, a week in which on Wednesday I make my Pre-Budget Report on the economy and on Thursday the Monetary Policy Committee sets interest rates.

We have had, over the last three years, low and stable interest rates, on average 4 per cent below the last twenty years.

That 4 per cent change in interest rates is worth, for the typical mortgage holder, over 1,000 pounds a year and for business a total direct impact of around one and three quarter billion pounds in all.

With our prudence matched by higher productivity, Britain can grasp the great interest rate prize that has eluded us for a generation: a long term future of low and stable interest and mortgage rates upon which people can rely and business can plan ahead.

But this would all be put at risk if unaffordable demands such as for cuts in fuel duties of up to 26p were met on Wednesday with interest rates rising soon after. So while I do recognise and the Budget will respond to the genuine concerns of hauliers and motorists I will do nothing that would risk returning the economy to 1980’s boom and bust.

So, challenge by challenge, stage by stage, we can tackle old British problems which have held Britain back for too long:

• by stability, tackling the old stop go economics and its short termism;
• by getting people back into work, tackling the old dependency culture;
• by opening up educational access and learning opportunities, making our skills deficit a thing of the past;
• and most of all by meeting the productivity challenge, building long term prosperity for all.

But we can do even better than that. I want us to spread the message of enterprise throughout the country and to open up the opportunities of enterprise to all.

I care passionately about this.

I want every young person to hear about business and enterprise in school; every college student to be made aware of the opportunities in business – and to start a business; every teacher to be able to communicate the virtues of business and enterprise.

I want businessmen and women going into schools and teaching enterprise classes; I want every student to have a quality experience of working in a local business before they leave school; I want every community to see business leaders as role models.

We have begun to improve the national network that brings schools and businesses together.

We are helping to increase the scale of enterprise classes in our schools, with extra funding for young enterprise and understanding industry.

And we are looking at how to improve the quality of work experience for year 10 students and business placements for teachers.

I applaud the new national enterprise campaign – “Enterprise Insight” – which will bring schools and businesses closer together. The campaign’s business ambassadors will take part in local events involving young people, aimed at inspiring them to go into business themselves.

But I want to see more businesses even more involved with their local schools.

Around Britain there are many successful examples of schools and businesses working together for the benefit of both. I want all schools – especially those in disadvantaged areas – to benefit.

So I urge all businesses throughout the country to adopt a school – whether it is by taking students on work experience and teachers on work placements, sending employees into schools to help run enterprise classes, or being business governors.

By adopting a school, every business in the country will be helping to build the new enterprise culture that we all want to see.

And I want us to take the enterprise reform message not just throughout Britain but throughout Europe, by championing economic reform.

Europe is where we are, where we trade from, where thousands of businesses and millions of jobs come.

Europe gives us access to a market of 375 million pounds and three quarters of a million companies have links with a Europe on which half our trade depends.

So it is in our national interest, as I have done with my letter to the EU Presidency, to promote ever more rapid modernisation of labour markets, capital markets and product markets.

At the Lisbon and Feira Summits, working with our European partners, we agreed a strategy for economic reform. Our aim should be to raise the EU’s employment and productivity performance beyond that of the us by the end of the decade.

We are putting the case for fair tax competition and against tax harmonisation, for the mutual recognition of nationally determined standards, and calling for timetables that would open up the single market in telecommunications, energy and financial services.

The publication of the recommendations of the Wise Mens Group on Thursday will be an important opportunity to accelerate the processes of liberalisation in the key area of financial services.

As you, Britain’s businesses, have rightly said, the challenge today is not to restrict the single market or retreat from it, but to extend the single market.

Conclusion

So this is a time of great challenges and risks but also a time of great opportunities, both in Britain and in Europe.

Because we know that every good and almost every service is exposed to global competition, and continuous and rapid innovation in our technologies will compel unprecedented flexibility and adaptability in skills and knowledge, this is not a time to pause, not a time to relax our efforts.

We must equip ourselves to meet and master these challenges and we must raise our game to achieve the fastest rise in productivity of our competitor countries.

British qualities – our creativity and financial skills, our work ethic and belief in self-improvement, our openness outward looking approach and our internationalism – stand us in good stead and can be the platform for decades of economic success.

The Britain that led the industrial revolution can be one of the leaders in this dynamic new age of enterprise. And from your energies and those of business throughout the nation our whole country can be a world leader this decade.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, in Islington, London, on 15 November 2000.

Today’s young children, some with us today, are our future teachers, our scientists and our doctors, our employers and our workforce.

Our country’s future lies with the hopes, dreams and potential of our children.

In the past our economy got by, realising only some of the potential of some of our children.

In the new knowledge-based economy we must realise all of the potential of all our children.

Yet we know that a child who grows up in a poor family is less likely to reach his or her full potential, less likely to stay on at school, or even attend school regularly, less likely to get qualifications and go to college, more likely to be trapped in a low-paid job or no job at all, more likely to reproduce the cycle of deprivation in childhood, exclusion in youth and disappointment – which is life long.

So it must be the Government’s objective to ensure that no child is left behind, that every child should have the best start in life, that we never allow another generation of children to be discarded and so abolish child poverty in a generation, recognising that tackling child poverty is the best anti-drugs, anti-crime, anti-deprivation policy for our country, and that when it comes to children the good society and the good economy always go together.

This is why since we came to power we have been determined to do more to help those people and places too long forgotten.

You would expect me as Chancellor to talk about money and I am happy to do that.

By raising child benefit, introducing the Working Families Tax Credit and new Children’s Tax Credit we have raised the first million children out of poverty and our aim is to raise the second million out of poverty. By extending nursery education, the quantity and quality of schooling and by investing 5 per cent more every year in education, we are doing our best to expand educational opportunity. So there will be both increased financial support to all families and children – especially to those who need it most; and there will be increased investment in education, to help break the cycle of poverty and disadvantage.

And our policy to reduce youth unemployment and increase the employment prospects of young people as they prepare for jobs is working. Soon 250,000 young people will have moved from welfare to work. And today’s figures show that while the claimant count is marginally up, unemployment is down by 153,000 over the year, employment is up by 303,000 over the year. There are a million vacancies spread across the country. And earnings are in line with our inflation target. But we recognise that the war against child poverty cannot be won by financial measures alone, or by government – national or local – on its own. It needs caring as well as cash. It needs practical day-to-day support for parents and children and young people, and it needs an alliance of parents, communities, professionals and voluntary organisations.

If we are to help children when they most need us, this requires a focus on prevention, which demands a partnership between all those who provide local services – whether statutory or voluntary.

For example, the National Pyramid Trust works with local partners from voluntary and statutory agencies to help primary school children to fulfil their potential in school and in life, by building their self esteem and resilience, and ensuring that difficulties can be tackled early and effectively. There are over 90 Pyramid Clubs, operating in 18 education authorities. So the new Children’s Fund represents a new approach, which recognises the strength of voluntary action. I will talk today about the role of voluntary action. The proposed new Children’s Fund is being designed to mobilise the forces of compassion and care in every community in our country, supporting the most innovative local solutions, meeting children’s aspirations and needs. Not just a national fund but a network of local funds, from which local voluntary projects that are making a difference in meeting children’s needs can gain support, changing for the better the relationship between state and voluntary action. This is no longer the state directing and charities responding – but neither is the state walking away – with charities left to plug the gaps – but voluntary organisations and government working together in a way that recognises both partners’ mutual strengths.

The Sheffield Young Carers’ Project was set up with the aim of reducing the isolation often experienced by young carers – to stand up for their rights and needs, and to increase access to social, educational and employment opportunities. The Homework Club at Colchester Road in Walhamstow offers a supervised space for young people to meet and work creatively. The aim is to raise children’s achievement levels at school as well as their motivation and self-esteem. It also helps to make children from low income families, who do not have access to a computer at home, familiar with information technology.

Allies in Bristol aims to provide independent adults to befriend, advise and support young people in care who have poor or infrequent contact with their parents.

Right Angle Productions in Oxford uses video to give young people a voice and to bring out the concerns that are important to them.

The Derbyshire-based Youths Fighting for Freedom encourages young disabled people to make contact with each other and offers them opportunities to share experiences, exchange views, and learn new skills.

The Asian Girls and Young Women Projects based at Awaaz in Wolverhampton aim to work with Asian young women on a range of issues to build self confidence and raise awareness of their rights.

These are just some examples of caring and compassion in action.

The Children’s Fund is designed to build on success; to support the innovative and make it commonplace, to make local successes into country-wide triumphs.

It is Government money to back non-government initiatives to tackle child poverty:

encouraging local initiatives and community action in the war against child poverty;
involving both the biggest voluntary and community organisations and the smallest;
with the emphasis on prevention not simply coping with failure.

And the new relationship between individual community and government involves real devolution of power from government – local and national – to self-governing communities.

Instead of just the state – local or national – running these programmes, these can be run in partnership with volunteers, charities, community organisations.

And throughout the country, by learning from what works and from each other, we can spread best practice as we extend the project.

Recognising the strengths of voluntary action

Now we know the limits of charity – that what is begged can also be refused, that what is given can be withheld, that what is granted can be taken away.

But we know too the real strengths of voluntary action, doing things at a local level that the state – sometimes remote, often inflexible – cannot.

This is voluntary action doing things with people, not for people, working for the common good.

The first great strength of voluntary action is that it is local rather than remote, close to home rather than impersonal, involving volunteers and local community workers who are not only more able to see a problem that can be solved and take action to solve it, but can do so with advantage, because local action minimises the space between the problem and the answer.

The second strength of voluntary action lies in a greater freedom to innovate and a flexibility of approach that the public sector sometimes lacks. The voluntary sector has in abundance the creativity and inventiveness that I believe to be great British qualities.

Within the voluntary sector, new problems are identified and new initiatives can more easily flourish. Today, in countless areas of need, voluntary organisations are pioneering and leading the way in new directions.

And both these strengths underline the third great strength of voluntary action:

its capacity for the individual rather than impersonal approach;
the greater emphasis you place on the one to one, face to face, person to person approach,
on being at the front line, often with the most needy and most vulnerable in our society; where the approach must above all be unique rather than uniform.

When I say put the emphasis on the one-to-one approach in supporting those in need it is about being there. As has so often been said, you do not rebuild communities from the top down. You can only rebuild one family, one street, one neighbourhood at a time.

Or as spiritual leaders sometimes say – one soul at a time.

As one Jewish saying puts it: “if you have saved one life, you are saving the world”.

John Dilulio quotes a conversation between Eugene Rivers, a minister in Boston, worried about his hold on a new generation of young people and a local youth who has not only become a drug dealer but has a greater hold now over the young people:

“Why did we lose you?” asks the Minister to the drug dealer. “Why are we losing other kids now?”

To which the drug dealer replies:

“I’m there, you’re not. When the kids go to school, I’m there, you’re not. When the boy goes for a loaf of bread… or just someone older to talk to or feel safe and strong around, I’m there, you’re not. I ‘m there, you’re not …”

The fourth great strength of voluntary action is that we learn by doing: voluntary action trains us in and strengthens our citizenship – because through the act of volunteering, citizenship becomes, as a result, not passive membership but active engagement.

So let me summarise.

In future people will not wait for Whitehall to solve our problems. Instead of people looking upwards to Whitehall for their solutions, from region to region, locality to locality, more and more people will themselves be in charge of the decisions that affect their lives.

The way forward is not, either, a constant war of attrition to decide the proper demarcation between charities and government, as if the success of government meant less charity and the success of charity meant less government.

The way forward is government and charities, working in partnership based on mutual respect, a recognition that the voluntary sector is not a cut-price alternative to statutory provision, nor a way of ducking the responsibilities of families, including the extended family or society.

How do we achieve this?

Our policies on the new Children’s Fund and Sure Start represent a new approach, which recognises this strength of local and voluntary action and the role it can play.

The Children’s Fund is part of a half billion pound injection into voluntary and community organisations in the United Kingdom:

that starts with our £400 million ‘Getting Britain Giving’ package of charity tax reliefs for individuals and companies, and a new publicity campaign to encourage charitable giving;
it continues with extra resources for the Active Community Unit and other initiatives to support volunteering;
and £70 million of the Children’s Fund will go direct to voluntary and community groups, to provide local solutions to the problem of child poverty.

In addition, the voluntary sector will play a key role in delivering the Children Fund’s £380 million programme of preventative work. Also, we are more than doubling the Sure Start budget to £499 million a year by 2003-4, with voluntary and statutory agencies working in partnerships to deliver services that respond to the needs of local parents and communities.

We are providing extra resources for the Connexions Service, again working in partnerships with the voluntary sector.

And extra resources for better quality care and protection for the most vulnerable children in society – through the “Quality Protects” programme.

So I propose that in future power and responsibility will be shared. That local, voluntary and community organisations should be full partners with government in developing new approaches.

I believe that businesses have a vital role to play in supporting and developing their communities. So I will be encouraging companies big and small to join our crusade against child poverty. We have pledged ú70 million for a local network of children’s funds. I call on business to match this.

We want the Children’s Fund to finance and support you in developing new ideas and new ways of working – working with voluntary organisations to do more to counteract disadvantages that arise from poverty and lack of support at birth and beyond, and to tackle the causes of poverty – lack of educational opportunity, lack of parental support, lack of health advice.

Mentoring

Let me give one set of examples of where I believe we can work together – in extending mentoring by encouraging a new generation of children’s champions:

Bedfordshire and Luton Third Age Mentors bring in the elderly and retired to help 100 pupils aged 6 to 9 from troubled families across 10 schools;
150 pupils in South Wigston High School mentor others, older pupils mentoring the younger;
in the Salford Business Education Partnership there is mentoring of 60 pupils by adults from the business and wider community;
a project in Sandwell is matching mentors with 8 to 17 year-olds to stimulate their interest in learning;
in the Vision Programme in Gloucester Lea, run in partnership with Afro- Caribbean Association, mentors act as positive role models for African-Caribbean pupils in years 8 to 11 who are at risk of underachievement;
in the Birmingham Mentoring Consortium University entrants mentor 10 to 14 year olds at risk of underachieving. In the West Bromwich Afro-Caribbean Resource Centre there is group mentoring for African-Caribbean primary children;
Big Sisters and Brothers, which led the way in promoting mentoring in the States, has now opened its first British project in Bristol and has plans for expanding across the country.

I know that a nationwide appeal would bring forward many thousands of people willing to give time and support to our nation’s children.
Children’s Alliance

I know the people of this country care about child poverty. The challenge is for all sections of the community to work together to eradicate it forever.

That is why I am delighted that a broad-based coalition – an alliance for children – is coming together to fight child poverty.

The Alliance’s aims are:

to raise awareness of child poverty and its consequences;
to press Government to accelerate the process of ending child poverty;
to promote the active role of all sectors of the community in ending child poverty.

I hope that as the Alliance develops, everyone here is able to play their part in this, looking to see what we can offer, working together for our country’s children.

Conclusion

So a better society for children will grow through building a new and more creative relationship between individuals, communities and government, working together to meet shared objectives.

We should neither place all the emphasis on action by government alone, nor on action by the isolated individual. Instead we should seek to develop the great strengths that lie in society itself, in the vast web of social relationships and social organisations that bring individuals together below the level of the state, and which we call civic society.

It is my belief, after a century in which to tackle social injustice the state has had to take power to ensure social progress, that to tackle the social injustices that still remain the state will have to give power away, not just devolving power to empower local communities, but also enabling community and voluntary organisations to do more.

This new relationship brings a new understanding to the rights and responsibilities of the citizen and to the reach and role of Government. It involves a credible and radical view of citizenship as responsible citizenship and a new view of the state as an enabling state. It is only by creating a new and mutually supportive partnership stretching from the individual and family, to the community and state that we can build a Britain where there is security and opportunity not just for a privileged few but for all.

We have lifted a million children out of poverty. But this is not a time for complacency. In the year 2000, we share a moral duty to end the scourge and tragedy of child poverty in our society. It is a duty we as citizens owe to each other.

To meet this challenge and provide security for all our children, we must all accept our responsibilities – as parents, neighbours, citizens and community leaders.

At the centre of my vision of British society is a simple truth: not the individual glorying in isolation, sufficient unto himself, stranded or striving on his own, but the individual and family as part of a caring neighbourhood, a supportive community and a social network.

And in this vision of society there is a sense of belonging that goes outwards beyond the front door or the garden gate, a sense of belonging that expands outwards as we grow – from family, out to friends and neighbourhood play groups and after school groups, children’s and youth organisations, trade unions, sports, community and religious organisations, voluntary organisations, local authorities – a sense of belonging that then ripples outwards again from work, school, and local community – and eventually outwards to far beyond our home town and region – to define our nation, our state and our country as a society.

This is my idea of Britain – because there is such a thing as society – a community of communities, tens of thousands of local neighbourhood civic associations, unions, charity and voluntary organisations, each one unique and every one special.

A Britain energised by a million centres of action and compassion, of concern and initiative that together embody a very British idea – that of civic society. And at the heart of our civic responsibilities is our duty that every child has the best start in life.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, on 30 November 2000.

Five years ago, we made a radical advance in our approach to employment policy, and proposed a wholly new programme – the New Deal to help young people back into work.

It was founded on an old ideal – of full employment – but based on new methods.

The principle that work was the best route out of poverty.

The belief that the overwhelming priority must be to get young people into real jobs, through a personal adviser service.

The importance of a partnership with the private sector.

The need for rights and opportunities to be accompanied by new responsibilities and obligations.

Because we are not complacent about levels of unemployment, now and into the next Parliament, we will continue to make radical advances in employment policy based on the founding principles of the New Deal .

And we do so at a time of possibility for our economy and for Britain – a platform of economic stability from which we can build, a steadily growing economy and a million job vacancies across the country.

Today, I want to set out four central challenges that I believe the New Deal must tackle:

First, lone parents? employment.

Research shows that if the lone parents who wanted to work were doing so, 75 per cent not 50 per cent would be in work.  But the problem is that many lone parents face real barriers to doing so.

So today, having met our challenging objective for the New Deal for young people, we set with our new programme Choices to be nationwide from April a new challenging objective for lone parent employment – that, by the end of the decade, we reach 70 per cent of lone parents in employment.

Increasing lone parent employment rates from one of the worst in the industrialised world to one of the best.

Second, the rate of worklessness for partners of the unemployed is 57 per cent. Having begun in this Parliament to bring partners of unemployed men under 25 into the New Deal, we will consider extending the New Deal to all those women under 45 in unemployed couples without children – 55,000 more people – extending at the same time responsibilities to work.

Third, to tackle the problems of people and places too long excluded from prosperity in areas where unemployment is more than twice the national average, we are consulting on a ,1bn package of measures to encourage economic regeneration in our deprived areas, including new stamp duty relief in deprived areas and tax credits for community investment.

But we must go further in strategically addressing the problems and particular needs of local areas, through action teams often involving private sector intermediaries. John Prescott, David Blunkett and I have agreed that Regional Development Agencies will work with the Employment Service, Learning and Skills Councils and local employers, drawing up local full employment plans. For all areas of the country they will report on local labour market trends, likely growth areas in employment and the particular skill needs of localities, and tackle all barriers to unemployment with greater local flexibility to do so.

Fourth, although we have cut long-term unemployment by 60 per cent and cut youth unemployment by 70 per cent, we will not be satisfied until we have removed the scar of long-term unemployment from the face of Britain. We shall do so by matching obligations with opportunities. From next April, we are introducing a national New Deal for the over 25’s on the same basis as the New Deal for the under 25’s – with options of work and training there will be sanctions for those who fail to take up the options of what is available to them.

And for those guilty of fraud, as Alistair Darling will make clear, we will legislate a policy – two strikes and you’re out – disqualification from benefit for 13 weeks for those convicted for a second time of cheating the system.

While the Government would extend and strengthen the New Deal, others would abolish the New Deal, leaving thousands of unemployed out of work on benefit. We have got them back to work.

And if we stay the course, the prize is substantial – to bring hope and opportunity back to millions more people left out.

Cut the costs of economic and social failure to the benefit of everyone.

And ensure that the economy can sustain higher growth with low inflation for longer, bringing higher living standards for all.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, on 5 December 2000.

I am pleased to be here today at the conference of the National Council for One Parent families, an organisation which started from modest beginnings as long ago as 1918, has grown over nearly nine decades- with advice, services and support -to represent millions of families in this country, and is now, as this – your largest ever conference – shows today, at the centre of a great national movement of high ideals with goals that inspire:

That not just some but every child in Britain should have the best possible start in life;
And that all men and women in our country should have – as J K Rowling has just said so eloquently – what has been denied too long: opportunity, with real choices, to make the most of themselves and their talents and realise their potential to the full.

Now what J K Rowling said from her personal experience a few minutes ago you may also have seen, also from her personal experience, Karen Chazen say in the newspapers a few weeks ago.

Five years ago Karen was left -as she wrote- on her own with a young child, with no money and no job. Today she has a good job running Sure Start in Merseyside, she owns her own home and she has recently bought her first car. Karen has overcome enormous barriers to get where she is now . At our Downing Street reception earlier this year Karen spoke eloquently for the case the national council makes and I am pleased that Karen is here with us today and to be able to thank her for the work she does.

And joining us today also is Catherine Gibson whose story I also want you to hear. Catherine is from Fife in Scotland – where I come from too – and last month I had the privilege to launch the first choices programme -the programme that is expanding choices for lone parents who may want to train for work or work part time or full time -and will soon go nationwide, answering some of the challenges Kate Green set this morning.

At the Fife launch I met and heard the story of Catherine, one of the beneficiaries of our new programmes. A year ago she was struggling at home on low income. Now she is in a job ,in receipt of our new working families tax credit and many pounds a week better off, with the barriers – as she call tell you -that prevented her getting a decent income and realising her potential now being broken down. And I wish Catherine and all who are facing the same challenges well in the future.

And it is how we can do more from today to break down the old barriers that have held children and parents back for too long that is the theme of my speech today:

Breaking down the barriers parents face seeking child care -and what we can do -through our national childcare strategy;
Breaking down the barriers to making work pay, through the minimum wage and working families tax credit;
Breaking down the barriers to training and using new technology, with computers college training and new lifelong learning opportunities now being opened up to all;
Breaking down the barriers for lone parents starting a child care or other business and becoming self employed, through our policies to promote enterprise for all.

And of course, overall, breaking down the barriers that prevent every child having the best start in life, the barriers to family life – helping men and women balance work and family life – and building a modern Britain where all families share in the rising prosperity of the nation.

Breaking down barriers as we try to build a Britain where there is opportunity where before it never existed, for all men and women to make the most of themselves and realise their potential. This is the new Britain: the modern Britain I want to build fit for all children and all families to live in with prosperity.

So what are our policies ?

First so that every child should have the best start in life and that no child should be condemned to poverty, we are literally setting out to transform the old system of financial support for children – previously, as many of you know, chaotic, unfair and inadequate, into a seamless integrated and far more generous network of child financial support.

And you know why we should do so. As long as there is child poverty, there will be a scar on Britain’s soul. Let us never again have parts of Britain where there are children without nutrition, living in homes without heat, attending schools without proper books, in inner cities without hope.

Children endlessly watching TV adverts of possessions they can see but never afford to buy – spectators in the race of life rather than likely to be its success stories.

Let me explain the financial picture. For twenty years -overall – families with children fell behind the rest of the population, families without children , in living standards.

Four years ago the average income of households with children was around 30 per cent lower than for those without children.

That is why we set out to transform financial support for children and families.

The government’s additional help for families with children will reach around £6 billion extra in the last year of this parliament.

While child support for a family on average earnings with two children fell by 5 per cent in real terms between 1979 and 1997 , it will rise by 50 per cent this parliament.

And families are now seeing a falling direct tax burden – for a single earner family on average earnings from 21.5 per cent to 18.6 per cent, worth  £700 a year.

And from April next year income tax will not be paid by basic rate taxpayers with children until they earn £140 a week and on the new working families tax credit no income tax will be paid until families earn £250 a week.

At the heart of this new approach is integrating payments for child support into a new and seamless system – from £15.50 next April for every first child , the foundation of child benefit, ranging upwards to the weekly payment of £50 for children who need most.

And in this new system, from £15.50 to £50 a week for the first child, where we give more to those who need most, we have rejected both crude means testing and old style redistribution.

By April 2001 a quarter of families will be receiving more than £50 a week in child support. Two thirds will be receiving more than £30 a week and all will receive at least £15.50.

So our approach helps all and is at the same time progressive – a progressive universalism starting with the working families tax credit as we build a fully modern tax and benefit system under which, for the first time, the tax man can give money as well as receive it, where the tax rates range now from 40 per cent at the top to -200 per cent for the poorest paid, a modern tax and benefit system that is being designed to help families when they need help most – when their children are young.

Today some families are now £50 a week better off than they were last year. And by continuing to invest in children through education services and our public services generally and through our new family tax cut to benefit families with children, the needs of children and families will have a priority in the next budget too.

And the future needs of children and families will be a major feature in our future plans.

In March next year we propose to invest at least an additional £1.7 billion in the new children’s tax credit, ensuring a family tax cut, worth £8.50 a week, £442 a year, for most families.

Indeed I am now consulting on a bolder proposal, £10 a week, or £520 a year for families, payable from April next year, which would mean in total a tax cut of 2 billion pounds.

So millions of families will not only receive child benefit but receive both child benefit and the children’s tax credit- between £24.00 and £25. £50 a week for the first child – the highest level of child support ever.

We must of course balance this priority against our other priorities.

But what could ever be a better priority than giving every child in Britain the best possible start in life.

As a country our long term goals are that we invest in education and the best public services, that we ensure every child the best start in life, that we build a stable economy creating jobs for all and ensuring, from the youngest to the elderly, all and not just some have rising living standards.

It is right that we target tax cuts on the country’s priorities -work, families, savings and investment such as our 10p rate for small business start ups helping the elderly such as our new pension tax credit and improving the environment.

In future budgets we will have targeted tax cuts again. But what we will rule out is a return to the old short termist irresponsible tax promises of the past – which have no fiscal principles to underpin them, which start with an admitted gaping black hole which inevitably threatens deep cuts in our public services hurting children and the elderly and which threaten a return to the boom & bust of the late eighties and early nineties where unaffordable tax promises made for years ahead were an important factor in causing recession.

Instead this government is ensuring the balance is right: economic stability and low interest rates , the essential foundation; the rising public investment we need and tax cuts targeted on our priorities as affordable. But the people of Britain will never forgive those who lurch from one opportunist tax decision to another, retreating to the old short termist boom bust ways of the past, and this government will do nothing that puts this country’s stability and our public services at risk

So it is right that our policies give priority to children – based on the foundation of child benefit, supporting all families with children, leading the world in helping families struggling to balance work and family life and ensuring – as we will -that every family is better off.

Support for families and children

And we must ensure every child has the best start in life not just by financial measures alone, or by government – national or local – on its own. It needs caring as well as cash. It needs practical day-to-day support for parents and children and young people, and it needs an alliance of parents, communities, professionals and voluntary organisations.

When all the latest evidence is that the first three years are critical to a child’s brain development and can have a lifelong impact on a child’s intellectual and emotional well being, we would be failing in our duty if we did not do more to help the very young – to counteract disadvantages that arise from the earliest days. And with Sure Start we are trying to tackle the cause of poverty – lack of educational opportunity, lack of health advice, and often the lack of proper support.

But our approach requires that rights be matched by responsibilities. Neither you nor I shirk from saying parents must accept and discharge their responsibilities. So we are strengthening the capacity of parents to raise children, helping every child have the best start in life, helping men and women struggling to balance work and family life and helping families make the most of themselves.

This is what we seek to achieve not just with the very big expansion in investment in primary education for young children, but also with the programme Sure Start, spending 3,000 pounds on average per child over the next three years. Sure Start’s strength is that it is based on real communities. Some cover 500 children, others 1,000, the average 800. And we will also support locally led initiatives that help children with our new children’s fund.

The idea behind the children’s fund is not one of the state directing and charities responding but a vision of voluntary organisations and government working together in partnership. The voluntary sector will play a key role in delivering the children’s fund and indeed £70 million will go direct to voluntary and community groups to provide local solutions to the problem of child poverty.

Opportunity for all

But we should also expand the range of choices available to all men and women to realise their potential.

And let us be honest that the biggest denial of opportunity, the greatest discriminations, and the most unfair inequalities in chances have been those faced by women – in education, in employment, in the economy and in the provision of services generally.

I was moved as I was listening to JK Rowling describing the struggle of trying to raise a child in poverty. I was also struck by the enormous barriers she faced in trying to work part-time while at the same time spending time with her daughter.

Research shows that most lone parents would like the choice to combine paid work with the vital job of being a parent but still face barriers in doing so.

So tackling the barriers to choice for lone parent families is essential both to improving family incomes and wealth – to achieve international levels of lone parent employment could lift over half a million children out of poverty – and to helping mothers and fathers make the most of their potential.

The first element of this strategy is to make work pay through the minimum wage, tax cuts and the working families tax credit, backed up with a child care system that is accessible, affordable and high quality.

To enable lone parents to make the most of their talents and potential, we will, with our work focused interviews going nationwide next April, offer a range of choices in the new deal: working a few hours a week, engaging in education or training or moving into a part time or full time job.

As we create new opportunities for parents to work, gain skills or study, we must also break down the barriers to high quality, affordable child care.

Through our national child care strategy, high quality, affordable child care places will be created for over one million children in the coming years.

We are making more money available than ever before for childcare. In the spending review we tripled the annual investment in childcare – from £66 million this year to over £200 million a year by 2004.

And because we recognise that the barriers are often greatest in our poorest communities, this includes extra money for child care in these areas in order to realise our ambition that there should be a childcare place in areas of need for every lone parent entering employment by 2004.

Of course, all working parents are actually holding down two jobs: the one that pays the wage and the one that matters the most: raising a child. Having brought a life into this world, the primary goal for lone parents, as for all parents, is to help their children to grow into happy, healthy, well-adjusted adults. Combining this responsibility with paid work brings into clear focus the problems all parents face in the world of work.

That is why we have already taken steps to help people combine work and parenting:

We are ensuring new rights for working families, including the right to time off when a child is sick.
As a result of our reforms, virtually all mothers will now qualify for maternity benefit and the Sure Start maternity grant has been trebled from ,100 to ,300 claimed by 250,000 mothers.
And in the last budget I announced changes to the benefit rules to allow parents to claim working families tax credit during maternity leave, and to get extra help for the baby as soon as it is born.

But we must do more. That is why I announced in the last budget our review of maternity leave, as a result of which we will publish on Thursday a green paper with a series of different options for consultation. But let me say now that I am determined that when we conclude this review, we will make further progress in giving parents a real chance to take time off after the birth of their child.

A recent report from the national family & parenting institute showed that most parents struggle with a world they feel is not designed for children. Parents are rightly asking some hard questions of us, for example:

How can we do more to encourage jobs that fit around school hours?
How can we make it easier to get on buses with a buggy and a toddler?
Why are there too many places – such as shops or underground stations – where the only way in is to bump a pushchair up or down 2 flights of stairs?
And why, when this happens, is it so rare that anyone offers to help?
How can we do more to encourage service companies when many still think it reasonable to expect their customers to sit at home for up to 8 hours as if parents had nothing to do but sit and wait?
How -particularly after the events of the last week in London- can we do more to make communities, especially those with high rise flats, far safer and far more in tune with the needs of children and young families.

A modern Britain must be designed around the needs of family life in 2000 and I can say what our aims are.

The government will:

Help employers to ensure that they aren’t putting up unnecessary barriers in the way of parents moving into work;
Ensure that key public services are sensitive to the needs of parents;

And demand that the significant public investment we are making to improve and modernise our transport services – and our housing stock -takes account of the needs of parents and builds safer more family friendly communities in all parts of the country.

Conclusion

And this is the Britain I want us to build – a Britain where every child has the best possible start in life.

For we know that the children growing up today – the children in the creche upstairs – will be the teachers, doctors, nurses, entrepreneurs, the transport workers and public servants of tomorrow’s Britain.

I want us to be the generation that took millions of children out of poverty and created a society where everyone has the chance, so long denied, to make the most of themselves and their talents and realise their potential to the full.

That is our ambition: to meet new needs, scale new heights, extend new opportunities, tackle deep rooted injustices and work together for a better Britain.

Ambitions we share together and in common for our children and our communities. A great ambition for our country. I know it is your ambition too. And in the first years of this century at this time of opportunity working together we can and should make justice for all children and families our achievement.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, in Oxford on 11 January 2000.

Introduction

I am delighted you have invited me to be here with you in Oxford this evening; privileged to have been asked to deliver this lecture in honour of the late Gilbert Murray; and honoured to pay tribute to the world-wide contribution of a movement for change.

From modest beginnings in 1942, the Oxford Committee for Famine Relief became a beacon for social idealism:

• championing freedom from hunger in the 50s and 60s;
• then the hungry for change campaign;
• its development and emergency work extended to more than 70 countries.
• now championing worldwide education for all.

Throughout………..a force for justice in every continent and every country where injustice needs to give way to justice.

Indeed, no British organisation has done more to make us aware of famine relief, of the sheer scale of human suffering, and our duties to the poorest.

Our duties to the 35,000 young children who will each day lose their fight for life because of diseases which can be prevented.

Our obligation to the 800 million men and women in avoidable poverty whose lives today are ruined by hunger and the constant struggle to survive.

Our responsibilities to alter the shamefully blighted existence of more than one billion of the world’s people, today unnecessarily and unfairly trapped in poverty.

And I want to take this opportunity to thank you for the contribution you offer, the service you give, the good you do, the difference you make.

And I am pleased that in the New Year’s Honours list there has been recognition of the quiet, unassuming and unostentatious but highly effective work of Joel Joffe, your Chairman, who throughout the years, from the time he defended Nelson Mandela to his Chairmanship of Oxfam, has been a force for good and change in our world.

Joel, Oxfam as a whole and in particular the late Professor Gilbert Murray, a founding spirit not only of Oxfam but of the League of Nations – whose life we remember and honour this evening – have all worked and acted on the principle that when some are poor, our whole society is impoverished; that when there is an injustice anywhere, it is a threat to justice everywhere; that what – as Martin Luther King said – selfish men tear down, selfless men and women must build anew.

And this is my theme tonight.

If in 1999 the world’s wealthiest governments finally woke up to the urgent need for debt relief in support of the poorest, this year 2000 we must set ourselves a new task: instead of the new vicious circle of debt, poverty and economic decline, we must seek to establish a new virtuous circle of debt relief, poverty reduction and economic development.

The burden of debt, poverty, and economic decline

In nearly three years as Chancellor, as I have visited Asia and Africa, I have seen much of both need and greed. I have had a new insight into the world as it is – and a glimpse also of the world as it can be, and I know we must help.

In Asia I have seen young children who, because of poverty, are destined to fail even before their life’s journey has begun – but my memory is not only of the pain I witnessed, but of the hope shining in their eyes, and I know we must help.

I have been to Africa and seen the unemployment of Soweto, a whole generation of young people denied the chance to earn a better life, yet young men and women who yearn to believe that their new political freedom can finally bring them freedom from want, and I know we must help.

And I have met and talked to Finance Ministers in Asia and Africa. From countries weighed down by the burdens of debt and the consequences of war, with hopes for reconstruction tragically dashed. I have seen too many poor countries forced to spend millions more in their debt interest payments than they are able to invest in the young, the sick, the undernourished and the poor.

John Kennedy once warned us that if a free society cannot help the many who are poor, it cannot save the few who are rich.

But I believe that we start our considerations from something more fundamental – our dependence upon each other.

Martin Luther King’s central insight was that we are each strands in an inescapable network of mutuality, together woven into a single garment of destiny. That we are not here as self-interested individuals sufficient unto ourselves, with no obligations to each other, but we are all part of a community bound together as citizens with shared needs, mutual responsibilities and linked destinies. Not only across our nation but also across our world, our fates and interests bound together.

Environmental disaster, nuclear proliferation, poverty, famine and disease cannot simply be shut off in one part of our world and ignored by the rest. And as individuals and nations we are dependent upon each other for our sustenance and livelihood.

Dr James Stockinger explained our mutual dependence most memorably when he wrote:

“It is the hands of others that grow the food we eat, sew the clothes we wear, build the homes we inhabit. It is the hands of others who tend us when we are sick and lift us up when we fall. It is the hands of others who bring us into this world and lower us into the grave.”

It is precisely because we depend on each other and understand that we have obligations to each other beyond our front doors and garden gates, responsibilities beyond the city wall, duties beyond our national borders that we are called on to feed the hungry, shelter the homeless and help the sick whoever they are and wherever they are.

In implementing the high ideals and public purpose which characterised the creation of the IMF and World Bank, the founders put it very well. As the American Secretary of the Treasury said at the very start of the opening session of the Bretton Woods Conference in 1944:

“Prosperity like peace is indivisible. We cannot afford to have it scattered here or there amongst the fortunate or enjoy it at the expense of others…..

“Prosperity has no fixed limits it is not a finite substance to be diminished by division. On the contrary the more of it that other nations enjoy the more each nation will have for itself.”

In short, prosperity to be sustained has to be shared. Prosperity and morality go hand in hand.

And as we embark on a technological revolution, we must resolve to include in the new opportunities the people and places that the world has too long forgotten. We must strive for a more global social inclusion.

The task we face today is as urgent, if not more than that faced by the founders of the IMF and World Bank more than half a century ago.

Our international goal, cutting in half the proportion of the world’s population living in absolute poverty by 2015, indeed demands a strategy under which debt relief and poverty relief can promote what is most important of all to the poorest countries – sustainable economic development.

The virtuous circle

To achieve our goals I suggest that we need to move beyond the economic and social assumptions of the past two decades and require a new understanding of what makes for sustainable economic development – how we break from the vicious circle of debt, poverty and economic decline and light up a virtuous circle of debt relief, poverty reduction and economic growth.

Those who argued that you could achieve growth and poverty reduction simply by cutting deficits, cutting spending or by introducing an appropriate exchange rate policy have been proved wrong. But so have those who argued that we should provide debt relief and aid with no conditions.

For debt reduction and aid on their own are just not enough. They could simply lead to millions of pounds flowing to prestige projects that do nothing to relieve poverty, or to corrupt regimes and to military excess that destroys rather than builds for a better future.

Only when combined with the right economic and social policies which are essential to sustainable economic development, can debt relief be the catalyst for the true release from poverty.

So what we need is a new approach that recognises the links that form the virtuous circle.

First, we need to deliver the enhanced debt relief.

Second, we need to build the link between debt relief and poverty reduction strategies.

Third, we need to create the new conditions for economic development – stability and a recognition of the roles of the public and private sector – that will allow the participation of all poor countries in the global economy.

And fourth, we recognise that – as at the heart of Oxfam’s campaign – education for all – is central. Because the creation and sustenance of human capital is both a means and an end for the virtuous circle of debt reduction, poverty alleviation and economic development.

First, the importance of debt relief

You can understand from what I have said why I see debt relief as both an economic and moral issue – an economic issue, because a mountain of inherited and hitherto immovable debt stands in the way of economic development in Africa and elsewhere and their full inclusion in world society.

A moral issue, because unsustainable debt is a burden imposed from the past on the present, which is depriving millions of their chance of a future, preventing them breaking out of the vicious cycle of poverty, illiteracy and disease, preventing the investment in what is really necessary – the healing of the sick, the teaching of the children, and the advancement of economic opportunity for those denied it.

The exhibition on the history of debt – “In the Red” – that I have just opened at the Ashmolean highlights both the destructive impact of unsustainable debt but also shows the occasions in history where governments have recognised the need to forgive debt.
In 1997, when we came to power, only one country had passed its decision point in the heavily indebted poor countries initiative.

Indeed this time last year there was no G7 or governmental consensus for our call for deeper, wider and faster debt relief and how it would be delivered.

But spurred on and encouraged by Oxfam and other NGOs, agreement was reached at the Cologne summit in June on the principle of enhanced relief. And last autumn – at the annual meetings of the IMF and World Bank – agreement came on a new framework for financing that strategy.

And we agreed a millennium target not just for new qualifying criteria for enhanced debt relief but for the numbers of countries gaining debt relief, and for the actual amount of debt which will be wiped out, cutting the debts of the world’s poorest countries by 100 billion dollars. And we resolved that when a decision is agreed, countries get the benefits of debt relief immediately, and do not have to wait three years – three more years of misery.

The challenge now is to implement this enhanced relief.

Within a month, the first countries – Uganda, Bolivia and Mauritania – should start receiving funds from enhanced debt relief.

By April, our target is to have decisions to enable around ten countries, including Tanzania, Mozambique and Benin to receive relief.

By the end of 2000, our target is to have more than 25 countries receiving debt relief.

It was crucial that we concentrated first on getting and funding the international agreement on multilateral debt relief. That is worth 100 billion dollars and ensures that additional unilateral relief benefits the poor countries.

And I can say that Britain is the largest committed donor to the Trust Fund which finances the debt relief. And it was amongst the five countries that provided the additional $250 millions since October 1999 which allowed the initiative to proceed.

Having secured the international agreement and, critically, the agreement that money from debt relief must go to poverty relief, it was right for Britain to take an extra step, to eliminate the burden of all remaining bilateral debts owed to the government by the poorest nations that receive relief under the enhanced HIPC initiative. And let me explain to this audience that I mean all the debts – those treated under the HIPC initiative, known as pre cut-off debt and also post cut-off debt. And we will ensure that this relief is genuinely additional.

Just before Christmas – with David Bryer of Oxfam present at a seminar at no.11 – I met the Ugandan Financial Secretary and he told me not only that we were right to insist that debt relief led to poverty relief but the additional 100 per cent relief would enable every primary school child in Uganda to be educated in a classroom with a roof above their heads and halve the pupil/teacher ratio in Ugandan schools from the unacceptable 100-1 of today to 50-I in three years time.

For me this is the test of effective debt relief – schools with enough classrooms, classrooms with enough teachers and teachers and children with books to study with.

That is not just a promise from the Ugandan government ­ it is a condition of all countries receiving debt relief simply because we want to ensure that the money saved in all these countries goes to education, health, and poverty reduction not to corruption, bureaucracy or buying military arms.

So our pledge of 100 per cent debt relief is a pledge for a purpose. I hope it will encourage other creditor countries to follow this lead.

The nominal amount of this additional debt relief from Britain is £640 million due over the next 20 years. This is in addition to the cost of writing off debt under the enhanced HIPC initiative and our contributions to the World Bank Trust Fund and IMF Trust Fund. It brings our debt relief package, including past overseas development assistance loans, to a total of five billion pounds.

We have shown we are willing to go still further.

For countries weighed down by the double burden of debt and recovering from the ravages of war, we have proposed special post-conflict assistance. For countries disfigured by natural disasters, like Honduras and Nicaragua last year, we and others have proposed new arrangements. The special three year moratorium on debt interest to Paris Club creditors, and a Trust Fund to meet debt service payments to international financial institutions.

So in addition to the write-off of debt, we are prepared to take special action to tackle worsening economic and social conditions where we can.

Second, poverty relief

I believe that the last year has seen a major and decisive shift in international policy towards the needs of our poorest countries and citizens.

What you and other public spirited organisations have demanded over long years of campaigning – a shift from “structural adjustment” to “sustainable development” – has been agreed as a principle. And before I discuss the significance of its detail let me just summarise the extent of the change.

When, at the Annual Meetings of the IMF and World Bank in September 1999 the Interim and Development Committees met jointly for the first time to discuss poverty questions, they agreed – also for the first time – that the development of anti-poverty policy and economic policy will in future go hand in hand.

They agreed, for the first time, that civil society in the poorest countries will engage in and own their own poverty strategies. In other words, anti poverty strategies that will not only be country-driven but community driven – developed transparently with broad participation of civil society, key donors and regional institutions.

But most of all they agreed for the first time that both economic and social strategies must be clearly linked to the international development goals of halving world poverty by 2015 with measurable indicators to monitor progress.

So the IMF and the World Bank are now charged to demonstrate how macroeconomic reform, policies for sustainable development, and anti poverty programmes can together bring less poverty and more growth.

The key is the decision to transform the enhanced structural adjustment facility (ESAF) into the poverty reduction and growth facility (PRGF); for a joint framework for future IMF and World Bank concessional operations in low income countries; and the primary vehicle for closer World Bank-IMF collaboration in IDA (international development association) and ESAF/PRGF countries. And we must meet the challenge for change in culture and operations at the IMF and World Bank that this requires.

So our task from this year is to move from noble resolutions to detailed implementation, from agreement on change to delivering that change effectively.

Effective delivery requires policy measures and action in three key areas:

• first, measures to build skills and capacity of individuals in the governments and civil society of these countries to implement and participate in the process;
• second, a partnership with Oxfam and other NGOs on the ground, in as many countries as possible, to provide support and objective monitoring; and
• last vigilance in ensuring that resources are not wasted on unproductive expenditure.

For the poverty reduction strategies to be genuinely country-driven, and be developed transparently with the broad participation of civil society, many if not all of the countries receiving debt relief need to build the skills and capacity of their governments and society. I would therefore propose:

• first, an internationally co ordinated technical assistance programme of capacity building for the delivery of poverty reduction strategies in the countries that require it; and
• secondly, ensuring that all donor aid programmes in HIPCs and other poor countries, for whichever sector – health, education, infrastructure projects – provide support for and recognise the importance of capacity building and skills transfer.

This would be one of the most worthwhile investments in empowering the poorest to build a better future for themselves.

Clare Short has already demonstrated Britain’s commitment to capacity building. For the last two years we have helped countries in delivering their programmes through advice, technical assistance, sponsorship of forums. For example:

• a HIPC capacity building programme which enables secondment of experienced personnel from one HIPC country to another, recognising and sharing some of the unique skills and experience that can only be developed within countries that face these challenges everyday;
• in Uganda, help with putting in place a framework for consultation with the poorest sectors of society, which will ensure Uganda’s poverty reduction strategy reflects the realities of poor people’s lives;
• in Ghana and Malawi, support for the development of medium term expenditure frameworks which look systematically at government resource allocations.

But Britain, other donors and the IMF and World Bank cannot work effectively alone. So second we need a partnership with NGOs such as Oxfam who have a greater presence in the countries and often a keener insight into the daily challenges faced.

You can provide vital assistance in creating stronger civil society and providing an independent and objective monitor of progress – both of the results and of the integrity of the process. This is crucial particularly for the early cases that will come up in the next few months as they will set the examples of best practice. In order to make the best use of resources, I would urge that all the NGOs adopt countries to work with on implementing the poverty reduction strategies.

And lastly, if anti-poverty strategies are to work and secure the resources they need, we need to be far more vigilant in ensuring that resources are not wasted in unproductive expenditure, particularly on destructive military purchases.

This is not just an obligation on the part of the recipients of debt relief but also on the part of lenders and exporters of richer nations who benefit from this expenditure.

We require a new resolve from poor countries to pursue anti poverty strategies, to be more transparent, and as I will suggest, to follow certain codes and principles in macro economic and social policy. These obligations require great effort and will on the part of the poorest nations. The least we can do from our position of wealth, is fulfil an obligation not to benefit from burdening these countries further.

While we were pursuing agreement on the HIPC initiative, Britain banned export credits for unproductive expenditure in the forty one highly indebted poor countries for a two year period and did so unilaterally. This ban has now expired. But the problems faced by these countries as we all know will take much longer to resolve. It is right that we announce today that Britain will, once again unilaterally, extend this ban to help ensure these countries are released from poverty.

But HIPCs are of course not the only poor countries in the world. There are others as poor and, while they do not have a historic debt burden, can ill afford to take on new burdens of commercial loans for unproductive expenditure. We will therefore also widen the ban to all countries defined by the World Bank as “IDA only” – poor countries who can only borrow from the world bank on highly concessional terms – currently a further 22 countries.

Britain’s export credits will only support productive enterprise that assist social and economic development and thus reduce poverty. Britain’s ban will of course only fully achieve its aim if it is applied by all exporting countries. Just as our pledge to unilaterally write off all debts due from HIPCs was a pledge with a purpose – to call on others to follow – so is this pledge. I urge all countries to ban export credits for unproductive expenditure in all IDA only countries and join us in banishing forever the spectre of unproductive unpayable debt.

Third: conditions for economic development

But if we are to break from the cycle of debt poverty and decline, we must see the central importance of economic development – and the necessity of new approaches to securing it.

We must restore to the heart of economic policy the high ideals and public purpose which made us seek for every country from 1945 the highest sustainable levels of growth and employment.

Let us remind ourselves that in macro-economic policy our aim is not only to control inflation, important as that is, but based on a platform of stability to pursue policies for growth and employment for all countries which will increase living standards, including improved health and education.

And let us remind ourselves that we seek equitable development which ensures all groups in society, not just those at the top, enjoy the fruits of development; we seek sustainable development which includes preserving natural resources and maintaining a healthy environment; and we seek democratic development in which citizens participate in making the decisions that affect their lives, and countries and communities have ownership of the policies.

In the years to come we must build anew our understanding of the relationship between democracy, equality, environmental protection and growth.

In other words, we need to move beyond the Washington consensus of the 1980s, a creature of its times which narrowed our growth and employment objectives. Which assumed by liberalising, deregulating, privatising and getting prices right, private markets would allocate resources efficiently for growth. This has proved inadequate for the insecurities and challenges of globalisation.

We need to find a new 2000 paradigm. The new consensus cannot be a Washington consensus, but as we have recognised in the poverty reduction strategies, countries must claim ownership and make it a part of their national consensus.

Let me set out what the key elements of this new paradigm might be

• First, it must recognise the critical role of the public sector as well as the private;
• Second, macro economic stability is an essential condition to growth and all countries need to follow clear policy codes and principles to ensure this;
• Third, it is vital for their development that the poorest countries participate in the flow of capital, technology and ideas in the global economy but in a manner that benefits rather than harms them; and
• Fourth, we need to recognise that sustainable economic growth and social justice are totally interdependent.

First, the new paradigm needs to recognise the role of governments and the public sector. The public sector is an investor in human capital and also in science, research and technology where benefits to society often outweigh benefits to individual entrepreneurs. But critically governments also have the role of ensuring the right macro economic conditions, the right corruption free institutional and regulatory framework, the right framework for competition, and a sound financial system to underpin growth, employment and equity.

Without governments ensuring a robust financial system, effective competition and the protection of consumers it is difficult to mobilise savings or allocate capital efficiently.

The original Washington consensus grew in the context of highly regulated and protected financial systems in need of deregulation. But, as the Asian crisis has shown, it is but one thing to eliminate regulations that restrict competition. It is also necessary to create regulations to ensure competition – and proper prudential behaviour.

The issue is not, as posed in the 80s, regulation versus deregulation: it is achieving the correct balance of regulation and deregulation to ensure financial systems work better. The new paradigm is not about how government can be pushed aside – but how the right kind of government can be an essential complement to markets.

Second, the new paradigm need to recognise the importance of macroeconomic stability. For every country, today’s rich and today’s poor, macroeconomic stability is not an option but an essential pre-condition of economic success. Indeed, in the new global marketplace there is a new premium on economic stability.

Any nation state operating in a global economy which relies on or seeks to achieve investment flows from round the world now knows that the punishment for getting things wrong is greater than ever, the rewards for getting it right better than ever.

Good macroeconomic policy includes in my view:

• clear rules for monetary and fiscal policy that can allow for flexibility to respond to shocks; and
• a fiscal policy that allows automatic stabilisers to operate

I believe that the way forward is for each and every country, rich and poor, developed and developing, to adopt and apply codes of conduct or plans for stability in monetary, fiscal, corporate and also critically social policy, founded on agreed ground rules of the game which each country can adopt and apply.

That is why the UK pressed for and secured agreement that there should be internationally agreed codes for transparency in monetary and fiscal policy. Take the monetary policy code for example, which was agreed at the annual IMF/World Bank meetings last year. It sets out that we should each announce our targets, identify responsibility for achieving these objectives, and for reporting and explaining monetary policy decisions. The code of monetary policy makes it clear that countries should provide a complete picture of usable central bank reserves, including any forward liabilities, foreign currency liabilities of the public sector and commercial banks and indicators of the health of the financial sectors.

But these new principles need to go beyond public policy. In the corporate sector, for example, we also need an international standard of best practice in corporate governance, and for financial institutions and regulators. The OECD has now finalised its code of good practice in corporate governance.

I think it is also true that the UK has taken the lead in pressing the IMF to develop the social dimension to its work in all countries. The IMF and World Bank need to ensure and we need to monitor with international surveillance that the burden of adjustment is not placed on the poor and most vulnerable. The Asian crisis demonstrated the devastating impact that economic shocks can have on the most vulnerable sections of society and highlighted the need to ensure adequate social provision. Building on the codes of good practice in fiscal policy, monetary policy and corporate governance, the UK has stressed the need to identify and disseminate principles and good practice in social policy. Following discussion at the development committee in April 1999, this work has been taken forward by the World Bank and the UN. In his statement to the Board of Governors of the Fund on 28 September 1999, the Managing Director of the Fund explicitly highlighted the vital relationship between growth and social development.

However, for many developing countries the poor quality of data on social spending, social indicators, and social protection arrangements is a key constraint on effective policy design and implementation. Clearly we need a strengthened social data standard.

Let us not forget that when we talk of codes of conduct we are talking about the conditions in which international investment flows can benefit the poorest in the poor countries not about how they can benefit investors. Transparency will discourage waste, corruption and increase the accountability of governments to civil society.

The transparency and clarity of these codes will help ensure that investors can differentiate between the performance of countries – hence prevent some of the indiscriminate contagion that we saw destabilise the international financial system 18 months ago. And by building the confidence of investors they will prevent the exclusion and discrimination of investors against the poorest countries.

So the third element of the new paradigm is the recognition that in order to grow out of poverty, the poorest countries must participate fully in the global economic system, but under conditions in which they get their fair share of the benefits. Without access to the flows of technology, ideas and capital that are revolutionising our world, the poorest nations will be permanently excluded from the prospect of prosperity.

To complete the virtuous circle of debt relief, poverty relief and economic development, our aim in 2000 must be to ensure greater private as well as public investment in Africa and the poorest developing countries and also their share of the benefits of trade.

Now there will be critics of globalisation who say that the poorest countries can never benefit. There is indeed a real debate about capital liberalisation. For it is true that without a proper framework for development, capital liberalisation can destabilise.

Yet this is precisely why the codes of conduct are essential – codes which Britain has argued for so hard and which the international community have now accepted. If capital liberalisation happened without the right macro-economic policies and financial regulation, then short term flows could destabilise that country. So we need measures to encourage the introduction of sound and transparent economic policies, good financial regulation and corporate behaviour – exactly what codes of conduct intend to offer and why codes of conduct are in the interests of the poorest countries as they seek to benefit from participating in the international economic system.

Of course the precise terms for a country’s capital account liberalisation need to be scrutinised, and there is a great deal of work on relationships between private lenders and public sector borrowers both in normal times and in times when crises arise. But the codes of conduct are the new building blocks for economic growth in developing countries.

But to ensure that poorer nations genuinely benefit from the global economic system, there are also obligations on the richer countries to create a fair playing field.

I believe this first is in ensuring a more stable international financial system particularly for weaker economies who can be easily destabilised. That is why Britain proposed last autumn bringing together the IMF, the World Bank and key regulatory authorities in a new permanent committee for global financial regulation charged with delivering the global objective of a stable financial system.

The Financial Stability Forum has now been established. The forum’s work will make co-operation between international institutions and national regulators a fact of international financial life. I believe in time it can become the world’s early warning system for regional and global financial market risk.

The second obligation, I believe, is helping the least developed countries promote greater productive foreign direct investment. At present only 3 per cent of foreign direct investment goes to low income countries and only 1 per cent goes to the highly indebted poor countries.

Direct investment into productive enterprise should bring not just capital, but transfer skills and technology and encourage best international business practice. Where domestic capital markets are not well developed, it can also be a more stable flow of inward investment than portfolio investment in stock markets. We need to consider creating an effective forum for investment in Africa which would discuss the current barriers to investment perceived by potential investors, propose reforms and encourage business investors in the continent.

Thirdly, we have an obligation to recognise that growth and trade are the key to tackling poverty and our approach to trade should be informed by a progressive internationalism.

So the test for trade talks will be whether developing countries benefit.

Social principles which we support are there to benefit the poorest countries. Any attempt by developed countries to erect new protectionism should be resisted.

We must take further steps to increase market access for the least developed countries. The UK’s proposal, for example, is for zero tariffs to be applied to all goods.

Trade talks would achieve more if openness prevails and this requires new ways of working by the international organisations as well as the individual countries. I believe there is now a strong case for looking at reforms to improve the accountability and operations of the WTO, just as we are working to improve the IMF and World Bank.

It is vital to make progress in the WTO. This must be done in a way that reflects the needs and views of the developing countries, and enables them to participate fully in the discussions and have ownership of the final agreement.

Fourth and central to the new paradigm is the recognition that economic growth and social justice are totally interdependent. The experience of so many countries has shown that growth is not sustainable if large sections of their communities live in extreme poverty. Because even if market prices are correct, an economy cannot respond adequately and in a flexible manner to market forces without the human capital, institutions and basic infrastructure necessary for growth.

Indeed one of the main reasons private investors in Africa quote for not investing in the continent is insufficient skilled labour. They are telling us that education and the creation of human capital are as important as controlling inflation.

Fourth, social investment and education

So I come last in a list of areas for action to social investment particularly in education. Not because it is the least important but because, as I hope I have made clear, it is the most important.

The new approach I have outlined today rests on two central ideas –

• first, social justice is vital to economic progress; and
• second, economic reform requires the support, participation and trust of the populations. In other words, there should not just be country ownership but community ownership.
• It is here that education, empowering people for their future, putting opportunity directly in their hands, is critical.

Oxfam rightly calls education the single most powerful weapon against poverty. Children – as I have said before – are 20 per cent of the population 100 per cent of our future. And instead of developing some of the potential of some of the people, future economic growth depends upon developing all of the potential of all. What we want for our own children we want for all our children.

Universal primary education across the world is a basic human right for all children. But equally significantly it is the absolute precondition for progress in development and reduction of poverty. Countries cannot develop properly if only elites are educated.

So the development case for education, the case for investing in primary education, is unanswerable. It is essential to the creation of an economy which has the flexibility to respond to market forces; it helps people to become more productive, and to earn more income; it leads to improvements in health, nutrition and child mortality. People are able to transform their own lives and society, and they acquire the basic skills of literacy and numeracy, as well as the capacity to utilise knowledge and information.

Let us remember the commitments we have all made.

Not just fifty years ago, when the universal declaration of human rights proclaimed free and compulsory education to be a basic human right.

But successively in international declarations:

The 1990 world conference on education for all which set the target of ensuring universal access to, and completion of, primary education by the year 2000.

The 1990 world summit for children – signed by all but two of the world’s governments which reaffirmed the right to an education as a legally binding obligation.

The 1995 world summit for social development which said that by 2005 we would achieve universal access to basic education and completion of primary education by at least 80 per cent of primary- school-age children, and close the gender gap in primary and secondary school education

The 1999 convention on the rights of the child which reaffirmed that we would reduce by half the number of people living in extreme poverty by 2015; have universal primary education before 2015; gender equality in primary and secondary education by 2005.

But as we all know there have been too many grandiose statements, too little development and implementation.

900 million people over the age of 15 are illiterate – one sixth of the world’s population.

And today 130 million children do not attend primary school – 21 per cent of the primary age population.

Two-thirds of these are girls. A gross denial of their right to education and to develop their full potential. Especially when we know that women with as little as four years of education are more likely to choose to have smaller, healthier families.

Understanding the web of issues, constraints and power relationships that affect the schooling of girls – within families, communities, schools, cultures and societies, and within governments – is essential if practical solutions are to be defined, shared and implemented.

We must work together, with the international organisations, other governments and NGOs, to explore the strategies.

And not only raising enrolment levels but retaining children in school is critical when we know that in south Asia, sub-Saharan Africa, Latin America and the Caribbean where only two thirds of the children who start primary school reach the fifth year of primary education.

For the majority of children from poor households, primary education is the one chance they will have to acquire basic literacy, numeracy and some essential life skills to enhance their chances of a sustainable livelihood.

And as we embark on an information revolution, we have at our disposal new tools such as the internet and distance learning.

We have a chance this year to make education for all a strategy that works. As you know there are important dates.

There will be:

• the first ever meeting of education ministers from the G8 countries;
• in April 2000, the education community from developing countries meets in Dakar to review progress on education for all in the 1990s; and
• in November, the Commonwealth Education Ministers meet in Nova Scotia.

We are preparing now for these meetings. Our priorities will be to increase the focus on universal primary education; to work with developing countries to identify workable strategies; to seek a co-ordinated approach bringing together work at national and international level; and to continue to address factors constraining the equal participation of girls and boys in schools.

As Oxfam has said the old ways have failed, and we need to refocus the use of resources.

What then is the way forward to achieve the improvements in education so urgently needed?

There has been some progress. In Uganda, spending on education has trebled in five years. Primary school enrolment is 90 per cent in Zimbabwe and Botswana. The enrolment of girls remains low in Pakistan, but is high in Bangladesh.

So we must now spread best practice.

First there needs to be a sustained commitment by developing countries to education. For example, the poverty reduction strategies developed by heavily indebted countries must, I believe, make education a central plank. That would put education at the heart of national and aid budgets and ensure transparent monitoring of delivery. Once again, ownership by the countries of the policy is the key to its success.

Second we need to shift from the project based to the sector wide approach Oxfam has proposed. Educational, and indeed other aid is too often used to support isolated projects. In Tanzania there are 30 donors, 1000 projects, 2000 aid missions. Greater coherence is needed. All aid and concessional lending from donors, World Bank and Regional Development Banks need to be based on the agreed poverty reduction strategies and be co ordinated under an agreed framework. This poses real challenges to both donors and recipients.

For donors it means no special pleading for projects that “fly their national flag”. For recipient countries it means strengthening their institutions so they can take the lead in co-ordinating and targeting the aid. These challenges are worth facing because it is the only way in which we can ensure the effective targeting of funds.

Third, we need to focus, as I have mentioned before, on tackling the skills shortages which limit economic growth. These skills shortages are at all levels of the economy – from high-level policy analysis skills needed to drive forward development, to the practical skills needed to exploit new technologies.

To meet this need we have established a major new programme of assistance and support. Over the next two financial years, twenty five million pounds will be available under the Department for International Development’s skills for development programme.

This programme is designed to help countries stimulate the entrepreneurial skills essential for economic growth and to develop new approaches to skills development.

Let me give one example of how the programme is working in practice – matching skills to work.

In Chennai in India we have been supporting the “colleges without walls” programme – informal learning organisations which are working with the poor and unemployed to help them acquire the skills which have been identified by local employers. So far, 85 per cent of trainees have found work with local employers.

Lastly, I would like to emphasise that we must continue to provide more financial aid for education. The Department for International Development currently have commitments of £800 million to education, of which around three quarters is for basic education. Of the total of £800m, approximately £300 million has been committed since 1997, which represents a dramatic increase for this sector. And we are on target to meet the Prime Minister’s 1997 Denver commitment to increase by 50 percent our aid to Africa for primary education, primary healthcare, and sanitation by 2000. This represents an extra £360 million of aid to Africa.

We all recognise that the economic development and the escape from poverty requires increased flows of aid from rich nations to underpin the development of human capital and basic infrastructure. In Britain’s case, the Department for International Development will receive over £1.5 billion extra in the comprehensive spending review over three years, taking its budget to more than £3 billion in 2001-02 – a real terms increase of 28 per cent.

Conclusion

The task we all face is awesome. Recent estimates show that for Africa, where currently nearly 50 per cent of the population live below $1 a day, growth rates in GDP/capita will need to reach some 6 per cent per year for the poverty target to be reached. Yet between 1990 and 1997 growth in GDP/capita in Africa was minus 0.7 per cent per year.

In 1999 the world’s richest nations finally accepted their obligations to the word’s poorest peoples.

But we can and must do more.

We need a world economy working for everyone everywhere.

Tom Paine’s message of the 1780s is even more relevant as we begin a new millennium. “We have it in our power to begin the world anew”.

The task for 2000 will be to transform good will into monumental change.

Because no one can be happy living in an oasis of wealth where there is a desert of poverty, I want ours to become the generation who lifted the scar of poverty and hopelessness from the worlds soul.

And I am optimistic.

Why? Because not just a few, but millions feel, however distantly, the pain of all those in need.

Why optimism? Because across the world there are millions of people of conscience and of belief in something bigger than themselves.

Why optimism? Because there are millions more who know that now as never before, we in this generation have – within our power if we choose to use it – the means to eliminate abject poverty.

And who want to realise that ancient dream that we become truly one moral universe, in which by the strong helping the weak, all of us become stronger.

So ours is a call to action to all men and women full of idealism irrespective of political party.

A call to action to all, full of campaigning vigour, irrespective of age.

A call to all people of conviction and faith, irrespective of religious denomination.

A call to action as new as the debt crisis, but it is as old as the call of Isaiah to ‘undo the heavy burdens and let the oppressed go free’.

We will not reach our goal today or tomorrow. Perhaps not in this generation.

But the quest for prosperity round the world is the greatest challenge and greatest moral imperative of our times.

This is indeed an age of possibility as we chart the world of tomorrow.

It is not a time to look backwards but to plan ahead.

I want this generation to be remembered for seizing the opportunities not missing them, for making us masters of our destiny, not victims of fate.

In this new age, I believe our generation can achieve a new way forward. Here in January 2000 we are all making a start on a journey of hope and renewal and we must and will complete our path.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, on 16 February 2000.

Britain can enter a new year of challenge with more optimism than for many years.

If in the twentieth century Britain suffered relative economic decline, the twenty first century can be one of economic renewal, where the challenge for Britain is to build on the best chance for stable long term prosperity we have had for generations.

My optimism is rooted in my belief that we are rediscovering our essential strengths as a nation.

We are rediscovering the strength to take the tough decisions to build a framework of fiscal and monetary stability.

While the need for stability was taken for granted in our nineteenth century economic heyday the pressures of twentieth century politics pushed successive governments off course.

We have now, as a country, found a new resolution to take the tough decisions and entrenched it with the independence of the Bank of England and our new rules and code for fiscal stability. Britain now has the foundation of stability on which to build.

We are not only rediscovering our commitment to toughness in economic management but, even more important, our commitment to the work-ethic.

With our new deal, the work ethic is being reestablished in every part of Britain. And we are stage by stage building it into the culture of our society, with radical programmes of reform in education and welfare to work.

And we are also discovering – and this is my theme today – new ways of harnessing our innate creativity and adaptability as a people.

At every point in our industrial history our greatest successes have been built on the creative genius of our people and the willingness to adapt and change. This is true not only of the inventive skills – from the steam engine to jet engine – which made Britain the home of the first industrial revolution but also of the pioneering work of Babbage and Turing that made possible the computer and information revolution.

Now that the future is knowledge-based – e-shaped, if you like – we can already see the qualities needed for success: those countries that will succeed will be those that can best unleash the potential of their people by drawing on the qualities of creativity, flexibility and adaptability, the work ethic and of course an open and outward looking approach to the world.

So, I believe Britain to be well-placed to lead in this new world and I want to suggest today a number of measures that can help us succeed.

But let us remember the challenge we must surmount. For today, just one in ten companies in the UK sell on-line.

Just one in four companies make purchases on-line.

Just over forty per cent of households already have computers.

Around ten million people – less than 20 per cent – use the Internet.

We must do better and start doing better now, this year.

I recognise success for the future will not come automatically. And much of our success will come from government getting out of the way and releasing the energies of the British people. But I also want today to draw attention to how, through applying British values – our creativity, openness, and willingness to adapt – we will bring into play the critical ingredients for success.

First, measures to create a knowledge economy – through the encouragement of competition, innovation and new business development – not least measures that need to be backed up by a willingness in the public sector to innovate.

And second, measures to create a knowledge society through transforming education and widening access for all, drawing on the long-standing British commitment to fair play and opportunity for all.

1. The knowledge economy

First, measures to create for Britain a strong knowledge economy.

The sharpest spur to innovation, efficiency and improvement is competition.

The new economy of the next decade will need more competition, more entrepreneurship, more flexibility and more long-term investment.

And Britain is well-placed to rediscover the genius for creativity and invention that was displayed so clearly in the industrial revolution.

Indeed, our creative talents that are flourishing today in design, communications and software serve us well for the next stage of the e-commerce revolution.

The Government is now reviewing every barrier to competition in the emerging e-commerce market and seeking to remove them.

In every area we are asking what we can do to enhance competition and opportunity.

Our new Competition Act not only makes our competition authority independent but also for the first time prohibits all anti-competitive practices.

And we are now reviewing the rules of professional associations to ensure there are no unfair barriers to entry holding back the new economy.

It is critical to ensure that the price of telephone use is not a barrier to greater Internet use, or leads to a divide between IT-haves and IT-have nots.

Affordable high speed access to the Internet for both businesses and consumers is key to the future growth of e-commerce in the UK. This requires the right infrastructure for the different forms of access, delivered within a competitive environment. So I am encouraged by a number of developments in this area.

One of the inhibitors to greater use of the Internet in the UK has been expensive telephone charges. But industry is responding to competitive pressures and consumer demands. BT recently announced proposals for a series of Internet pricing packages allowing unmetered Internet access. This was followed on Monday by an announcement from TeleWest that they will offer unlimited access to the web – 24 hours a day, 7 days a week – for 10 pounds a month. Other companies are likely to make similar announcements soon. So very soon, just as you can in the U.S., you will be able to surf the net without worrying about the cost of each extra minute.

And Oftel have announced new pricing arrangements so that Internet service providers can choose how to price their calls. This should further enhance the competitive pressures that are pushing down the cost of Internet access in the UK.

Equally important to cost is the availability of high-speed access – broadband access – to the Internet. The upgrading and unbundling of BT’s local loop is a welcome and major step forward in this area.

In the spring BT will be rolling out ADSL – bringing high-speed Internet access to homes and businesses across the country. But this must be done within a competitive environment to ensure broadband access is affordable. To promote competition, Oftel will ensure that other operators are able to provide their own broadband services over BT’s local loop by July 2001- if not before. Indeed, I know that Oftel believe this timetable can be improved. Let the industry be in no doubt that I stand full square behind Oftel in these aims. We will not allow any foot-dragging here.

We are also actively promoting other forms of broadband access, again ensuring these are delivered with a competitive and innovative environment.

Britain is at the forefront of the new third generation technology that will revolutionise the mobile phone – allowing access to data up to two hundred times faster than through existing mobile phones. The new spectrum auction – the auctioning of five licenses, one of which will be reserved for a new entrant into the market – is designed to maximise competition. There have been 13 applications to participate in this auction.

And we are looking to rapidly roll out fixed wireless technologies. Last May, Michael Wills and subsequently in January Patricia Hewitt set out the Government’s plans to make radio spectrum licences available for new broadband fixed wireless access services. The first of these will be available in the Summer. And we will be ensuring that these licenses are allocated within a competitive environment.

I encourage the industry to think creatively and come forward with innovative proposals for the use of this exciting technology. This should provide an early alternative to fixed line access and is especially good news for small businesses.

These are welcome and exciting developments but I remain concerned about the competitive disadvantage that British businesses face in this area. I want to see a quick roll out of the necessary infrastructure, and competition to drive down prices further, so that the costs in the UK for both business and consumers are comparable to those in the U.S. I know that Oftel share this desire.

I met with David Edmonds, the Director General of Oftel, yesterday to discuss developments, and to emphasis the strong support that Oftel have from me and others in Government. We discussed how important it is for the competitiveness of the UK economy that urgent progress is made. I know that David firmly shares my strong belief that delivering low cost Internet access is one of the single most important things we can do to promote the knowledge economy. It is our aim that the cost of using the Internet in the UK will be as low as in the U.S. by end 2002. This is our challenge to the industry – a challenge our country needs met, a challenge we will continuously monitor in detail and if not being met will prompt us into further action.

But we must do more than simply create this new competitive environment.

I have said I want British creativity and inventiveness and enterprise to flourish in the new knowledge economy.

So we must also create an environment more favourable to the high investment, high skill, hi tech and high wage economy we want to create for Britain.

The measures that will release what I sometimes call the British genius for invention and enterprise will include incentives that encourage new investment and more innovation; the transfer of technology – with, overall, a more favourable commercial environment and tax regime.

A goal for Britain is to lead the way in the interactive content industry, which will be one of the biggest drivers of growth in the new economy. Just as Hollywood brought together, for the film industry of the 1930s, the finance and management skills, together with writing, acting, design and creative talents, so too we could bring together finance, management and technical and creative skills in the interactive content industry. With the benefits of the English language and our indigenous talents Britain is well placed to lead the world. So we will now examine detailed measures to promote this.

Let me set out some of the measures that will assist this and growth in high technology industry.

First, to build on Britain’s genius for scientific invention by modernising our science and technology base, we are investing in an innovative 700 million pound public-private partnership with the Wellcome Trust and the awards that have already been made include, for example, support for an advanced technology institute in the University of Surrey.

Second, a new R&D tax credit will, from this April, mean that nearly a quarter of new investment in small and medium-sized business research and development is under-written even before a penny profit is made.

Third, we have created a new University Challenge Fund to help universities commercialise their inventions and help university based companies transform British inventions into British-made products. These are seed venture capital funds to allow universities to demonstrate the feasibility of research outputs with commercial potential.

Fourth, to help universities gain management expertise to commercialise inventions and to help transfer technology from the science lab to the market place, the Government is creating new Institutes of Enterprise. Indeed, we are keen that British universities build trans-Atlantic and trans-European alliances in research and commerce, such as we have initiated with the MIT/Cambridge link up.

There are a number of examples of existing and planned link-ups between UK and U.S. universities. For example, Warwick University with Carnegie-Mellon University in Pittsburgh; Heriot-Watt University is currently involved in discussions with Michigan concerning the development of a Scottish centre of engineering excellence at Rosyth; and Imperial College has formal links with both Georgia Tech and Emory University in Atlanta.

We recognise that UK universities are keen to establish such U.S. link-ups. And we are looking at how to promote these link ups. And while most government effort on science exploitation has in the past focussed on the academic “push”, we will consider how we can meet the challenge by encouraging an industry “pull” – examining the case for incentives for business/science collaboration with an emphasis, as in ‘smart’, on getting business to take a closer interest in exploitation opportunities in universities.

Fifth, I want new encouragement for the venture capital industry and especially for the start up and early stage ventures, where equity is more appropriate than bank loans, but where there is as yet insufficient encouragement to invest.

In advance of the Budget we will examine how we can build on the new network of Government- backed regionally based venture capital funds, nine in total, that are designed to encourage investment in early-stage, high technology companies, especially for amounts up to 500,000 pounds. The DTI published bidding guidance before Christmas and they have now received 21 intentions to bid. I would now urge potential investors to look seriously at investing in the regional venture capital funds.

We are also taking forward a UK High Technology Fund to help early-stage high-technology businesses – who have historically found it difficult to raise money for development. It will be a fund-of-funds, providing finance for investment in existing venture capital funds that specialise in the provision of equity-based finance for early stage high-technology firms. Funds are currently being raised from institutional investors and the fund manager is making significant progress towards meeting the target of 125 million pounds.

And sixth, tax reforms are designed to encourage investment in new companies. We have cut small business tax from 23p to 20p and introduced a new starting rate of tax for small companies of 10p in the pound. Every company making profits of up to 50,000 pounds will benefit.

Corporation Tax has been cut from 33 to 30 per cent, and to encourage and reward new business investment, we have cut the long-term rate of Capital Gains Tax from 40p to 10p. We have proposed a cut in the taper so that anyone investing for five years will pay only 10p and for three years only 22p.

We are also freeing high tech start-ups from unnecessary regulation to allow quicker access to finance. Our proposals could save months, in an area where this can make the difference between business failure and business success.

These new companies will also be able, from this April, to benefit from the Government’s Enterprise Management Incentive Scheme, tailor made for the new Internet and hi tech company. To recruit top managers for smaller high risk companies, we are offering tax relief for key employees on stock options worth up to 100,000 pounds.

Seventh, a new tax incentive to promote corporate venturing. Corporate venturing has been vital in Silicon Valley and elsewhere – providing small high tech firms with a strong capital base, better skills in marketing and management, and a greater market reach. So to help the large companies sponsor the development of the small, large companies that invest in growing companies for a specified period will receive a tax relief of 20 per cent, underwriting one fifth of their investment. This 100 million pound incentive can bring Britain additional investment of 500 million pounds every year.

The City of London is one of the largest financial centres in the world and this month alone a number of UK Internet start-ups have found financial backing. But we need to do more to build on the strengths of our capital markets. That is why we have encouraged Techmark, a new market within the London Stock Exchange for companies whose success depends on innovation, and the arrival of NASDAQ in Britain.

I am planning to host a major UK-U.S. conference later this year which will bring together leading U.S. & UK entrepreneurs and representatives of leading companies and capital providers to look at further ways we can develop a more entrepreneurial and enterprise focussed economy in the UK which can grasp the opportunities new technological developments can offer.

Businesses and individuals are responding to new technologies and the new challenges of the Internet age. Government must do the same.

Just as businesses have used the Internet to refocus their activities on the customer – supplying new services, when, where, and how the customer wants them – Government needs to do the same.

So we are restructuring our public services, from taxation to procurement, from health to our legal systems – organising Government in new, innovative and more flexible ways.

I can announce that we are undertaking a cross-cutting spending review to look at all aspects of Government and e-commerce. This will be headed by Andrew Smith and Patricia Hewitt and will ensure that as one element of our ambition to make the UK the best place in which to do e-commerce we make this the best e-government in the world.

The Internet presents a great opportunity to enhance the interaction between people and Government. As Bill Gates recently pointed out, this new technology is making Government more democratic.

The 2.5 billion pound Capital Modernisation Fund was set up to support capital investment to improve public services. Projects which this has funded include:

– 1.1 million pound for an integrated single electronic procurement system across government to support electronic tendering – this could save 10 million pound a year;

– 18 million pound for an IT job matching scheme – a sophisticated IT system to match job seekers to employers online;

– 30 million pound for cross-departmental IT linkages between the Criminal Justice Departments to promote joint working and reduce paper;

– 2.8 million pound for the Driving Standards Agency for hand held computers for driving examiners to record test results in the car and transmit results to allow the automated issue of driving licences; and

– 12 million pound to provide a global network of British information and services abroad – one-stop shop information kiosks built on interactive websites.

And we have introduced the new 230 million pound Invest to Save Budget – funding innovative ways of delivering services:

– testing the scope for delivering a range of employment service and benefits agency services through a call centre, accessible by telephone, fax, e-mail – or through an Internet website;

– two pilots testing the feasibility of allowing drivers to apply for vehicle tax discs by electronic means; and

– a pilot developing and testing a new IT system, providing detailed information on local authority enforcement functions through a single point of contact.

By 2002, our aim is that the public will on-line be able to:

– book driving and theory tests;

– look for work and be matched to jobs;

– submit self-assessment tax returns and get information and advice about benefits;

– apply for training loans and student support, all on-line.

Businesses will on-line be able to:

– complete VAT registrations and make VAT returns;

– submit PAYE returns and other forms;

– file returns at Companies House; and

– receive payments from Government for the supply of goods and services.

And today I can announce the discounts for the filing of tax returns over the Internet. We will offer discounts to encourage electronic filing and payment:

– in April 2000-2001, 10 pounds for each income tax self assessment return filed by taxpayers over the Internet.

– in April 2001-02, 50 pounds for either PAYE or VAT returns filed by small businesses over the Internet – 100 pounds for both PAYE and VAT;

We are also looking to modernise Government in a number of other ways. For example:

– liberalising Government data; and

– stretching targets for electronic procurement.

How Government, as the largest single agent in the economy, buys goods and services is a key driver of private sector behaviour. That is why we have set targets for Government procurement. And we are considering whether we can go further.

As an early step to make sure Government information is fully exploited, I can announce that the new national statistics website is to be launched in April – offering an extended range of data from across Government free of charge, demonstrating our commitment to ensure that data is widely available and easy to access.

And with our Invest to Save and Capital Modernisation Funds we are rapidly moving forward the e-government agenda. But I want to make sure that we give the best incentives and encouragement to departments and officials to exploit new technologies and the opportunities e-commerce presents to the full. So today, by ring-fencing some of the ISB and CMF monies explicitly for electronic Government ideas, I am launching an e-challenge fund. This will give incentives to Government departments and agencies to identify e-commerce opportunities in their areas.

2. The knowledge society

Now I turn to the knowledge society.

You cannot build a knowledge-driven economy without a knowledge-driven society. Unless everyone in it has knowledge of these technologies and access to them, no economy will have the size and sophistication of markets nor the quality of skills base needed to succeed in this digital age.

So, success in the Internet age depends upon an educated economy where the benefits flow not just to some but to all. And we must make sure that the opportunities of new technologies are shared in every community.

As a nation we could stand aside. We could have a society divided between information haves and information have nots. A society with a wired up superclass and an information underclass. An economy geared to the needs of some parts of Britain but not the whole of Britain.

Yet the blessings of new technology give us the means to break down the walls of division, and the barriers of isolation.

By putting the equipment, as well as the opportunity, directly into people’s hands, we can break down the barriers that prevent people realising their potential.

The extra 19 billion pound our country is now investing in education will help give everyone the opportunity to master the skills and technologies of the new information age.

Today we are pushing through huge educational reform. We are introducing early learning; a new focus on basic skills in primary schools; restructuring teachers’ pay to reward good performance; zero tolerance of failing schools; expansion of further and higher education through an extra 800,000 students by 2002.

When we came to power in 1997, around one in ten of our schools were linked to the Internet.

I can report to you that the extra investment this Government has made is already giving access to the Internet’s new world of knowledge to pupils in two in every three schools across Britain.

By 2002, there will be over 23,000 schools connected to the Internet, with training in computers open to 400,000 teachers. We are well on track to achieve this target with over 15,000 schools already on-line. Our IT strategy is allowing, for the first time, teachers and head teachers to share experience and good practice techniques over the web.

New help worth 20 million pound is making it possible for more teachers to have computers for home use.

But we must go further. This year we are doubling the money on IT in schools. By 2002 every school – rural and urban, rich and poor, north and south – all of our schools should be connected to that new world of knowledge. And parts of the national curriculum will be taught through software accessed on the Internet, motivating all pupils.

But we are doing far more than simply invest in schools and colleges.

In the last Budget, we allocated an additional half a billion pound to the establishment of new ICT learning centres and accompanying measures to widen use of ICT in homes, schools, business, the community.

Altogether, the Government is providing 1.7 billion pound for the national IT strategy – including support from the New Opportunities Fund. To 2001-2002, this comprises:

– over 650 million pound for schools in England, plus 62 million pound in Scotland (Wales and Northern Ireland not yet known);

– 230 million pound for teacher training in ICT;

– 20 million pound for librarian training in ICT;

– 50 million pound for digitisation of library content;

– 200 million pound for ICT infrastructure in libraries (contributing to the ICT learning centres);

– 470 million pound from the Capital Modernisation Fund for up to 1000 learning centres across the UK.

A whole new network of computer learning with one purpose only, that the whole of Britain is equipped for the information age.

So everyone will have the chance to succeed in the new economy. We are delivering individual learning accounts. A million men and women can receive 150 pounds to set up their own individual learning accounts – putting the power to plan and prepare for their own careers in their own hands. Next year any adult with an individual learning account will be able to claim a discount of 20 per cent, an additional grant of up to 100 pounds, on the cost of their learning.

For all adults signing up to improve on their basic computer literacy, there will be a discount of 80 per cent on course fees.

The Internet not only brings home the need for lifelong learning but also enables lifelong learning to be brought into every home.

The University for Industry will use the latest technology, including the Internet, to do in the 90s for lifelong learning what in the 70s the Open University did through TV for university learning – to bring education and training into the home and the workplace.

So with our new university, individual learning accounts, and with help with computers and computer literacy, the Government is embarked upon the biggest public education programme on offer in our history – opening up new opportunities for millions of people.

In Sweden the biggest single measure that increased the number of families with computers and the Internet was the tax incentive we are introducing in Britain.

To bring more computers into more British homes, we have made it possible for employees to be able to borrow computers from their companies as a tax free benefit.

And we now expect the number of people doing so to rise to 300,000 over the next two to three years.
But we need to do more.

In our poorest communities, the facts are that people are left out.

While three quarters in work use a computer, only one third out of work.

Of those working, half have a computer at home. Of those not working, only 21 per cent.

Of the lowest skilled and lowest income, only 18 per cent have a computer.

And only 3 per cent of the poorest households are on the Internet.

Only one fifth of those out of work have been on an open computer course.

So, in the Budget and beyond, to widen access to ICT and to ensure that there is no group of information have-nots, we will consider further action in the following areas.

First, we are making opportunities available for an extra 50,000 people to attend IT introductory learning courses. These will be available free – including to the unemployed, the low paid, the disabled and single parents. And we are considering how we can expand this.

Second, we will see how quickly we can expand to all areas of need computer learning centres

In the last Budget, we set a target for a national network of 1000 computer learning centres, one for every community in Britain – in schools, colleges, libraries, in Internet cafes and on the high street. We are well on course.

And here, new forms of providing access are being introduced – as libraries pioneer easier access – including drop-in centres in shopping locations.

Two sets of pilots have already started – one in September 1999, the other in January. And the first large tranche of centres will be announced in September, for which DfEE has just invited bids. New forms of provision are being tested, including a mobile ICT learning centre attached to a travelling circus around Birmingham. In Sheffield, the Citinet will link community-based ICT learning infrastructure and the University for Industry.

It is only right and fair that we start with the most deprived communities in the country, and make sure that they are equipped for the computer age.

Third, Learning Direct – the new University for Industry – will be the next stage in computer learning .

ICT learning centres will offer links into Learn Direct. And individual learners will be encouraged to move from taster and basic ICT courses to more advanced ICT and other courses offered by Learn Direct.

And fourth, people who need them should have computers available in their homes as well as at computer learning centres.

And we will do this by loans.

So, we are already pioneering a system under which poorer individuals – sometimes through local partnerships – will be able to lease computers and software in the new century in the same way local libraries have loaned books in the last century.

And in April we will be able to announce those partnerships across the country that will deliver the first tranche of our 100,000 computers on loan to poorer families.

And public provision will not only include hardware and software, but also connectivity and advanced online and offline learner support.

Taken together, these measures – new courses, new computers, new computer centres – will mean that every unemployed person will be offered a computer training course free of charge, and at a later stage the chance to graduate to the University for Industry courses.

And we will extend this beyond those who are registered as unemployed. Helping the single parent back to work by giving them skills – as well as information about work – is vital. The new computer courses put opportunity directly in their hands and will increase employability. So in addition to the registered unemployed, every single parent on benefit will be offered this course free of charge as part of the extension of opportunities to them.

We believe that in total one million can benefit by the end of 2002

So, with our new University for Industry providing education in people’s homes, with one million individual learning accounts that can finance computer courses, with help to loan computers and use them in computer learning centres, Britain is now embarking upon the biggest public education programme on offer in our history – opening up new opportunities for millions of people.

Imagine it, every child in every school in every community given access through computers and the Internet to the greatest libraries and museums in the world.

Imagine it, the 45 year old redundant worker in my part of the world – who has the courage and opportunity to go on an IT course and who acquires new skills and gets a new job.

Imagine it, the disabled person, house-bound, but now free – able to work from home through their personal computer.

All based on the understanding that in the new economy the more individual talent we nurture the more economic growth and prosperity we will achieve.

Looking to the future

So we are determined to catch up and lead.

That is why I have today set out policies to secure rapid development of broadband access, to broaden our commitment to ICT in education, to bridge the digital divide, and to encourage the development of new high tech companies specialising in the Internet measures that could help Britain lead the way.

And I believe that over time we can, if we achieve these changes, catch up and then surpass the U.S in these key areas.

We can be optimistic about Britain’s future because, building on British qualities that value work and self improvement, we have one of the strongest national commitments to education and investment in the most modern educational technology.

We can be optimistic because within one of the largest marketplaces anywhere – the single market in Europe – we have a great opportunity for Britain to do business and to make it a springboard into the rest of the world.

We can be optimistic because, through our pioneering and innovative private-public partnership, we can release new energy to build both a knowledge economy and a knowledge society.

We can be optimistic because we have the indigenous talent in all the relevant industries to make Britain the centre for a new Hollywood of the creative interactive content industry.

We can be optimistic because we are now ready to lead the way in bridging the digital divide, leaving no one, no community, no area out.

In short, we can be optimistic because we are determined to build from lasting British values and a commitment to opportunity for all the efficient economy and fair society from which future success will be best guaranteed.

British values and the British people ready to rise to and surmount the newest challenges ahead.