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Category: Economy

  • John Swinney – 2022 Letter to Nadhim Zahawi on Public Sector Pay

    John Swinney – 2022 Letter to Nadhim Zahawi on Public Sector Pay

    The letter sent by John Swinney, the Scottish Deputy First Minister, to Nadhim Zahawi, the Chancellor of the Exchequer, on 31 July 2022.

    Rt Hon Nadhim Zahawi MP
    Chancellor of the Exchequer
    HM Treasury
    1 Horse Guards Road
    London
    SW1A 2HQ

    31 July 2022

    Dear Nadhim,

    I write to notify you that I have taken on responsibility for the Finance and Economy portfolio whilst the Cabinet Secretary, Kate Forbes, is on maternity leave.

    I look forward to working with you and, while I appreciate there may be some limitations on the business of the UK Government pending conclusion of the Conservative leadership process, I am open to engagement with you through this period. I also appreciate the value of the on-going dialogue between our respective officials.

    There is one urgent issue I would wish to take the opportunity to raise given its importance to the delivery of public services in Scotland. Further to the joint letter from devolved administration finance ministers to you on 15 July, and in light of the UK Government’s subsequent announcements regarding public sector pay, I am concerned that no associated funding is being provided to meet these additional costs.

    Last year’s UK Spending Review, which as you know determines the majority of the Scottish Budget, did not take account of the levels of pay uplift now proposed or indeed the wider effects of inflation. The associated reduction in spending power across public-sector budgets is deeply worrying for our public services and our capacity to respond to the cost of living crisis, which will undoubtedly bring renewed challenges through the coming autumn and winter period. Given our fixed budgets, our restricted borrowing powers and the inability to change tax policy in year, the lack of additional funding for public sector pay deals via the Barnett Formula means the Scottish Government could only replicate these pay deals for public workers in Scotland with deep cuts to public services.

    I would urge you to consider appropriate funding for public sector pay, and would welcome early discussions with you on this matter.

    John Swinney

  • George Osborne – 2006 Speech to the Credit Today Conference

    George Osborne – 2006 Speech to the Credit Today Conference

    The speech made by George Osborne, the then Shadow Chancellor of the Exchequer, on 12 May 2006.

    “I am delighted to be here at the Credit Today conference, and to follow such an impressive array of speakers who have covered such broad subjects.

    I have been impressed by the focus of the credit industry on controlling risks and striking the balance between competition and responsible lending.

    That is what I want to talk about today.

    The story of the credit industry has a rich history, and is closely intertwined with the development of the modern economy that we live in.

    The first recorded loan transactions known to man date from Mesopotamian agreements etched in stone, paying interest in silver.

    And the Romans entered into contracts based on contingent liabilities.

    In early modern times, first in Holland and later in London in the sixteenth and seventeenth centuries, credit began to finance an expansion of world trade that heralded the beginning of the industrial revolution.

    To pay for the ships and crew that undertook global trade, the entrepreneurs of the day needed to borrow. Until this first expansion of credit, only kings had the gold to pay for ships. But as debt finance grew, so did the merchants who brought spices from the east, and cotton from the west, and returned with cloth.

    By the end of the seventeenth century, the Government too saw the advantage of credit, and in 1694 King William III set up the Bank of England to borrow from his people. That innovation is often credited with underpinning victory in King William’s war against France three years later.

    Since then the industry has expanded, and London has grown into the largest international financial centre in the world. Over a million people now work in the UK financial services sector, and in London, nearly one in ten is employed in finance. Financial products of all kinds, including credit, are one of our key exports.

    In recent years we have seen another expansion of credit, both private and public. Since the mid 1990s, the level of personal debt has risen in double digits each year, while inflation has remained low. And the level of private sector borrowing, on and off the balance sheet, has rocketed.

    Borrowing by households has risen to almost £1.2 trillion. That’s £40,000 for every family in Britain. A fifth of that debt is unsecured, borrowed on credit cards, personal loans, and overdrafts.

    This great expansion in credit brings both challenges and opportunities.

    Free access to credit allows people and families to plan their budgets. Gone are the days when we had to wait in turn for access to a mortgage, when the building society would tell us when we were considered responsible enough to buy our first home. With freer access to credit, young people can apply for mortgages when they choose.

    Unsecured credit helps us to manage our finances, to smooth over tricky times, and to plan when we spend. Access to credit allows us to move money over our lifetime, to spend when we need it, and earn it back later. So when we discuss the challenges that are posed by debt, we must not lose sight of the huge benefits that access to credit can bring.

    As in many markets, liberalised credit markets have boosted our freedom and boosted our economy.

    But as well as these great advantages, the expansion of credit has brought challenges. The Conservatives have been very aware of these challenges in recent years.

    There are two challenges I particularly want to talk about today. First, for some, especially vulnerable, families, too much debt can cause misery and great financial hardship. And second, high levels of debt, both public and private, make the economy more vulnerable to certain types of shock, and may put macroeconomic stability at risk.

    For families, and for the wider economy, more debt means more vulnerability.

    Most of us use our credit cards every week, and many pay off our balances at the end of each month, and we can manage our mortgage payments. But that isn’t the case for everyone.

    Just this week, the governor of the Bank of England described the rise in debt and bankruptcies as a ‘social problem that is materialising’. He is right. We are in danger of becoming credit card Britain.

    Last year, three million people had problems paying off debt. Another twelve million have kept up payments only after a struggle. 1.1 million people contacted the Citizen’s Advice Bureaux with debt-related enquiries – up 47% over the past five years. So debt is a significant problem for a small but important minority. For many of those struggling with debt problems are also the most vulnerable – often living from benefits or in badly paid jobs.

    The Financial Services Authority has spoken of a ‘financial crisis’ for 18 to 40 year olds. Average debt for 18 to 24 year olds has doubled to £15,000 since 1999. And Alliance and Leicester has found that those in their 20s pay as much on average in interest as those in their 30s and 40s, despite usually not yet having a mortgage.

    This is not a problem that is going away. As we as a nation get richer, problems with debt are getting worse. Bankruptcies have doubled in the past year. That may partly be due to a change in the law in England and Wales. But even in Scotland and Northern Ireland, where the regime has not been changed, bankruptcies have risen. Last year alone, 120,000 people were declared bankrupt – three times more than in 1997.

    Even despite the benefits of more freely available credit, we cannot ignore those whose lives are made a misery by debt.

    Like the case of a lady who built up £58,000 of unsecured debt despite telling her creditors that her only source of income was from benefits. Or the pensioner who attempted suicide after she acquired 25 personal loans and credit cards totalling £135,000 of debt over a decade. A man from Yorkshire whose only income was disability benefits accrued £40,000 in unsecured debt from several lenders. When he first applied for a card he had expressed doubts to the lender about his creditworthiness, but the lender advised him to ‘be creative’.

    We need to consider imaginative solutions to these interconnected and difficult problems.

    For policymakers who believe in markets, this leaves a difficult challenge.

    I instinctively believe in the power of business to generate wealth and opportunity, as well as the tax revenues that fund our public services and infrastructure.

    Like you I want a strong and healthy credit industry. And like you I want that industry to be responsible.

    That is what David Cameron said earlier this week when he talked about corporate responsibility.

    Every time a business behaves irresponsibly, it makes it that much harder to persuade people that business is a force for good. If the political response to corporate responsibility becomes the preserve of the left, then the response is over-regulation and yet more burdens.

    That applies in the domestic debt market too. Irresponsible lending to those unable to cope is bad for people, and it’s bad for business too. In the short term, it’s bad for the bottom line as irresponsible lending is less likely to be paid back. And in the long term, it harms the good name of business and encourages those who don’t believe in or understand business at all to interfere and impose new regulation.

    So what can we do?

    Last year the Griffith report, commissioned by the Conservatives and produced by Brian Griffith of Goldman Sachs, reported on possible solutions to the challenges we face. I am glad to say that some of those recommendations have been taken up. I might suggest four areas that we must consider in more detail.

    We must, for instance, continue the FSA’s work in financial literacy, so that all families understand the consequences of taking on debt. Well informed customers are better placed to borrow responsibly – and better financial literacy will lead in turn to even less need for regulation. Some people, for instance, believe that a higher APR is a good reason to choose a credit card. According to a survey by Norwich Union, over three quarters of people find finance complicated and around half said that complexity has put them off addressing their financial needs.

    As well as boosting financial literacy to improve the responsibility of customers, we must ensure that credit advertising and credit scoring are responsible. It is a knee-jerk reaction of an interfering Government that responds to this challenge with yet more regulation. But it is in the credit industry’s own interest to advertise responsibly.

    And we can support measures for helping families out of debt. I want to pay special tribute to the work of the Citizen’s Advice Bureaux and others in helping so many people who find themselves in difficult financial situations. Their services should be properly funded, because if they are not then it is the state that will have to pick up the bill.

    These are all step we should take. But many of the most difficult cases, like these, occur when people accumulate debt from many different lenders.

    While any one loan may be affordable, taken together, loans from many different lenders can tip a family over the edge. So responsible credit scoring should take into account not just defaults, but the financial stress of any applicant.

    But that sort of responsibility is difficult without adequate procedures for data sharing. The existing data protection legislation causes difficulties, even among lenders who want to share.

    So we should consider extending data sharing among lenders, particularly of unsecured debt, so that lenders know their clients’ full financial picture before agreeing more loans. I recognise the work that the industry and the Treasury Select Committee have done in pushing forward this agenda.

    It seems to me that data sharing doesn’t just help lenders to assess the reliability of a client. But, properly introduced, it would help to protect vulnerable clients from resorting to many different lenders, often to pay interest on other debt.

    In the past there was no need to share data. Credit was effectively rationed, through queuing. And the number of lenders was small. In 1971, there was just one credit card – the Barclaycard. Now, there are over 1,300 types of credit card, and over 70 million cards in issuance – that’s more than one for every man, woman and child in the country.

    So policy must adapt to changing circumstances.

    I acknowledge that there are concerns about data sharing. We would not want data sharing to become an unnecessary regulatory burden. But data sharing can improve the competitiveness of the credit market. Only with more accurate information about risk can lenders price risk more accurately.

    And data sharing benefits highly credit-worthy customers too, as lenders know who the low-risk customers are too.

    So I applaud the strides have already been made by some banks to share data with customers’ consent through credit rating agencies.

    We must strike the right balance, appropriate for the challenges that we now face.

    We can see that excess debt increases vulnerabilities at the personal level. And it causes vulnerabilities at the national level too.

    Over the past nine years, the ratio of debt to annual national income has doubled.

    Four fifths of the outstanding debt has been secured against housing, and has in part financed the rapid increase in house prices.

    As the debt and house values have risen in tandem, so the average homeowner’s balance sheet has not been damaged. But the mismatch between a fixed-price debt and a variable priced asset heightens exposure to a fall in house prices. With larger debts relative to income, the impact on consumption and therefore on the wider economy of a fall in house prices would be bigger.

    The remaining fifth of households’ debt, lent on credit card, personal loans, and overdrafts, usually funds consumption. Growth in the economy is at risk if it is mainly fuelled by consumption – both by individuals and by the Government – that is funded by debt.

    An economy built on borrowed money is eventually living on borrowed time.

    And on top of all the mortgages, credit cards, and bank loans, there is one man who has borrowed more than us all. The Chancellor has borrowed a further £100 billion on our behalf. He plans to borrow another £150 billion over the next three years. And that is before you add in the billions borrowed and hidden off the balance sheet.

    These twin deficits – in the public and private sectors – combined with a current account deficit of almost 4% of GDP, means that overall, Britain is borrowing from overseas to spend, and our imports are out of balance with our exports. In other words, we have a trade deficit, which over the first three months of this year was the largest on record.

    These imbalances in our economy may not reverse soon.

    Economists play a game of trying to predict when the structural imbalances will unwind with as much enthusiasm as politicians playing the game of when Tony Blair will depart. At least in our game there’s an end in sight.

    What the economists do agree on is that imbalances caused by profligate Government borrowing and high private borrowing makes our economy more vulnerable to instability, like a sharp exchange rate movement, or a fall in asset prices.

    So just as private lending should be responsible, Government must be responsible too. We must strengthen the fiscal rules, and instead of fixing the rules to fit our spending, we must fix our spending to fit the rules. We must be transparent about Government borrowing – we must share data too. In January we proposed a ‘triple lock’ on stability to do just that.

    The modern Conservative approach to debt is part of our broad economic strategy.

    To re-build the competitiveness of our economy, by entrenching stability, and encouraging growth.

    By taking long term decisions;

    by facing up to the challenges of the new global economy;

    and by trusting people, and sharing responsibility.

    We want to build an economic strategy that can make Britain the most competitive place in the world to do business, where Government doesn’t just get in the way, with rising living standards for all.

    We are at the start of a journey, as we build the ideas, and vision, and policies that will help Britain meet the challenges of the twenty first century.

    And I would like to ask for your help in travelling on that journey too. We want to work with you, listen to you, both directly and through our policy groups on economic competitiveness and social justice, and I look forward to participating in this debate and learning from it in the months and years to come.

  • Nadhim Zahawi – 2022 Comments on August 2022 Interest Rates Rise

    Nadhim Zahawi – 2022 Comments on August 2022 Interest Rates Rise

    The comments made by Nadhim Zahawi, the Chancellor of the Exchequer, on 4 August 2022.

    I know today’s news will have been concerning for many people across the UK. I’ve spoken to Andrew Bailey, the Bank of England Governor to discuss the challenging global context and our continued focus to tackling inflation and supporting people with rising prices.

  • Simon Kirby – 2017 Speech at the LSE Global FinTech Investor Forum

    Simon Kirby – 2017 Speech at the LSE Global FinTech Investor Forum

    The speech made by Simon Kirby, the then Economic Secretary to the Treasury, at the London Stock Exchange in London on 16 March 2017.

    Good morning everyone.

    It’s always a pleasure to come to the London Stock Exchange – one of the oldest exchanges in the world, one of the biggest, and one of the best.

    Based in the heart of the City, it’s also a symbol of what we are lucky to have in the country at large. And that’s our outstanding prowess in the world of global finance.

    Because it is a truth universally acknowledged – perhaps not always universally liked, if you ask our global rivals – but a truth universally acknowledged nonetheless, that the UK is one of the best places for financial services firms in the world.

    And today, we opened the markets talking about something that’s going to help us keep it that way – our FinTech.

    Now FinTech is, without doubt, a pretty broad term, covering a pretty wide range of different specialisms. But for me it boils down to the technological advances that will mean real improvements to our financial services – whether that’s in how money is lent, payments are made or decisions are taken.

    And as you’d expect in a country that is home to so many world-class financial experts, we’re proving to be the best in the world in this sector.

    I’ve heard from businesses of all kinds about how they are shaking up financial services with their innovative, new developments.

    And that’s not just about what the big, established players of this industry are doing.

    It’s also about all the exciting new start ups – both across the country, and even internationally – I met several British companies, for example, when I went to visit the Cyberport FinTech space in Hong Kong just a couple of months ago.

    So what is clear to me, is that in FinTech, we’ve got all the ingredients for a real British success story. And the question for all of us is how we can help it unfold further.

    There is of course, much we’ve already done to create the right environment for success.

    Let me give just three examples of things that people keep telling me they envy in the British system.

    Firstly, the FCA’s regulatory sandbox.

    That’s already proven its worth to businesses which need to test out their new models and products with real consumers – and to do so in a safe regulatory space.

    Secondly, the Bank of England’s FinTech Accelerator.

    Which is giving FinTech companies the chance to work with the Bank to find innovative solutions that help it improve how it performs its job as the country’s central bank.

    And thirdly, the FinTech Delivery Panel.

    Which is all about our leading finance and FinTech companies – and often rivals at that – coming together to work out how to make the UK an even better place to do business – and I look forward to the ideas that will come out of this group.

    One last thing deserves a mention – Open Banking.

    We’re not quite there yet – the full release is on track for January next year – but this is really going to make a big difference to change banking as we know it– allowing customers to give FinTech companies safe access to their personal data held by their bank, so they can take advantage of new services.

    It is clear that we’ve got a good environment for FinTech to flourish.

    But I’ve been asking FinTech companies what more can be done.

    And the answers I get tend to fall into three main categories – it’s about talent, international connections and investment.

    So let me take each one of those in turn.

    And let’s start with the people. Because as a business man myself, I’ve seen first-hand that it’s the people that make all the difference to any company’s success.

    And there are two points to make.

    Firstly, on developing our own home grown talent. And I think there’s an awful lot we’re doing to reform our education system and prepare the next generation for the 21st century – look, for example, at the fact that we were one of the first countries in the world to put computer coding on the national curriculum.

    But the other point is about international talent – and I know Brexit has worried some of you on this front – especially as FinTech is one of the most international sectors in what is already a very international industry as a whole.

    Let me reassure you then, that we know how important this is. In fact, I held a meeting with FinTech companies just last month – with my colleague, Robert Goodwill, the Immigration Minister – to discuss this very issue. And I want to say to you, as I said to those firms, that though this government is determined to control our immigration, I cannot conceive of any circumstances in which we would want to stop companies moving highly qualified, highly skilled people into their businesses here in the UK.

    We want all of our industries to keep reaping the benefits of the world’s best talent – both in terms of the international members of staff you already have and value, and those you will want to hire in the future.

    The next big ask you had of us, was that we keep working to make links between the UK and other international markets.

    Because many of you have a really global outlook – we’ve recently been supporting World First, for example, as they take their money transfer business across the globe, with openings in China, India, Korea and Japan. And in turn many international companies are coming to the UK – last month, for example, we welcomed Square to the Treasury – the San Francisco mobile payments company, which is preparing to launch its UK operations. governments can do a lot to help such companies as they go across borders, by bringing down barriers, and paving the way for greater co-operation and more complementary regulatory systems.

    That’s what we’ve been working with our international partners to do – particularly, through our bespoke FinTech Bridges.

    We’ve already got three of these agreements with big FinTech markets – Singapore, the Republic of Korea and China. And we’re working on our next with Hong Kong – to build on the regulatory agreement between the FCA and Hong Kong Monetary Authority we already have in place. All of which is good news for those British start-ups I met in Hong Kong’s Cyberport.

    And I’ve been flying the flag for British FinTech throughout my visits to Asia.

    I promoted it at the Asian Financial Forum in January.

    I went to Singapore’s inaugural FinTech festival with a trade mission of impressive British FinTechs.

    And I’ve been talking FinTech in my visits to Indonesia, Malaysia and Hong Kong.

    We’re also really fortunate to have Eileen Burbidge as our special envoy – to promote our FinTech sector – both at home in the UK, and with international investors.

    That brings me to the last issue you raised with us, which is investment – and again, I know Brexit is a factor in your concerns.

    But it’s not the cause of them. Because even before the Referendum in February last year, an EY report told us that capital investment in UK FinTech is falling behind that in other countries.

    Consider just this one stat – in 2015, the UK attracted £524 million of external investment into FinTech. While New York and California got about £5 billion between them.

    So we’ve been working with you to turn that around. And one of the things we’ve got coming up to do that, is our International FinTech Conference on the 12th April.

    This is going to gather investors from the UK, and around the world, to see for themselves what British FinTech has to offer.

    It’s going to have a glittering cast of senior business leaders, like the London Stock Exchange’s very own Xavier Rolet, and the CEOs of the British Business Bank, TransferWise and Funding Circle.

    As well, of course, as the Chancellor of the Exchequer, the Governor of the Bank of England and our special FinTech envoy, Eileen Burbidge.

    So if there’s anyone here who doesn’t know about the conference who wants to come along, details are online, or you’re always welcome to get in touch with my office at the Treasury.

    Because my door is very much open to British FinTechs.

    I’ve already been meeting companies from across the country, and listening to what you have to tell me.

    And I want to keep hearing from you – to know what you’re worried about, and what you’re excited about too.

    Because this government is here to support you as you build your businesses up, compete internationally, and collaborate internationally too.

    So if you ask me, the world should watch this space – because British FinTech is going to go from strength to strength.

  • Simon Kirby – 2017 Speech at the Asian Financial Forum

    Simon Kirby – 2017 Speech at the Asian Financial Forum

    The speech made by Simon Kirby, the then Economic Secretary to the Treasury, in Hong Kong on 16 January 2017.

    Good morning.

    I’m honoured to be here today.

    Not only because Hong Kong is such a beautiful and vibrant city.

    But because this is a forum that brings together some of the finest expertise in our financial community – from across Asia, and from across the rest of the world too.

    This is all the more important as we meet in the context of economic and financial uncertainty, and profound political change.

    Change and uncertainty require global dialogue, so it is a real privilege to be given the opportunity, on behalf of the British government, to contribute to that dialogue here today.

    The theme of this year’s forum is ‘Driving change, innovation and connectivity’.

    And I want to talk about each in turn.

    Let me start with change.

    Because as you may have noticed, that’s something we in Britain had quite a lot of in 2016!

    Not only did we get a new Prime Minister – and, I’m proud to say, the second female Prime Minister in our history.

    But we also took the historic decision to take a new direction and to leave the European Union.

    I know that for many of you, this will raise some questions about how things will change in the future.

    But let me provide some reassurance.

    The Prime Minister has made it clear that the process of leaving the European Union will begin by the end of March this year, meaning no unnecessary delays.

    Most importantly of all, our economy is growing, our banks are well capitalised, and we are well equipped to deal with any ongoing risks.

    So it is clear Britain is in a strong position to make this adjustment.

    I also want to be clear that the UK government sees this as a huge opportunity for Britain.

    We are not turning our back on the international stage.

    We see our relationships with countries across Asia and the rest of the world as more important now than ever before.

    And, working closely with our international partners, we will continue to advocate passionately for free trade and free markets.

    But it’s not all change in the UK.

    When it comes to Financial Services, the UK remains home to one of the most international and the most experienced financial capitals in the world:

    we’re the largest exporter of financial services in the world

    we’re home to over 250 foreign banks – more than any other financial centre

    we account for close to 40% of global FX trading – more than anywhere else in the world

    and with an unrivalled pool of investors, we’re also Europe’s largest asset management centre – with almost £7 trillion pounds under management

    and all this is supported by world-leading legal and professional services

    So the UK is a leading global financial centre, and the natural partner of choice for Asian companies looking to go global.

    And we’re determined to keep it that way as we navigate our exit from the European Union.

    Because we don’t rest on our laurels in Britain, which leads me on to our second watchword of this forum – innovation.

    What’s clear is that if you don’t keep moving, you don’t keep your reputation for excellence.

    The City of London can look back on centuries of success – but we know our future success depends on making the most of opportunities to come.

    And these are exciting times in global finance.

    In the UK, we are embracing innovation – and I’m pleased to say we’re doing it in partnership with countries across Asia.

    Take FinTech.

    Domestically, we’re doing many things to support the development of this important sector.

    But we’re also co-operating with other leaders in FinTech.

    We’ve agreed partnerships – we call them ‘FinTech Bridges’ – with Singapore, the Republic of Korea and the People’s Republic of China.

    I’m delighted that we’ve taken the first steps towards agreeing a Bridge with Hong Kong too.

    And in a few months’ time, we’re going to hold the first ever International FinTech Conference to promote the UK’s world-leading FinTech sector to investors from across the world – and I hope to see many of you in this room there.

    We’re also leading the way in developing new capital markets.

    We’re collaborating with countries across the world, in particular here in Asia, to develop the market for green finance to meet our collective commitment to stop climate change in its tracks.

    The UK is also the leading western hub for the Islamic Finance, and we continue to work closely with countries like Malaysia and Indonesia, and with the Gulf Cooperation Council, to drive innovation in this important market.

    And we’re also supporting others – in particular India and China – to internationalise their currencies, helping them to connect and integrate their financial markets with the global financial system.

    And this brings me to the final theme of this conference: connectivity.

    Because, as the examples I have mentioned show, in the UK we believe the best way to tackle the big issues, and the best way to raise prosperity for all, is through partnerships across borders.

    We place huge importance and value on the connections we have here in Asia.

    It’s telling, for example, that the Prime Minister’s first bilateral visit outside Europe was to India.

    And that the British Chancellor’s first foreign trip was to Beijing and Hong Kong.

    The UK has always had a special relationship with this part of the world.

    But it’s about much more than shared history.

    It’s about common values and cultural links.

    It’s about the thousands of people from this part of the world that come to study and work in the UK; and the thousands of British citizens that choose to make their living here.

    And of course, it is about the close connections between the UK and Asian economies.

    Those connections matter because we have so much to offer each other.

    I saw this first-hand when I took part in the recent UK-China Economic and Financial Dialogue – where we not only made substantial progress to boost our cooperation on financial services, but also cemented ties on energy, trade and investment.

    I saw this too on my recent visit to Malaysia, Singapore and Indonesia, where I discussed with my counterparts, and with industry, the many ways in which we can collaborate further on Financial Services.

    In Britain, we believe passionately in the power of working in partnership with countries right across the globe.

    And we will continue to work tirelessly to strengthen those partnerships in the future.

    So – we are living in times of change.

    But we should be optimistic – both at home in the UK, and across Asia – that we will also be in times of great opportunity and progress.

    Because, ladies and gentlemen, by embracing change…

    By empowering innovation…

    And by working in partnership…

    We will all become more prosperous as a result.

    Thank you.

  • Simon Kirby – 2016 Speech at the UK Financial Services Brexit Summit

    Simon Kirby – 2016 Speech at the UK Financial Services Brexit Summit

    The speech made by Simon Kirby, the then Economic Secretary to the Treasury, on 11 October 2016.

    Good Morning everyone.

    Thank you for inviting me to speak here today.

    And I want to congratulate City and Financial Global, the Corporation of London and the CityUK, and other organisers and sponsors, for holding such a timely event.

    Because it doesn’t matter what industry you’re working in. There’s one question every single business sector is wrestling with, and that’s what our exit from the European Union will mean in practice.

    And I know there are some concerns among the financial services sector and I’ve listened carefully to Charles’ 5 points [Charles Bowman – City of London].

    People are asking whether the UK will be able to maintain its reputation as a world-leader in financial services once we’ve left the EU? Whether we’ll still be able to keep and attract the very best talent? Whether this industry will be consulted about what is the very best deal for Britain and what it would look like?

    And the reason I wanted to come here today, is to make very clear, that the answer to all three of these important questions, is a resounding yes.

    So let me kick off with that first question – can the UK still be one of the best financial centres, anywhere in the world, even if we’re outside the EU?

    Well let me say this is an absolute priority for the government. This sector is hugely important to the British economy. It is the world’s largest exporter of financial services, insurance and pensions exporting £63.7 billion.

    And across the country, over 2 million people have jobs in this and related industries – and it really is across the country, with the vast majority of these jobs actually outside of London. And it is important to every single part of our great country.

    But what I want to remind you – as we will remind the world – is that being in the EU is simply not the biggest strength we have to offer. Standing in this building makes that point very clear to me.

    What we can offer in the UK, is all the services the industry needs – in one place.

    And we’ve got a lot of strings to our bow.

    We’ve got our hugely respected legal system.

    We have world-leading business and support services.

    We have a multilingual workforce. And we have a great time zone for doing business across the globe.

    We have some of the best universities in the world.

    And we have a financial system that we’ve spent the last 6 years making more and more resilient – as illustrated for example, by the capital requirements for the largest banks which are now 10 times higher than before the crisis.

    And another great skill we have here in this country, is that we don’t stand still.

    We’ve been steadily developing our capacity in this industry across the whole UK.

    So the success of the square mile is now being seen in the regions across the country, which we’re working to promote as financial centres of excellence in their own right inextricably linked to London and important across the whole world.

    And we keep moving towards the future in terms of new innovation.

    Look at the exciting use of technology in this sector!

    We should all be proud of the fact that London was recently declared the very best place in the world to set up and run a FinTech firm – a sector that last year generated almost £7 billion in the UK.

    So we have a lot to offer and a positive story to tell.

    We have a positive story to tell and we have all the talents to keep offering the financial products and expertise that our global customers require.

    And while we are rewriting our relationship with the EU, we will also be working hard to retain our reputation for British excellence in this industry.

    Now I know that for many of you a key part of retaining that reputation, is retaining the talent that we have.

    So let me turn to the second question many of you are asking, which is about our ability to keep and attract the best people to the UK’s financial services industry.

    And there are two parts to that question.

    Firstly, concerning the rights of EU nationals already here within the industry. We fully expect that the legal rights of EU nationals already in the UK will be properly protected. Because they make a huge contribution to our country, as well as our financial services industry. And we’re confident that we’ll be able to reach an agreement protecting the rights of EU nationals here, as well as our citizens in Europe.

    But the second part of the question is about making sure we can attract the right skills and the people to our financial services industry.

    The Prime Minister has made it clear the Britain we will build after Brexit is going to be a global Britain. So it’s the time now to be bold, the time to build a new confident role for ourselves on the world stage. And that means continuing to be a place which can attract the very best workers coming from abroad, while at the same time making sure we keep developing our home-grown talent of the future. It’s a balance between the two.

    And in response to the third question – about how much the views of the financial services industry will be taken into account as we lay the groundwork for a successful Brexit.

    Let me be very clear, ladies and gentlemen. We want to secure the very best possible deal for this country – across our industries, and across the UK. 2.2 million people, £67 billion in tax income. We want the very best deal for financial services. But we cannot do this alone.

    It’s always important that government and industry talk to each other.

    But now it is more important than ever so we can meet the challenges and take advantages of the opportunities, yes opportunities, ahead effectively.

    So we need to hear your perspectives from the financial services sector.

    We will listen to you. We will work hard to understand your issues. And we will weigh this up as we consider our position before opening up negotiations with the EU. And the process has already started. You’ve told us, for example, about the importance of market access for this industry.

    We know that if the UK is to have a passporting regime, that we will need a regulatory regime that is comparable and well-harmonised with the countries into which we are passporting.

    And I think we are in a strong place to achieve this with Europe: starting a new relationship at a point when we have shared the same rules for so long and had huge economic integration.

    You’ve also told us you’re worried about market disruption and the risks to financial stability when we leave the EU.

    And so we will push for a solution that means an orderly transition – that neither disrupts how financial services are delivered, nor importantly drives up costs.

    So my message to you today is to keep talking to us, to keep sharing your views, and to keep working with government in this spirit of constructive collaboration.

    To conclude, we know the path ahead won’t always be easy.

    There’s a lot of work ahead for all of us.

    And we know that we must expect some turbulence- some bumps in the road- as we negotiate our exit from the EU – with article 50, the mechanism to withdraw, set to be triggered by the end of March at the latest next year. But we’ve worked hard to strengthen our economy, and we approach this period from a position of strength. So we are confident that we can weather any storm that comes our way.

    And as I started with three questions, let me end with three promises to you here today.

    First, that we are going to keep on doing what it takes to see the UK’s financial services industry remain a world leader.

    Second, that we are going to keep on making this a country which is competitive and open for business.

    And thirdly, that the government will keep fighting to get the best possible deal for British business, and make Brexit a success.

  • Bank of England – 2022 Statement on Interest Rate Increase (August 2022)

    Bank of England – 2022 Statement on Interest Rate Increase (August 2022)

    The statement made by the Bank of England on 4 August 2022.

    The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 3 August 2022, the MPC voted by a majority of 8-1 to increase Bank Rate by 0.5 percentage points, to 1.75%. One member preferred to increase Bank Rate by 0.25 percentage points, to 1.5%.

    Inflationary pressures in the United Kingdom and the rest of Europe have intensified significantly since the May Monetary Policy Report and the MPC’s previous meeting. That largely reflects a near doubling in wholesale gas prices since May, owing to Russia’s restriction of gas supplies to Europe and the risk of further curbs. As this feeds through to retail energy prices, it will exacerbate the fall in real incomes for UK households and further increase UK CPI inflation in the near term. CPI inflation is expected to rise more than forecast in the May Report, from 9.4% in June to just over 13% in 2022 Q4, and to remain at very elevated levels throughout much of 2023, before falling to the 2% target two years ahead.

    GDP growth in the United Kingdom is slowing. The latest rise in gas prices has led to another significant deterioration in the outlook for activity in the United Kingdom and the rest of Europe. The United Kingdom is now projected to enter recession from the fourth quarter of this year. Real household post-tax income is projected to fall sharply in 2022 and 2023, while consumption growth turns negative.

    Domestic inflationary pressures are projected to remain strong over the first half of the forecast period. Firms generally report that they expect to increase their selling prices markedly, reflecting the sharp rises in their costs. The labour market has remained tight, with the unemployment rate at 3.8% in the three months to May and vacancies at historically high levels. As a result, and consistent with the latest Agents’ survey, underlying nominal wage growth is expected to be higher than in the May Report over the first half of the forecast period.

    Inflationary pressures are nevertheless expected to dissipate over time. Global commodity prices are assumed to rise no further, and tradable goods price inflation is expected to fall back, the first signs of which may already be evident. Although the labour market may loosen only slowly in response to falling demand, unemployment is expected to rise from 2023. Domestic inflationary pressures are therefore expected to subside in the second half of the forecast period, as the increasing degree of economic slack and lower headline inflation reduce the pressure on wage growth. Monetary policy is also acting to ensure that longer-term inflation expectations are anchored at the 2% target.

    The risks around the MPC’s projections from both external and domestic factors are exceptionally large at present. There is a range of plausible paths for the economy, which have CPI inflation and medium-term activity significantly higher or lower than in the baseline projections in the August Monetary Policy Report. As a result, in coming to its assessment of the outlook and its implications for monetary policy, the Committee is currently putting less weight on the implications of any single set of conditioning assumptions and projections.

    The August Report contains several projections for GDP, unemployment and inflation: a baseline conditioned on the MPC’s current convention for wholesale energy prices to remain constant beyond the six-month point; an alternative projection in which energy prices follow their downward-sloping futures curves throughout the forecast period; and a scenario which explores the implications of greater persistence in domestic price setting than in the baseline. These are all conditioned on announced Government fiscal policies, including the Cost of Living Support package announced in May. There are significant differences between these projections in the latter half of the forecast period. However, all show very high near-term inflation, a fall in GDP over the next year and a marked decline in inflation thereafter.

    The MPC’s remit is clear that the inflation target applies at all times, reflecting the primacy of price stability in the UK monetary policy framework. The framework recognises that there will be occasions when inflation will depart from the target as a result of shocks and disturbances. The economy has continued to be subject to a succession of very large shocks, which will inevitably lead to volatility in output. Monetary policy will ensure that, as the adjustment to these shocks occurs, CPI inflation will return to the 2% target sustainably in the medium term.

    The labour market remains tight, and domestic cost and price pressures are elevated. There is a risk that a longer period of externally generated price inflation will lead to more enduring domestic price and wage pressures. In view of these considerations, the Committee voted to increase Bank Rate by 0.5 percentage points, to 1.75%, at this meeting.

    The MPC will take the actions necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit. Policy is not on a pre-set path. The Committee will, as always, consider and decide the appropriate level of Bank Rate at each meeting. The scale, pace and timing of any further changes in Bank Rate will reflect the Committee’s assessment of the economic outlook and inflationary pressures. The Committee will be particularly alert to indications of more persistent inflationary pressures, and will if necessary act forcefully in response.

    In the minutes of its May 2022 meeting, the Committee asked Bank staff to work on a strategy for selling UK government bonds (gilts) held in the Asset Purchase Facility and committed to providing an update at its August meeting. Based on this analysis, the Committee is provisionally minded to commence gilt sales shortly after its September meeting, subject to economic and market conditions being judged appropriate and to a confirmatory vote at that meeting.

  • Rachel Reeves – 2022 Speech at The Economy 2030 Inquiry Conference

    Rachel Reeves – 2022 Speech at The Economy 2030 Inquiry Conference

    The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, on 13 July 2022.

    Thank you.

    I want to pay tribute to the work of the Economy 2030 Inquiry.

    Today’s report strikes not just at the truth that our economic problems are deep-rooted but that they are far more than an abstract question of lines on a chart.

    That it is questions of growth, productivity and inequality which underlie the sense that Britain isn’t working for far too many people.

    As many of you will know, I’m an economist by trade, spending the best part of a decade at the Bank of England.

    But I’m also a politician, so let me spend a few moments on the political situation we find ourselves in.

    Because the tables have turned.

    On the day the Prime Minister finally announced his intention to stand down, I was in Leeds, meeting business leaders.

    What I heard from them was what I have heard repeatedly over recent weeks:

    That political instability at the top is a major drag on market confidence – and the last week has shown us something else about this government.

    Because any lingering sense that the Conservatives are the party of economic responsibility has been shredded to pieces over the past few days.

    Instead of setting out serious plans to help people with the cost of living crisis, just as we hear terrifying estimates of how much energy bills will go up again in October, we are presented with the extraordinary spectacle of a Tory tombola of tax cuts – with no explanation of what public services will be cut, or how else they’d be paid for.

    Honesty and integrity matter in politics, not just when it comes to parties and rule breaking but also when it comes to economic policymaking.

    The level of unfunded tax cuts being bandied about this week would blow a massive hole in the public finances.

    Every single Conservative leadership candidate supported the government’s fiscal rules when they were passed into law in January, but now they are prepared to take a flamethrower to them.

    I’ve set out the fiscal rules which will bind the next Labour government.

    Rules which I will stick to with iron clad discipline.

    Because responsible management of our public finances is the only route to providing the strong foundations we need to reboot our economy, revitalise our public services and re-energise our communities.

    They will be paired with an absolute commitment to ending the shocking levels of waste and fraud we’ve seen under this government strengthened by the creation of a new Office of Value for Money, .to make sure every pound of taxpayers’ money is treated with the respect it deserves.

    Back in September I said that I am more than happy to take on the Tories when it comes to economic competence because I know we can win. If didn’t know then that they wouldn’t even bother putting up a fight.

    It is important that we put this moment in wider context.

    Because we face a succession of long-term economic challenges – low growth, flatlining productivity, stagnant wages, and now soaring inflation.

    Under the last Labour government, the UK economy grew at an average of 2.1 percent a year, allowing us to deliver the biggest boost to investment in public services in our lifetimes.

    But since then, growth has averaged just 1.5 percent a year.

    We shouldn’t kid ourselves that this is solely a product of global trends.

    The UK had the second lowest productivity growth in the G7 in the 2010s and, as today’s report shows, the UK’s productivity gap with France and Germany has almost trebled since 2008 – equivalent to an extra £3,700 in lost output per person.

    Stagnation isn’t inevitable.

    Our capacity for innovation, enterprise and old-fashioned hard work remains undiminished.

    Britain has huge opportunities if only we have a government that can bring the country together in a spirit of national purpose.

    But the only alternative to a high-tax, low-growth, high-inflation economy is a serious plan.

    Let me tell you what that involves.

    It means addressing our deep-rooted supply-side problems which have contributed to low growth and stalling productivity and are a major factor in the spiralling inflation rates we’re seeing.

    In America, Treasury Secretary Janet Yellen has called this approach “modern supply side” economics.

    It’s based on the knowledge that government plays a crucial role in bringing about economic growth and tackling the structural challenges that have held us back

    My vision for a modern supply side economics for the UK involves three key things.

    First, we need to make sure people can realise their potential and play an active role in a growing economy.

    For all ministers’ talk of a jobs miracle the reality is we have a hidden worklessness crisis with employment lower than before the pandemic at a time of record vacancies, and a million people missing from the workforce relative to pre-pandemic trends.

    That is why my colleague Jonathan Ashworth this week outlined plans from better links between employment and health services, to flexible working, and reforming how our job centres operate to help people return to work where they can.

    Fundamental to strengthening our supply of labour is supporting parents to work.

    That means urgently addressing the cost and availability of high-quality, affordable and flexible childcare.

    Second, we need to support British businesses to thrive – working in partnership to get the economy growing again and provide the good jobs we need.

    That will rest on a modern industrial strategy on our plan to use all the tools at government’s disposal to buy, make and sell more in Britain, and on our Climate Investment Pledge – which will help create new markets and leverage in private investment, and drive carbon emissions down.

    Today’s Resolution Foundation report argues forcefully – and rightly – that we must play to Britain’s strengths.

    We are the second largest exporter of services in the world and pioneers in creative industries.

    We should be proud of those strengths.

    That is why it is beyond belief that the Tories delivered a Brexit deal that hurts our creative and service industries.

    So we will address these flaws building on the deal, ensuring at a minimum we agree the mutual recognition of professional qualifications and negotiate an EU-wide cultural touring arrangement.

    And third… we need to support great British entrepreneurs.

    Which is why, last month, I announced the launch of a new review, led by a panel including Lord Jim O’Neill to map out how we can build the institutional ecosystem that ensure new and growing businesses have what they need to flourish here in the UK.

    This approach – a new, ‘modern supply side’ economics – comprises an ambitious plan for growth grounded in the realities of the world in the 2020s, not in Tory Party fantasy which would result in higher borrowing, increased mortgage rates, and cuts to our schools, hospitals and police.

    Labour’s alternative is based on partnership between government and business – working for sustainable growth felt in every part of the country with a serious plan and the determination to deliver it, built on the strong foundations provided by our fiscal rules.

    Committed to honesty and integrity, because they are important virtues in public life, and because they are essential to a growing economy with stronger public services and higher living standards for all.

    Thank you.

  • Keir Starmer – 2022 Keynote Speech on the Economy

    Keir Starmer – 2022 Keynote Speech on the Economy

    The speech made by Keir Starmer, the Leader of the Opposition, in Liverpool on 25 July 2022.

    I’d like to start with an observation about recent crises.

    Whether it’s the cost of living or recovering from the pandemic our economy is weaker than our competitors. Less resilient. Brittle. And ultimately, we are all poorer for it.

    This is why I am clear Labour will fight the next election on economic growth.

    That there is no task more central to my ambitions for Britain than making the country and its people better off.

    Tonight, I think you will hear two other candidates for Prime Minister who will also define the choice for their party to be about the economy and growth.

    But what a choice it is.

    In one corner you have Rishi Sunak, the architect of the cost-of-living crisis. In the other, you have Liz Truss, the latest graduate from the school of magic money tree economics.

    Neither of them has the answers to the economic challenges we face – and who can be surprised?

    Under their watch, the average British family is £8,800 poorer than their equivalents in other advanced economies. This isn’t just a failure of policy, it’s also a failure of philosophy. Their leadership contest won’t change that.

    Because both Rishi Sunak and Liz Truss rage against the dying of the Thatcherite light. They don’t understand economic strength in the 21st century needs partnership. They don’t believe you need state and market – business and worker.

    The everyday economy and the technological frontier. All contributing together if you want strong, secure and fair growth.

    I am under no such illusions. Rebooting our economy in this way will be the defining task of my Government.

    It will ask searching questions of my party and our instincts.

    We cannot be like the Tories – clinging to old ideas, trapped in our history.

    To give Britain the fresh start it needs, we need a new approach. The goal is straightforward – to maximise the contribution we all make to national prosperity. Every business, every person, every community.

    It sounds simple. But in reality, we failed to do it for decades.

    The best of British business is the best in the world. But we have geared our whole economy to delivering only for those firms.

    We have been complacent about the number of jobs created which are low paid and insecure.

    When insecurity stops people getting on and too few communities feel the benefit of the wealth we create.

    Which makes people feel hard work is not rewarded.

    In a nutshell: we draw our economic strength from too few places.

    And like a skyscraper built without foundations, that ultimately leaves us weak.

    If you want evidence of this, look no further than the cost-of-living crisis.

    Everywhere I go, I hear the same stories. People scared about the future.

    Worried that when winter comes, they will face horrible choices about what to spend their money on.

    Pensioners who can’t afford to turn on the heating.

    Families cutting back on what they buy their children.

    But there’s one thing I hear time and time again that worries me more than anything else.

    That is: working people telling me hard work doesn’t pay.

    That they’re working harder and harder just to stand still.

    That alarms me for two reasons.

    First, because I’ve been lucky enough to take a journey in my life.

    From a working-class family to head of the Crown Prosecution Service.

    And my fear is an economy so wracked by low growth and insecurity means people from my background can’t get on.

    Second, because honestly: what does it say about the state of Britain when working people feel that hard work doesn’t pay?

    What does it say about the health of our country?

    The health, even, of our democracy?

    It says an unwritten contract is broken.

    A contract that says in return for hard work you get a fair reward.

    That you don’t have to feel insecure about your prospects.

    That your contribution is respected.

    It’s a two-way thing.

    A strong national economy needs everyone making the best contribution they can.

    Whatever their circumstances, wherever they live.

    But in exchange, we must make sure the contribution working people make to that national effort is fairly rewarded.

    That hard work does pay.

    That their effort is respected.

    That they enjoy the security they need to get on.

    To do all that we need three things:

    Growth. Growth. And growth.

    That’s why I have told the Shadow Cabinet that every policy they bring forward will be judged by the contribution it makes to growth and productivity.

    Because everything I want for Britain comes back to this central mission.

    Without growth we won’t get a high wage economy.

    Without growth we can’t revitalise public services.

    Without growth we can’t repair that broken contract, re-energise communities or unite the country.

    Low growth countries are weaker at standing up for the national interest.

    Low growth economies can’t support people from my background to get on.

    Low growth economies can’t rise to meet the challenges of the future.

    Challenges like climate change.

    I want to be very clear on this point.

    We will not be distracted by the siren calls – from the right or the left – that say economic growth and net-zero do not go together.

    That these two objectives are somehow in tension.

    Or even that we should actively pursue a policy of no growth.

    I reject that completely. It is totally the wrong way round.

    A plan for net-zero needs growth.

    A plan for growth needs net-zero.

    This is about the future of course.

    Fail to tackle climate change and you can forget about growth -there is no bigger business risk.

    Look at how our infrastructure has struggled in the last few weeks.

    But tackling climate change is also a clear opportunity to create wealth in the here and now.

    That is why Labour is committed to a Climate Investment Pledge worth £28bn a year until 2030.

    And we see that pledge as a down-payment that will unlock the private investment which delivers the next generation of jobs.

    Because – the way I see it – some nation is going to lead the world in electric vehicles, in floating off-shore wind, in new hydrogen and nuclear technologies. Why not Britain?

    But to maximise our collective contribution, we must be clear about the kind of growth we need.

    The growth I want for Britain is strong, secure and fair.

    Strong, because it will build a foundation where every business and every person plays a role.

    Secure, because it will produce good jobs that don’t leave people feeling insecure.

    Fair, because it will unlock the potential of every place – every community, every town and every city.

    This last point is so important and strikes at the structural weakness of our economy.

    It’s not an issue of city versus town.

    The productivity gap between our cities and their equivalents in Europe is too big.

    And too many of our towns don’t have a fair chance to contribute in an economy still dominated by London and the South East.

    This is the hurdle we must clear.

    We need growth that is strong, secure and fair to re-establish the contract between people and prosperity.

    The distinction I would make is this:

    An economy can grow and leave some of its people behind.

    But a nation based on contribution cannot grow in that way.

    But of course all promises need a plan.

    Boosterism and fantasy economics are not the same as ambition.

    So today I want to share with you some of the plans Labour has to reboot growth and set out five principles that will guide my government in growing our economic contribution.

    These are:

    1. We will be financially responsible.

    2. We will be distinctively British.

    3. We will work in partnership with business.

    4. We will re-energise communities and spread economic power.

    5. We will refocus our investment on boosting productivity.

    Let me take each of these in turn, starting with the most direct – financial responsibility.

    The risk of rising inflation could not be clearer.

    So we will not announce a single penny of day-to-day spending without saying how we would pay for it.

    We will only borrow to invest to meet the challenges of the future – that’s what our Climate Investment Pledge is all about.

    And we will set a target to reduce debt as an overall share of our economy.

    That’s the responsible thing to do.

    And the contrast with the Conservative competition to waste more of your money could not be starker.

    With me and with Rachel Reeves you will always get:

    Sound finances; careful spending; strong, secure and fair growth.

    There will be no magic money tree economics with us.

    My second principle is that we must grow our contribution in a distinctively British way.

    This means two things.

    First, that we need resilient supply chains in sectors which are vital for British security and growth.

    That’s why we have a strategy to buy, make and sell more in Britain; why £3bn of our Climate Investment Pledge will help forge a new future for our steel industry.

    And why we have committed to new public procurement rules that will build up Britain’s sovereign capabilities in key industries.

    And let me be clear: it isn’t protectionist to say this.

    Or somehow old fashioned.

    Britain will always be an outward facing, confident, trading nation.

    But all around the world, businesses are looking again at the resilience of their supply chains.

    Reacting to the crises we have faced and will face in the future.

    Countries must do the same.

    Second, a British approach means we cannot transplant the economic model of another country onto ours.

    I met Olaf Scholz, Chancellor of Germany and leader of our sister party, the SPD, the other day.

    He is showing that when levelling-up is based on practical plans, not far-fetched promises, amazing things can happen.

    In eastern Germany right now, some of the poorest parts of the country are leading the continent in the lucrative race to develop batteries that store renewable energy.

    This is what can be done.

    And, as Lisa Nandy has spelt out, just because the Tory commitment to levelling up is dead, doesn’t mean the idea of levelling up is dead – Labour will take it on.

    But to do this in a way that isn’t pure boosterism, we must be honest about British strengths.

    Take manufacturing.

    Britain has an extraordinary genius when it comes to manufacturing.

    We lead the world in pharmaceuticals, bio-science, aerospace…

    The Nissan factory in Sunderland is one of the most productive in Europe;

    And the Covid-19 vaccine developed by AstraZeneca and Oxford University has saved millions of lives around the world.

    When I was at Airbus in Filton, I saw them working with 3D engineering literally shaping components by bringing together particles and matter in a way unimaginable in the factory my dad used to work in.

    We can and should take advantage of these strengths.

    The road to higher growth and productivity runs right through them.

    But we are not Germany.

    The role manufacturing plays in our economy will always be different.

    And we have superpower strengths – in universities, in creative industries, in exporting services – that other countries can’t compete with.

    The challenge in both services and manufacturing is the same.

    The best of British is the best in the world.

    And the way we stay competitive is to get more of it: more innovation, more new technology, more research and development, more unlocking the commercial power of our universities, more specialising in the knowledge-rich industries of the future, and more start-ups.

    Which is why we have asked Lord Jim O’Neil to look at how we can make Britain the best country in the world to start a new business.

    And why we have a plan to Make Brexit Work that doesn’t ignore the strength of our services or our universities.

    But an economy that grows our contribution, must rest on strong foundations.

    Foundations that are there in every community.

    That is why the work Rachel has been doing on the everyday economy is so important.

    Retail, education, health and care – we saw in the pandemic how much of the wealth we create depends on these sectors being strong.

    For too long industrial strategy has simply ignored them.

    And with that, ignored one of Britain’s distinctive challenges on growth.

    Labour’s industrial strategy will contain a plan for the everyday economy.

    And our New Deal for Working People will introduce new employment rights to give greater security for people working in it.

    That brings me to my third principle: partnership.

    For growth that is strong, secure and fair – we must work together.

    We need real partnership between state and market;

    Business and worker;

    The everyday economy and the technological frontier and it is the job of a modern industrial strategy to make sure this partnership grows our collective contribution.

    Not in a nostalgic way where Government directs the activities of businesses.

    Modern industrial strategy isn’t about growing the size of the state – it’s about what the state does.

    How it supports businesses to innovate and grow.

    Brings in the creative brilliance of our universities.

    And applies them to the national missions we must all contribute towards.

    Whether that’s leading the world in artificial intelligence.

    Or applying our genius to the challenge of net-zero.

    Just down the road, at the Materials Innovation Factory, the University of Liverpool and Unilever are partnering to bridge the gap between scientific research and production.

    Developing the new materials we need to tackle climate change or discover life-saving new medicines.

    We need to do so much more of this mission-driven partnership.

    But the Government doesn’t have a plan.

    And we have a massive job on our hands when it comes to private investment.

    For decades we have trailed our competitors.

    In France, businesses invest around 30% more relative to GDP every year.

    If we could just close this gap, we would land a serious blow in our battle against low growth.

    We know it requires public investment – that is why we have our Climate Investment Pledge.

    We know it requires fair taxation – that is why we will scrap business rates and replace them with a system that levels the playing field.

    But we also know it requires stability.

    And that requires institutions that take a serious, patient, long-term view about what needs to be done.

    So today I can announce we will establish an Industrial Strategy Council.

    And we will go further by putting it on a statutory footing.

    It will provide advice that shapes policy in the way the Climate Change Committee does.

    Or the Office for Budget Responsibility.

    A permanent part of the landscape.

    That sets out our strategic national priorities that go beyond the political cycle.

    Brings in the expertise of business, science, and unions

    Holds us to account for our decisions.

    And builds confidence for investors that will boost long-term growth and productivity.

    My fourth and fifth principles are best taken together.

    Because spreading power and raising the productivity of the economy everywhere are fundamental to growing our contribution.

    On spreading power, I have asked Gordon Brown to look at new forms of economic devolution.

    To make sure the decisions about things that drive regional growth:

    Like skills; infrastructure; attracting investment; are all made by people with skin in the game.

    Labour will not attempt to run our levelling-up strategy from the centre.

    Nor will we offer it alongside a divisive argument about north versus south;

    City versus towns.

    To me they’ve always felt like false choices.

    A productive Liverpool is good for Birkenhead.

    A strong Dudley is good for Birmingham

    And each has a shared fate in a wider battle against regional inequality.

    But we must also recognise that every place needs the power to grow its own economy.

    So our reforms will allow devolved and local government to make long-term financial decisions.

    To reap the rewards of investment in their economy.

    That way you make sure every city, every town, every place takes ownership of their contribution.

    That people and businesses with a long-term commitment to their community, work together in partnership.

    It’s what Labour is delivering where we are in power.

    And it’s what Labour will deliver in national government.

    But as well as spreading power, real levelling-up also requires investment.

    And this is where my Labour Party will move on from the old ideas.

    Because the old approach focused on growing the pie in any way possible.

    Then redistributing.

    But this is not strong, secure and fair growth.

    It leaves too many people in insecure jobs where their hard work is not fairly rewarded.

    Too many communities locked out from the benefits of growth.

    And redistribution cannot repair the contract.

    There is no point looking to the right on this.

    The evidence of the past decade shows they will only give us stagnation.

    But what we will do – what winning centre-left parties around the world have done – is to adopt a new approach to investment.

    An approach the US Treasury Secretary Janet Yellen has called Modern Supply Side economics.

    It rests in part on a universal truth about social democracy.

    A strong economy needs strong public services.

    And strong public services need reform and investment.

    But it also depends on something more subtle.

    Because the investments we make now should have a laser-like focus on boosting long-term productivity across the country.

    Not just quick wins in the South East.

    Which means we must learn to focus on the supply side.

    On growing the collective contribution.

    Everywhere.

    You can see this approach in our fully-funded plans for public service reform.

    Whether it is our 8,500 new mental health professionals….

    or our National Excellence Programme for schools that will tackle the educational inequality at the heart of low productivity…

    our policies are not just an investment in the health and wellbeing of our communities.

    They are also an investment in the long-term growth and productivity of the country.

    There is no tension here – just look at how many people at the moment can’t work because of their health.

    A highly skilled and healthy nation.

    And a fast-growing modern economy.

    Depend on each other.

    I never think it’s too hard to identify what people want from politics.

    At the moment, it’s probably easier than usual.

    People want a fresh start for Britain.

    They want the opportunity to get on.

    And above all they want to be free from the insecurity of the cost-of-living crisis.

    The approach to growth I have set out today will challenge my party’s instincts.

    It pushes us to care as much about growth and productivity, as we have done in the past about redistribution and investment.

    Not to hark back to our old ideas in the face of new challenges.

    You will see a clear contrast between my Labour Party and the Thatcherite cosplay on display tonight.

    The difference between a Labour Party ready to take Britain forward.

    And a Tory party that wants to take us back into the past.

    Between Labour growth.

    And Tory stagnation.

    That will be the choice at the next election and we are ready.

    Ready to renew the contract with working people.

    Ready to reboot our economy and end the cost-of living crisis.

    Ready to unlock the contribution of every business, person and community.

    And deliver the strong, secure and fair growth our country needs.

  • Boris Johnson – 2022 Answers at Liaison Committee (Tax Cuts)

    Boris Johnson – 2022 Answers at Liaison Committee (Tax Cuts)

    The answers given by Boris Johnson, the Prime Minister, at the Liaison Committee held in the House of Commons on 6 July 2022.

    Darren Jones: Prime Minister, how is your week going?

    The Prime Minister: Terrific, like many others.

    Q99 Darren Jones: Did Michael Gove come and tell you to resign today?

    The Prime Minister: I think I said earlier that I am here to talk about what the Government is doing. I am not going to give a running commentary on political events.

    Q100 Darren Jones: Okay. Let’s talk about what the Government is doing. You have just said today that the Government is giving the biggest tax cut in a decade, but it is a tax cut to your own tax rise, isn’t it?

    The Prime Minister: No, what it does is it gives 30 million people—by lifting the threshold, it gives them, on average, a tax cut of £330.

    Q101 Darren Jones: Against the tax rise that you previously announced. In fact, freezing tax allowances for average income tax payers means that they are going to pay £46.8 billion more over the next four years. Tax is going up, not down, isn’t it?

    The Prime Minister: It is certainly true that what we have had to do is make sure we deal with the fiscal impacts of covid. The Committee will remember that we had a colossal fall in output. We had the biggest pandemic for 100 years, and we had to look after people and businesses to the tune of £408 billion. That money doesn’t grow on trees. In order to protect our schools and hospitals, we of course have had to—

    Darren Jones: Increase the tax levels.

    The Prime Minister: We have had the health and care levy. What we are doing now is helping people with, on average, a £330 tax cut.

    Q102 Darren Jones: Prime Minister, I asked about the tax cut that was announced today, but I will move on. Let’s look at the economy before the pandemic. You mentioned the pandemic—an event that was very difficult for the Government. Before the pandemic—between 2010, when the Conservative party came into office, and the pandemic—national debt increased by £640 billion. It is now at 100% of national wealth, and you keep announcing tax cuts and spending plans at the same time. Are you just going to keep putting more and more debt on to the nation’s credit card?

    The Prime Minister: Sorry, you were just complaining about taxes going up.

    Darren Jones: I am asking about what you are doing in government, Prime Minister.

    The Prime Minister: You need to get your story straight.

    Darren Jones: My facts are from the Treasury, Prime Minister. Debt is up.

    The Prime Minister: We have to be sensible and we have to be responsible. We are making sure we manage the public finances in a prudent way, and I think that there will be scope for further tax cuts in due time.

    Q103 Darren Jones: Maybe imminently. Prime Minister, can I move on to economic growth? You said yesterday that you welcomed your new Chancellor, Nadhim Zahawi, because he would grow the economy, presumably in a way that Rishi Sunak couldn’t.

    The Prime Minister: I don’t think I said that. Anyway, go on.

    Q104 Darren Jones: We are more likely to end up in a recession this winter, aren’t we?

    The Prime Minister: As I was saying to Stephen, the economy and people are going to be under a lot of pressure, but I think we will get through it.

    Q105 Darren Jones: Do you think there will be a recession in the winter?

    The Prime Minister: I think there will be a lot of pressure caused by the price spike. We are going to do everything we can to shield people and deal with the underlying causes of inflation, whether that is through the energy markets, the labour markets or whatever. There is a lot that we can do, and I think we will emerge stronger on the other side.

    Q106 Darren Jones: You and your supporters have often said that you have got all the big calls right as Prime Minister, but actually on tax, debt, growth and pay, things have been getting worse, not better. I understand that 14 million people voted for you in 2019; you have let them down, haven’t you?

    The Prime Minister: No, I think that what they can see is a Government that gets on relentlessly with a programme of uniting and levelling up. We have the biggest investment in infrastructure for a century—£650 billion going in on all the things that Huw was talking about: roads, rail, transport of all kinds and housing. It is a colossally ambitious programme that we are still doing. At the same time, because, as you put it, Darren, we got the big calls right—

    Darren Jones: I didn’t agree with that, by the way.

    The Prime Minister: Well, I’m going to agree with it even if you don’t. We got the big calls right on covid. We came out of lockdown faster, and we got it right with the vaccine. That has put us in a position to look after people, and that is what we are doing.

    Q107 Darren Jones: Thank you. I’m going to move on to my next question. I would like to read something out to you: “When a regime has been in power too long, when it has fatally exhausted the patience of the people, and when oblivion finally beckons—I am afraid that across the world you can rely on the leaders of that regime to act solely in the interests of self-preservation, and not in the interests of the electorate.” Who authored that quote?

    The Prime Minister: You are trying me. Was it Cicero? Was it Aristotle? Let me think—was it Plato? Was it Montesquieu?

    Q108 Darren Jones: Maybe Nero. Just to break it to you, it was you, Prime Minister. Perhaps it was foresight. I will finish, because I am about to run out of time. I made a joke there, but in all sincerity—I know this must be difficult for you personally—this isn’t funny. This is not a game. People are struggling across the country. It is not brave for you to carry on doing this. I think, in my view, you are hurting the country, Prime Minister. On a very human level, surely you must know that it is in the country’s interests for you to leave now.

    The Prime Minister: I think the country is going through tough times. You are making a point about duty, right? I look at the issues this country faces, I look at the pressures that people are under and the need for Government to focus on their priorities—which is what we are doing—and I look at the biggest war in Europe for 80 years, and I cannot for the life of me see how it is responsible just to walk away from that, as I said earlier on in PMQs, particularly not when you have a mandate of the kind we won two or three years ago.