HISTORIC PRESS RELEASE : Enterprise and Wealth are the key to continuing prosperity – Gordon Brown [October 2000]

The press release issued by HM Treasury on 24 October 2000.

Chancellor Gordon Brown today welcomed the innovative approach the Social Investment Task Force has taken to revitalising Britain’s poorest communities.

The report’s five key recommendations set out how £1 billion of private finance can be investment into the UK’s most deprived areas. The report highlights enterprise and wealth as being vital to building sustainable communities that will provide long-term growth for the future.

Responding to the report at the launch in London the Chancellor said:

“This is the time to bring jobs and enterprise to those areas of the country that have not yet fully participated in the economic recovery.

“I understand that the story of economic improvement is not a story of improvement for everyone, that there are still too many people left out of the British success, and that while more people are in work that ever before, there are still pockets of high unemployment in every region of the country.

“We are determined to make sure that everyone who is able to work has the chance to do so. The aim must be to build a working economy in every community of the country. In tackling the employment and enterprise problem in the high unemployment areas, we will not return to the old ways, which have failed.

“We believe that in the new economy we will succeed in creating an economy with employment opportunity for all when we create an economy with enterprise open to all.

“So in the Pre-Budget Report in a few days time we will propose how investment and venture capital can raise the rate of business creation and growth, and for the whole country show how we are prepared to reward enterprise – for example, through capital gains tax reform and small business tax incentives – to show that the entrepreneurial culture is open to all.

“We will build on the report’s recommendations. The report sets out a five-point programme of action which would deliver £1 billion of new investment in businesses in deprived areas:

• first, a new community investment tax credit to encourage private investment in under-invested communities;
• second, a community development venture fund with matched funding from Government;
• third, more detailed disclosure by the banks of their lending activities in under-invested communities;
• fourth, more flexibility for charitable trusts and foundations to invest in community development projects; and
• fifth, more support for community development financial institutions.

Outlining why this problem needed to be tackled, the Chancellor stated:

“In Britain the overall rate of business start-ups is less than half that in the US, and in high unemployment areas we do much worse. There is significant variation in the rates of business creation across regions. Last year, small business VAT registrations were six times higher in high employment areas than in low employment areas.

“And there is also variation within regions – here in Newham there are only 39 VAT registrations per 10,000 adults but in other areas of London the number is much higher – for example, 108 in Kensington and Chelsea and 146 in Camden.

“If the 100 areas with the lowest rates of business creation performed as well as the average areas, they would together create nearly 18,000 new businesses.

“Our new approach to regeneration is about building on the potential strengths of local people – encouraging new dynamism, not the old dependency; backing success, not the old subsidies. In this approach, there are three pillars:

• First, in every areas we want to build an enterprise culture not for the few but open to all;
• Second, in the high unemployment areas, we want to encourage private investment flows and new businesses;
• Third, as we create more job opportunities, we want to tackle all the barriers that people face in getting into work.

“This is the time to say to every corporate leader in our country, take a look at investing in our high unemployment areas. They offer business new choices, new recruits and new markets. It is good for business and good for growth.

“I believe we can work together – Government, business leaders and local communities – to deliver our aim of enterprise and employment opportunity open to all in every region, every town, every community in Britain.”

NOTES TO EDITORS

The Social Investment Task Force, led by Ronald Cohen, was set up in February 2000. It was independently manage by the UK Social Investment Forum in partnership with the New Economics Foundation and the Development Trusts Association. HM Treasury had an observer role. The members of the Taskforce were:

Ronald Cohen, Chair, Apax Partners and Co

David Carrington, Chief Executive, PPP Healthcare Medical Trust

Ian Hargreaves, journalist and academic

Philip Hulme, Chairman, Computacenter

Geraldine Peacock, Chief Executive, Guide Dogs for the Blind

Joan Shapiro, former Executive Vice President, South Shore Bank, Chicago

Tom Singh, Managing Director, New Look

The Task Force’s report is titled “Enterprising Communities: Wealth Beyond Welfare.”

The Task Force report was launched by Ronald Cohen at Community Links, Newham, East London. It is a major charity and has run a wide range of community projects over the last 21 years. In 1999, more than 25,000 people benefited from its projects, run by over 450 volunteers in 60 key sites.