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  • Helen Liddell – 1998 Speech to the Life Insurance Association Conference

    Helen Liddell – 1998 Speech to the Life Insurance Association Conference

    The speech made by Helen Liddell, the then Economic Secretary to the Treasury, on 21 January 1998.

    Thank you for inviting me to your conference.  I know that this audience represents a wide range of insurance industry interests and I welcome this chance to get together again.

    I should like to speak this morning about the Government’s plans for  reform of financial services regulation.

    The speed with which the new Government announced our reforms in May reflected the importance we attach to the industry.  An efficient and clean financial sector is of benefit to the whole UK economy.  Effective regulation is central to attaining our wider economic aim of a stable, low inflation economy with sustainable growth and high employment.  An economy with a world-leading financial services industry, of which your own sector is a most important and valuable part.

    Single regulator

    The key element of our reforms is the creation of a single, statutory regulator.

    A single regulator will be better placed to provide effective and consistent regulation across the traditional financial sectors of banking, investment services and insurance.  This is the logical way to go as traditional business boundaries continue to get more blurred.

    The single regulator will be more effective because there will be no duplication of effort, no doubt about which body is responsible.  Firms will benefit because they will no longer be supervised by several bodies with overlapping regulatory demands.

    Many firms are currently subject to a range of statutory regimes, for insurance, investments and deposit taking.  In many cases equivalent provisions relating to different kinds of business are subtly different – in some cases radically so.  It is not in anyone’s interests for firms to have to consider in each case which regime they are operating under.  Neither theirs nor their customers.

    Stages of reform

    Our reforms are already taking shape.  Last October we launched the new regulatory body, the Financial Services Authority, under the excellent chairmanship of Howard Davies.

    The transfer of banking supervision from the Bank of England to the FSA will be effected by a Bill currently before Parliament.  At the same time, we are drafting a second bill which will complete the task of dismantling the old, fragmentary arrangements based on self-regulation and putting in place a new, fully statutory system.  We intend to publish a draft of the bill for consultation in the Summer.  As a result of the two bills, the FSA will replace nine existing regulators.  The FSA’s role will also include the authorisation of those members of the professions who carry on investment business.

    The FSA will be a unique one-stop service for financial regulation.  There will be a single supervisor for all financial services providers.  Wholesale and retail; from the smallest  independent financial advisers to the biggest City firms.  What it will not be is a one size fits all bureaucratic monolith.

    Statutory objectives

    When the Chancellor launched the FSA he announced that it would have a set of statutory objectives written into the second bill.  The objectives will set down the responsibilities of the FSA, who will be required to comment annually on performance against them in their annual report to the Treasury.

    The FSA will have a responsibility to sustain confidence in the UK financial system and markets.  The FSA’s role as a prudential supervisor of financial institutions and its oversight of markets are both essential to the maintenance of confidence in the UK financial system.

    The FSA must also protect consumers by ensuring that firms are competent and financially sound and give their customers confidence in their integrity, while recognising customers’ own responsibility for their decisions.  This will set down in law the need to protect consumers.

    I am sure I do not need to tell you how much importance I attach to this objective in the life insurance industry.

    It is essential also that the FSA should promote the improvement of public understanding of the benefits and risks associated with financial products.  I believe that the FSA has a key role in helping to educate customers, to enable them to discharge their own responsibility to themselves to make sensible choices.

    The FSA must also monitor, detect and prevent financial crime.

    In delivering these objectives, the FSA has an obligation to facilitate innovation in financial services and to take account of the international nature of financial services business.

    The FSA will also have to be efficient and economic and to ensure that costs and restrictions on firms are proportionate to the benefits of regulation.

    Cost-effective regulation

    I know that this last point will be of particular importance to you, who will be responsible for meeting part of the FSA’s costs.  I can assure that, as with all aspects of the objectives, we regard it as more than an aspiration.

    Cost effectiveness goes hand in hand with effective consumer protection.  The costs of regulation are met by firms.  This means they are passed on to consumers in the form of higher charges or lower returns.

    We will be taking specific steps in the Bill to achieve cost effective regulation.  Not only must the FSA use its resources effectively, it will need to show the industry and the public that it is doing so.   So it will be required to publish its proposed budget for consultation at the same time it publishes its proposals for fees.

    Also, where the FSA introduces a new rule or change to an existing one, it will have to consult the public and practitioners by publishing the proposals.  These proposals will include estimates of the costs and benefits, and other options.  This requirement goes well beyond the  requirement in the current legislation for the SROs to take account of the costs of compliance.

    Complaints

    Now let me touch briefly on two further areas I know are of  interest to those here today –  the issues of consumer complaints and compensation.  These are fundamental to our plans to provide an effective level of protection for consumers.

    We intend to establish a system of complaints handling arrangements which will ensure that consumers receive help when they need it in a manner that is simple and easily accessible.

    At present the Insurance Ombudsman Bureau and the Personal Insurance Arbitration Service are just two of at least eight schemes which relate to different sectors of the financial services industry. There are also separate procedures for complaints against professional bodies.  These schemes operate in different ways, with differences between the schemes in terms of eligibility criteria and limits on awards.

    The result is a confusing alphabet soup of arrangements.  Consumers do not always know where to turn to when they have a complaint.

    Whilst I welcome the recent initiatives which have been taken by the various ombudsmen to streamline their operations within the boundaries of the current system, we intend to undertake more fundamental changes to harmonise complaints handling arrangements in line with our approach to regulation.  I have recently announced our intention to establish a single, statutory Financial Services Ombudsman. Consumers will have a single point of access to the complaints handling arrangements.  There will be a clear and simple means to seek redress to a scheme which will be independent of both consumers and practitioners.  The scheme will be compulsory for firms.

    This will put firms in no doubt about the obligation to deal with complaints fairly and quickly.  Complainants will have access to a highly visible ombudsman scheme.

    The scheme will of course need to be set up in a way which draws on the best features of the existing schemes.  I am confident that the FSA will enjoy the assistance and full cooperation of the various ombudsmen and of the industry.

    Compensation

    We will also establish a simpler and where appropriate more harmonised set of arrangements for dealing with compensation when firms are unable to meet their obligations. Currently, there are multiple schemes – the Policyholder Protection Scheme, the Deposit Protection Scheme, the Investors Compensation scheme, the Building Society Investor Protection Scheme and even the Friendly Society Protection Scheme.  Each has its own set of rules and eligibility criteria.

    We will replace this patchwork with a single scheme with a single board with harmonised administrative arrangements.  The creation of a single scheme, like the establishment of the Financial Services Ombudsman, will benefit both consumers and the financial services industry.

    There will be easier access for consumers, greater clarity about who is eligible and in what circumstances.  There will be clearer governance arrangements which will be underpinned by statute.

    I believe that effective arrangements to deal with complaints and compensation will build confidence in the industry.  The Financial Services Authority is currently consulting on these issues.  I welcome their desire to work with the industry and consumers in order to get the details right.

    Lloyd’s

    There is one further very important area I would like to talk about, which is again relevant to our determination to apply statutory regulation consistently across the board.  This is Lloyd’s.

    For a vast majority of its time Lloyd’s has been a successful part of UK financial services industry, making an important contribution to the economy and balance of payments.

    As you will be aware though, it suffered huge losses – 8 billion Pounds – in the period 1988-92. There were a number of reasons for this which were out of Lloyds’ hands – such as natural and man-made disasters. But the losses were exacerbated by bad underwriting decisions and practices.

    Since then action has been taken.  I should like to pay credit to Lloyd’s for resolving its financial difficulties through the successful implementation of  Reconstruction and Renewal’ in 1996 and for all it has done to improve regulatory arrangements.

    But more needs to be done. Lloyd’s itself has recognised the need for a greater independent element in its regulation.  It rightly believes that businesses which are well regulated – and are perceived to be so -will be in a better position to compete in global markets.

    Lloyd’s is a complex organisation – many of us tend to think of it as a big insurance business. But far from being one business it is – even now – many separate businesses operating under a common umbrella. This means that it needs to be looked at from a number of different angles.

    Prudential supervision

    The first is prudential supervision. As with all insurance regulation, the first priority is protection of policyholders.  We intend to give FSA much more extensive prudential supervision powers in relation to Lloyd’s. These will be more like the powers it will have for insurance companies, such as fitness and properness checks and comparable powers of intervention. They will  also include a requirement for FSA authorisation of managing agents. These are the  people who are responsible in practice for running underwriting syndicates.

    We intend that the FSA should have reserve powers to authorise and supervise Lloyd’s members direct, if that proves appropriate in future.  But we do not intend that the FSA should supervise individual Names, so long as Lloyd’s own supervision is adequate.

    Protection of capital providers

    Protection of capital providers is another important area.  Individual members of Lloyd’s are advised by members’ agents, who act  like financial advisers.  We propose to extend the authority of the FSA in this area to the authorisation and regulation of members’ agents.  This will give increased protection to members of Lloyd’s, some of whom have suffered from bad advice in the past.

    We recognise that the main risk to capital providers is the risk to which they are exposed through the contracts of insurance which they underwrite.  The enhanced insurance supervision arrangements I mentioned should also provide a substantial benefit to members in reducing those risks.

    Capacity auctions

    Next, I would like to say something about capacity auctions. Recently, participation on a syndicate has moved from being a privilege to a right.  As a result, a market has developed in trading capacity for different syndicates.  This market, which currently operates through a series of auctions run by the Corporation of Lloyd’s, is analogous to an investment market.  This market will be overseen by FSA under a regime similar to that currently in place for recognised investment exchanges.

    Role of the Council

    Finally, these arrangements will continue to allow scope for a major role for the Council of Lloyd’s in ensuring Lloyd’s continues to be a well-regulated, successful and important part of the UK financial services industry.  This reflects the special role of the Council of Lloyd’s in controlling the affairs of the Society.

    Taken together, I believe that these changes to the regulatory regime for Lloyd’s  will however provide, for the first time in many areas, a major element of external regulatory accountability.

    Conclusion

    The Government is committed to reform and to achieving the best financial regulatory system we can. The UK financial services industry has achieved a great deal, but a lot of people remain, sometimes rightly, suspicious of its capacity to act in their best interests. This lack of confidence tarnishes the whole industry.   The FSA and the industry it regulates need to work together to ensure that confidence is maintained in those areas where standards are highest and improved where standards have fallen short.

    In short, the regulatory system must be more effective, providing an adequate level of protection for consumers. It must be transparent and inspire public confidence in the regulatory structure. It must be efficient, imposing only such burdens and restrictions which are necessary to achieve sound regulation.

    I fully recognise the  importance of working with the insurance industry and its customers in designing the new framework of regulation.

    There will be further opportunities for discussion – not least when our draft bill is published for consultation next summer.  But I do not want to wait until then to hear the views of the life insurance industry. Various representative bodies in the life insurance industry are already in touch with me and my officials to make sure we are aware of your ideas and concerns.  I urge you to continue this dialogue in the coming months.

  • HISTORIC PRESS RELEASE : Stronger Powers for the Financial Services Authority [January 1998]

    HISTORIC PRESS RELEASE : Stronger Powers for the Financial Services Authority [January 1998]

    The press release issued by HM Treasury on 21 January 1998.

    The Financial Services Authority (FSA) is to be given extensive supervisory powers over Lloyd’s the Economic Secretary, Helen Liddell announced today.

    The FSA will have intervention and authorisation powers to ensure a greater independent element in the regulation of Lloyd’s.

    In response to a Parliamentary Question from Jackie Lawrence [Preseli Pembrokeshire], Mrs Liddell said:

    “In her statement of 23 July 1997, my right hon friend the President of the Board of Trade announced that the supervision of insurance business, including that carried on at Lloyd’s, would ultimately become a responsibility of the proposed Financial Services Authority (FSA).  Since then, I have been considering the options for the future regulatory arrangements for Lloyd’s in the context of the comprehensive reforms which we will implement in the forthcoming financial services reform bill.  As we have already made clear, we intend to publish a draft Bill for consultation in the Summer.

    “Holders of insurance policies underwritten at Lloyd’s should enjoy the benefits of  the same kind of supervisory regime as those with policies issued by other insurers.  I intend as part of the modernisation of the prudential supervision powers currently available to the Treasury under the Insurance Companies Act 1982, that the FSA will have much more extensive supervisory powers in relation to Lloyd’s.  I intend that these should include enhanced powers of intervention and a requirement for authorisation by the FSA of managing agents, who are responsible in practice for running underwriting syndicates.  I also intend that the FSA should have reserve power to undertake direct authorisation and supervision of Members of Lloyd’s, should that prove to be appropriate in due course.

    “Certain activities at Lloyd’s are similar to business which is currently regulated by the Financial Services Authority under the Financial Services Act 1986. Members’ agents advise Members of Lloyd’s about which syndicates they should participate in  and I intend that their activities should be subject to authorisation by the FSA.  In addition, the emerging secondary market in syndicate capacity  resembles markets subject to control under the 1986 Act.  I intend that the FSA should oversee the operation of the market under a regime similar to that currently in place for recognised investment exchanges.

    “These arrangements will continue to allow scope for a major role by the Council of Lloyd’s in ensuring that Lloyd’s continues be a well-regulated, successful and important part of the UK financial services industry. They will however provide, for the first time in many areas, a major element of external regulatory accountability.”

    In a speech to the Life Insurance Association tomorrow, Mrs Liddell will say:

    “Lloyd’s itself has recognised the need for a greater independent element in its regulation. It rightly believes that businesses which are well regulated – and are perceived to be so – will be in a better position to compete in global markets.”

  • HISTORIC PRESS RELEASE : Helping children:A top priority for Government [January 1998]

    HISTORIC PRESS RELEASE : Helping children:A top priority for Government [January 1998]

    The press release issued by HM Treasury on 21 January 1998.

    Preventing young children from becoming socially excluded is top of the agenda at a seminar being hosted by the Treasury today.

    The seminar, the first in a series of three, is part of a Cross Departmental Review which aims to consider whether the multiple causes of social exclusion affecting young children could be more effectively tackled at the family and community level.

    Representatives from Government, local authorities, universities and voluntary organisations will attend and speak at the event. The aim is to ensure that the best information is available to inform decisions.

    Tessa Jowell, chair of the Ministerial Committee said:

    “We want to help those young children, who are at present not getting the support and help from services they need in early childhood, who fall behind before they even get to school and never catch up.

    “We want services to be flexible and responsive to the needs of each child so everyone can get the best possible start in life.

    “If Government departments work together not only can we give best value to the child but we can also get value for money by cutting the costs of crime and unemployment which can so easily follow if children do not get help at an early age. “

    The Treasury is organising the event and leading the review in close collaboration with the Prime Minister’s Office, the Social Exclusion Unit and other Government Departments eg the Department for Education and Employment and the Department of Health.

    The first seminar will look, in particular, at which children are most at risk of becoming socially excluded. The second seminar in February will look at the effectiveness of different forms of early intervention to help children and how services can be delivered effectively.

  • Alistair Darling – 1998 Speech to Ernst and Young Network Dinner

    Alistair Darling – 1998 Speech to Ernst and Young Network Dinner

    The speech made by Alistair Darling, the then Chief Secretary to the Treasury, on 14 January 1998.

    “OUR ECONOMIC APPROACH”

    Introduction

    UK Economy

    The world has been transformed over the last few years.  We live in a global economy.  We are moving towards a single global economy in many respects.  Industries typically span geographical and political boundaries.  No country can go it alone, in economic terms.  Our objective is to ensure Britain is equipped to rise to the challenge of the world’s new and fast changing economies.

    The key objective of our economic policy is to achieve high and stable levels of growth and employment, to allow everyone to share in higher living standards.

    The need for stability

    Over the past  forty years, our economy has had an unenviable history of boom and bust.  Stop-go has meant higher interest rates, less investment, fewer successful companies and lost jobs. It has been the inevitable result of a failure to take a long-term view, and to bow to short term pressures – political and economic.

    The economy we inherited in May was in danger of over-heating, with unsustainable growth in demand and a threat of inflation rising well above its target.  And despite five years of upswing, public borrowing was too high for the point in the economic cycle.  The national debt doubled in the six years from 1990.  And at this stage of the cycle the we should not be adding to that problem.  This year alone the taxpayer will pay out 25 billion Pounds in interest payments on debt – more than we spend on our schools.

    So we need to address the fundamental weaknesses in the economy. Instability, under-investment, the need to improve education and skills and the need for welfare reform – all of which have been neglected for too long.

    In the eight months since we took office we have begun to put in place the building blocks we need:

    • first, the need to achieve stability and to raise the  rate of sustainable growth;
    • second, to increase productivity; and
    • third the need to remove barriers to growth, invest in education and modernise the   welfare state, and tackle the need to expand markets.

    In the short time since the election, we have begun to lay the foundations to secure Britain’s long-term economic future.

    Openness and transparency

    Stability will of course depend, to a large extent, on markets having confidence in the commitment of Government to prudent and sound management of the economy.  So economic policy must be open and transparent.  Openness builds confidence and credibility. It is essential in today’s global economy.

    And in our fiscal and monetary policies, we have set out open and transparent frameworks that have clearly enhanced our credibility.

    The Government will now publish a Pre-Budget consultation document each year setting out the economic issues we face.  Operational independence for the Bank of England.  The new code for fiscal stability.  All these measures add to openness and transparency, and will enhance credibility in our determination to look to the long term.

    So the building blocks are there.  Firstly stability.

    Stability

    Long-term stability – in monetary and fiscal policies, low inflation and sound public finances – is an essential pre-condition for high levels of growth and employment.

    Monetary policy

    That is why one of our first acts in office was to establish a wholly new monetary policy framework for the UK.

    This framework gives operational independence to the Bank of England for setting interest rates to meet the Government’s inflation target, while enhancing accountability and ensuring policy is conducted in an open way.  We now have one of the most open procedures for making monetary policies decisions in the world.  Since the new monetary framework was announced, long-term interest rates have fallen by more than a full percentage point, partly reflecting a fall in inflation expectations.  Clear evidence that anti-inflation credibility has been enhanced.

    Fiscal policy

    As with our approach to monetary policy, so in fiscal policy we have established clear rules, a new discipline, openness and accountability.

    A key element of the new fiscal framework is the adoption of two strict fiscal rules:

    • first, the golden rule, that on average over the economic cycle, the government will borrow only to finance its investment;
    • and second that, as a proportion of national income, public debt will be held at a prudent and stable level on average over the cycle.

    Our tough approach to public borrowing, embodied in a five-year deficit reduction plan, means, from public sector borrowing of 7 per cent of GDP four years ago, we are now set  to cut the deficit to 1 1/4 per cent in the current financial year and just 1/2 per cent next year.

    And the new Code for Fiscal Stability will require the Government to produce estimates of the cyclically-adjusted fiscal position and long-term projections, so that past policy mistakes are not repeated.  We are determined not to repeat the mistakes of the late 1980s, where the signals were misread.  Over-optimistic assumptions led to an unsustainable boom, followed by one of the deepest recessions this country has ever seen.

    We will maintain strict discipline in public spending, rooting out waste and inefficiency as part of the Comprehensive Spending Review.  This review will not only achieve discipline in the public finance but it will also set our spending priorities for the rest of this Parliament and beyond.

    Together these tough fiscal rules, the deficit reduction plan and a root and branch review of public sector efficiency will ensure a break from the short-termism and expediency of the past.  And our fiscal policy will be more credible for being open and accountable and will ensure new long-term stability for the public finances.

    Productivity

    The second key challenge is to raise productivity.

    Government and industry must work together to remove systematically all barriers to raising productivity:  in product markets through encouraging competition and innovation;  in capital markets through measures to enhance growth and investment, not least for innovative small businesses;  and in the workplace through encouraging the creativity and flexibility of inventors, managers and workforces.  We need to rediscover our capacity to invent and see that there is profitable production.

    We are examining how, to improve productivity, we can help leading-edge businesses gain funds to develop new technologies; how we can improve Britain’s poor record of investment in research and development; and how we can make it easier for small businesses to draw on venture capital to create jobs and a more entrepreneurial culture.

    We have taken measures to tackle long-term under-investment in both capacity and skills, including a cut in corporation tax to its lowest ever level.  We are determined to increase investment in education – the key to our future.

    But we still need further structural reforms if we are to encourage a more dynamic economy through increased competition and through reforms in welfare and employment policy. We are committed to a wholesale modernisation of the welfare state.

    Employment

    And to achieve high and stable levels of growth and employment we must ensure that people are skilled and employable and making work pay.  Today sees further reports of skills shortages, which constrain our ability to expand.

    We are addressing the obstacles that prevent people taking up and benefiting from work:

    • the absence of marketable skills;
    • the failure of the tax and benefits system to make work worthwhile;
    • the poverty and unemployment traps that for far too many mean that work does not pay;
    • the lack of employment opportunities;
    • and the scarcity of affordable child care.

    Reform to both the tax and benefit system is needed as part of the modernisation of the welfare state, that has remained largely unreformed since its foundation in the 1940s.

    And the Government’s welfare to work initiative will get the young and long-term employed from welfare into work.

    Since May we have made a start by announcing a New Deal worth almost 4 billion Pounds,  providing jobs for young unemployed, the long-term unemployed, and to lone parents [and the long-term sick and disabled].

    Helping lone parents into work is one of the most effective long-term ways to tackle  family poverty.

    We are also introducing a plan to extend out-of-school childcare clubs to every community in Britain.  Funds will be available to set-up as many as 30,000 new out-of-school clubs, which will provide places for nearly 1 million children.

    Last week we launched the New Deal for the young and long-term unemployed. There will be 12 pathfinder projects to give those under the age of 25 and unemployed for more than 6 months the skills to get them back to work and give them the skills they need.

    All these measures are focussed on getting the young and long-term unemployed from welfare to work.  And they are all part of our strategy to meet the challenge of increasing employment opportunities for all.

    Europe

    Key to our economic approach is our European strategy.  In October the Chancellor declared for the principle of the single currency.  There is no constitutional bar to entry.

    But any decisions to join must be based on a hard headed assessment of the economic benefits of joining.  We must have satisfactory answers to these questions:

    • would joining EMU create better conditions for firms making long-term decisions to invest in Britain?;
    • how would our financial services be affected?;
    • would there be sufficient convergence between economies so Britain could live comfortably with Euro interest  rates?;
    • is our economy sufficiently flexible to deal with any emergent problems?;
    • and will joining Europe promote higher growth, stability and a lasting increase in jobs?

    On the basis of these fives tests, the Government has decided that it would not be in our economic interest to join in the first wave in 1999.  We need a settled period of convergence before we can make a decision on membership.

    So we will join a single currency when and if it is in our economic interest.  But we believe there are potentially clear benefits for business and that is why we have begun making extensive preparations, helping and advising business with the euro.

    Pay

    The Government is taking the long term view. Our strategy is based around building a stable framework for fiscal and monetary policy, encouraging investment in our economic infrastructure, the education and skills of our workforce and rebuilding the welfare state around the work ethic.

    The challenge is to steer a long-term course towards sustainable growth.  Where prosperity can increase year on year, where public finances can deliver the public services we want and need.

    We have put the policies in place to bring this about.  But if we are to succeed we must maintain the strict discipline necessary to put the public finances on a sound footing and keep them there.

    We are not going to repeat the mistakes of the past, where the economic signals were misunderstood and an unsustainable boom led to bust – with all the consequences that brought about.

    Central to this aim is the need to ensure that pay increases are affordable right across the board, from boardroom to the shop floor, in both the public and private sectors.  People have to understand that to bring about long-term stable growth, pay increases must be fair and affordable.

    For its part, the Government will be applying these principles to public sector pay.  We are determined to deliver long-term growth and prosperity.  It is essential, if we are to succeed in rebuilding this country and increasing prosperity for all the people in a sustainable way.

    Conclusion

    We are governing for the long term.  The building blocks are being put in place to bring the long term prosperity we all want to see.  This means we have to take tough decisions now.  But it is right that on pay, as with every other issue, we avoid measures that bring short term gain but long term pain.  This is the approach the British people expect of us.  It is what we promised at the election.  And we are delivering on our promises.

  • HISTORIC PRESS RELEASE : Pay increases must be affordable if we are to have long term prosperity – Alistair Darling [January 1998]

    HISTORIC PRESS RELEASE : Pay increases must be affordable if we are to have long term prosperity – Alistair Darling [January 1998]

    The press release issued by HM Treasury on 14 January 1998.

    “Pay increases must be affordable right across the board, from boardroom to shop floor, in both the private and public sectors, if we are to bring about the long term stable growth and prosperity we all want to see”.

    That was the clear message from Alistair Darling, Chief Secretary to the Treasury, speaking tonight at an event organised by Ernst and Young.

    He added:

    “Since we took office we have begun to put in place the building blocks we need to bring about the long term prosperity we all want to see.

    Our strategy is based around building a stable framework for fiscal and monetary policy, encouraging investment in our economic infrastructure, the education and skills of our workforce and rebuilding the welfare state around the work ethic.

    This means we have to take tough decisions now. We are not going to repeat the mistakes of the past, where the economic signals were misunderstood and an unsustainable boom led to bust.

    Central to this aim is the need to make sure pay increases are fair and affordable, in both the public and private sectors.

    We are determined to deliver long term growth and prosperity.”

  • HISTORIC PRESS RELEASE : Helen Liddell announces proposals to deliver cost-effective regulation [January 1998]

    HISTORIC PRESS RELEASE : Helen Liddell announces proposals to deliver cost-effective regulation [January 1998]

    The press release issued by HM Treasury on 14 January 1998.

    The Financial Services Authority (FSA) must be cost effective in order to protect the consumers’ purse and the competitiveness of the UK financial services industry, and that goes hand in hand with providing effective protection for the consumer, the Economic Secretary Helen Liddell said today.

    Addressing the Law Society Commerce and Industry Group the Minister said that the FSA will be required to publish its proposed budget for consultation at the same time as it publishes its proposals for fees.She said:

    “Not only must the FSA use its resources effectively, it must also show the public and the industry that it is doing so.

    “After all, the costs of regulation are met by the firms under regulation. This means they are ultimately passed to consumers in the form of higher charges or lower  returns. Firms themselves need to know that the UK will remain a competitive place to do business.”

    The Minister also announced that where the FSA introduces a new rule or change to an existing one, it must consult the public and practitioners by publishing the proposals. Their proposals will include estimates of costs and benefits of the proposals and other options. Mrs Liddell said:

    “This statutory requirement to publish cost-benefit analysis will allow much more focussed consultation than sometimes happens now. Indeed firms will be able to challenge the FSA’s estimates if they believe they are inaccurate.”

    The Minister stressed this goes well beyond the current requirement upon the Self-Regulatory Organisations (SROs) to take account of the costs of compliance.

  • Gordon Brown – 1998 Speech Launching the New Deal

    Gordon Brown – 1998 Speech Launching the New Deal

    The speech made by Gordon Brown, the then Chancellor of the Exchequer, on 5 January 1998.

    Today marks the start of a new deal for Britain’s young. A new beginning in the war against poverty, and the first step in the modernisation of the welfare state in Britain.

    It’s the Labour Government’s 1998 new year’s resolution for Britain – to help our long-term unemployed back to work and to give them the skills they need.

    Here today from Dundee and Tayside we launch the first of twelve pilot programmes offering jobs and training to every young person six months out of work.

    From April, every long term unemployed young man or woman under 25 will be offered the new deal options of work or training.

    A total of 3 billion pounds is being invested in jobs.

    It is not just the young who will benefit from the new deal.

    From June, employers will be offered a 75 pounds a week subsidy to take on the long-term unemployed.

    During 1998 lone parents with their youngest child at school will be offered help to find work.

    And from this year too disabled men and women, denied the right to work for too long – will be given new opportunities to work.

    The old deal – of paying people a few pounds in benefit and then forgetting about them – failed the unemployed and failed Britain.

    Today begins the long haul towards full employment in the years to come.

    From now on in Britain, young people will have new opportunities and a new contribution they can make under the new deal. Rights go hand in hand with responsibilities and for young people offered new responsibilities from today there will be no option of simply staying at home on full benefit doing nothing.

    So it is something for something, not something for nothing

    Young people are our future. Yet unemployment among the under- 25s is twice the national average.

    With new resources from the windfall levy we will invest in young people and in the skills the whole country needs them to have for the future.

    From today there are pilot programmes in every part of Britain, offering every young person unemployed for more than six months the chance of work.

    Already 9,000 employers have signed up in our pathfinder areas.

    Some of the top household name companies are making their contribution to the new deal.

    In the next few weeks, 1 million employers will be contacted and asked to consider taking part.

    The programme that starts today in 12 pathfinder areas will offer young people advice, help and training to enter the world of work. From April the programme will operate nationally.

    The scheme offers four routes into work and helps each young person pick the route that suits their needs – a job, full-time education, a job  in the voluntary sector or a role in the environmental task force.

    Tayside

    300 million pounds will be invested in scotland under the new deal here in Tayside there are more than 1,000 young people  who have been nemployed for more than six months. For them opportunity is available now. The pathfinder approach is to ensure that young people receive the help they need immediately.

    Every month, 100 more young people will be entering the programme.

    I have no doubt lessons will be learned from the pilot and we will be carefully evaluating the programme in Tayside and other pathfinder areas so that rough edges can be identified.

    Here in Dundee some of the biggest companies like NCR and Michelin have committed themselves to the new deal. Stagecoach and National Express, together with Scot-Rail and Travel-Dundee will be mounting travel concessions for young people in Tayside on the new deal and I am grateful to them for their involvement.

    This programme will succeed only if we involve all employers who are able to make a contribution.

    My appeal to employers is as businesses in the community who can see at first hand the impact of social division and a wasted generation of young people and who know that failure to tackle the problem now will hurt us all in the future.

    My appeals is to employers and managers with a reputation for motivating people who will immediately understand  how a job can make the difference between what young people are and what young people are capable of becoming.

    My appeal to employers is as leaders of the economy who know that however successful their own business is, the economy as a whole will never be at its best unless we unlock the potential of all our people.

    I want all of you to feel part of what I believe is a national crusade to clear for one and for all the social divisions that are entrenched in our society because of unemployment.

    And this is just the start. The Government believes in helping thousands more from welfare to work in the years to come as part of the long haul towards our goal of full employment.

    That is why we are prepared to extend the new deal from the under 25s to the over 25s and are prepared to invest more in the long term unemployed, lone parents and disabled men and women who want the right to work, to make this ambition a reality.

    And we will do more. The new deal is our first step towards a new welfare state. And I want men and women who have been unemployed and written off by many to be able to say they now have a new chance to make the best of themselves and to make a contribution, not just to their families, but to the progress of Britain.

  • Gordon Brown – 1998 Speech at the Central Organisation of Scottish Local Authorities

    Gordon Brown – 1998 Speech at the Central Organisation of Scottish Local Authorities

    Part of the speech made by Gordon Brown, the then Chancellor of the Exchequer, in Glasgow on 27 February 1998.

    Since I took over as Chancellor I have always said that a commitment to stability and prudence as well as work and; enterprise will be the watchwords of this Government.

    We will not make the mistakes of previous Labour Governments who failed to control spending and then had to cut back.

    And we will learn the lessons of the late eighties where the public finances and the economy’s ability to sustain growth were misjudged, plunging us into the longest recession since the war.

    So the Budget on 17 March will not be a Budget with quick fixes for the short term. The Budget will be an investment Budget for the long-term, laying the foundations to build a more dynamic and successful economy.

    We will not sacrifice our spending discipline and commitment to prudence – instead there will be consistency to ensure long-term prosperity.

    With a 400 billion Pounds national debt, 25 billion Pounds a year interest payments, a borrowing requirement of 23 billion Pounds last year and with the deficit continuing into next year, ensuring prudence in our public finances is our priority – not just in one year but in every year across the economic cycle.

    Just as there will be no return to boom-bust in the economy so there will be no return to soft options in public spending.

    We are all long termists now – the best guarantee for our future.And long term measures for enterprise and work – making work pay – will come top of my agenda.

  • HISTORIC PRESS RELEASE : UK is a world leader on public private partnerships, says Geoffrey Robinson [February 1998]

    HISTORIC PRESS RELEASE : UK is a world leader on public private partnerships, says Geoffrey Robinson [February 1998]

    The press release issued by HM Treasury on 24 February 1998.

    The UK is leading the way in Europe and around the world in its partnership approach to using private finance capital and expertise in the provision of a wide range of public infrastructure services, Paymaster General Geoffrey Robinson said today.

    Speaking to a Public Private Partnerships conference in London, Mr Robinson said that countries from Europe and from further afield such as Australia, Brazil, China, South Africa, Taiwan and United Arab Emirates were interested in what the UK government had achieved in developing public private partnerships.

    Mr Robinson said:

    “The British approach to gathering private and public sectors engaged in effective partnerships is the way forward into the next millennium. Many countries have already contacted the British government to share best practice and experience with contracts in areas as diverse as hospitals, schools, light rail schemes, IT systems and government accommodation.

    “The Government’s success in developing its initiative is breeding success both at home and abroad.  The British model is being taken up by many governments around the world.  They realise that the newly invigorated PFI is bearing fruit and want to learn from our experiences.

    “The development of PFI and PPPs abroad is providing an enormous additional market for those British companies already familiar with, and well versed with the concept.”

  • HISTORIC PRESS RELEASE : Seven principles for jobs – G8 agrees new agenda [February 1998]

    HISTORIC PRESS RELEASE : Seven principles for jobs – G8 agrees new agenda [February 1998]

    The press release issued by HM Treasury on 22 February 1998.

    G8 Agrees New Agenda

    A new international employment agenda to promote jobs and tackle unemployment and social exclusion has been agreed by the G8 countries at a Conference on Growth, Employability and Inclusion in London this weekend.

    Commenting on the Conference, UK Chancellor Gordon Brown said:

    “The G8 has set itself a new agenda based on seven principles for action. It is now important that the principles are turned into practice. I am delighted that the G8 backed my suggestion of presenting job Action Plans to the Birmingham Summit of Heads of State and Government in May.

    “A new employment agenda is vital given the background of intensified global competition and technological advances we all face as the 21st century approaches.”

    UK employment policies were also given strong endorsement at the Conference. Education and Employment Secretary, David Blunkett said:

    “G8 members share the priorities we have set for our domestic employment policy – promoting employability and adaptability and tackling skill shortages. For the first time at an international summit the key principle of lifelong learning was specifically endorsed. It is clear we have to deliver on education, skills and employment.

    “We all face the challenge of change. We need to improve the skills of everyone in the labour market and to bring those excluded from employment into the world of work.”

    Seven broad principles have been agreed to guide the action the G8 countries will take. These are:

    • sound macroeconomic policies;
    • structural reforms to labour, capital and product markets;
    • fostering entrepreneurship and an economic climate favourable to the growth of small and medium-sized firms;
    • enhancing employment, education and training including for the young, long-term unemployed, lone parents and the disabled;
    • reforming tax/benefit systems to provide work incentives to foster growth and employment and the successful transition from welfare to work;
    • encouraging lifelong learning; and
    • promoting equal opportunities and combatting discrimination.

    The Conference agreed the seven principles to guide employment policy and Heads of State and Government will be asked to endorse them at the Birmingham Summit in May.

    In conclusion, the Chancellor said:

    “We must ensure that the important messages of this Conference are heard by policy makers around the world and
    that we continue to share best practice.”

    The Chancellor said he would:

    • continue to use the UK’s chairmanship of the G8 and
      Presidency of the EU to advocate the new agenda on employment and economic reform;
    • write to the Heads of International Financial Institutions including the IMF and OECD to report on policy initiatives agreed at the Conference; and
    • carry out an examination of how help can be given to entrepreneurs and SMEs, and enhance access for small firms to venture capital.