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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So let me tell you where this Government stands.

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

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

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

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

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

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

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

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

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

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

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

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

UK productivity

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

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

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

We all know the prize from productivity growth:

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

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

So what is the best way forward?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I care passionately about this.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Conclusion

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Recognising the strengths of voluntary action

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

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

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

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

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

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

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

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

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

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

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

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

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

To which the drug dealer replies:

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

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

So let me summarise.

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

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

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

How do we achieve this?

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

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

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

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

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

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

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

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

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

Mentoring

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

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

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

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

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

The Alliance’s aims are:

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

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

Conclusion

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The importance of a partnership with the private sector.

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

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

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

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

First, lone parents? employment.

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

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

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

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

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

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

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

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

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

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

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

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