Tag: 2004

  • HISTORIC PRESS RELEASE : Reform of Financial Regulation for Small firms Looking for Informal Capital Investment [December 2004]

    HISTORIC PRESS RELEASE : Reform of Financial Regulation for Small firms Looking for Informal Capital Investment [December 2004]

    The press release issued by HM Treasury on 2 December 2004.

    The Government today announced the outcome of its review of the regulations facing small firms and their ‘business angel’ investors. This formed part of the two year review of the Financial Services and Markets Act 2000 (FSMA).

    The key changes are:

    • Introducing self-certification for high net worth and sophisticated investors, making it much easier for these groups to exempt themselves from the financial promotion rules. This will make it easier for small firms to approach wealthy or experienced investors.
    • Making it easier for small firms to promote to potential investors by allowing them to promote to anyone they ‘reasonably believe’ to be self-certified high net worth or sophisticated.
    • Ensuring consumer protection by ensuring that unapproved financial promotions come with a prominent health warning, and by including clear warnings, tested with consumers, on the self-certification statements.

    The Government believes today’s changes will mean that many companies facing difficulties in obtaining funding will find it easier to approach and attract investors. Addressing barriers to finance is a key part of delivering the Government’s agenda to build a more enterprising Britain. The changes are in response to a consultation paper on informal capital raising and the financial promotions regime published earlier in the year.

    Announcing the outcome of this part of the two-year review, Stephen Timms said:

    “Today’s changes should improve access to finance for small and high growth firms who are looking for equity investment from business angels.  It is an excellent example of Government responding to concerns that legislation isn’t doing its job. Now business angels should find it easier to become certificated, and small firms should find it easier to reach a pool of certificated investors. Both groups will face less burdensome regulation.”

  • HISTORIC PRESS RELEASE : Advancing Regulatory Reform in Europe [December 2004]

    HISTORIC PRESS RELEASE : Advancing Regulatory Reform in Europe [December 2004]

    The press release issued by HM Treasury on 8 December 2004.

    Better regulation holds the key to jobs and growth in Europe, according to a new joint statement on regulatory reform agreed yesterday. The statement was signed by the Chancellor, the Secretary of State for Trade and Industry, and the Finance and Economics Ministers of Ireland, the Netherlands, Luxembourg, Austria and Finland.

    The joint statement, endorsed by the six consecutive Presidencies of the European Union during 2004, 2005 and 2006, highlights the important advances made in reforming EU regulation since the launch of the original Four Presidency statement in January of this year. It presents further concrete proposals to reduce the economic burden of EU regulation.

    The joint statement, Advancing regulatory reform in Europe, notes both the EU’s achievements over the past year, and the challenges that lie ahead if Europe is genuinely to put in place a world-class regulatory framework. In particular, it calls for further action to:

    • reduce the administrative burden associated with EU regulation, with regulatory impact assessments to measure and explain administrative costs by the end of 2005;
    • ensure that new regulations are effectively scrutinised for their impact on competitiveness, with a cross-cutting role for the EU’s Competitiveness Council of Ministers;
    • tackle economic burdens in the stock of existing EU law, with further action taken in 2005 to identify priority areas for simplification;
    • establish clear and measurable objectives and goals for monitoring and controlling the economic and administrative burden of EU law;
    • strengthen business input into the regulatory process, for example through a new standing business taskforce to advise on reform and report annually to the EU institutions;
    • develop new arrangements for formal external audit and quality control of EU regulatory impact assessments;
    • enhance pre-legislative consultation, including through greater use of Green and White Papers; and
    • ensure non-legislative options get stronger consideration in EU policy discussions.

    The statement builds on the announcements in last week’s Pre-Budget Report on changes to relieve regulatory burdens on businesses in the UK, including the interim report of the Hampton Review, the extension of common commencement dates, and systematic post-implementation reviews.

  • Gordon Brown – 2004 Speech at CAFOD’s Pope Paul VI Memorial Lecture

    Gordon Brown – 2004 Speech at CAFOD’s Pope Paul VI Memorial Lecture

    The speech made by Gordon Brown, the then Chancellor of the Exchequer, on 8 December 2004.

    To be asked to address you tonight, to be part of this great lecture series in memory of Pope Paul VI is both humbling and challenging.

    It was Pope Paul VI who as early as the 1960s alerted the modern world that the old evil of poverty had to be addressed as an unacceptable scourge of the new global economy.

    It was Pope Paul VI who in 1967 in his ‘Encyclical Populorum Progressio’ – ‘Development of Peoples’ – urged upon the richest countries their sacred duty to help the poorest.

    And it was Pope Paul VI who set out, for our generation, the obligations that we all have a duty to meet: obligations that arise from – as he said in his own words:

    – Our mutual solidarity;
    – The claims of social justice;
    – And universal charity.

    In his book ‘The Power of Myth’ Joseph Campbell describes a hero as someone who has given his or her life to something bigger than him or herself.

    And today I want to honour not just the legacy of Pope Paul VI but all of you here tonight – missionaries, aid workers, supporters, contributors campaigners – as our modern heroes. For just as surely as some of our greatest heroes of history, your religious faith, your moral anger at poverty, your sense of duty, has led you to fight for great causes, stand for the highest ideals and do God’s work on earth. And let me on your behalf thank Cardinal Murphy O’Connor whom I and the British people admire so much for his leadership not just in this country but throughout Europe; Chris Bain for leading CAFOD and for his crucial, catalytic role in bringing the ‘Make Poverty History’ campaign together; and all members of CAFOD.

    The reward you seek, as you have always said, is not recognition nor status nor titles nor money but that the coming generation – who never even knew you – enjoys a better life thanks to your courageous work.

    And I also want to pay my personal tribute to the work of CAFOD over forty years and your leadership in achieving, by your determined campaigning, what many thought impossible – 100 per cent bilateral debt relief.

    You led a coalition whose voices rose to a resounding chorus that echoed outwards to the world from Birmingham, then from Cologne, then from Okinawa – a clarion call to action speaking not for yourselves alone but for the hopes of the whole world.

    And you led a coalition that achieved more standing together for the needs of the poor in one short year than all the isolated acts of individual governments could have achieved in one hundred years.

    Reminding us that as CAFOD campaigning for justice for the world’s poor you have for forty years:

    – Changed the way we think about giving;
    – Deepened our commitment to serving others;
    – Demonstrated that duty and obligation are more powerful than selfishness or greed;
    – And in doing so brought the world closer together.

    Now, it is the churches and faith groups that have, across the world, done more than any others – by precept and by example – to make us aware of the sheer scale of human suffering – and our duty to end it.

    Indeed, when the history of the crusade against global poverty is written, one of its first and finest chapters will detail the commitment of the churches in Britain to help the world’s poor.

    And my theme tonight is what this generation working together, each and all of us, can do – that we are not powerless individuals but, acting together, have the power to shape history.

    And each of us, building on the individual causes we cherish – from work on debt relief to education, from fair trade to clean water, from blindness to TB, from AIDS to child vaccination – can together not only make progress for our direct concerns but also turn globalisation from a force that breeds insecurity to a force for justice on a global scale.

    Today I want to sketch out for you a vision of a new deal that demands a new accountability from both rich and poor countries.

    A new compact between those to whom so much is given and those who have so little.

    More than a contract – which is after all one group tied by legal obligations to another – and nothing less than what the author of ‘The Politics of Hope’ called a ‘covenant’ – the richest recognising out of duty and a deep moral sense of responsibility their obligations to the poorest of the world.

    And I want suggest that at the same time as developing countries devising their own poverty reduction plans, we the richest countries must take three vital steps:

    – first, agreeing a comprehensive financing programme – that is we achieve a breakthrough to complete 100 per cent debt relief; find a way to persuade others to join us in declaring their timetables on increasing development aid to 0.7 per cent of national income; and immediately raise an additional $50 billion dollars a year, doubling aid to halve poverty, through the creation of a new International Finance Facility;
    – second, with this new finance, that we advance to meet the Millennium Development Goals on health, education and the halving of poverty; use this unique opportunity to drive forward the internationalisation of AIDS research and the advance purchase of HIV/AIDS and malaria vaccines; build the capacity of health and education systems; and deliver to the 105 million children who do not go to school today, two thirds of them girls, our promise of primary education for all;
    – and third, that we deliver the Doha development round on trade, and make it the first ever world trade agreement to be in the interests of the poorest countries.

    Indeed, because progress on each of these is dependent on progress on all of these, we must during 2005 advance all of these causes together.

    Exactly five years ago in New York and in a historic declaration every world leader, every international body, almost every single country signed up to a shared commitment to right the greatest wrongs of our time.

    The promise that by 2015 every child would be at school.
    The promise that by 2015 avoidable infant deaths would be prevented.
    The promise that by 2015 poverty would be halved.

    This commitment was a bond of trust, perhaps the greatest bond of trust pledged between rich and poor.

    But already, so close to the start of our journey – and 20 years after the problems were first exposed to this generation through Live Aid – we can see that our destination risks becoming out of reach, receding into the distance.

    And at best on present progress in Sub Saharan Africa:

    – primary education for all will be delivered not in 2015 but 2130 – that is 115 years too late;
    – the halving of poverty not by 2-0-1-5 but by 2-1-5-0 — that is 135 years too late;
    – and the elimination of avoidable infant deaths not by 2015 but by 2165 — that is 150 years too late.

    So when people ask how long, the whole world must reply:

    150 years is too long to wait for justice.
    150 years is too long to wait when infants are dying in Africa while the rest of the world has the medicines to heal them.
    150 years is too long for people to wait when a promise should be redeemed, when the bond of trust should be honoured now in this decade.

    Martin Luther King spoke of the American Constitution as a promissory note.

    And yet – for black Americans – the promise of equality for all had not been redeemed.

    He said that the cheque offering justice had been returned with ‘insufficient funds’ written on it.

    He said, ‘we refuse to believe that the bank of justice is bankrupt.

    And he said the time had come to ‘cash this cheque which would give upon demand the riches of freedom and the security of justice’.

    And in this way he exposed on racial equality the gap between promises and reality.

    But in exactly the same way today’s Millennium Goals – a commitment backed by a timetable – are now in danger of being downgraded from a pledge to just a possibility to just words.

    Yet another promissory note, yet another cheque marked ‘insufficient funds’.

    And the danger we face today is that what began as the greatest bond between rich and poor for our times is at risk of ending as the greatest betrayal of the poor by the rich of all time.

    As a global community we are at risk of being remembered not for what we promised to do but for what we failed to deliver, another set of broken hopes that break the trust of the world’s people in the world’s governments.

    And when we know the scale of suffering that has to be addressed, the problem is not that the promise was wrong, the pledge unrealistic, the commitments unnecessary but that we have been too slow in developing the means to honour, fulfil and deliver them.

    In the past when we as a global community failed to act we often blamed our ignorance – we said that we did not know.

    But now we cannot use ignorance to explain or excuse our inaction. We can see in front of our TV screens the ravaged faces of too many of the 30,000 children dying unnecessarily each day.

    We cannot blame our inaction on inadequate science – we know that a quarter of all child deaths can be prevented if children sleep beneath bed nets costing only 4 dollars each.

    We cannot defend our inaction invoking a lack of medical cures – for we know that as many as half of all malaria deaths can be prevented if people have access to diagnosis and drugs that cost no more than twelve cents.

    The world already knows we know enough. But the world knows all too well that we have not done enough. Because what is lacking is will.

    So if we are to make real progress we must – together from this meeting room this evening – and then from countless other centres of concern and endeavour, go out into this country and other countries and show people and politicians alike everywhere why it is morally and practically imperative that we not only declare but fight and win a war against poverty; why we must not only pass resolutions and make demands but move urgently to remove injustice; why lives in the poorest countries depend upon converting, in the richest countries, apathy to engagement, sympathy to campaigning, half hearted concern to wholly committed action.

    In short we must share the inspiration we have of the power of the dream of a better world – and why it is now more urgent than ever that people everywhere are awakened to the duties we owe to people elsewhere whose hopes for life itself depend upon our help, duties not just to people who are neighbours but to people who are strangers.

    So that even when we know that our sense of empathy diminishes as we move outwards from the immediate, face to face, person to person relationships of family outwards to neighbourhood to country to half a world away, we still feel and ought to feel however distantly the pain of others – and why it is right to believe in something bigger than ourselves, bigger even than our own community as a wide as the world itself.

    It has been written that, ‘if we answer the question why we can handle the question how’.

    And this evening I am going to put forward three propositions:

    – that our dependence upon each other should awaken our conscience to the needs not just of neighbours but of strangers;
    – more than that, that our moral sense should impel us to act out of duty and not just self interest;
    – and that the claims of justice are not at odds with the liberties of each individual but a modern expression of them that ensures the dignity of all – and there is such a thing as a moral universe.

    First, does not Martin Luther King show our responsibilities to strangers, to people we have never met and who will never know our names, when he describes each of us as strands in an inescapable network of mutuality, together woven into a single garment of destiny?

    Indeed just as the industrialisation of the eighteenth century opened people up to a society which lay beyond family and village and asked individuals who never met each other to understand the needs of all throughout their own country, so too the globalisation we are witnessing asks us to open our minds to the plight and the pain of millions we will never meet and are continents away but upon whom, as a result of the international division of labour, we depend upon for our food, our clothes, our livelihoods, our security.

    I recalled a poem in my Labour conference speech:

    ‘It is the hands of others who grow the food we eat, who sew the clothes we wear, who build the houses we inhabit; it is the hands of others who tend us when we’re sick and lift us up when we fall; it is the hands of others who bring us into the world and who lower us into the earth’

    When I talked of the hands of others, I meant our dependence upon each other – the nurse, the builder, the farm worker, the seamstress – not just in our own country but across the earth. We are in an era of global interdependence, relying each upon the other – a world society of shared needs, common interests, mutual responsibilities, linked densities, our international solidarity.

    And since September 11th there is an even more immediate reason for emphasising our interdependence and solidarity. Now more than ever we rely on each other not just for our sustenance but for our safety and security.

    Colin Powell, US Secretary of State, states: ‘What poverty does do is breed frustration and resentment which ideological entrepreneurs can turn into support for terrorism in countries that lack the political rights, the institutions, necessary to guard the society from terrorists. Countries that are lacking basic freedoms. So we can’t win the war on terrorism unless we get at the roots of poverty, which are social and political as well as economic in nature’.

    And President Bush said on the eve of the Financing for Development Conference in Monterrey: ‘Poverty doesn’t cause terrorism. Being poor doesn’t make you a murderer. Most of the plotters of September 11th were raised in comfort. Yet persistent poverty and oppression can lead to hopelessness and despair. And when governments fail to meet the most basic needs of their people, these failed states can become havens for terror. In Afghanistan, persistent poverty and war and chaos created conditions that allowed a terrorist regime to seize power. And in many other states around the world, poverty prevents governments from controlling their borders, policing their territory, and enforcing their laws. Development provides the resources to build hope and prosperity, and security’

    So does not everything that we witness across the world today from discussing global trade to dealing with global terrorism symbolise just how closely and irrevocably bound together are the fortunes of the richest persons in the richest country to the fate of the poorest persons in the poorest country of the world even when they are strangers and have never met, and that an injury to one must be seen as an injury to all?

    But is not what impels us to act far more than this enlightened self-interest?

    Ought we not to take our case for a war against poverty to its next stage – from economics to morality, from enlightened self interest that emphasises our dependence each upon the other to the true justice that summons us to do our duty – and to see that every death from hunger and disease is as if it is a death in the family?

    For is there not some impulse even greater than the recognition of our interdependence that moves human beings even in the most comfortable places to empathy and to anger at the injustice and inhumanity that blights the lives not just of neighbours but of strangers in so many places at so high a cost?

    It is not something greater, more noble, more demanding than just our shared interests that propels us to demand action against deprivation and despair on behalf of strangers as well as neighbours – and is it not our shared values?

    It is my belief that even if we are strangers in many ways, dispersed by geography, diverse because of race, differentiated by wealth and income, divided by partisan beliefs and ideology, even as we are different diverse and often divided, we are not and we cannot be moral strangers for there is a shared moral sense common to us all:

    Call it as Lincoln did – the better angels of our nature;
    Call it as Winstanley did – the light in man;
    Call it as Adam Smith did – the moral sentiment;
    Call it benevolence, as the Victorians did; virtue; the claim of justice; doing ones duty.
    Or call it as Pope Paul VI did – ‘The good of each and all’

    It is precisely because we believe, in that moral sense, that we have obligations to others beyond our front doors and garden gates, responsibilities to others beyond the city wall, duties to others beyond our national borders as part of one moral universe – precisely because we have a sense of what is just and what is fair – that we are called to answer the hunger of the hungry, the needs of the needy the suffering of the sick whoever and wherever they are bound together by the duties we feel we owe each other. We cannot be fully human unless we care about the dignity of every human being.

    Christians say: do to others what you would have them do to you.
    Jews say: what is hateful to you, do not to your fellow man.
    Buddhists say: hurt not others in ways that you yourself would find hurtful.
    Muslims say: no one of you is a believer until he desires for his brother that which he desires for himself.
    Sikhs say: treat others as you would be treated yourself.
    Hindus say: this is the sum of duty: do not do to others what would cause pain if done to you.

    Faiths that reveal truths not to be found in economic textbooks or political theory – beliefs now held by people of all faiths and none – that emphasise our duty to strangers, our concern for the outsider, the hand of friendship across continents, that say I am my brother’s keeper, that we don’t only want injustice not to happen to us, we don’t want injustice to happen to anyone.

    Indeed the golden rule runs through every great religion – or what the Bible calls righteousness or what you and I might call justice – and the words of Gandhi reinforce this golden rule:

    ‘Whenever you are in doubt apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him [her]…. Then, he said, you will find your doubts melt away.’

    So we are not – morally – speaking in tongues. And while there are many voices from many parts and many places, expressed in many languages and many religious faiths, we can and must think of ourselves coming together as a resounding chorus singing the same tune – and as a choir achieving a harmony which can move the world.

    So our interdependence leads us to conclude that when some are poor, our whole society is impoverished.
    And our moral sense leads us to conclude, as we have been told, that when there is an injustice anywhere, it is a threat to justice everywhere.

    But can we not also say – and this is my third point – that, even when we are talking about the needs of strangers, the claims of justice – that we should do our duty to ensure the dignity of every individual – are now more powerful than ever? It is because the dignity of the individual is at the heart of our concerns about human beings, that those claims of justice are not – as many once argued – at odds with the requirement for liberty but are essential for the realisation of liberty in the modern world.

    In her recent book Gertrude Himmelfaarb shows that, when the 17th and 18th centuries brought a revolt against outmoded forms of hierarchy, there was understandably a preoccupation not with justice or duty but with liberty. In 1789 ‘liberty’ literally came before ‘equality’ and ‘fraternity’.

    The call for freedom from outmoded forms of hierarchical obligations was then the only path to ending the power of absolute monarchs and repealing old mercantilist laws.

    But although the great Enlightenment philosophers marched under the banner of liberty, rightly wishing to prevent any ruler invading the freedom of the citizen, a closer reading of these writers shows that, for them, the march of individual freedoms did not release people from their obligations to their fellow citizens and fulfilling the duties they owed to each other. For them liberty was not at odds with justice or duty but liberty and duty advanced together.

    One of the greatest tribunes of liberty, John Stuart Mill, stated categorically that ‘there are many positive acts to the benefit of others which anyone may rightfully be obliged to perform’.

    And Rousseau wrote that ‘as soon as men ceased to consider public service as the principle duty of citizens we may pronounce the state to be on the verge of ruin’.

    And as Adam Smith – often wrongly seen as the patron of free market capitalism without a conscience – put it: the philosophy of ‘all for ourselves and nothing for other people’ was a ‘vile maxim’. ‘Perfection of human nature was to feel much for others and little for ourselves, to restrain our selfish and indulge benevolent affections’. And in that spirit and as he died Smith, not just the writer about the ‘invisible hand’ but about the ‘helping hand’, was writing a new chapter for his ‘Theory of Moral Sentiments’ entitled ‘On the Corruption of our Moral Sentiments’ which is occasioned by ‘the disposition to admire the rich and great and to despise or neglect persons of poor and mean condition’.

    So the great apostle of freedom believed passionately in justice and in duty to others and saw no contradiction in saying so. And in our century this should be our focus. We should be asking not just what rights you can enforce on others but asking what duties we can discharge for others.

    Selbourne says duties without rights makes people slaves but rights without duties makes them strangers.

    Moral strangers demand rights without duties.

    Moral neighbours say that every time one person’s dignity is diminished or taken away through no fault of their own it is an offence against justice.

    And if the dignity of a child or adult is diminished by poverty, or debt, or unfair trade, we are all diminished.

    Enlightened self interest may lead us to propose a contract between rich and poor founded upon our mutual responsibilities because of our interdependence. But it is our strong sense of what is just that demands a covenant between rich and poor founded on our moral responsibility to each other – that even if it was not in our narrow self interest to do so it would still be right for every citizen to do ones duty and meet the needs, and enhance the dignity, of strangers.

    My father used to tell me we can all leave our mark for good or ill – and he quoted Martin Luther King saying everyone from the poorest to the richest can be great because everyone can serve.

    That all of us, no matter how weak or frail, or at times inadequate, can make a difference for good is emphasised by a story told by Chief Rabbi Jonathan Sacks writing of the film ‘About Schmidt’. Schmidt – played by Jack Nicholson – describes a futile life of family estrangement ending in an equally meaningless retirement endured with an overriding sense of failure. In the film Schmidt says:

    ‘I know we’re all pretty small in the big scheme of things what in the world is better because of me? I am weak and I am a failure there’s just no getting around it…soon I will die…maybe in twenty years, maybe tomorrow, it doesn’t matter…when everyone who knew me dies too, it will be as though I never even existed…what difference has my life made to anyone? None that I can think of…none at all.

    But then he receives a letter from the teacher of a six year old in Tanzania whom in a small charitable gesture Schmidt has been paying for schooling and health care.

    The young boy cannot yet write, the teacher says, but he has sent Schmidt a drawing instead. It shows two little line figures, one large and one small, obviously the boy and Schmidt.

    And the drawing shows them holding hands together as the sun shines down upon their friendship.

    And so the film ends with Jack Nicholson’s character slowly grasping that he has done one good deed in his life – for a stranger – a young child far away whom he has never met.

    The duty to others done by Schmidt giving his life meaning.
    Proving that one generous act can redeem a life.
    So we do live in one interdependent world.
    We are indeed part of one moral universe.
    Even the meanest of us possesses a moral sense.
    What really mattes is the compassion we show to the weak.
    And you value your society not for its wealth and power over others but by how it can empower the poor and powerless.

    Now that moral sense may not, be ‘a strong beacon light radiating outward at all times to illuminate in sharp outline all it touches’ as James Q Wilson describes ‘The Moral Sense’ so brilliantly. Rather the moral sense is like ‘a small candle flame flickering and spluttering in the strong winds of passion and power, greed and ideology’. As Wilson says ‘brought close to the heart and cupped in ones hand it dispels the darkness and warms the soul’. And even when it burns as a flicker it is still a flame and a flame that can never be extinguished.

    So we do not wipe out the debt of the poorest countries simply because these debts are not easily paid.

    We do so because people weighed down by the burden of debts imposed by the last generation on this cannot even begin to build for the next generation.

    To insist on the payment of these debts offends human dignity – and is therefore unjust.

    What is morally wrong cannot be economically right.

    In the words of Isaiah – we must ‘undo the heavy burdens and let the oppressed go free’.

    So let me set out the agenda that flows from our moral sense.

    In 1997 just one country was going to receive debt relief.

    Now 27 countries are benefiting with $70 billion dollars of unpayable debt being written off.

    And it is thanks to your campaigning on debt relief that:

    – with debt relief in Uganda, 4 million more children now go to primary school;
    – with debt relief in Tanzania, 31,000 new classrooms have been built and 18,000 new teachers recruited;
    – with debt relief in Mozambique, half a million children are now being vaccinated against tetanus, whopping cough and diphtheria.

    But like me, I know you are less interested in what we’ve done than in what is still to do.

    And when many countries are still being forced to choose between servicing their debts and making the investments in health, education and infrastructure that would allow them to achieve the Millennium Development Goals, we know we must do more.

    That is why in 2005 we must break new ground, go much further than we have gone before, and why, having heard the proposals you put to us, we are proposing a new set of principles to govern the next stage in debt relief.

    First, that the richest countries match bilateral debt relief of up to 100 per cent with multilateral debt relief of up to 100 per cent so that all debts are covered.

    Second, that the cancellation of debts owed to the International Monetary Fund should be financed by using IMF gold.

    Third, that instead of running down the resources available internationally for development donor countries make a unique declaration that they will cover their share of the World Bank and the African Development Bank’s debts on behalf of eligible developing countries.

    And so that is why Britain has announced that we will relieve those countries still under the burden of this debt to these banks by unilaterally paying our share – 10 per cent – of payments to the World Bank and African Development Bank as we urge other countries to do so.

    Next, to put our duties to each other at the centre of policy, we also insist on a progressive approach to trade.

    And fair trade is not just about the financial gains, its also about giving people dignity – enabling people to stand on their own two feet and using trade is a springboard out of poverty.

    You know the damage that rich countries protectionism has done to entrench the poverty of the poorest countries.

    We spend as much subsidising agriculture in the European Union as the whole income of all the 689 million people in Sub Saharan Africa taken together.

    The money that the US spends just in subsidising 25,000 cotton farmers dwarfs the total income of Burkino Faso where 2 million people are dependent on cotton for their livelihoods

    And for every dollar given to poor countries in aid, two dollars are lost because of unfair trade.

    So 2005 is the time to send a signal and to agree a new policy.

    First, it is time for the richest countries to agree to end the hypocrisy of developed country protectionism by opening our markets, removing trade-distorting subsidies and in particular, doing more to urgently tackle the scandal and waste of the Common Agricultural Policy shows we believe in fair trade.

    Second, it is time to move beyond the old Washington consensus of the 1980s and recognise that while bringing down unjust tariffs and barriers can make a difference, developing countries must also be allowed to carefully design and sequence trade reform into their own Poverty Reduction Strategies.

    And third, because it is not enough to say ‘you’re on your own, simply compete’ we have to say ‘we will help you build the capacity you need to trade’ – not just opening the door but helping you gain the strength to cross the threshold. We have to recognise that developing countries will need additional resources from the richest countries both to build the economic and infrastructure – capacity they need to take advantage of trading opportunities – and to prevent their most vulnerable people from falling further into poverty.

    And our discussion of debt relief and trade leads to the essential challenge of 2005, that our new deal with the developing countries must involve a transfer of resources.

    Not aid as compensation for being poor but aid as investment in the future. And so like debt and trade this is about enhancing the dignity and potential of each individual.

    Since the 1980s aid to Africa, which was $33 per person ten years ago, had halved to just $19 per person now.

    So we need a new financing programme.

    Thanks to your campaigning, we are the first UK Government to be able to announce a timetable for 0.7 per cent.
    And over the next year we plan to ask other countries to join us and nine others in becoming countries which have set a timetable towards 0.7.

    But the truth is that the scale of the resources needed immediately to tackle disease, illiteracy and global poverty is far beyond what traditional funding can offer today.

    That is why the UK Government as part of the financing package to reach the Millennium Development Goals has put forward its proposal for stable, predictable, long-term funds frontloaded to tackle today’s problems of poverty, disease and illiteracy through the bold initiative of a new global finance facility.

    The International Finance Facility is in the tradition of the Marshall Plan of 1948, when to finance the development of a ravaged post war Europe, the richest country in the world – the USA – agreed to transfer one per cent of their national income each and every year for four years – a transfer in total of the equivalent in today’s money of $75 billion a year.

    And it is modelled on the founding principles of the World Bank in 1945 where nations provided resources to an international institution that then borrowed on the international capital markets.

    Let me explain what the IFF could achieve for the world’s poor.

    The IFF is founded upon long-term, binding donor commitments from the richest countries like ourselves.

    It builds upon the additional $16 billion dollars already pledged at Monterrey.

    And on the basis of these commitments and more it leverages in additional money from the international capital markets to raise the amount of development aid for the years to 2015.

    By locking in commitments from a wide range of donors, the IFF would enable us to front load aid for investment in development, enabling a critical mass of predictable, stable and coordinated aid as investment to be deployed over the next few years when it will have the most impact in achieving the Millennium Development Goals – saving lives today that would otherwise be lost.

    The IFF would enable us to invest simultaneously across sectors – in education and health, trade capacity and economic development – so that instead of having to choose between urgent emergency disaster relief and long term investment the impact of extra resources in one area reinforces the investment in another.

    And the IFF will allow us to attack the root causes of poverty not just the symptoms – focusing on developing the capacity and the dignity people need to help themselves.

    And let me just explain the scale of what I am proposing.

    In all our campaigns taken together we have managed to raise international aid from 50 billion dollars a year to 60 billion.

    Our proposal is to raise development aid immediately not from 60 billion to 65 billion or even 70 billion but effectively a doubling of aid to over 100 billion dollars per year.

    With one bold stroke: to double development aid to halve poverty.

    An extra 50 billion that will allow us to attack the root causes of poverty not just the symptoms, and to meet the Millennium Development Goals.

    The aim of the International Finance Facility is to bridge the gap between promises and reality.
    Between hopes raised and hopes dashed.
    Between an opportunity seized and an opportunity squandered.

    Of course we will continue to look at other means – international taxes, more resources direct to development banks, the IMF and the World Bank but the practical benefits of the IFF are:

    – we provide the support poor countries need immediately to invest in infrastructure, education and health systems, and economic development so they can benefit from access to our markets;
    – we provide grants to help ensure a sustainable exit from debt;
    – we make primary schooling for all not just a distant dream but a practical reality – meeting these needs and rights now and not deferring them to an uncertain future;
    – and we meet our global goals of cutting infant mortality and maternal mortality, eliminating malaria and TB and treating millions more people who are suffering from HIV/AIDS.

    I thank the Holy See and the growing number of countries who have indicated support for the IFF – including, of the G7, France and last week Italy.

    And let me give an example of what we can do today and now if we work together.

    Let me give an illustration of what – because of the IFF model – is already possible.

    The Global Alliance for Vaccines and Immunisation – who have immunised over the last five years not a few children but a total of 50 million children round the world – is interested in applying the principles of the IFF to the immunisation sector – donors making long term commitments that can be securitised in order to frontload the funding available to tackle disease.

    If, by these means, GAVI could increase the funding for its immunisation programme by an additional $4 billion over ten years, then it would be possible that their work could save the lives of an additional 5 million people between now and 2015.

    So in one fund, with one initiative, we can glimpse the possibilities open to us if we act together. If we could do the same for health, for schools, for debt, for the capacity to trade, for research and advance purchasing of drugs to cure malaria and HIV/AIDS, think of the better world we can achieve.

    So with next year – 2005 – the year of the UK’s G8 Presidency, the push for G8 progress starts now.

    You have set a challenge for 2005, with 2005 a make or break year for development, a moment of opportunity for development and debt relief, a challenge Tony Blair, Hilary Benn and I know we must, for the sake of the world’s poorest, not squander but must seize. An opportunity to make a breakthrough on debt relief and development, on tackling disease and on delivering the Doha development round on trade.

    We must rise to the challenge and we accept that we will be judged by what we achieve.

    So the task for Government now is to replace talk by action, initiatives by results and rise to the challenge – pledging to strive for urgent progress both on the priorities of finance for development and trade. And as you take forward your 2005 campaigns, I know you will hold us accountable as you have done so far, that you will challenge us, be the conscience of the world, be the voice that guides as at this crucial crossroads.

    Toni Morrison said that ‘courage is to recognise and identify evil but never fear or stand in awe of it’.

    And let that be our inspiration as we think of Africa.

    30,000 children will die needlessly today.
    If this happened in our country we would act now immediately together.
    We would indeed conclude it should never be allowed to happen anywhere.

    Yet today 30,000 children will die.
    Each child a unique personality.
    Each child precious.
    Each one loved, almost every one who could live if the medicines and treatments available here were available there.
    But each one of those 30,000 children will struggle for breath – and for life – and tragically and painfully lose that fight.

    And I know what you are thinking.
    If I could this day help one single child who might otherwise die live.
    If I could today and tonight prevent one avoidable death.
    If I could prevent a single child from needless suffering.
    If I could turn the despair of a mother worried about her child from desolation to hope
    Then it would make everything I do worthwhile.
    But if we could together by our actions help thousands, hundreds of thousands and millions.
    And if we could with all the power at our command, working together, collectively change the common sense of the age so that people saw that poverty was preventable, should be prevented and then had to be prevented, so that we met the Millennium development Goals not in 2150 but in 2015, then all else we do in our lives would pale into insignificance and every effort would be worth it.

    As Bono has said – It’s not enough to describe Everest. We have to climb it. And it’s not enough to picture the New Jerusalem. We must build it.

    But when people say debt relief, trade justice and finance for health and education is an impossible dream, I say:

    – people thought the original plans for the World Bank were the work of dreamers;
    – people thought that the Marshall Plan unattainable;
    – even in 1997 when we came to power people thought debt relief was an impossible aspiration and yet already with your support we are wiping out up to $100 billion dollars of debt;
    – people thought no more countries would sign up to a timetable for 0.7 per cent in Overseas Development Aid and yet year this year alone five countries have done so.

    So when the need is even more urgent and our responsibilities even more clear; and even when the path ahead difficult hard and long, let us not lose hope but have the courage in our shared resolve to find the will to act.

    Let us hear the words of Isaiah ‘Though you were wearied by the length of your way, you did not say it was hopeless – you found new life in your strength’.

    And let us answer with Isaiah also as our motto for 2005: that we shall indeed ‘renew our strength, rise up with wings as eagles, walk and not faint, run and not be weary’.

    A few weeks ago I cited a famous saying of more than one hundred years old – that the arc of the moral universe is long but it does bend towards justice.

    This was not an appeal to some iron law of history but to remind people that by our own actions we can and do change the world for good.

    And I believe that:

    – with the scale of the challenge revealed;
    – with the growth of public pressure you have started in Britain and in other countries;
    – and if there is a determination among world leaders to be bold;
    – building upon our moral sense, the arc of the moral universe while indeed long will bend towards justice in the months and years to come.

  • HISTORIC PRESS RELEASE : Treasury forges links with China [December 2004]

    HISTORIC PRESS RELEASE : Treasury forges links with China [December 2004]

    The press release issued by HM Treasury on 10 December 2004.

    Paul Boateng, the Chief Secretary to the Treasury this week jointly chaired the UK-China Finance Dialogue, designed to extend and deepen the “comprehensive and strategic partnership” between the UK and China.

    The dialogue covered UK and Chinese macroeconomic developments, industrial restructuring in a globalised economy; G7 and G8 co-operation, and financial reform. It also covered the need to promote enterprise and increase investment in science and innovation, to ensure that both nations and their citizens are equipped to cope with the challenges of greater global competition and the pace of technological change.

    Paul Boateng and senior representatives from the UK financial services sector participated in a roundtable with counterparts from the Chinese banking sector.  They discussed a broad range of issues, covering in particular financial market liberalisation and the mutual benefit to the UK and China of closer co-operation.  Paul Boateng offered UK expertise in aiding the ongoing financial reform programme in China, an offer which was warmly received.

    The meeting comes after the Pre-Budget Report produced a detailed analysis of the long term economic challenges and opportunities facing the UK, including the growth of China as a major economic power, with the Chancellor saying:

    “By 2015 Asia will be responsible for as much as 25 per cent of world trade.  Yet only 1 per cent of British exports go to China and just 1 per cent to India. So having set an objective to build trade links with Asia that match those in Europe and America, we propose that the China-UK Financial Dialogue now expand its role with enhanced private sector participation.”

    Mr Boateng held a number of bilateral meetings including with the Finance Minister, the Governor of the People’s Bank of China, the senior Vice Minister at the National Development and Reform Commission (NDRC), and the Chairman of the China Banking Regulatory Commission.

    Mr Boateng said:

    “The emergence of China as a modern economic powerhouse is having a major impact on world markets, and this is set to increase.

    We know that a more open and prosperous China will be to the benefit of us all – and we welcome this opportunity to strengthen the economic ties between our countries, and to develop stronger links between our Governments, and also between our businesses and our citizens.”

  • HISTORIC PRESS RELEASE : Publication of the Child Benefit Bill [December 2004]

    HISTORIC PRESS RELEASE : Publication of the Child Benefit Bill [December 2004]

    The press release issued by HM Treasury on 13 December 2004.

    The Government will for the first time pay Child Benefit to the families of 16-19 year olds in unwaged work-based learning and 19 year olds completing a course of education or training, thanks to measures set out in the Child Benefit Bill published today.

    Supporting young people to achieve, published alongside Budget 2004, set out a package of short-term measures and a long-term vision to improve financial support for 16-19s, to ensure that all young people can stay on in education or training after 16.

    The Bill, which is the first Child Benefit Bill since 1975, is an important step towards implementing these proposals.

    The measures have been developed in consultation with voluntary sector youth organisations, learning providers and businesses.

    Commenting on the Bill, the Paymaster General Dawn Primarolo said: m“We want to see all young people reach the age of 19 ready for higher education or skilled employment.  This is essential to increase individual opportunity and build a flexible, productive and high skilled economy.

    “The successful national roll out of the Education Maintenance Allowance has demonstrated the importance of financial support and incentives in delivering higher post-16 staying on rates.  Building on this success, the Child Benefit Bill will support young people’s choices between education and work-based learning, and ensure that young people are supported until they finish their course.”

  • HISTORIC PRESS RELEASE : Morris Review – Interim Assessment published [December 2004]

    HISTORIC PRESS RELEASE : Morris Review – Interim Assessment published [December 2004]

    The press release issued by HM Treasury on 17 December 2004.

    The Government asked Sir Derek Morris to conduct a wide-ranging independent review of the UK actuarial profession. Sir Derek Morris has today published his interim assessment.

    The issues identified in the interim assessment include:

    • the profession overall has been too insular and slow to adapt to changing circumstances;
    • there has been insufficient transparency in actuarial advice;
    • there has been inadequate scrutiny, challenge and market-testing of actuarial advice by users: such as some pension fund trustees and Boards of insurers;
    •  there has been a lack of clarity about the accountability of actuaries to the wider public interest;
    • in the past the educational syllabus has failed to take full account of developments in actuarial and non-actuarial thinking;
    • professional standards have been weak, ambiguous or too limited in range; and perceived as too influenced by commercial interests;
    • self-regulation has not been sufficient to address these issues.

    The interim report identifies issues and policy options in three broad areas: the level of choice and competition in the market for actuarial services, the regulatory framework for the actuarial profession and the future role of the Government Actuary and the Government Actuary’s Department.

    The review’s preliminary finding is that there is a reasonable level of choice and competition in the market for actuarial services for all but the largest pension funds but that there is inadequate market-testing and scrutiny of actuarial advice. The review identifies a need to encourage market testing; discourage the bundling of actuarial advice; improve actuaries’ communication skills and to increase user knowledge and understanding.

    The review identifies a number of weaknesses in the current self-regulatory framework of the actuarial profession: including weaknesses in professional actuarial standards; inadequate protection of the interests of consumers and pension scheme members and the perception that commercial interests may have superseded the interests of the wider public.

    The report proposes three alternative models of regulation: continued self-regulation by the profession; independent oversight of the profession’s self-regulation and full statutory regulation. The review’s current thinking is that independent oversight of the profession’s self-regulation may be the best way to combine professional actuarial input into the regulatory framework with sufficient independence from the profession to provide the necessary protection and assurance for the public. The review identifies the Financial Reporting Council as a possible independent oversight body.

    Many clients of the Government Actuary’s Department (GAD) were satisfied with the services that they received but a number of issues were also raised:

    • public service pensions schemes are required in statute to use GAD’s services: the review’s current thinking is to deregulate to give users of these services a choice of provider;
    • there may be more efficient ways of producing the UK population projections and the occupational pension scheme survey: the review is considering transferring the population projections work to the ONS and the pensions scheme survey to The Pensions Regulator;
    • there is a continued need for independent advice on the National Insurance Fund and statements of broad comparability of pensions when staff are transferred from the public to the private sector: the review recognises that there may be an ongoing role for the Government Actuary in providing independent sign-off on these activities; and
    • GAD competes for overseas work: the review is not currently considering any changes in this area.

    Sir Derek Morris said:

    “The review has no reason to doubt that the overwhelming majority of actuaries in the UK are dedicated, skilled professionals providing important and useful advice, with commitment, integrity and a strong sense of duty. However, the review also identifies a number of quite serious problems faced by the profession in the UK.”

    “Against this background, the central question for this review, and for the actuarial profession, is how it can encourage and ensure the availability of best practice actuarial services to users.”

    “I am grateful to the many contributors who have taken the time to put forward their views to the review team. I am keen to hear the views of interested parties on the issues and possible policy options that I set out in the interim assessment.”

  • HISTORIC PRESS RELEASE : Review of Myners Principles for Institutional Investment Decision Making [December 2004]

    HISTORIC PRESS RELEASE : Review of Myners Principles for Institutional Investment Decision Making [December 2004]

    The press release issued by HM Treasury on 17 December 2004.

    Progress positive but further work needed, the Government said today, as it brought forward new proposals to strengthen the Myners principles. This follows the conclusion of its review into how effective the Myners principles have been in improving pension schemes’ investment decision-making.

    The review marks another important step in the Government’s programme of reform to improve the efficiency of the investment chain which links savers and the companies in which they invest.  This is of vital economic importance for productivity and long-term growth, because the investment chain is a critical mechanism for ensuring that investment is efficiently allocated.

    Announcing publication, Financial Secretary Stephen Timms MP said:

    “I welcome the efforts that pension schemes, particularly the larger ones, are making to adopt the Myners principles: everyone – consumers, industry and Government, but especially pension schemes themselves – stands to benefit as a result.  However, our review shows that further action is needed to accelerate progress in key areas, in particular in relation to trustee expertise and decision-making processes.”

    Paul Myners, author of the original Myners Review, said:

    “I am very pleased that the principles are now widely accepted as the benchmark of best practice for investment decision-making. But more change is needed before the vision of a much-better functioning system I set out in my original report will be realised.”

    The Government proposes to strengthen and amplify the Myners principles in respect of the areas where progress has lagged.  These revisions will make clear that:

    • the chair of the board should be responsible for ensuring that trustees taking investment decisions are familiar with investment issues and that the board has sufficient trustees for that purpose;
    • for funds with more than 5,000 members, the chair of the board and at least one-third of trustees should be familiar with investment issues (even where investment decisions have been delegated to an investment subcommittee);
    • funds with more than 5,000 members should have access to in-house investment expertise equivalent at least to one full-time staff member familiar with investment issues;
    • as well as contracting separately for investment and actuarial advice (as the principles currently require), in relation to investment advice, funds should also contract separately for strategic asset allocation and fund manager selection advice. (This is consistent with Sir Derek Morris’s analysis in his interim assessment of his review of the actuarial profession – see below.);
    • trustees should provide the results of monitoring of their own performance to members, and ensure that key information provided to members is also available on a dedicated fund website.

    The Government will also explore, in conjunction with stakeholders, the practicalities of a voluntary, independently-compiled report on compliance with the Myners principles by trustees, akin to the FRAG reports commissioned by custodians to demonstrate to clients their compliance with various internal control procedures. This would help provide an informed commentary on how the principles are being implemented, and help trustees validate and benchmark their decision-making procedures more effectively.

    The interim assessment of Sir Derek Morris’s review of the actuarial profession, also published today, provides further analysis of the investment consultancy market, and identifies a need: to increase trustee knowledge and understanding; to encourage greater scrutiny and market testing of advice; and to discourage the supply of such advice being bundled with other services.

  • Gordon Brown – 2004 Speech to the Council on Foreign Relations

    Gordon Brown – 2004 Speech to the Council on Foreign Relations

    The speech made by Gordon Brown, the then Chancellor of the Exchequer, in New York on 17 December 2004.

    I would like to start by saying how delighted I am to be here.

    To be introduced by Robert Rubin – held in respect and admired in every continent for your outstanding leadership during and since your successful time of office as Treasury Secretary.

    And to be invited here to make our case at the Council on Foreign Relations about the forthcoming British G8 presidency is both humbling and challenging.

    For this is the forum – set up to help rebuild the international order after world war one, central to the 1944 and 1945 conferences for building that order after world war two – where out of the seeding of new ideas, the discussion of international events, so much that has been so good for the world has been initiated.

    And at the heart of the internationalism advanced by the Council, just as it is at the heart of the close and historic links between our two countries, the UK and the US – are our shared values:

    • our shared passion for liberty and democracy;
    • our fundamental beliefs: in opportunity for all, the work ethic and enterprise;
    • and our commitment to being open, outward looking and engaged with the world – not least our shared convictions that economic expansion through trade and free markets is the key to growth and prosperity.

    And let me start by acknowledging the debt the world owes to the United States for your leadership not just in the world economy but in the fight against international terrorism. And coming to New York three years after September 11th I am once again deeply impressed by the resilience and bravery in the face of tragedy. Indeed, America has shown by the actions of all its people that while buildings can be destroyed, values are indestructible; while lives have been put at risk, the cause of liberty never dies; and while hearts may be broken, your faith in the future is unbreakable.

    And in Iraq, Afghanistan and round the world I can assure you that Tony Blair and I are determined that this alliance endures, prospers and advances from strength to strength.

    And when the transatlantic economic relationship between Europe and America now accounts for up to $2.5 trillions of commercial transactions each year, including $500 billions of foreign trade, and provides employment to over 12 million people on both sides of the Atlantic, we must do more to break down the tariff and non tariff, regulatory, competition and financial services barriers to greater trade and investment between our two continents. And I repeat my proposal – more relevant than ever – a proposal born out of my experience as a Finance Minister – that European countries like Britain and the US and the NAFTA countries should meet in a regular economic forum to examine shared economic challenges.

    But this morning I want to discuss with you how as the US Presidency of the G7 of 2004 evolves into the British Presidency of 2005 we can work together to fashion a global alliance for peace and prosperity that starts from the shared needs, common interests and linked destinies of developed and developing worlds working together.

    And I have a quite specific set of proposals: that as poor countries reform and agree to continue reform, the richest countries must ensure that all countries in desperate need of sustainable debt relief receive it; that we complete as a matter of urgency the first trade round the world has ever seen that sets out to rebalance the trading system to take account of the interests of the developing world; and most of all that we consider an innovative proposal to tackle HIV/AIDS, TB and malaria, to give every child the chance of primary education and to double aid to halve poverty.

    Let me put my proposals in context:

    Just before the Iron Curtain descended over Europe in the late 1940s Prime Minister Churchill and President Roosevelt came forward with bold proposals for a strengthened Atlantic Alliance and looked ahead to a new era and – in their day and for their times — built a new world order.

    In that remarkable decade, visionaries here in America and round the world created:

    • the United Nations;
    • the World Bank and International Monetary Fund;
    • and then in a remarkable act of generosity – through the Marshall Plan – America transferred 1 per cent of national income to the war ravaged economies of Europe, recognising that prosperity like peace was indivisible; that prosperity to be sustained had to be shared.

    And that vision led to not only a new military and political settlement but a call for a new economic and social order that tackled, in their words, ‘hunger, poverty, desperation and chaos’.

    Like these visionaries of the post war era, we are today dealing with military, security and strategic challenges in a number of critical countries to which we must respond at a security and military level comprehensively with clear and defiant resolution but as Marshall did, also at an economic, social and cultural level.

    Like our predecessors we are seeing the need for an offer to the least developed countries – the most recent being the Monterrey consensus and in the USA the Millennium Challenge Account – what Marshall argued for: ‘to permit the emergence of political and social conditions in which free institutions can exist’ – and that such an offer can only succeed if it goes beyond compensation for poverty to dealing with its underlying causes, beyond temporary relief to wholesale economic development.

    And like them we see that any future global economic and social order must be grounded in responsibilities as well as rights. So like theirs our proposals also call on the poorest countries to rise to the challenge. And thus our vision of the way forward – akin to the 1940s challenge to rich and poor countries alike – is that only by each meeting their obligations for change all can benefit.

    And we recognize the differences.

    We understand that when what happens to the poorest citizen in the poorest country can directly affect the richest citizen in the richest country, the security threat we face is not an Iron Curtain which separates East from West but a blanket of fear – permanent, guerrilla war fought not by conventional armies or nation states but by cliques and factions of whose suicide bombers it is often said they cannot easily be deterred, they need succeed only once and they do not have to win in order for us to lose. I am more confident that by military and security measures and also by the far sightedness of our economic and social vision we can separate those extremists from the peoples they seek to exploit.

    But we also recognize that while the Marshall Plan was constructed in a post-war world of distinct national economies in need of rebuilding, our job now, in a more interdependent world – the world of globalisation – is to help build for a wholly different environment of open not sheltered economies, international not national capital markets, and global not local competition —– and to do so in a way that recognizes that the foundations of prosperity – the rule of law, transparency and accountability – need to be built by support in aid not as compensation for poverty but as investment in the building on modern economies.

    The answer is not to imply you have to choose between engaging in the global economy and addressing poverty, as if men and women of compassion should reject globalisation.  The answer is to advance globalisation and justice together with new policies for a new era of engagement.

    Now exactly five years ago in New York and in a historic declaration every world leader, every international body, almost every single country signed up to a shared commitment to right the greatest wrongs of our time.

    The promise that by 2015 every child would be at school – the right to education so everyone can help themselves.

    The promise that by 2015 avoidable infant deaths would be prevented – the right to a healthy life so all have the opportunity to make the most of their abilities.

    The promise that by 2015 poverty would be halved – the right to prosper so each and every individual can fulfil their potential.

    But already, so close to the start of our journey, we can see that our destination risks becoming out of reach, receding into the distance.

    At best on present progress in Sub Saharan Africa:

    Primary education for all will be delivered not in 2015 but 2130 – that is 115 years too late

    The halving of poverty not by 2015 but 2150 – that is 135 years too late

    And elimination of avoidable infant deaths not by 2015 but by 2165 – that is 150 years too late

    The world will not wait 150 years for promises made to be honoured.

    Recall the past promises:

    • the promise in 1970 that all developed countries would set aside 0.7 per cent of their national income for development aid;
    • the promise of primary education for all made in 1980 in Jomtien (Thailand) and re-affirmed in 2000 in Dakar (Senegal);
    • the promises at the World Summit for social development in 1995 on eliminating poverty;

    promises which all have one thing in common – they have all been broken.

    Martin Luther King spoke of the American constitution as a promissory note.

    And yet – for black Americans – the promise of equality for all had not been redeemed.

    He said that the cheque offering justice had been returned with ‘insufficient funds’ written on it.

    And in this way he exposed on racial equality the gap between promises and reality.

    And so too the Millennium Development Goals – a commitment backed by a timetable – are now being downgraded from a pledge to just a possibility to just words.

    Yet another promissory note, yet another cheque returned marked ‘insufficient funds’

    Now since 2000 some progress has been made.

    $70 billion of unpayable debt is being written off.

    At the 2002 Monterrey Financing for Development conference, donor countries pledged an additional $16 billion a year for development aid from 2006.

    Under President Bush’s leadership the United States have promised $5 billion a year by 2006 through its Millennium Challenge Fund – increasing US foreign aid by 50 per cent – and $500 million to promote HIV/AIDS prevention and provide antiretroviral therapy — in total more than tripling US investment globally in tackling HIV/AIDS since 2001.

    And five countries including the UK have this year committed to a timetable for raising development aid to the UN target of 0.7 per cent of national income.

    In addition, in the past decade in developing countries, primary school enrolments have increased at twice the rate of the 1980s.

    The proportion of those aged over 15 who can read has risen from 67 per cent to 74 per cent.

    Life expectancy has increased by from 53 years to 59 years.

    And the number of people living in extreme poverty has fallen by 10 per cent.

    But at the same time we face the challenge of a continent – Africa – where 30 countries still have an average life expectancy of less than 50.  Where 25 million people are infected with HIV/AIDS. Where in 24 countries one in every ten of children die before the age of one and the everyday story is of mothers struggling to save the life of their infant child and in doing so losing their own.  Where millions of children die unnecessarily each year.

    We cannot anymore blame these failures on a lack of science, medicine or knowledge. And we cannot blame our inaction on ideological division, that we have been frozen into action by a failure to agree. I cannot think of a time when there has been so much basic agreement between developed and developing counties on the role of markets and public investment; on the importance of trade, private investment and transparency in monetary and fiscal regimes — what you might call a new consensus.  Instead, what we need is greater political will.

    And the UK’s plan is this.  We need to make an offer as bold as the offer that was made in the Marshall Plan of the 1940s.  An offer that as developing countries pursue corruption-free policies for stability, implement their own poverty reduction plans and take forward the policies necessary to expand development, attract private investment, encourage entrepreneurship and reform trade at their own pace, the richest countries should offer:

    • to make a reality of our pledge to wipe out 100 per cent of debt that is unpayable;
    • to dismantle our trade barriers and finance, for the poorest countries, the building of capacity to trade and attract investment so they can take advantage of opportunities in our markets;
    • and to offer – in what Robert Rubin calls a ‘parallel agenda’ – the resources that are urgently needed to meet the Millennium Development Goals – an extra $50 billion a year.

    It is an offer made for security, economic and moral reasons.

    It is an offer that requires accountability and transparency from the poorest countries to justify development aid.

    It is an offer however whose generosity – an act of statesmanship – would illuminate the values we are defending and show the world that we, the richest countries are ready to march forward with the poorest countries under the banner of liberty, democracy and opportunity for all.

    And out of this I believe we could achieve not only a major assault on poverty in the poorest countries but pave the way, as the Marshall Plan and the Bretton Woods institutions did, for greater trade and higher and longer-term world economic growth benefiting us all.

    Let me outline the scale and significance of our proposals.

    Let us in 2005 make a historic offer that finally removes the burden of decades old debts that today prevent the poorest countries ever escaping poverty and leading their own economic development.

    In 1997 just one country was going to receive debt relief.

    Now 27 countries are benefiting with $70 billion of unpayable debt being written off.

    And it is because of debt relief in Uganda that 4 million more children now go to primary school.

    Because of debt relief in Tanzania that 31,000 new classrooms have been built, 18,000 new teachers recruited and the goal of primary education for all will be achieved by the end of 2005.

    Because of debt relief in Mozambique that half a million children are now being vaccinated against tetanus, whopping cough and diphtheria.
    And all achievements made without undermining creditor confidence.

    But when many developing countries are still choosing between servicing their debts and making the investments in health, education and infrastructure that would allow them to achieve the Millennium Development Goals, we have to recognise that while 100 per cent bilateral debt relief has wiped out half the debts of most poor countries, the process can only be completed – as US Treasury Secretary John Snow has suggested – with a bold act of offering 100 per cent multilateral debt relief, relief from the $80 billion of debt owed to the IMF, the World Bank and the African Development Bank, up to 80 per cent of the historic debt of some of the poorest countries.

    And instead of running down the resources the international financial institutions have available for development, I suggest that IMF debt write-off be financed by using IMF gold and that donor countries make a unique declaration that they will, on this occasion, repatriate their share of World Bank and African Development Bank debts owed by eligible developing countries. And to lead the process we the UK are prepared to assume responsibility for 10 per cent of all debts owed to the World Bank and the African Development Bank.

    But debt merely deals with the burdens of the past. It is not enough to break the vicious circle of debt, poverty and under-development, we must also build a virtuous circle of private investment, open trade and economic development.

    Less than 5 per cent of total flows of foreign direct investment go to the least developed countries – and only 1 per cent to the whole of Africa. Domestically generated savings and investment barely match foreign capital inflows – and the savings that do exist often leave the country in capital flight.  That is why country-owned poverty reduction strategies are rightly focusing on creating the right domestic conditions for private investment and commerce with the IMF, World Bank and nations like ours providing direct support to help create a stable economic environment, an educated and healthy workforce, improved infrastructure, encouragement for entrepreneurship, well functioning capital markets and sound legal processes that strengthen property rights and deter corruption.   We know now that who holds the raw materials is less important than who has the skills.  As President Bush has said:  ‘Africa is a continent that has got vast potential, and the United States wants to help the people of Africa realise that potential’.

    All of us here know that no country has moved from poverty to prosperity by cutting itself off from the international economy and without increasing its investment and trade.  We also know that reducing tariffs and achieving the ambitious pro-poor trade agreement promised at Doha could boost the world’s yearly income by over $500 billion.  And while developing countries could gain the most, all countries and regions stand to benefit.

    So 2005 must become the year when through the world trade talks, we release the poorest countries from unfair trade barriers.  But my proposals involve not just removing the barriers but a more positive encouragement of private investment and trade.

    First, it is time for the richest countries to agree to open our markets, remove trade-distorting subsidies and in particular, do more to tackle the scandal and waste of the European Common Agricultural Policy, showing we believe in free and fair trade.

    Second, it is time to move beyond the old consensus of the 1980s and recognise that while bringing down unjust tariffs and barriers can make a difference, developing countries must also be able to carefully design and sequence trade reform into their own poverty reduction strategies.

    And third, it is not enough to say ‘you’re on your own, simply compete’ we have to say ‘we will help you build the capacity you need to trade’ – not just opening the door but helping developing countries gain the strength to cross the threshold.  We have to recognise that they will need additional resources from the richest countries both to create the physical infrastructure and human capital to take advantage of trading opportunities – and to prevent their most vulnerable people from falling further into poverty.

    It is this last offer that could in my view unlock the stalled world trade talks and as we progress together – America and Europe – towards the next meeting in December 2005 in Hong Kong we must drive forward this agenda.

    But any discussion of debt relief and encouragement for trade leads to the third great challenge of 2005: that progress on debt relief and capacity building for trade side by side with Rubin’s ‘parallel agenda’ of investment in education, health and anti poverty programmes must also involve new resources – not aid as compensation for being poor but aid as investment in the future potential of the developing world, tackling the underlying causes of under-development.

    Making better use of existing aid – reordering priorities, untying aid and pooling funds internationally to release additional funds for the poorest countries – is essential to achieve both value for money and the improved outcomes we seek.

    But the brutal fact is that while ten years ago aid to Africa was $33 per person per year, today it is just $27

    All the public spending on education in Sub-Saharan Africa taken together is still, per pupil, under $50 a year, less than one dollar per week.

    And compared to $2000 a year in America, Sub-Saharan Africa still devotes only $12 per person per year to health – and only $3 per person per year comes from aid.

    So the fact is that as the problems of disease and poverty have grown, financial support has been reduced.  And the scale of the resources needed immediately to tackle disease, illiteracy and global poverty, far less to meet the ambitious Millennium Development Goals to which we are pledged, is far beyond what traditional funding can offer.

    That is why the UK Government as part of the financing package to reach the Millennium Development Goals has put forward its proposal for stable, predictable, long-term funds frontloaded to tackle today’s problems of poverty, disease and illiteracy through a new global finance facility.

    The International Finance Facility is in the tradition of the Marshall Plan.

    And it is modelled on the founding principles of the World Bank where nations provided resources to an international institution that then borrowed on the international capital markets.

    But it is a temporary facility to meet the needs of development from now to 2015.

    Let me explain how the IFF will work.

    The IFF will be founded upon the additional $16 billion a year already pledged from the richest countries like ourselves at Monterrey.

    Donors will make this additional funding a long-term pledge – over 30 years.

    And using these binding donor commitments as security, the IFF will leverage in additional money from the international capital markets to raise the amount of development aid for the years to 2015 by $50 billion a year – which will be repaid during the second half of the life of the facility through donor commitments

    Let us be clear the IFF is a temporary facility that involves no new bureaucracy.  The IFF would disburse development aid through grants and work through existing channels for delivering aid – indeed, current US commitments to the Millennium Challenge Account, for example, could be scaled up by the IFF structure before being disbursed in exactly the same way as planned today by the Millennium Challenge Corporation.

    And I believe the IFF has the following advantages – it allows us to tackle the causes of under-development not the symptoms; it allows us to ensure predictable funding where first aid is not at the expense of long term investment; and it allows us to frontload the flow of resources required to meet the Millennium Goals.

    First, the IFF would provide a predictable flow of aid to developing countries so they no longer have to suffer from an up to 40 per cent variance in the amount of aid they receive from year to year which itself prevents them from investing efficiently in health and education systems for the long term and tackling the causes of poverty rather than just the symptoms.

    Too often in the last 50 years we have seen development funding as short term charity aid, charity for being poor, instead of for a higher and more substantial purpose – long term investment tied to tackling the underlying roots of poverty and promoting sustainable growth.  That is why the development funding I propose today through the IFF is specifically designed to generate the public investment needed to create the best environment to boost private investment and trade by increasing funds for health and education – not typically areas in which private capital flows but areas in which public investment is necessary to create an environment in which private commerce can flourish.

    Second, the IFF would create the scale of funding necessary to invest simultaneously across sectors – in education and health, trade capacity and economic development – so that instead of having to choose between urgent emergency disaster relief and long term investment the impact of extra resources in one area reinforces what is being done in others and has a lasting effect.

    For the fact is that no one area can be seen in isolation from another:

    • every year of additional schooling that a mother has reduces her child’s chances of dying by up to 10 per cent so if we cannot invest in education we cannot succeed in tackling diseases like HIV/AIDS, TB and malaria;
    • teachers in dozens of countries are dying of HIV/AIDS faster than they can be trained so if we cannot tackle ill-health we cannot solve our problems in education;
    • 90 per cent of diarrhoeal disease is caused by poor water so if we cannot invest in sanitation we cannot succeed in public health;
    • investment in transport and telecommunications are essential if developing countries are to reap the benefits of access to our markets so if we cannot invest in infrastructure we cannot succeed in stimulating economic development;
    • and because every dollar no longer required in repayment to meet the burden of unpayable debt can be money spent on education and health, if we cannot continue to secure debt relief we cannot succeed in education and health.

    So to rise to the scale of the challenge we need a financing vehicle through which we make possible the funds for – and then the realisation of our goals for – education, health, AIDS, economic development, debt relief and trade, all together at the same time.

    Third, the IFF is designed to be a fiscally neutral means of scaling up development aid between now and 2015, bringing forward in time the value of the commitments already made at the Monterrey conference and enabling us to frontload aid so a critical mass can be deployed as investment now over the next few years when it will have the most impact in achieving the Millennium Goals.

    We know that by spending now in many areas we can not only save lives earlier but also reduce costs for the longer term.

    Take HIV/AIDS for example – which will be a priority of the international finance facility.

    Research shows that for every year we bring forward the discovery of an AIDS vaccine we could save 2 million lives that would otherwise be lost. So if we increased investment in AIDS research now and used it to find a vaccine – and then eventually to finance a jointly agreed advance purchase scheme to make the vaccine accessible to Africa at an affordable price – then we can not only save lives earlier but also reduce the costs of treating those with HIV/AIDS in the medium and longer term by up to $2 billion a year.

    I also see an enormous opportunity for pushing forward the initiative to create a worldwide infrastructure – or platform – for sharing and coordinating research in AIDS, and then for encouraging the development of viable drugs. But it is generally recognised that the sums of money required involve at least a doubling of research money for AIDS.

    The generation that – by their generosity and far sightedness – advanced a cure to prevent HIV/AIDS would truly merit the title ‘the greatest generation’.

    In the last 50 years the Marshall Plan’s European model could not be applied wholesale to developing countries because in many poor countries neither the economic foundations nor the necessary open, transparent and accountable systems for managing the public sector were properly in place to absorb aid and prevent corruption and waste.   And the proposal I am making today will work only if we see development assistance in this light:  with the multi-national pooling of budgets and the proper monitoring of their use to achieve the greatest cost effectiveness of new aid; untying aid so maximising its efficiency in diminishing poverty; more effective in-country use of funds to help countries invest and compete; and development funding focused on results and based on developing countries pursuing agreed goals for social and economic development including tackling corruption.

    And let me give an illustration of what – because of the IFF model – could already possible.

    The Global Alliance for Vaccines and Immunisation (GAVI) – which is funded by the Gates Foundation and governments and has immunised over the last five years not a few children but a total of 50 million children round the world – is interested in applying the principles of the IFF to the immunisation sector – donors making long term commitments that can be securitised in order to frontload the funding available to prevent disease.

    If, by these means – through the pilot we are developing with them – GAVI could increase the funding for its immunisation programme by an additional $4 billion over ten years, then it would be possible that their work could save the lives between now and 2015 of an additional 5 million people.

    So in one fund, with one initiative, we can glimpse the possibilities open to us if we act together.  If we could make the same offer for health, for schools, for debt, for the capacity to trade, for research and advance purchasing of drugs to cure malaria and HIV/AIDS, think of the changed world and the changed view of the developed countries in the developing countries.

    Marshall’s Plan in the 1940s was investment for a purpose – for a Europe rebuilt.  He summoned forth a new alliance for prosperity between rich and poor countries that, for his time, played a vital part in winning the peace.

    So today – summoning up the spirit of Marshall – the new offer I suggest for developing countries is aid as public investment for a purpose, so that they can play their part in a stable, peaceful world.

    And by each meeting their obligations for change all can benefit.

    First, the obligations on developing countries: to end corruption, put in place stable economic policies, encourage private investment, meet their commitment to community ownership of their poverty reduction strategies and ensure resources go to fighting poverty.

    Second, the obligations on business to engage with the development challenge and not to walk away, becoming long term partners in growth and development.

    Third, the obligations on international institutions – to reform systems to ensure greater transparency and openness, and to focus on priorities that meet the international development targets.

    Fourth, the obligations on the richest nations to the poorest of the world – to curb our protectionism, to fulfil our commitments and to help release the potential of the developing world through a substantial and decisive transfer of resources. Not aid that entrenches dependency but investment that empowers self sufficiency – investment money that is, in the truest sense of the word, freeing the poorest countries to find their way forward.

    Here in the Council on Foreign Relations you have for over almost a century addressed the great challenges of our times.

    Your origins were the search for a new post First World War world order – and your contribution was to demand security with justice.

    Then in the 1940s you planned and discussed the policies that led to the Bretton Woods conference and the Marshall Plan – and your contribution was to demand far sighted acts of statesmanship.

    Now here in New York and after September 11th, President Bush, your Government, your armed forces and your people have led a great and global effort worthy of America’s history and its ideals: working together with steadfast resolve both to win the war against terrorism and to make an offer to developing countries that rises to the health, education, poverty and economic challenges all have to meet.

    The words of one great poet sum up what we must now do:

    “The future has many names
    For the weak it is unattainable
    For the fearful it is unknown
    For the bold it is opportunity”

    Let it be our generation that shows those who suffer in the bleakest places of the world that we can light a candle of hope which, radiating outwards, can cut through the darkness and shame of injustice and emblazon across the world – for all people everywhere to see and believe – a message of confidence and faith in the future.

    Let it be our generation that – with practical and bold resolution – takes up the challenge and discharges our duty to remove the scar of poverty and hopelessness from the world’s soul.

  • HISTORIC PRESS RELEASE : Government welcomes Myners report on the corporate governance of life mutuals [December 2004]

    HISTORIC PRESS RELEASE : Government welcomes Myners report on the corporate governance of life mutuals [December 2004]

    The press release issued by HM Treasury on 20 December 2004.

    Paul Myners today published his report on the corporate governance of life mutuals commissioned by the Treasury in March 2004.

    The Government welcomes the report, which provides a thorough analysis of the issues, and a proportionate and pragmatic set of recommendations. The review builds on the work of Sir Derek Higgs on corporate governance and complements the reviews by Sir Derek Morris, Paul Myners and Ron Sandler in improving the efficiency of the investment chain which links savers and the businesses in which they invest.  The issues identified by Paul Myners in this report concerning the influence of members of life mutuals echo those he considered in the review of institutional investment for members of occupational pension schemes.

    Paul Myners’ report recommends adoption by life mutuals of the Combined Code on corporate governance, which has been annotated to reflect the circumstances of life mutuals.  The annotations serve to emphasise the importance, in the life mutual context of greater transparency and accountability in the boardroom, formal performance appraisal, proactive support for non-executive directors and closer links between non-executive directors and mutual members.  Complementary proposals aim to foster accountability by life mutuals to their members and to other market monitors through promoting better member relations and disclosure of relevant information.

    The Government believes Paul Myners recommendations will encourage the success of the sector and protect the interests of its members. It calls on the mutual life sector to begin implementing the recommendations put forward by the review now. The Financial Secretary to the Treasury, Stephen Timms MP, plans shortly to meet industry leaders to affirm this message.

    The Government will be reviewing the impact of implementing the proposals after two years after the Code comes into effect.

    Stephen Timms said:

     “Mutual life offices are an important part of the UK’s financial services sector, providing a home for the savings of nearly 10 million members.  The way in which these organisations are run is important to the overall health of the economy as well as to the financial well-being of the individual policyholders concerned.   The challenge for life mutuals – and in particular its representative bodies – is to build on the momentum of this report to drive forward the review’s recommendations.  The Government is now looking for life mutuals to respond.”

  • HISTORIC PRESS RELEASE : Myners Urges All Life Mutuals To Adopt Corporate Governance Best Practice [December 2004]

    HISTORIC PRESS RELEASE : Myners Urges All Life Mutuals To Adopt Corporate Governance Best Practice [December 2004]

    The press release issued by HM Treasury on 20 December 2004.

    Launching the final report of his independent review of the governance of mutual life offices, Paul Myners said:

    “Good corporate governance is essential to all forms of business. It provides the checks and balances that ensure that firms are run efficiently and meet the objectives of their owners, whether shareholders or the members of a life mutual.”

    “It also has its limitations. In formulating the review’s recommendations, I have recognised that risk is inherent in the conduct of business, and necessarily so.    Good corporate governance can ensure those risks are identified and appropriately managed, but it does not eliminate them, and it should not be believed that it does.   Indeed measures that sought to eliminate risk could destroy the very purpose of these entities.”

    Commenting on the review’s recommendations, he said:

    “The recommendations I am making today aim to achieve greater accountability by life mutuals to their members.  In doing so I have looked to develop a package of measures to help improve accountability, recognising that there are limits on what can be expected of life mutual members.  This includes measures to better enable other external monitors to scrutinise life mutuals, promoting better internal scrutiny of management by firm’s boards as well as the role of the Financial Services Authority.”

    “My approach is to address these issues in a realistic and proportionate way, with recommendations based on established practice and common sense.  Taken together they provide the basis for life mutuals to ensure that their governance will compare very favourably to best practice in proprietary companies.  I am not recommending legislation, as the issues identified do not warrant it.  I expect the recommendations in the report to be taken forward by life mutuals and their trade bodies, supported by FSA supervision.”

    “The FSA has made considerable strides in recent years in recognising the importance of good corporate governance to good regulation.  I hope it will take into account the lessons from this review as it further develops and refines its approach.”

    Recommendations include:

    • Promoting greater engagement by life mutuals of their members, through guidance on fair and accessible voting procedures on a member relations strategy.  This includes promoting dialogue with members as well as facilitating communication among members.  Members also have a clear responsibility to look after their own interests as the effective owners of life mutuals;
    • Proposals to better inform life mutual members and the market through providing better information, including on directors’ remuneration, and for large mutuals, publication of forward-looking strategic information in the form of an Operating and Financial Review;
    • Promoting adherence to best practice corporate governance through producing a life mutual specific piece of guidance.  This takes the form of a number of annotations to the Combined Code to reflect the particular characteristics of life mutuals. The Review’s objective is that this Code will be used by the FSA as its benchmark when it looks at governance as part of its risk monitoring process;
    • Proposals that give particular prominence to the need for a strong independent element on life mutuals’ boards, and underlines the importance of board appraisals.  Monitoring of business risks should be an explicit function of the non-executive directors; and
    • Helping equip non-executives to deal with the challenges they face in monitoring a complex, technical business. Proposals in the report aim to foster informed discussion and challenge. The company secretary or equivalent in friendly societies has a very valuable and pro-active role to play in this regard and in supporting non-executives more generally.

    Commenting on the report, Sir Derek Higgs said:

    “I welcome Paul Myners’ proposals for enhancing the governance of life mutuals. They build pragmatically on the sound, common sense principles of the Combined Code.”

    Financial Reporting Council (FRC) chairman Sir Bryan Nicholson commented:

    “These are sensible, proportionate recommendations that build on the principles of good corporate governance set out in the Combined Code.  The FRC stands ready to support the Association of Mutual Insurers in promoting best practice in the life mutual sector through the Code.”

    Callum McCarthy, Chairman of the FSA said:

    “The FSA sees effective corporate governance in authorised firms as being crucial to our statutory objectives of maintaining market confidence and consumer protection.   So we welcome the recommendations of this report that are aimed at strengthening governance in one of the sectors we regulate.  In particular, we support the aims behind the annotations to the Combined Code which we hope, when they are finalised, will provide a useful benchmark against which we will be able to measure governance standards in mutual life offices.”