Tag: Gordon Brown

Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, to the AMICUS Conference in Blackpool on 10 June 2002.

Today I want to talk about the National Health Service, full employment, the future of our economy, and our international agenda.

National Health Service

I believe that the case for the NHS system of funding – free at the point of need – is not weaker but stronger now than it was even in 1948 when it was founded.

Look at what your members faced in 1948 and now.

In 1948, the scientific and technological limitations of medicine were such that high cost treatments and surgery were rare or very rare:

– no chemotherapy for cancer;

– cardiac surgery was in its infancy;

– intensive care barely existed; and

– hip and knee replacement almost unknown.

Now, the standard of technology and treatment is such that unlike 1948 some illnesses or injuries could cost £20,000, £50,000 or even £100,000 to treat and cure, and some drugs cost as much as £8000 per prescription.

Because these costs of treatment and of drugs are higher than ever, the risks to family finances – if there was in Britain a requirement to pay privately – are greater than ever, not just for poorer families but for comfortably off families up the income scale. And therefore the need for comprehensive insurance cover of health care stronger than ever.

So I would say that in 2002 it is because none of us ever know in advance whether it is you or your family that will need that expensive care for acute or chronic illness that the best policy is clearly an insurance policy that offers cover to all of the people, whatever their income, for all illnesses and diseases without the ifs, buts and small print of private insurance policies.

So while some present the current NHS system of funding as an ideological hand-me-down, to be supported only out of sentiment rather than hard headed calculation; and while others dismiss the NHS funding system as an impossible dream – “fine in principle, a failed experiment in practice”; we now need to campaign to show people that the NHS system of funding – comprehensive and inclusive insurance with treatment free at the point of need – is demonstrably the modern rational choice: the best insurance policy in the world not just for poor or low income families in Britain, but for the vast majority of families in Britain. Not just for today but for tomorrow too. And more so than in 1948.

The issue now is between those who want to invest in the NHS and public services and those who want to charge and introduce private insurance.

I believe we should now expose the costs and inequity of private insurance – under which typical family premiums in the United States are around £100 pounds a week, rising by 13 per cent a year, and 40 million Americans are left uninsured – and thus insure only some of the people for some of the time when we wish to insure all of the people all of the time.

And I believe we should together expose the costs and inequity of charging for clinical services – £8,000 for a hip replacement, £40,000 for a heart transplant, £10 for a visit to a GP or to stay for a day in hospital – the unfairness of the sick paying for being sick.

And so I want to ask you today to help us ensure that we continue to prevent the introduction of a private system under which poverty would bar the entrance to the best hospitals; under which the only health care you could be sure of is the health care you were able to pay for.

And so let us affirm that it is because we recognise the rising costs of health technology, the risks that any family in this country face to their health, and the equity and efficiency of the NHS tax funded system that, for us, a reformed and renewed NHS – with the largest sustained increased investment in any decade of its fifty year long history – must be and remain a public service free at the point of use with decisions on care always made by doctors and nurses on the basis of clinical need – the best insurance policy in the world.

Economic stability and employment

The foundation of our sustained increases in public investment in health is economic stability not boom and bust.

It is because we rejected short-termist free for alls, the take-what-you-can, irresponsibility – and it is because we put faith in our values of economic responsibility – building from solid foundations, looking to the long term – that with Bank of England independence, tough decisions on inflation, new fiscal rules, hard public spending controls, we today in our country have had economic stability not boom and bust, the lowest inflation in Europe, long term interest rates and mortgage rates for homeowners lower than for nearly 40 years.

It was not by lucky chance but by difficult choices that we now have a more stable economy. And we will continue to reject the soft options, the quick fixes and short-termism in favour of a foundation of economic stability that enables us to move towards our goal – the goal we share – of full employment.

Since the time I went to school and grew up beside a mining community – since the first factory closure I remember being announced in my home town – and for a whole generation – our lives have been dominated by unemployment: long-term unemployment, youth unemployment, the fear of unemployment, the poverty and insecurity caused by unemployment.

I remember when I first became an MP a young couple coming to see me, both in tears, who having lost their jobs, knew they would lose their homes too.

I remember too the tragedy of the miners in my constituency, steel workers, dockyard workers, transport workers, engineer workers – redundant in their forties who feared they would never work again.

20 years ago, 10 years ago, even 5 years ago young people tried as hard as now to find work – they were applying for jobs, they were training for jobs. Don’t tell me these generations of young people didn’t have talent or potential, couldn’t learn or hold down a job. What they needed was a government on their side.

So the day we came into government we acted – starting with a windfall tax to pay for our New Deal. And I say it was right that £5 billion be transferred from the richest utility companies in our land to create employment opportunities in the poorest and most deserving communities of our country.

If only one person had benefited from the New Deal that would have made it worthwhile. But in total 660,000 people, two thirds of a million of our fellow citizens have benefited.

Every time a young person denied a job under the previous government gets a job under this one we should be proud of the New Deal – that this is what can happen when we work together.

In the mid eighties 350,000 young people were unemployed for more than a year.

Today it is 5,000.

And I can report to you today that the full total of jobs Britain has together created since 1997 is 1 million 500 thousand jobs – more people in work today than at any time in the history of our country.

Unemployment among men the lowest since 1979.

Unemployment among women the lowest since 1976.

Youth unemployment now the lowest since 1975.

Long-term unemployment now the lowest since the early 1970s.

But as long as there is unemployment we will not be complacent.

So let us send the message from this conference: that the next stage is to do even more to help those people and those places still too often forgotten and left behind.

Because too many disabled people are denied the right to work, we have introduced the New Deal for the disabled and a guaranteed minimum in-work income for disabled men and women of £194 a week to give disabled people denied chances in the past – to develop their talents and potential to the full.

Because for too long too many lone parents have been denied the right to live their lives as they want, we have put in place a new programme of choices, underpinned by a national child care strategy to push up employment rates from just over 45 per cent when we came to power to 70 per cent by 2010.

Because for too long too many people have had doubts about whether it is worth their while working, we will make work pay: building on the Minimum Wage, from next year we will introduce a new Working Tax Credit to tackle poverty in work.

So, for the first time, there will be a minimum income for all those in work over 25 – creating a tax system where the rates range from 40 per cent at the top to minus 200 per cent as we create fairness and justice in the workplace.

And because child poverty is a scar on the soul of Britain, we are bringing together payments for children in a new Child Tax Credit from next April. Creating a new seamless system of support, built on universal Child Benefit, with one single payment through the tax system – improving work incentives and ensuring for the first time that all child payments are paid to the main carer:

– from the £11 a week mothers received for the their first child in 1997 to the £26.50 most will receive this time next year;

– from £28 a week for the poorest child in 1997 to £54.25 a week next year and £92 a week for a family of two.

Taking, as a result, thousands of children out of poverty.

And in the same way we are creating social justice for families, our aim is social justice for pensioners with our £1.5 billion rise in pensions next year: the basic state pension rising each year, pensioners with modest occupational pensions and savings gaining up to an extra £14 a week from the pension credit, with a minimum income guarantee rising in line with earnings that takes thousands of pensioners out of poverty. Our aim that in our generation we abolish pensioner poverty and ensure every pensioner has dignity and security in retirement.

And because securing the future of company pensions is important not just to those whose pensions are at risk but to the whole country, the government will not only be vigilant about what is happening to pensions but will publish a document on pensions later this year.

Productivity

Having been winning the employment battle just as we have been winning the stability battle, we must win the productivity war.

And in particular creating modern manufacturing strength. Let us be clear about the future: the countries that succeed most in the future will be internationalists not insular – in our case playing our proper role in Europe – and will not be those who compete on low wages but compete on high skills, high technology and high value added.

And because increasing productivity in our economy depends on increasing opportunity in our society – increasing the opportunities for jobs, to get education qualifications and skills, to make the most of your inventive talents, to start and expand a business – I can say today that our public Spending Review will continue to do what government can and should do to remove four barriers to British productivity growth and prosperity:

– first, removing the barriers to innovation and science so that Britain leads again in science, technology and engineering;

– second, removing barriers to enterprise so we have thousands more small and growing businesses;

– third, building a modern infrastructure in transport, planning and housing so we have regionally balanced growth; and

– fourth, and most of all, investing in skills and education – because we cannot be number one in the world as an economy if we are number two in education. And as we expand the numbers of men and women able to benefit from the new economy – through world class education, lifetime learning and portable benefits we need to replace what is too often a poverty of aspiration among too many people in Britain with a wealth of ambition.

Science and innovation

Two thirds of growth comes from innovation so take science, technology and engineering which as you as a union have told us we have as a country neglected for too long.

To create the virtuous circle of innovation we need from the university lab and the science park to the workplace of every company, we will – in addition to the new Research and Development tax credit, worth half a billions a year to company innovation and research, and £1.75 billion re-equipment of university science – take new steps in the Spending Review next month to:

– improve science education and the science and technology skills base;

– re-equip science and engineering laboratories in colleges and universities;

– fund science technology and engineering postgraduate researchers to tackle skill shortages in key disciplines;

– invest in increasing the quality and quantity of science, technology and engineering research;

– and continue in the regions the work of science enterprise centres to spin-off companies from research and provide the capital to finance inventions – to ensure we tackle our long-term failure to transform pure research into British products and ensure that more British inventions mean more British manufacturing and more British jobs.

So our Spending Review can and will do more to sustain and build UK science in the face of increasing global competition – including improving the recruitment, retention and training of skilled scientists and engineers.

With new investment in research, science and innovation let no one think that manufacturing is a sector of the past, to be praised for its historic role but somehow not relevant to the future.

Let us tell the critics that manufacturing accounts for 60 per cent of our exports, 80 per cent of our research and development and is vital to this and every region.

And with world beating firms from aerospace and pharmaceuticals to motor vehicles and general engineering meeting the difficulties of a low Euro, with a world lead in electronics design, photonics, mobile network broadcast technologies and knowledge intensive industries and services, the challenge we face and will meet is to build for our country modern manufacturing strength.

And as we do so for Britain, our policy for Europe remains consistent – to be at the centre of Europe, to pursue economic reform and to make our decision on the single currency on the basis of the five economic tests that we have set down.

Enterprise

We know that our small and growing businesses are the large businesses of the future and because for too long barriers have restricted small business creation and development and a Britain where you can work your way up, we will – by our small business and Capital Gains Tax cuts, by our competition policy and by our support for the Small Business Service and enterprise lessons in our schools – open up new opportunities for new businesses and build a stronger enterprise culture in Britain.

And I hope this union which played so big a role in demanding the creation of Regional Development Agencies will work with us to build up their strength – local people making local decisions about local economic needs, and in particular regenerating old industrial towns and cities from local high streets to urban estates.

Infrastructure

Because for too long there has been chronic under investment in our infrastructure, our Spending Review will update our £180 billion ten year plan to modernise our transport system – the biggest public investment programme in transport history – and we will do more to remove barriers to planning and housing, so that – instead of congestion, overheating and pressure on house prices in one part of the UK and emigration, depopulation and unemployment in other parts – we can ensure balanced economic growth in all parts of our country.

Education and skills

And having raised the share of education in our national income during the last Parliament, we are pledged to increase significantly the share of national income devoted to education over the course of this Parliament – not just because education is crucial for social justice but because it is key to improving the productivity of the British economy.

And our focus in our Spending Review will be not just on resources but on reforms to break down the educational barriers that at whatever point in the life cycle – from access to nursery education to new opportunities for workplace training – deny opportunity and hold people back.

The challenge, because we waste too much of the talent of Britain, is to open up opportunities for education to an extent never before seen in this country so that every child, young person and adult will have the best possible chances in life.

And it is time to ensure that not just a minority have access to higher education but for the first time a majority by opening up recruitment and widening access so that our colleges and universities can draw on the widest possible pool of talent.

So our pre-five year old Sure Start and nursery programme will provide opportunities for children to be better prepared to learn when they get to school, and we will improve standards in secondary as well as in primary schools, so that unlike the past when too many children were destined to fail even before their life’s journey has begun, we invest in developing not just some of the potential of some of our children, but we invest in the development of all of the potential of all of our children.

And our Spending Review will offer new opportunities to stay on at school, to study at college and university, to enjoy the benefit of lifelong learning into the third age, with new support with resources tied to reform for the colleges supporting 4 million students now in further education.

And in the work place in addition to increasing modern apprenticeships – many of these in the manufacturing sector with 15 per cent in engineering – we will, from September, pilot a new approach to in-work training combining direct financial support for business, especially small business, with time off for their employees for training so that once again productivity in our economy rises to the benefit of not just a few but to the benefit of everyone. And we have responded positively to the proposals put forward by the TUC-CBI skills group, with additional funding to help small organisations attain Investors In People status – creating a Britain where what matters is not where you start from but what you aspire to, not what your background is but what your ambition is.

And just as we improve productivity in the private sector so, by matching resources with reform, we must increase the productivity of the public sector.

Those of us who believe passionately in public services understand that just as we cannot serve the public if investment is low, we cannot serve the public well either if service is poor, if performance is faulty, or if there is resistance to necessary change.

And we know that in the new Spending Round – not just for health but for education, policing transport, housing and social services – there can be no blank cheques; that the days of something for nothing are over; and that resources must be tied to results.

And the requirements for reform that will dominate decisions not just on NHS spending but in our public Spending Review later this summer will be securing the highest national standards with proper audit and accountability to ensure standards are met; ensuring local devolution of decision-making – our policy being “front line first”; greater flexibility to achieve greater results; and – for the public – extended choice.

International agenda

But the challenges we have to address for Britain – unemployment, poverty, inequality, access to education and health – the challenges of economic and social development –we have to address for the world.

The global campaign for debt relief in which many of you through churches, NGOs and local organisations have been engaged is now lifting the burden of unpayable debt from 26 of the most highly indebted countries, cancelling $62 billion in debt. And as we have seen with Uganda pupil teacher ratios as a result of debt relief is falling from 100-to-1 to 50-to-1 and every child at school will have a roof above his or her head.

But what drives us forward are not the achievements we can point to – important as they are – but the gains still to be made:

– 113 million children – two-thirds of them girls – who are not going to school today because they have no schools to go to;

– 30,000 children facing death each day from diseases we could prevent;

– in total 600 million children in developing countries living in the most disfiguring, grinding poverty imaginable – condemned to failure even before their life’s journey has begun.

In my five years as Chancellor I have visited Asia and seen young children living above open sewers and yet their eyes still bright and full of hope – and I know we must help.

And I have been to Africa and I have seen young people living on the knife’s edge of bare existence asking why their new found political freedom cannot bring economic and social freedom from unemployment and poverty.

Yes, before us are threats we must face and defeat – from terrorism, to exploitation, to the easy temptations of indifference.

But before us there is also an unprecedented possibility of progress.

Unique to our time we have in our hands the opportunity to banish the worst of poverty from the earth.

And our commitment should be that:

– every child be in education;

– avoidable infant mortality is banished from this planet; and
we half world poverty on the road to its abolition.

Recognising that we are all – rich and poor, old and young – bound in one vast network of mutuality across all the lines that might otherwise divide citizens of different countries – members of the same global community, the same moral universe.

And what we need is a new deal for the global economy, that is a new deal for the world’s poor – that in return for developing countries pursuing corruption-free policies for stability and for creating a favourable environment for investment, developed countries should increase vitally needed funds to achieve the agreed millennium development goals, so that no country genuinely committed to good governance, poverty reduction and economic development should be denied the chance to cut infant mortality and poverty and achieve schooling for every one of its children.

This week I travel to Canada for a G7 meeting to prepare the way for the African plan that will be agreed by world leaders in three weeks time when they meet in Canada

And we must act.

Take hunger – today a fact of life for too many children. And in some countries – in southern as well as sub Saharan Africa – it is tragically getting worse not better. Even when there is adequate food available, poverty often prevents poor people from feeding their children.

So the British government proposes today to take not only short term immediate action – as Clare Short our International Development Secretary is doing – to help those countries currently affected by food shortages, including Malawi, Zimbabwe and Zambia, but that we finally recognise the importance of the trade round for long-term food security – opening up agriculture in all our countries to fair competition, and opening up trade in everything but arms.

Second, because we have been far too slow in advancing our education goals – because as things stand 88 countries will not achieve primary education for all by 2015 and indeed, because instead of raising educational aid as a share of national income the world has been, disgracefully, cutting it – the government’s proposal today is that the richest countries back the new World Bank initiative with the funds it now needs to fast track our commitment to meeting the goal of primary education for all by 2015 and to ensuring that in all countries education is not subject to fees but free for everyone.

Third, half child deaths are from four avoidable diseases – acute respiratory tract infection, diarrhoea, malaria and measles – a loss of millions of children’s lives unnecessarily each year. So building on this years new global health fund for drugs and treatments in HIV/Aids, malaria and TB, I propose that just as we fast track investments in education for countries who have a plan, so too for health we should fast track support for helping to build health care systems.

Fourth, because too often the world has set goals like the millennium development goals and failed to meet them; because too often, we have set targets, reset them, and recalibrated them again; because too offer our ambitions, in the end, only measure our lack of achievement, this time, it can be, and must be, different.

So to build a virtuous circle of debt relief, poverty reduction and sustainable development for the long term, I propose to do more than increase debt relief and agree that the cost of meeting the millennium development goals is $50 billion a year.

Our aims: every child the best possible chance, every young person the prospect of education, every adult the reality of a job, every pensioner dignity in retirement, every citizen the best public services, every country playing its part in a just and inclusive world. Not just some but everyone – whatever their birth, background or race – having the chance to achieve their potential.

National and international goals which show the sheer scale of our ambitions for Britain – goals that for economic as well as equity reasons we cannot postpone or defer, goals that taken together can advance a new progressive consensus for Britain.

Goals for our country worth fighting for, goals that show there is purpose in politics.

Good causes worth fighting for.

We can build a Britain worthy of our pioneers; we can build a Britain worthy of our ideals.

And we achieve our ideas best when we achieve them together.

Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, at the Mansion House in London, on 26 June 2002.

Mr Lord Mayor, Mr Governor, my Lords, Aldermen, Mr Recorder, Sheriffs, Ladies and Gentlemen.

In thanking you for your invitation, let me at the outset pay tribute to the contribution you and your companies make to the prosperity of Britain.

You represent a financial services sector that generates fifty billions of wealth each year, provides work for over one million people and accounts for over five per cent of UK GDP. And, even in a most difficult year, thanks to you, London has maintained its position among the world’s top financial centres; and our foreign exchange market here in London – with its daily turnover of more than five hundred billion dollars – has secured its position as the largest and most important in the world.

And, as you, Lord Mayor, have indicated this evening, the importance that the city attaches to integrity and the highest standards in the provision of financial services is the enduring means by which London’s reputation as one of the world’s leading financial centres is secured, and indeed enhanced.

So let me first of all thank you and pay tribute.

To you Lord Mayor for the work you do – particularly your role in leading the City’s celebrations in her Majesty’s Jubilee year;

To the City of London;

And to Sir Edward George, who has been an outstanding leader and ambassador for this City and the United Kingdom and is held in such high esteem in all parts of the world.

Lord Mayor, the events of the last year have shown that while globalisation brings unprecedented opportunities it also brings with it understandable insecurities.

With ever more rapid changes in technology and ever more fierce global competition in almost every product and service – and far beyond the economy itself the threat from failed states and terrorist groups – people are, understandably, less certain of the future.

But globalisation also brings vastly increased opportunities for individuals, businesses and countries.

And it falls to us now to maximise the opportunities of globalisation and to minimise its risks.

It is part of the greatness of this City of London’s history that as the world economy has opened up, you have succeeded not by sheltering your share of a small protected national market but by striving for a greater and greater share of the growing global market.

In your recent history you have embraced technological innovation as an opportunity not a threat.

In pace with globalisation and the new technology, you have transformed the skills of your workforces.

Always outward looking — for centuries part of a trading empire — you have taken globalisation in your stride, its risks and opportunities, and have become ever more international in your reach.

What you, as the City of London, have achieved for financial services we, as a Government, now aspire to achieve for the whole economy.

And so, Mr Lord Mayor, as we make decisions in the forthcoming Spending Review with a view to Britain achieving higher productivity growth across public and private sectors, I believe there are important lessons to learn from your success and adaptability.

Indeed the nations that will succeed in the future will be those that develop a competitive environment and levels of skills, science, investment and enterprise that, like yours, are genuinely world class.

And I believe that this nation, small in size but large in vision and global reach, for three centuries past a towering presence in the world, can again, in this generation, fulfil its destiny as a powerhouse of skill, enterprise and economic success.

As you well know, economic stability is the foundation of all we do.

Over the past few months – in the face of the tragic events of September 11th, the larger instabilities in the global economy and the greater volatility of financial markets – we have remained vigilant.

A time of global uncertainty puts an even greater premium on national monetary and fiscal stability

While we should not be complacent, I remain cautiously optimistic about the prospects for growth in the UK and world economy this year and next.

In the UK, fiscal policy is supporting the decisive action taken by the Monetary Policy Committee last year.

Amidst the ups and downs, there are in the US and in the euro area generally signs of renewed growth, and we are now finally beginning to see improved prospects of an export-led recovery in Japan.

And with strengthening global recovery and domestic consumer demand already strong – against a background of historically low interest rates – the Bank of England will, of course, have tough choices to make in the coming months to ensure sustainable growth and the maintenance of stability.

It was by prompt and early action that in the past our monetary authority has avoided the risks of stop-go instability and we will, as we have always done since 1997, back the Bank of England in the difficult decisions they have to make.

Economic stability offers business a platform for sustained investment free of Britain’s long history of economic instability which so damaged the spirit of enterprise – most recently in the recession of the early 1990s.

But over the last 100 years, the worries about Britain falling behind have always focused on our low levels of investment and innovation.

For all the success of moving our economy from stop-go to stability, and raising the overall level of long term investment, we still have much to do.

So achieving sustained and balanced non-inflationary growth throughout all regions of Britain requires us to match the right monetary policy decisions with an even tougher approach than in the past to address the supply side weaknesses of our economy.

I believe there is general agreement that, in recent years, we in Britain have moved beyond the old stop-go economic instability of the past —- and beyond the sterile and self defeating adversarialism of management versus workforces, capital versus labour, state versus market, private versus public.

Right across the political spectrum and throughout all sections of industry and business there is a growing consensus that the preconditions for a successful economy are not just economic stability but also the highest educational standards and a reformed welfare system based on responsibilities and not just rights.

And I believe that the next step is to widen and deepen the spirit of enterprise in all parts of our country and, in doing so, realise a shared economic purpose to the benefit of all our companies, our communities and our country.

Government spending reviews have traditionally focused on dividing up the national wealth – apportioning public revenues, concentrating on who gets what.

But one central theme and purpose of this summer’s spending review will be on how we can expand that national wealth – how together as nation we can, and must, be more productive.

So the Spending Review will focus on supporting the drivers of productivity growth – improving competition, science, investment, enterprise and skills.

And working as a team under Tony Blair’s leadership every department from transport to home affairs, from education to industry, is now playing its part in meeting the productivity challenge.

First, competition.

Competition at home is the key to competitiveness at home and abroad and we will build this year on our decision last year to achieve for competition policy what we achieved for monetary policy — competition decisions and the competition authorities fully independent of political influence.

In the spending review we will reinforce this independence by ensuring our competition authorities have additional resources and new expertise so that the competitive environment is as open, fair and conducive to new entrants as it can be — and empowering them to look not only at barriers to productivity growth in the private sector but in the public sector too, including anti-competitive effects of current and new regulations.

Wider reforms in planning, transport, housing and immigration policy are needed too in the competitive environment to meet our goal of higher growth in every region and balanced growth across the country – raising the potential for indigenous growth in the northern parts of the UK as they benefit from the increased mobility of capital but not at the expense of the south east growing less fast – instead radical planning, housing and transport reforms will be designed to ensure London and the south east can continue to grow at a sustainable level and be competitive with other fast growing regions in the rest of Europe.

So to improve our competitive environment, the spending review will:

Provide additional funding for transport in line with delivery of our 10 year plan – and separately we will consult on the long term need to increase airport capacity;

Take seriously the case for further new housing development;

Radically revamp the rules and resources to speed up planning decisions – seeking to strike the right balance in a modern economy which puts an ever higher premium on speed, efficiency and flexibility;

And provide resources to expand work permits – already up from 50,000 to 140,000, with 175,000 applications expected next year – to encourage into Britain the key employees and entrepreneurs we need.

Strengthening the competitive environment means attaining the highest standards in the provision of financial services and it is because of the issues raised on auditing, accounting and the regulation of financial services that in February we announced a thorough review of the UK’s current regulatory arrangements for financial reporting and auditing which will make its initial report next month, and why – more generally – we have created a new Standing Committee on Financial Stability and the Financial Services Authority – and I applaud Sir Howard Davies on the work he has done.

Second, to create a favourable environment for investment, we have cut corporation tax for large companies and for small companies, and for most transactions in business assets cut capital gains tax to 10 pence.

And in reply to those who suggest that our National Insurance rises to pay for health care undermine our approach to investment, let me say that the CBI has estimated that ill health costs British industry 12 billion pounds a year; that in nearly every industrial country employers are contributing more – and in America, France and Germany’s case much more – to meet the rising costs of new medical technology; and that in Britain’s case the changes have been costed to fund health care improvements not just for this year and next but to 2008. And I urge business to join us and help in implementing our ambitious agenda for radical health service reform.

Because we have taken a long term view of our investment needs, we have made investment allowances a permanent feature of the tax system – with 40 per cent capital allowances for investment by small and medium sized businesses in plant and machinery, and 100 per cent capital allowances for companies investing in designated energy-saving technologies.

And to build a modern tax regime for British firms operating in a global economy, we have not only modernised the tax treatment of intellectual property and exempted from tax the gains from the sale of substantial shareholdings, but in consultation with business we will publish our proposals later this summer to take forward the modernisation of Britain’s corporate tax system to meet the needs of a global economy.

And for small businesses we have not only been prepared to simplify the vat system, to cut small business tax from 23p in 1997 to 19p now, with the 10p starting rate reduced to zero so that small companies with taxable profits less than 10,000 pounds pay no corporation tax, but also introduced special measures – stamp duty exemption, VAT relief, new capital allowances – for start ups and long term investment in high unemployment communities.

Just as there is no place in a world class British economy for short-termism in investment decisions, so too there is no place for poor educational standards and poor workplace skills, for managerial complacency or hostility to enterprise, for restrictive practices from whatever quarter they come.

The new Britain will be built on skills, science and enterprise – backing the scientist and inventor, rewarding the entrepreneur, challenging all of us to improve our skills: these are the best means to raising our national game and driving forward productivity and prosperity.

Let us face some uncomfortable truths: when so much of growth comes from innovation, too few of our young people with scientific, technological or engineering talent have had the chance to make the most of their potential through study, research training and the chance to turn ideas into products – so it is time to remove the barriers to British science, technology and engineering leading the world again.

Too few of our young people have had either the opportunities or the aspiration to get the necessary qualifications at school, in Modern Apprenticeships or at college and university; and too few British adults have had the chance to upgrade their workplace skills. And so it is time to remove the barriers that for too long have prevented too many from fulfilling their educational potential in their own interests and that of our country.

And too few men and women here in Britain – a third less than the proportion in the US – have started or grown a business or become self-employed and so it is time to remove the financial, cultural and other barriers to enterprise so that in Britain starting a business becomes the ambition not just of an elite few but of many.

To sum up: with too few scientists, too few skilled employees, too few men and women starting and growing businesses — the greatest constraint on the growth of Britain’s productivity and prosperity today is now our failure to realise the educational and entrepreneurial potential of our own people.

So to improve science education and the science technology skills base in Britain, the spending review will:

Take forward our manifesto commitment to set up a National Centre for Excellence in science teaching;

Complete the re-equipment of science laboratories;

Improve funding of science, technology and engineering postgraduate research;

And ensure that universities can finance not just teaching and academic research but also a third specialism – commercialisation of university inventions – with funding for the Higher Education Innovation Fund and for Science Enterprise Centres: our aim to ensure that more British inventions mean more British businesses and more British jobs.

I want Britain to be the best place to start a business and British entrepreneurship to flourish. That is why in the spending review I propose to back up our budget tax relief measures with local, regional and national reforms in the planning system, with help for training up skilled employees, and in cutting red tape and improving what the small business service can offer in information and advice businesses need.

Business start ups in high unemployment areas are one sixth of their level in the most prosperous areas. In high unemployment communities where traditionally paying out giro cheques or simply offering subsidies for bricks and mortar were the essence of local neighbourhood renewal strategies, the Deputy Prime Minister and I now want the encouragement of enterprise, of new business activity, firmly at their heart.

And because a strong enterprise culture must be built upwards from the classroom as well as outwards from the boardroom: our long term ambition that every young person experiences business enterprise in school, every teacher is able to communicate the virtues of business, every community comes to value good business leaders as role models.

Competition…investment…science…enterprise…the final and perhaps most important driver of modern productivity is skills.

We cannot be first rate in enterprise if we are second rate in education.

And the long term reforms Tony Blair and Estelle Morris are pioneering seek nothing less than a revolution in standards for our schools, colleges and universities.

To push a teenager into the world of work without any qualifications today is to put them at lifetime risk of poverty, failure and wasted potential. So in our spending decisions up to 2006, new resources will be made available not just for raising standards in our worst performing secondary schools but also for offering even greater opportunities in scientific and technical education for young people from 14 onwards and for developing workplace skills.

Having lifted young people out of welfare into work, the challenge now is to lift young people from jobs to careers. And we must have the same ambitions as we have for the 50 per cent of young people we wish to go to university for the other 50 per cent. So through Educational Maintenance Allowances and improvements in post-school training we should now expand work-relevant qualifications — with more young people staying on at school, more going into further education colleges as well as university, and more enjoying apprenticeships.

Apprenticeships, which a few years ago were dying, have risen in number to 227,000 today, increasing to over 300,000 by 2004. The aim: that over a quarter of young people aged between 16 and 22 will take part in the scheme by 2004 with even more by the end of the decade.

And because new resources must be matched with reform to deliver results, the modernisation of public service delivery is crucial. And I believe that there are lessons to be learnt from the widely acclaimed success – under Sir Edward George’s excellent leadership – of Bank of England independence, and in this case from the principles which have underlined its work:

The setting of clear objectives or output targets;

A clear separation of responsibility between those who set the standards and those who have to deliver the outcomes independently of the political process – with maximum devolution of responsibility;

And far greater transparency and accountability leading more generally in public sector reforms to a focus on independent audit, independent scrutiny and inspection, and an independent flow of information to the public.

In the forthcoming spending review we will set out new incentives and flexibilities to reward success – spreading the benefits of good leadership, management and performance in our best schools, hospitals and local authorities to raising the standards of the worst. So when people ask about the next stage of our work, public sector reform has only just begun.

As I said at the outset a commitment to world class levels of skill innovation, enterprise and investment must be matched in the global economy by the same commitment you have shown – a commitment to being outward looking and open to the world.

That is why we pursue a radical agenda for opening up trade in the WTO talks and resist protectionism. It is why we favour breaking down the remaining barriers to trade with the USA, and support fundamental economic reform including that of the common agricultural policy in Europe.

Britain’s future for a pro-European like me is at the centre of Europe not isolated on its fringes.

Our decision on the euro is of immense, historic importance to the long term future of our economy and our country as a whole.

It is perhaps the biggest peacetime economic decision we as a nation have to make.

It is because of its constitutional significance as a decision that we said in 1997 that the economic benefits should be clear and unambiguous.

In principle British membership of a successful single currency offers us obvious benefits – in terms of trade, transparency, costs and currency stability – and could help us create the conditions for higher and more productive investment and greater trade and business in Europe.

I therefore reject the view of those who would rule out membership of the single currency on principle. They would refuse to join even if it were in the national economic interest to do so. To rule out membership of the single currency on dogmatic grounds would in my view be damaging for investment, jobs and business generally.

Similarly I reject those who would urge us to join regardless of the assessment of the five tests. To join without a proper, full assessment of the five tests could, in my view, prejudice our stability, risk repeating past failures of exchange rate management, and could return us to the days of stop-go at the expense of our ambitions for high investment, full employment and high and sustained levels of growth.

So being serious about the economics of the euro means being serious about the five economic tests. Often the tests are described as the Treasury’s tests or the government’s tests, but neither description does justice to their critical role in assessing whether EMU membership is in the British national economic interest.

As Tony Blair said only last week they are not window dressing for political appearances. While the Maastricht criteria can judge convergence in the short term, the five tests go to the heart of what is required for the long term future of our economy: they are the means of judging the decision on EMU membership against the Government’s central objectives – full employment and high and sustainable rates of investment and growth. The tests are, in my view, important to everyone who cares about the economic future of Britain.

Today I want to set out in more detail why each of the five tests are important and the right framework for assessing the national economic interest; and, as I will later explain in more detail to the treasury select committee when I meet them during their examination of this in the autumn, the importance of the preliminary and technical work that is now underway prior to the assessment.

The five tests, which I set in 1997 are:

Whether there can be sustainable convergence between Britain and the economies of the single currency;

Whether there is sufficient flexibility to cope with economic change;
The effect on investment;

The impact on the financial services industry;

Whether it is good for employment.

And when the assessment is complete the detailed supporting studies will be published alongside, all to be subject to intensive public scrutiny and debate. Such openness and transparency will be in marked contrast to the past history of economic policy making.

The first test is the convergence test.

In October 1997 the Treasury stressed that “sustainable and durable convergence is the touchstone and without it we cannot reap the benefits of a successful EMU.”

The Treasury’s preliminary work in this area includes our study of the output gap, inflation, interest rates and the real effective exchange rate, as we analyse not just short term cyclical factors but also long term structural issues to assess whether convergence is sustainable and durable.

To that effect, there are a number of supporting analyses – part of the technical and preliminary work – of key features of the UK and euro area which will be published at the same time as the assessment, including:
Assessing the behaviour of the housing market, and its impact on consumption;

Reviewing and updating various empirical studies of national business cycles, and what drives them;

And analysing different approaches and estimates of the sustainable real exchange rate – as this is a key indicator of convergence and of obvious importance to this and all of the tests.

A high degree of convergence does not eliminate shocks and changes to the internal and external economic environment. So the work leading to the assessment of the second test – the flexibility test – is focussed on building up a foundation for evaluating how alternative adjustment mechanisms within EMU will help the economy adjust given a single European interest rate.

EMU membership would also place a greater premium on the success of domestic instruments of policy as an adjustment tool, in particular, fiscal policy and fiscal frameworks.

So the preliminary work for the flexibility test is investigating labour, capital and product market flexibilities and the supporting studies we will publish are looking at:
The role of labour markets – and how labour mobility might complement movement in wages and prices;

How the various adjustment mechanisms might operate for the UK including how the economy responds to different shocks.

Sustainable convergence – through cyclical convergence and a high degree of flexibility – must be accompanied by microeconomic benefits to ensure rising productivity and rising trend growth.

Economic theory and empirical evidence both show that investment in capital is a key driver of productivity, growth and overall economic performance.

So for the third test – the investment test – the preliminary work is, as in 1997:

Examining how EMU membership will affect public and private investment in general and foreign direct investment in particular;

Identifying the key drivers of private sector investment in the UK, and examining the impact of EMU;

And considering the potential impact of EMU on public sector investment.

Because of the importance of the EMU decision for business in the UK and its contribution to investment, productivity and growth, we will produce a study assessing the impact of EMU on business in different manufacturing and service sectors of the UK economy.

The fourth test is the financial services test.

It is a source of pride that the UK has a significant comparative advantage in wholesale financial services, and the City is by a large measure the pre-eminent financial centre in Europe.

The last five tests assessment in October 1997 concluded that “in summary, EMU offers benefits to the UK financial sector, whether the UK is in or out. But the benefits and the opportunities from the single currency will probably be easier to tap from within the euro zone.”

The dynamic nature of the sector means there is no room for complacency, so the preliminary work for the financial services test is monitoring the changes that have occurred in this sector in the UK and the euro area since the start of the single currency in 1999.

The preliminary work includes a supporting analysis that will consider the drivers of the location of activity in the financial services sector in the European union. We reaffirm that the decision on EMU must ensure that the UK remains an attractive location for financial services.

The fifth test, the employment test, assesses, as we stated in 1997, whether EMU will “promote higher growth, stability and a lasting increase in jobs.” So the preliminary and technical analysis is – as in 1997 – analysing the potential benefits of EMU for the longer-term performance of the economy.

In order to ensure that the assessment is comprehensive and rigorous, we are producing a number of supporting studies relating to the fifth test, but also with relevance to the other tests, which are looking in detail at:

The likely impact of EMU on trade;

What lessons can be learned from the experience of the US as a monetary union;

The robustness of the arrangements for macroeconomic stability – including the stability and growth pact – and their contribution to overall economic performance.

As I emphasised to this gathering last year our approach is, and will continue to be considered and cautious – one of pro-euro realism.

The case for the five economic tests is not just that we must avoid the economic policy mistakes of the past but, when the decision is not just momentous but irreversible, affecting every industry and all people, that the national economic interest – full employment, high and sustainable levels of investment and growth, long term prosperity – is, and should be seen to be, the decisive factor.

So the work underway will ensure that the assessment will be the most robust, rigorous and comprehensive work the Treasury has ever done and there will be no fudging or short-circuiting as we measure the effect of the euro on employment, growth, investment and stability.

More competitive prices for consumers and business, expanding trade, the lowest possible long term interest rates – and sustained high growth and employment – would indeed be a prize to be valued.

If the tests are met then I believe we should join. If the tests are not met, we should not. The tests are decisive. There is no hidden agenda: only a resolution to make the right long term decisions for Britain in the national economic interest.

Our commitment, Mr Lord Mayor, to economic stability is immovable and we will take no risks with it. Our determination that Britain be a world leader in the new global economy is absolute.

In the eighteenth century we created an industrial revolution which gave Britain the chance to lead in the world and in the nineteenth a global empire where again Britain led the world. In this new century, globalisation – with all its opportunities and despite its insecurities – can herald a new period of British success precisely because enduring British qualities – our internationalism, spirit of enterprise, fair play and creativity – can come to the fore. And it is my belief that around this mission we can not only forge but together deliver a new age of achievement for Britain that is of benefit to this great city, to all our industries and enterprises, to all our communities, to everyone who cares about our country.

Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, on 16 September 2002.

Today, with the national advertising launch of the new tax credits, we are witnessing the biggest revolution in our tax and benefit system since the time of Beveridge.

The new tax credits – advertised on television from tonight and introduced next April – are central to this Government’s goals of not only tackling child poverty and making work pay but ensuring family prosperity for all.

Because we believe the tax system should recognise all the everyday pressures on middle as well as low income families, the new Child Tax Credit will be available right up the income scale for families with incomes of £58,000 or below and for the first year of a child’s life families earning up to £66,000 will receive some help.

9 out of 10 families with children will be eligible for support…
…with £13 billion pounds paid out to 6 million families
…and £325 million to help with childcare costs

As a result of the new tax credits and our other tax and benefit reforms, on average, families with children will be £1200 better off next year than in 1997 – and the poorest families £2400 better off.

In total we will be spending £8 billion a year more to support children next year than in 1997.

No government has spent as much on children and families.

And there is another major innovation that we are introducing next April.

Instead of a tax credit paid through the wage packet to the main earner, normally the father, we will pay the Child Tax Credit directly in cash or through a bank account to the carer, usually the mother.

In total £2 billion pounds will be transferred from fathers to mothers – providing them and their children with a secure and regular source of income.

Let me explain the philosophy behind our changes.

It is in the family that we build the next generation. And in today’s fast changing economy – with all its uncertainties – families, now more than ever, need to know they don’t have to go it alone. They need security and support.

So our starting point is that a family friendly tax and benefit system should be founded on the principles of the 1942 Beveridge report: that nothing should be done to remove from parents the responsibility of maintaining their children and it is in the national interest to help parents to discharge their responsibilities properly.

We know that mothers and fathers struggling to cope with bringing up their children, meeting the challenging demands of work and family life, anxious about doing their best for their children while making ends meet, want a tax-benefit system for families that is on their side.

So our approach applies the Beveridge principles to the realities and needs of modern family life. Today many families rely on two incomes and most women work. And some of the greatest pressures parents face were almost unknown in Beveridge’s time: the loss of income because one parent ceases employment and is at home or works part time after the birth of a child; or the costs of childcare when the mother goes out to work. The new tax credits are designed to help families cope with all these challenges.

We also know from our research that parents feel the need for better services as well as a modern system of financial support, and that both are needed to help them discharge their responsibilities best.

And so in this Parliament we are combining improved children’s benefits with our other reforms:

For the first time, higher direct support for all families at the time when they need it most in the first year after the birth of their child;

For the first time paternity benefits, alongside enhanced maternity provision;

A new integrated approach that delivers, on the ground, day care for children and after school care for working parents or parents in need of respite;

Special advice, training and financial support to help lone parents into work;

Support for parenting through enhanced, long-term financial provision for parenting education and special measures to deal with accommodation for lone parents under 18;

Measures to ensure every child has the best start in life – guaranteed nursery education for all 3 and 4 year olds, with three years old guaranteed nursery education under our spending review from next year …backed up by Sure Start in areas of most need in the country – a comprehensive approach to meet the needs of under fours;

And through the new Children’s Fund and other initiatives, enhanced encouragement for the voluntary community and charitable organisations that are the vital link between the needs families have and the help they receive.

Together these initiatives are radically reforming the system of support for families — tackling poverty and investing in the potential of every single child in our country.

And these reforms are grounded in new rights and new responsibilities as we tackle injustice, re-emphasise personal responsibility and renew the welfare state of 1945 for a new era.

This also includes reforms to work and making work pay. On the one hand there are new opportunities to work, to gain skills, to meet new commitments – and on the other hand, new obligations – in particular, the right to work if you can.

1.8 million men and women have benefited from the New Deal. Unemployment is now lower than in America or in Japan for the first time in fifty years. But there are thousands who have fallen through the net – able to work but unwilling to do so. In the Pre-Budget report the Secretary of State for Work and Pensions and I will be bringing forward measures to tighten up the New Deal so that the opportunities it offers are matched by the obligation to make the most of them. New rights matched by new responsibilities.

Now let me explain the detailed changes in financial provision for families.

There was for years – until this administration – no recognition in the tax system of the existence of children or of the sheer costs of bringing children up. Our tax and benefit system did not put the needs of families with children first – in fact, it neglected them with the result that thousands of children were left behind and lost out.

Between 1979 and 1997, total child support for a family on average earnings with two children actually fell by 6 per cent. As a result, the living standards of families with children fell behind the rest of the population. Indeed, in 1997, the average income for households with children was around 30 per cent lower than for those without children.

So in the first few years our first priority was to get thousands of families out of poverty – both by improved chances of work through the New Deal and improved child support for the lowest income families.

Payments for the first child, which in 1997 started at £11 and rose to £28, now start at £15.75, for 5 million families are nearly £26 and for the poorest children are £48.25 a week – a near doubling of cash support for the poorest families.

But we need to go further and in the budget earlier this year I announced details of our new measures – not just more investment in children’s services but two and a half billion pounds of extra support for families through the new Child and Working Tax Credits.

A tax and benefit system that puts families first in the modern world should not just recognise the family as the bedrock of society, and the rights and responsibilities of parents, but also the very real pressures parents face right up the income scale. It should materially help them balance the needs of work and family and be generous enough to ensure for each child a good start in life.

So our approach is universal and progressive. It starts with child benefit for every family and recognises the costs of raising children that middle income families face. But is designed to help families most when they need help most and when their children are youngest.

The new Child Credit will integrate payments for child support into one single payment, built on universal child benefit – creating a simpler and fairer system that will be more responsive to changes in circumstances, improve work incentives and ensure for the first time that all payments for children are paid to the main carer, usually the mother

As a result, £2 billion pounds will be transferred from the main earner – usually the father – to the main carer – usually the mother. Money that – as research shows – is then more likely to be spent on the child.

Our changes mean that, from next April, mothers who wish to leave work and be with their children at home but have found it financially difficult to do so will find it easier. For single earner families more help is now available and for those on incomes between £43,000 and £58,000 help is available for the first time.

We must do most for the children that need it most. And for two million of the poorest families in the country, child support – which was £28 a week in 1997 will now be £54.25 a week for the first child – a near doubling of support since 1997.

And to further reduce the numbers of children living in poverty and ease the transition to the new system, we will increase the child allowances in Income Support and Jobseeker’s Allowance by £3.50 a week from next month.

So in this new modernisation of welfare, we have rejected both crude means testing and old style redistribution in favour of progressive universalism where all get help, but those in greatest need get the greatest support.

And this is backed up by our other reforms:

To give families extra support after the birth of a child, maternity pay will rise to £100 a week from April next year with paid maternity leave extended to 26 weeks. And we will also introduce Britain’s first-ever paid paternity leave so working fathers can spend more time with their partner and new child. Together with the new tax credits, families will be provided with up to £2,200 extra to contribute to the costs of the first year of a child’s life.

To help parents combine being a parent with paid work, we are improving access to affordable, good quality childcare with an additional 250,000 places by 2006 and more flexible help with childcare costs through the new tax credits.

To help lone parents move into work we are extending work-focused interviews to all those on benefit – and Andrew will talk more about our welfare to work policies and making work pay in a moment.

Reform also means we should match the new opportunities we offer families with the responsibilities we expect of them. It is not for government to tell people how to live their lives but what we can do, for the sake of children, is to encourage good parenting. So in the spending review I announced an additional £25 million pounds over the next three years to deliver a network of parenting education across England.

There are circumstances where vulnerable parents need special treatment. Where there are lone parents under 18 who cannot live with their family or partner, the policy is that instead of independent tenancies, they will have supported housing that combines accommodation with counselling and help with childcare.

Giving every child the best start in life also requires good public services. By September 2003, we will guarantee a nursery place for every three and four year old who needs it. We are building on Sure Start – which will cover up to 400,000 children under four by 2004 – by setting up new Children’s Centres to provide a focal point for children’s services in deprived communities, as well as providing support for local and voluntary projects through the children’s fund.

The old days of Whitehall knows best are over.

We know that support for families cannot be provided by Government alone.

And we know that child poverty cannot be removed by Government alone.

Instead, with Government working together with parents, voluntary, charitable and community organisations, we can – and will – deliver a better future for our children.

So Sure Start and the Children’s Fund bring a principle into action which has lain dormant for many years: that services can not only involve voluntary and charitable organisations at a local level but can be run locally through and by them.

The children you passed on the way here this morning – laughing, shouting, playing? – will grow up to be the nurses and police officers, teachers and doctors, parents and taxpayers of tomorrow.

These children are the children of our country, the children on whom Britain’s future depends. And if we do not find it within ourselves to pay attention to them as young children today, they may force us to pay attention to them as troubled adults tomorrow.

So it must be the Government’s objective to ensure that no child will go without help, that every child is included, that every child will have the chance to make the best of their lives, that we will never allow another generation of children to be discarded.

Our new tax credits..

…supporting families

…tackling child poverty

…investing in the potential of every single child in our country…

…are both symbol and substance of this government’s ambition for Britain: to meet new needs, scale new heights, extend new opportunities, tackle deep-rooted injustices and work together for a better, fairer, more prosperous Britain.

Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, in London on 25 September 2002.

Introduction

I am delighted to have the opportunity to open our session on the world economy and prospects — not just to say something about the challenges we face in the world economy where recovery is under way, but to show how the modern Commonwealth – united by history, strengthened by diversity and resolute in its high ideals – has a unique role to play in building the next stage of global prosperity and advancing us towards the globalisation we want – social justice on a global scale.

1.8 billion people –30% of the world’s population – live in the countries of the Commonwealth. Our economies account for 23% of world trade, 20% of world investment and 10% of world GDP. But because not everyone benefits from our global reach, today – across the Commonwealth – 665 million people are struggling to survive on less than a dollar a day, 75 million children are unable to go to school and 15 million women and children are suffering from the physical and emotional burden of HIV/AIDS.

Over the next year our aim as a Commonwealth must be to make real our commitment to the elimination of poverty, the promotion of development, the achievement of the Millennium Development Goals and the progressive removal of the wide disparities in living standards among our members by embracing what I call a new deal for the global economy —- a new development compact that will allow all countries – across the Commonwealth and across the world – to earn a fair share of the benefits of global prosperity by:

Developing countries systematically tackling corruption and instability, and creating the conditions for private investment; and
Developed countries opening up their trade and radically improving aid for poverty reduction, including education and health.
And because I believe that in the long run our prosperity is indivisible, and that to be sustained it must be shared, I hope that —- even in an insecure world —- we can make progress in Washington this weekend towards building a new international financial architecture and meeting the world’s agreed Millennium Development Goals – including that, by 2015, we halve global poverty, cut child mortality by two thirds and achieve primary education for all.

And this new deal is more not less necessary, more not less urgent, as we tackle the consequences of a worldwide slowdown, assess the risks and challenges ahead, and deal with the vulnerabilities of a more integrated but more volatile international financial system.

There are four building blocks of this new deal: action on economic stability, investment, trade and aid.

Economic stability

The first is more urgent than ever: international economic cooperation and a new framework for a more stable global economy based on clear codes and standards, enhanced transparency, and improved crisis prevention and resolution mechanisms.

We must all be vigilant to the risks that we face at this time and stand ready to act decisively with economic reform as we did with monetary activism a year ago.

And we must all, each continent and the international institutions, face up to our responsibilities in sustaining and strengthening the economic recovery round the world: Europe must make progress on economic reform, Japan take decisive action on financial sector reform, and America show that corporate reform is working.

More generally, it is in the interests of greater stability, confidence and growth in the world economy – and of preventing crises in developing and emerging market countries – that we adopt far wider reforms.

I now believe that, just as through central bank independence we set down a new rules based system for our nation with Bank of England independence and a new monetary and fiscal regime, we should, in pursuit of the objectives of stability, development and prosperity, consider also a new rules based system of international economic governance for the community of nations.

A new system founded also on:

Clear procedures – all countries, rich and poor, pursuing agreed codes and rules for fiscal and monetary transparency, and for corporate and social standards; and

On a new openness and transparency – with the IMF as independent from political influence in its surveillance of economies as an independent central bank is in the operation of monetary policy.

The adoption of clear and transparent procedures in economic decisions – for example, presenting a full factual picture of the country’s debt position and the health of the financial sectors – and a willingness to be monitored for them, improves stability and provides to markets a flow of specific country-by-country information that engenders greater investor confidence and reduces the problem of contagion. We should all adopt and monitor similar codes and standards for corporate governance including for accounting, working with standard setters to develop stronger regulatory frameworks.

And, leading by example, I can announce that the UK will participate in the Reports on the Observance of Standards and Codes (ROSC) modules covering accounting and auditing, corporate governance and insolvency and creditor rights. We will then have completed assessments against all codes and standards – the first, I hope, of many countries to achieve this.

And with technical assistance and transitional help for early implementation of codes and standards generally, I hope other countries will become part of a wider move towards greater transparency including the routine publication – by rich and poor countries alike, as well as the IMF – of all surveillance and programme reports, and IMF policy and administrative papers.

But there is a case for going even further. To ensure that the Article IV surveillance process fulfils the key objective of early identification of risks and vulnerabilities, all Article IV reports should include:

Strengthened debt sustainability analysis;

Greater focus on the structural sources of instability;

Early identification of unsustainable macroeconomic policy frameworks;

An assessment of adherence to codes and standards; and

Identification of countries which still need to take action to forgive debt under the HIPC initiative.

More fundamentally, I believe there is a strong case for enhancing the IMF’s surveillance and monitoring functions so that surveillance is – and is seen to be – independent of decisions about crisis resolution. We must implement reforms to promote:

Greater independence – ensuring the fund applies objective, rigorous and consistent standards of surveillance to all member countries and there is a clear separation between surveillance and lending activities; and

Greater accountability – with the IMFC setting a surveillance remit, IMF management reporting each year on the Fund’s performance and an annual assessment of the effectiveness of fund surveillance
…together, helping to reduce the risk of financial crises internationally and promoting a new era of global economic stability.

Under this new framework we can move from letting crises happen and then intervening to systems that in themselves diminish the likelihood of crises – and ensure earlier awareness as difficulties arise and more measured, orderly responses when crises have to be resolved.

So the new financial architecture, I suggest, is not just the adoption of codes and standards by all countries but a far more effective system for preventing and resolving crises, not least to ensure that the burden of adjustments is not as in the past placed on the poorest and most vulnerable.

We need to resolve the obstacles that stand in the way of effective debt rescheduling – including continuing to work on an international bankruptcy procedure and agreeing new standards for international best practice in sovereign debt contracts, with a strategy for encouraging their adoption worldwide. We also need to establish much clearer normal limits to IMF financing – with more transparent and objective criteria for going above the limits – and a clearer fund policy on standstills and lending into arrears.

Investment and corporate accountability

But stability is only the precondition. Over the last decade, Foreign Direct Investment flows across national boundaries, including to, and between, developing countries, have increased almost six-fold — an important driver for growth and development.

But the poorest and least developed countries suffer a double handicap. Not only is Foreign Direct Investment too low – with just three dollars per head going to low income countries compared to eleven hundred dollars per head to higher income countries – but also domestically generated savings and investment are low and often the savings that do exist leave the country in capital flight.

In seeking more favourable business environments in which private sector investment can be more productive, country-owned poverty reduction strategies have correctly focused on creating the right domestic conditions for business investment, including improved infrastructure, sound legal processes that deter corruption and the creation of an educated and healthy workforce. And we can list a number of countries recently – like Mozambique -which have taken tough decisions to restructure their banking sector, strengthen corporate governance, improve their transport infrastructure and develop their natural resources. In Mozambique this has resulted in a six-fold increase in Foreign Direct Investment over the last decade and GDP growth rates averaging nine per cent over the last five years.

And I welcome the work of the World Bank in surveying investment climates in developing countries such as India, Mozambique and Bangladesh. By investigating the regulatory, legal, human resource, financial and infrastructure constraints, we can inform future policy development and, as good practice emerges, it can be shared.

Last year I supported the creation of new investment forums – bringing public and private sectors together to examine the current barriers to investment and build a consensus, in the light of regional conditions, on how to secure higher levels of investment.

I am delighted that the World Bank and IMF have now established two such forums in Ghana and Tanzania – both members of the Commonwealth. These have been welcomed by both business and governments and are already identifying the priority reforms that will help increase investment flows – improvements to infrastructure, regulatory reform, the need for regional integration and the promotion of Africa as an investment destination for foreign firms.

Most importantly, investment forums are helping to break down the assumption that private sector development should either be led solely by business, or directed by the state – instead recognising that public and private sectors must work together in partnership to secure economic growth and reduce poverty.

Where multinationals are unaccountable across boundaries – and sometimes appear more powerful than the developing countries in which they operate – businesses and government must do more to restore the right balance, increase stakeholder awareness and achieve cross border accountability. Many businesses are already recognising the need to pursue socially and environmentally responsible business practice and I urge more companies to follow the principles of good corporate practice laid out in the OECD’s guidelines for multinational enterprises.

Business can also play a part in encouraging governments to be more accountable for the revenues they earn from their natural resources. The recent proposal from George Soros and Global Witness to increase transparency in extractive industries is an excellent example of how private sector companies can positively contribute to development and poverty reduction — and following the formation of a partnership to take this work forward at the recent world summit on sustainable development, more governments, businesses and NGOs must sign up to this initiative and make it work.

The challenges are formidable. The suspicions remain considerable. But I believe that by working with governments to remove barriers to investment, and through adopting sound principles of corporate practice, the private sector can play its part in the development of the world’s poorest countries.

Trade

Our third building block is widening and deepening trade.

In the last forty years those developing countries which have managed to be more open and trade more in the world economy have seen faster growth rates than those which have remained closed. From the early 1970s through to the 1990s, developing countries that were able to pursue growth through trade grew at least twice as fast on average as those who kept their tariffs high and their doors closed to imports and competition. We must ensure that all countries have the opportunity to reap these benefits.

Full trade liberalisation globally could lift at least three hundred million people out of poverty by 2015. Diminishing protection by fifty per cent in agriculture, industrial goods and services sectors would increase the world’s yearly income by an estimated four hundred billion dollars. All countries and regions stand to benefit, with developing countries gaining higher than average increases in GDP growth.

That is why the UK Government is committed to a trading system where developed countries do not dictate the terms of trade, but instead all countries participate on equal terms. We strongly support the new trade round launched at Doha where developing countries had a real and effective voice in the negotiations. And we are committed to Doha’s core development agenda – a package of measures to progress in areas that will lead to major gains for developing countries and the poorest people in these countries.

Now we must deliver on our commitments.

We must ensure that poor countries have access to the medicines they need to tackle the diseases crippling their societies – AIDS, tuberculosis, malaria – and protect public health.

We must continue to press for other developed countries to follow the European Union’s lead by offering duty and quota free access to all products except arms from the forty-nine least developed countries.

And since three quarters of the world’s poor live in rural areas, urgent action is needed to reduce agricultural protectionism and open up trade.

More than two thirds of workers in low income countries work in agriculture compared to only 5 per cent in high income countries. Yet developed country subsidies to agriculture amount to one billion dollars every day – greater than the national income of the whole of sub-Saharan Africa and seven times the total of overseas aid flows.

On average the 6.5 million farmers in the European Union receive subsidies of $2 a day for every cow they own. At the same time, 3 billion people in the world do not have $2 a day to live on.

The UK is working hard to secure substantial reforms in the mid-term review of the CAP now underway and I urge others to join us – all developed countries subsidising agriculture must show leadership.

But we must not rush developing countries to reduce their tariffs without recognising the effect it could have on both government revenues and on the livelihoods of people working on the land. We need a sequenced approach which ensures that appropriate measures are in place to protect vulnerable countries and vulnerable people from an overly rapid transition to a system of liberalised trade.

So we support the IMF and World Bank commitment to work with countries to undertake poverty and social impact analyses of trade reforms, and will continue to promote the integration of trade into developing countries’ poverty reduction strategies. And to enable developing countries to participate fully and effectively in the trading system, by 2004 the UK Government will have committed £45 million pounds to support trade-related capacity building.

Development compact

Radical trade reform could be worth $150 billion dollars a year to developing countries, but there cannot be a solution to the problems that developing countries face without a fourth reform: that in return for developing countries pursuing corruption-free policies for stability and for creating a favourable environment for trade and investment, developed countries should be prepared to increase vitally needed funds to achieve the agreed millennium development goals.

Too often the world has set goals like the Millennium Development Goals and failed to meet them.

Too often we have set targets, reset them, and recalibrated them again so that our ambitions in the end, only measure our lack of achievement.

This time it can – and must – be different. This time, we must together commit ourselves to a specific course of action, and then each of us as partners must be prepared to make the radical changes required.

Action is particularly needed on education and health.

In some Commonwealth countries great progress has been made on education. Enrolments in Malawi and Uganda doubled in five years with the abolition of school fees; enrolment rates of over 90% have been achieved in Botswana, Swaziland, South Africa and Zimbabwe. And in South and West Asia, primary enrolment is approaching 75%.

But according to a recent World Bank study, nineteen Commonwealth countries are in danger of missing the Millennium Development Goal of primary education for all

Developing countries themselves must play their part – drawing up their own education plans, channeling resources to education through their poverty reduction strategies, abolishing user fees and ensuring that children do not just start school but actually finish their education. But, in return, the international community must increase substantially its financial contribution for education in the poorest countries.

Since 1997 – under the leadership of Clare Short, Secretary of State for International Development – the UK has committed over £700 million to the development of sustainable, quality primary education systems in sub-Saharan Africa and South Asia —- and we will substantially increase our education spending again over the next few years to enable an extra 20 million children to enroll in primary school by 2006 – 80% of these in commonwealth countries.

I urge other developed countries to also provide additional finance for basic education – resources committed over the long-term so that countries can plan and utilise them effectively. And in the months ahead, the World Bank and their partners must continue to develop its fast-track initiative – rooting their support within existing country efforts, doing more to address the needs of children in countries with poor government performance where the challenge is greatest, and reporting back on progress at the spring meetings.

We must also move forward with as much speed and purpose on the issue of health.

As many as half of all malaria deaths could be prevented if people had access to diagnosis and drugs that cost no more than twelve cents.

A quarter of all child deaths could be prevented if children slept beneath four dollar bed?nets – in Africa, only one per cent of children do.

And improving and expanding immunisation could save a further two million lives each year.

Where these strategies have been implemented in commonwealth countries in the last twenty years, they have brought results. In Uganda the spread of HIV/AIDS has been halved in urban areas and reduced by a third nationally; in India tuberculosis deaths have been halved; and in Bangladesh child mortality has more than halved.

Inspired by these successes, developing countries across the Commonwealth should place action on health at the very core of their priorities, budgets and poverty reduction strategies. But recognising the limits imposed by the weaker economies of developing countries, the international community must also urgently increase its support.

In the last year much progress has been made. So far over 2.1 billion dollars has been pledged to the global health fund to support developing countries in their fight against AIDS, TB and malaria. And the UK is playing its part – contributing two hundred million dollars to the fund over five years and creating new tax incentives to accelerate the research into diseases like AIDS, TB and malaria.

But we must do more to increase the capacity of health systems in developing countries to enable them to provide good quality, appropriate and affordable services for their citizens. So just as the World Bank has set out an action plan for education, we call on them to work with the World Health Organisation to identify – on a country-by-country basis and through a systematic review of poverty reduction strategies and sector plans – the capacity gaps and financing efforts needed to build effective healthcare systems. An initial report should be presented at the spring meetings.

What is clear is that we will not succeed in achieving our goals of reducing poverty, and of improved education and better health, by acting alone. Instead all of us – developed and developing countries, international institutions and civil society – must work together.

The role of developing countries in tackling their own problems is key. They must show genuine commitment to education, health and poverty reduction – demonstrating that both public and donor funds are properly and effectively used.

As finance ministers we have a key role to play – a step change cannot be made without the highest political leadership. Here in the UK, we are driving forward the reform of public services, including education and health, through Public Service Agreements between spending departments and the Treasury to ensure that additional resources spent actually result in improved outcomes.

Anti-corruption strategies and international standards in public financial management are also crucial. All countries should meet high standards in public financial management and accountability, and all HIPC countries should agree ambitious timetables to do so within their poverty reduction strategies. As a first step, I am proposing that all HIPC countries currently receiving debt relief should achieve a core number of international benchmarks in budgeting, auditing and reporting within three years.

In return for developing countries adopting reforms, the international financial institutions must provide governments with much more coordinated support as they strive to meet these benchmarks – and undertake much broader consultation on the indicators, including with the Economic Commission for Africa.

The IMF and World Bank must also do more to ensure a more open policy dialogue when supporting the development of poverty reduction strategies in low income countries – including explicit discussion in fund programmes of alternative policy choices and trade-offs, supported by poverty and social impact analyses to ensure policies deliver real benefits for the poorest.

Where developing countries demonstrate a genuine commitment to poverty reduction and the Millennium Development Goals, this must be matched by an equal commitment on the part of the international community to ensure that no such country is denied the chance of achieving its goals through lack of resources.

This will require a significant increase in aid and further progress on debt relief.

Pledges from the United States and the European Union made at Monterrey in March will, from 2006, raise an extra 12 billion dollars each year for education, health and anti-poverty programmes, with possibly half or more of these funds going to Africa. This is an historic advance – a reversal of the twenty-year decline in aid levels.

For its part, the UK will increase its aid budget to nearly £4.9 billion pounds by 2005-06 – a ninety-three per cent real terms increase since 1997. This will take the UK’s ODA/GNP ratio to 0.4 per cent – the highest in twenty years and double the G7 average: continuing evidence of our commitment to the target of raising development assistance to 0.7 per cent.

At the same time, the HIPC debt relief process is lifting the burden of unpayable debt from twenty-six of the most high indebted countries, canceling sixty two billion dollars in debt from countries that have clearly demonstrated their commitment to poverty reduction.

But what drives us forward are not the achievements we can point to – important as they are – but the gains still to be made. If all countries eligible – including countries in conflict – became part of HIPC, one hundred billion dollars of debt could be cancelled.

The commitment by the G7 to contribute an extra 1 billion dollars to finance the shortfall in the enhanced HIPC initiative, together with the call foraction to tackle the issues of creditor participation and debt sustainability, is a great achievement. And the UK stands ready to pledge our contribution towards the financing gap at the annual meetings.

We must also do more to support HIPC and other low-income countries who face legal challenges from creditors – both commercial and official – who are unwilling to give debt relief and we look forward to receiving the forthcoming report on this from the Fund and Bank. We particularly condemn the perversity where vulture funds purchase debt at a reduced price and make a profit from suing the debtor country to recover the full amount owed – a morally outrageous outcome. The UK proposes that the IMF or World Bank should manage a trust account, funded by donors, to pay for technical assistance to help any HIPC country being sued by a creditor who refuses to deliver relief, including vulture funds.

Where countries have had to contend with external shocks – such as sharp falls in the price of key export commodities – we must form a broad consensus on the need for topping up at completion point to ensure a lasting exit from sustainable debt. And we must develop more realistic and generous rules for its provision – including agreement that the calculation of topping up should exclude voluntary bilateral provision of additional 100 per cent relief.

But debt relief and the aid already pledged will not be enough on their own. The report of the high-level panel on financing for development, chaired by former president of Mexico Ernesto Zedillo, estimated last year that if we are to achieve the Millennium Development Goals at least an extra fifty billion dollars of aid will be required every year. And this will be needed even with trade liberalisation, increased private sector investment and developing country reforms.

So as a matter of urgency we must consider the means by which the benefits of the new resources agreed earlier this year can be maximized – both through improved aid effectiveness and by leveraging in additional funds.

Reordering priorities, untying aid and pooling funds internationally could release additional funds for anti-poverty programmes in the poorest countries. The UK Government will increase the poverty focus of our own aid in order to raise the proportion spent in low-income countries from seventy-eight per cent currently to ninety per cent by 2006. And we will also work to improve the effectiveness of European Union aid.

But we must be honest with ourselves. Even with more debt relief and improved aid effectiveness the scale of the challenge is such that we need to consider other innovative forms of financing, building on the twelve billion dollars already pledged to reach our fifty billion dollar target.

One option is to pool additional resources in a new international development financing facility that could leverage funds from international capital markets to meet the demand for large-scale assistance now and enable a much earlier achievement of the Millennium Development Goals than might otherwise be possible.

This new financing facility requires donor countries to pool substantial additional resources – including, for example, those pledged at Monterrey – with some guarantee, perhaps backed by callable reserves or appropriate collateral as security, so these resources could be leveraged through borrowing from international capital markets to meet the demand for large-scale assistance now.

The extent to which such a financing facility might leverage funds from international capital markets would depend on a wide range of factors including the size of donor contributions, interest rates, the total amount disbursed and the proportions and terms of any grants and loans within that total. But reasonable assumptions suggest that such a fund might clear its debts in around thirty years. A broad package of measures that generated additional flows of fifteen to twenty billion dollars a year could be leveraged up by the private sector to provide an additional fifty billion dollars each year until 2015 – enough to meet the Millennium Development Goals.

What is essential is that, whatever option is taken forward, we build a coherent response from the entire international community that generates confidence and support from both developed and developing country governments and their citizens. And I believe that the commonwealth can play a key role in driving this forward.

Conclusion

The challenges of globalisation are immense. But before us there is an unprecedented possibility of progress.

Our vision of the way forward is that, in an increasingly interdependent world, all can benefit if each meets agreed obligations for change.

At this momentous time in history which has seen the best and the worst of humankind, it is up to all of us in every nation – the most powerful and the most powerless, the most prosperous and the poorest – to pledge together that in the face of so much pain and poverty, and with the possibility of so much progress, we will not pass to the other side.

We should not retreat from globalisation. Instead, we must work together – across the Commonwealth and across the world – recognising our common values, our mutual needs, our linked destinies and our shared goal: to advance social justice on a global scale.

Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, at the opening of a new HM Treasury building on 25 September 2002.

Can I begin by welcoming our guests – who have travelled here today from all over the UK and from all over the world – and by thanking all who have contributed to the making of this modern Treasury.

With us today are Finance Ministers from 52 countries in the Commonwealth;

The Prime Ministers of:

Barbados
Belize
Antigua and Barbuda
St Lucia
St Kitts and Nevis
And St Vincent and the Grendanies;

Leaders from the UK’s Overseas Territories and Crown Dependencies;

The President of the World Bank – James Wolfensohn;
The Governor of the Bank of England – Sir Edward George;
Chairmen and women and Chief Executives of some of Britain and America’s foremost businesses;
Past and present leaders of our civil service;
Past Chancellors;
Ladies and gentlemen

Can I on behalf of the more than 1000 staff who work here every day for the British economy and Britain welcome you all to the Treasury.

Built almost a hundred years ago…opened in 1908…in its life it has seen much history:

In this building, Winston Churchill and the war cabinet worked for victory through democracy’s darkest hours in the Second World War;

The balcony over-looking Whitehall is where Churchill acknowledged the crowds on VE day in 1945;

The Battle of Britain was planned here, in a room where the Air Council met throughout the Second World War: a room I have just vacated…

And, even more dauntingly, just as here in the Treasury building we planned for a successful war, so too we planned for a successful peace…the corridor I have just moved to is the one from which J.M. Keynes devised the plans he put forward at Bretton Woods for the International Monetary Fund and the World Bank.

And it is therefore entirely fitting that today to reopen the modern Treasury we have with us, from our foremost ally, a great American, America’s greatest central banker, not just of our generation but of all time, and one of the world’s most esteemed statesmen.

It is both a pleasure and a privilege to welcome Dr Alan Greenspan to London and to this historic building – and a pleasure too to welcome his wife Andrea Mitchell – a world-renowned commentator and the internationally acclaimed foreign affairs editor for NBC.

And we are all delighted that in recognition of Dr Greenspan’s services to economics and to the United Kingdom the Queen will tomorrow award Alan a knighthood.

Alan, you are a towering figure in the international financial community who combines – whether it be in your chairmanship of the Federal Reserve, in your position in international organisations or in your personal and charitable work – the qualities of outstanding leadership, extraordinary insight, absolute integrity and a strong sense of social responsibility and internationalism. And that is why you are so widely and genuinely admired not just in one continent – America – but in every continent around the world.

You have been a great force for the advancement of the world economy – and a great friend of the United Kingdom.

The world owes you a debt of gratitude for your stewardship of the world’s greatest economy over four terms and fifteen years as chairman of the United States Federal Reserve.

You have helped to build prosperity and to save it. You are a steady hand in difficult moments – and when things seem all too easy. No one in a position such as yours has ever made a greater contribution, or for a longer time.

And I am personally grateful to you for your advice between 1994 and 1997 when you regularly met me and Ed Balls – now the Chief Economic Adviser to the Treasury – and we discussed privately with you how central bank independence would work for Britain.

1997 was the year that – from this building – I had the privilege to announce the independence of the Bank of England and set in place, in pursuit of the 1944 objectives of high and stable levels of employment and growth, a new monetary and fiscal regime based on:

First, clear long term objectives;

Second, transparent, open procedures of decision-making; and

Third, full transparency and accountability.

And as we approach the meetings of our international financial institutions in Washington this weekend – and consider how we can work together internationally to build a more stable world economy – I now believe that, just as through central bank independence we set down a new rules based system for one modern nation, we can, for the world community of nations – in pursuit of the objectives of stability, development and prosperity – achieve also a new rules based system of international economic governance — founded also on:

Clear procedures – all countries, rich and poor, pursuing agreed codes and rules for fiscal and monetary transparency, and for corporate and social standards;

And on a new openness and transparency – with the IMF as independent from political influence in its surveillance of economies as an independent central bank is in the operation of monetary policy

That is, in my view, the basis of a long term new deal between developing countries and developed countries:

Developing countries systematically tackling corruption and instability and opening up to private investment;

And developed countries liberalising trade and radically increasing aid for investment in education and health.

A new deal that recognises that, in the new global economy, prosperity is indivisible and that to be sustained it must be shared.

It now also time, I believe, to enter the next stage of the Treasury’s work as a modern economics ministry.

Today we have with us some of the most senior members of the business and financial community in our country.

And I say to small, growing and large business: the enterprise culture certainly doesn’t start here in the Treasury; it starts with you and the great contribution you make every day to the success of the British economy.

But from the Treasury I see it as our duty to do all we can do, not just to steer a course of stability in an insecure world but also to help deepen and widen our entrepreneurial culture, removing the barriers to productivity and enterprise — and in the next few weeks we will take forward our proposals to open up competition, reform our planning laws, reward entrepreneurship, sponsor better workplace skills, and – in Britain’s high unemployment communities that prosperity has for too long passed by – create enterprise areas.

So our new Treasury looks outwards, to the nation and to the world too… and the physical changes made in the course of its modernisation reflect that.

Though built as long ago as 1908, and never fully modernised throughout a whole century, such is the prudence prevalent in the Treasury that there were, of course, some who considered a refurbishment premature.

Delivered on time but within budget, this has been a model of how a successful private finance initiative project should work and I would like to thank everyone involved:

The designers, developers, architects, builders, and facility managers; and those leading and contributing to the project within the Treasury, including the three Permanent Secretaries who have so ably managed the Treasury over the last ten years – Sir Terence Burns, Sir Andrew Turnbull and Gus O’Donnell.

You will be interested to know that not just a few yards of internal walling and partitions have been torn down to create the open plan Treasury but a total of nearly eight miles of walls torn out…

So we can affirm that as a workplace the new Treasury is open plan, interactive and transparent; no longer a maze of corridors and offices, divided and hidden away

…and a total of sixty thousand tons of rubble was removed – not all of it old budget drafts and discarded economic policies.

Chairman Greenspan – that you are with us today and that we can thank you for your work over many years in furtherance of global stability and economic growth gives us so much pleasure.

And delight…

Indeed, I might say that your presence here fills us with exuberance…

Rational exuberance.

So now I am pleased and privileged:

To introduce a great leader, an inspired economic thinker and a loyal friend. And to ask him to say a few words before officially opening our newly modernised Treasury.

Ladies and gentleman – Dr Alan Greenspan.

Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, at the Launch of the Charity Bank in Downing Street, London on 17 October 2002.

Welcome to Downing Street for the launch of the Charity Bank

Today is a tremendously important and exciting occasion – the launch of the first charitable bank in the UK and, indeed, the world. And first of all I’d like to thank all those involved with its development:

The Chairman and Chief Executive – David Clark and Malcolm Hayday; Sir Brian Jenkins, Deputy Chairman of Barclays Bank, for his support; and the countless others who have worked tirelessly over the past few years to make this a reality.

The launch of the Charity Bank means that, for the first time, many charities and social enterprises – especially those in deprived areas that have been refused loans or charged onerous rates – will be able to access affordable loans. And to ensure these organisations receive the help they need to flourish, the Bank will also provide support and advice to make sure that their activities are sustainable.

But the Charity Bank is more than just another bank. It represents a new way of thinking about charity. At the same time as helping others, individuals and businesses that open Charity Bank accounts will be earning a modest financial return for themselves. And with all profits ploughed back into the Bank, charities and social enterprises will also be helping one another – a unique situation where all can benefit.

An emphasis on financing, not just fundraising; investing, not just giving — fostering a new spirit of self sufficiency in the voluntary sector and changing the way people see their own communities.

Yesterday I opened an account with Charity Bank and I hope that many of you here will do the same.

The Charity Bank has its origins in our concern to revitalise deprived areas and is one of a new generation of financial institutions advocated by Sir Ronald Cohen in his innovative Social Investment Taskforce.

As Ronnie demonstrated, enterprise and wealth are vital to building sustainable communities and so, building on his recommendations, we have:

– introduced a new Community Investment Tax Credit to allow local Community Development Finance Institutions to raise funds at affordable rates;

– started a Community Development Venture Fund worth £40 million pounds to invest in the most deprived parts of the country;

– and talked to the banks about the role they have as lenders in our under-invested communities.

But as Ronnie recognised, the challenge of community regeneration will never be met by the state alone. Charities also have a critical role:

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

– second, because the voluntary sector has a freedom to innovate and flexibility of approach that the public sector often lacks. Your diversity, creativity and inventiveness can lead government to new ways of thinking about problems and new ways of solving them;

– third, because of your capacity to focus on the individual rather than simply rely on a standardised approach. As so often has been said, you do not rebuild communities from the top down. You can only rebuild from the bottom up – one family, one street, one neighbourhood at a time;

– lastly, because voluntary action provides, of itself, an education in citizenship for volunteers and recipients alike. Those who embark on voluntary action out of a sense of duty often find that it brings, in the end, a new richness of meaning – that in the giving, they have also received something important, something fundamental.

It is because of the great strengths of voluntary action that we are devolving power to the many charities and social enterprises that make such a difference to the strength and vitality of our communities.

The old days when the man in Whitehall knew best are gone for good. Our role now is to champion a localism which empowers people, encourages innovation and delivers high quality public services for all:

– through the Children’s Fund, local groups using local knowledge are helping to provide tailored solutions to the problems of children in need and child poverty;

– in Sure Start, hundreds of local partnerships made up of voluntary, private and statutory organisations are ensuring that tens of thousands of under fours are receiving the best possible start in life;

– through the New Deal, community organisations are increasing the opportunities for the hard-to-employ young unemployed and adults with not just training, but advice and coaching;

– and so that the vitality and independence of the community and voluntary sector can grow and flourish across the country, the Government has set aside £125 million over the next three years for these organisations to draw upon for their public service work.

In my vision of Britain there is such a thing as society – a community of communities, tens of thousands of local neighbourhood civic associations, unions, charity and voluntary organizations – each one unique and every one special but united in support of a Britain that is tolerant, fair and values public service.

I know that the Charity Bank will play an important role in helping voluntary and community organisations to flourish, particularly in our most deprived areas, and I wish you every success as you start-up and grow.

Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, on 24 October 2002.

I am very pleased to be here with David Blunkett and David Venness this morning to discuss the new steps we are taking to combat terrorist financing. And I want to thank all organisations from Police and intelligence services to banks and financial institutions nationally and internationally for the work done to combat terrorist financing

Those who finance terror are as guilty as those who commit it. And our response to funding of terrorist acts is every bit as clear, as unequivocal and as united as our response to the terrorist acts themselves.

Last night I ordered, and today I am reporting, the freezing of all assets held by the Jemaah Islamiah organisation in the UK.

This follows the designation of Jemaah Islamiah by the United Nations Security Council as an organisation associated with Al Qa’ida, engaged in financing terrorism. This designation was the result of representations made by the UK, in collaboration with the US and Australia, about the nature of Jemaah Islamiah’s activities.

Jemaah Islamiah engages in terrorism. Members of Jemaah Islamiah have been trained in Al Qa’ida camps. They have acquired bomb making equipment. They have been found in possession of lists of terrorist targets as well as photographs and videos of intended targets. Their aim is to establish a extensive Islamic Republic covering Malaysia, Singapore, Indonesia and parts of the Philippines, and they are prepared to bomb, shoot and kill their way to achieving this aim.

The UK has already frozen the assets of Jemaah iIlamiah and has instructed UK banks not to transact business on their behalf. And I call on other countries to follow in accordance with the UN Security Council designation.

Today the Home Secretary and I are publishing a report setting out the action the UK Government has taken to combat the financing of terrorism before and since the tragic events of September 11th last year:

freezing assets worth $100 million of over 100 organisations and over 200 individuals suspected of terrorist financing;

Completing the NCIS report on the vulnerabilities of Hawala banking and alternative remittance systems to Hawala banking;

Publishing a consultation document on the disclosure of beneficial ownership of unlisted companies;

20 arrests in connection with terrorist fundraising, with 15 of those arrested subsequently charged with terrorist fundraising, fraud or money laundering;

Identification by the National Terrorist Financing Investigation Unit of over £500,000 of assets linked to someone on the UN sanctions list and subsequently frozen; and

The first conviction for terrorist financing in the UK under the 2000 Terrorism Act.

And the most important measures for the long-term have been the establishment of the new multi-agency Terrorist Finance Unit within the National Criminal Intelligence Service to prepare financial intelligence packages and quadrupling of the staff in the National Terrorist Financial Investigation Unit based at New Scotland Yard – already 3,500 suspicious reports have been passed to the TFU, which has referred 600 to Scotland Yard for follow-up investigation.

These units put the UK at the forefront of the international fight against terrorist financing. By cracking down their networks and breaking their codes we can build a Bletchley Park for the 21st century.

And we are also taking action internationally.

I welcome the recent proposals by the Financial Action Task Force to make it easier for authorities to identify quickly who is using wire transfers to finance terrorism.

I also welcome their publication of best practice guidance on the regulation of charities, which have in some cases been used to disguise the financing of terrorists. Our own Charity Commission has been active in investigating charities suspected of financing terrorists and closing down charities abusing their charitable status.

But there is more to be done both internationally and domestically.

Domestically we must further strengthen information sharing between regulators and investigators and financial institutions, building on the successful contacts that have already taken place.

Internationally we must continue to cooperate to develop further in-depth intelligence of terrorist organisations by exchanging information. And in particular I call on those countries which have not yet done so to implement un Security Council Resolutions against terrorism and Al Qa’ida and to act on the FATF 8 special recommendations on terrorist financing. And I hope that the G20, when it meets in Delhi in November, to strongly endorse this essential action.

We must all continue to apply ourselves to the task of cutting off financing flows to terrorists. If fanaticism is the heart of modern terrorism, then finance is its lifeblood and we must move expeditiously to cut off the source of terrorist financing and end wanton acts of terror.

Below is the text of the speech made by the then Chancellor of the Exchequer, Gordon Brown, at the Birmingham Urban Summit on 1 November 2002.

It is a pleasure to be here in Birmingham today – a city which is a leading example of urban renaissance in progress.

A city with some of the largest regeneration projects in Europe, with new arts facilities, top quality commercial developments and now your nomination this week for the 2008 European City of Culture.

But here to in Birmingham – one of the country’s most successful cities – we have growth side by side with large pockets of deprivation — and so today I want to talk about the challenges of poverty and unemployment in our urban areas.

The steps we have taken:

– The challenges ahead

– The lessons we have learned

– And the new policies I think we must introduce

– And I want to congratulate participants here – councillors, local authorities, public servants, academics, community groups, companies, urban specialists in every field – on the huge advances that have been made in our understanding of, and action on, what makes for quality of life in our urban areas: advances in the study and practice of geography, planning, the built environment, the role of cities in regions and – my theme today – understanding of the economic and social forces at work in poorer urban areas. And I want to thank you for the work you do, the service you give and contribution you make.

I think most of you would agree that 50, 20 or even 10 years ago the idea that the treasury would be interested in issues like public space, the design quality of public procurement in urban areas, devolution, regionalism and social exclusion would be almost unthinkable. But we know that not only are these questions vital to successful, economically vibrant cities but they are at the heart of the agenda for social and economic progress.

And I can genuinely say that I and the Treasury are privileged to be associated with the challenge, led by the Deputy Prime Minister John Prescott, of creating sustainable communities in our towns and cities.

One hundred years ago Winston Churchill, then an economics minister, spoke to an audience in the midlands about the unacceptable gap in Britain between the excesses of accumulated wealth and the gaping sorrows of the left out millions.

And I know that today – as one hundred years ago – we must and can do better.

I know that we cannot talk of real prosperity for all of Britain if thousands are left behind on the margins; that for economic efficiency and social justice reasons Britain needs an economy that works not just for some people some of the time but for all of the people all of the time; and that, learning from the work many of you here have done and the service you have given, we must – to achieve our objective that no area is bypassed and no one excluded from the mainstream of economic prosperity:

Not only continue to make the right long term choices about stability and growth – avoiding the old economic instability of boom and bust so damaging to economic activity in the past;
Not only ensure the finance necessary to back reform and modernisation in local public services – the task of last July’s spending review for health, education, the environment, tackling crime and local government services where – for deprived areas where outcomes are worst and the need for good schools, hospitals and other services is greatest – we have introduced new floor targets to raise the performance of public services;

And not only directly tackle low incomes – with the introduction of the new child and working tax credits – expenditure of £4.5 billion pounds more for low paid workers, families with children and pensioners …but we must also, more fundamentally, tackle not just the consequences of unemployment and poverty and its symptoms, but the underlying causes — being aware more than ever before of just how much poverty and deprivation are rooted in low levels of economic activity. People are poor because they have no jobs, no skills for jobs – or if disabled, old or sick are poor because of inadequate provision where they or their families have had historically low earnings from employment.

And second – and this is the main point I wish to make to you today – we must recognise that the old approaches to renewing economic activity which have been less than successful must give way to the new:

Neither an old style bricks and mortar only approach which, for example with the experience of enterprise zones in the 1980s, targeted subsidies for property development, often at huge public cost diverting economic activity from one area to another with no overall economic gain;

Nor the old style benefits approach which gave hand-outs to compensate for unemployment but provided no real help to get people back to work, leaving whole communities abandoned on the dole; …both of which failed to tackle the causes of unemployment and poverty or secure long-term environmental regeneration and social inclusion. And both of which failed to invest, as we must, in the forces of renewal – education, training, jobs, enterprise and business development

So increasingly the emphasis of our approach will be measures to encourage and foster the indigenous skills, talents and potential of local people and communities.

This focus on the drivers of homegrown local economic activity is also at the heart of our new approach to regional policy.

There have been three phases of regional policy in our country

The first generation of British regional policy – from the 1930s – was designed to support hard up areas with emergency measures.

So the second generation – from the 1960s – sought to encourage inward investment with new incentives.

Now we are moving to the third stage of modern regional policy – creating regional development agencies where the emphasis is not just on encouraging inward investment but also on local innovation and local investment and building indigenous strength with freedom and flexibility for local people to make decisions based on local needs.

So first today I want to put the spotlight specifically on measures to renew economic activity and encourage enterprising communities across the country.

And I will secondly suggest that in modern economic regeneration our aims – high and stable levels of economic growth and employment – can best be met by protecting and enhancing the local environment.

Third, modern economic regeneration with its emphasis on local activity not only means but requires the devolution of power – local people making local decisions about local needs.

And fourth, special new measures will be needed to tackle unemployment, measures that recognise that the problems are not simply in the creation of jobs but in the employability of the unemployed.

First, because our comprehensive solution to urban poverty and unemployment has to involve raising levels of economic activity – more businesses if you like rather than more benefit offices – we should start to see inner cities and old industrial areas not as no-go areas for business or simply “problem” areas but as areas of opportunity: new markets where businesses can thrive because of the competitive advantages they often offer – with strategic locations, untapped resources, a high density of local purchasing power and the potential of their workforce.

In the late 1990s the rate of business creation in our high unemployment communities was one sixth of our prosperous areas so we recognise not only that barriers to enterprise are greater in poor communities – many people, for example, trying to start up businesses face special problems – but also that we need to put in place the right incentive structure to stimulate business-led growth.

So if a key that unlocks inner city regeneration is fostering the potential strengths of local people, we need to systematically tackle all barriers to development: cutting the cost of buying, starting up, investing, hiring, training, attracting equity, and growing.

Renewing the economic base is one of the main aims behind not only neighbourhood renewal funding in 88 areas worth almost £1.9 billion pounds over this parliament and the new deal for communities in 39 areas worth £2 billion pounds over ten years; but the creation of regional development agencies and the small business service; the new encouragement for local authorities in their economic role; and the creation of local strategic partnerships which can do more to drive forward policies on enterprise and employment at the local level.

And it has led to our policies for enterprise in high unemployment areas to help firms start up, invest, hire and expand:

Encouraging investment – through the community investment tax credit, the community venture capital fund, the phoenix fund, and reforms to the small firms loan guarantee scheme;

Help with hiring, employing and training – the special work of the new deal and training programme;

Support and advice for business – the remit of the new small business service;

Cutting the cost of property purchases – with reforms in stamp duty;

And reforming our planning system to make it quicker, more flexible and more responsive.

Central to this is recognising the importance of regenerating the environment, attracting new businesses to our inner cities. And following the recommendations by Lord Rogers – to whom we owe a debt of gratitude – measures to renew local high streets and urban estates have included:

A 150 per cent accelerated tax credit to clean up contaminated land and bring it back into productive use;

100 per cent capital allowances to enable owners and occupiers to obtain full tax relief when creating flats for letting over shops and other commercial premises;

Breaking with flat rate vat by targeted vat reductions to encourage the renovation and conversion of existing properties to bring vacant homes back into use; and

Measures to tackle the crime that hits businesses, particularly retailers, in inner city areas…showing that our objectives for growth and employment are not at odds with but complimentary to our objectives for environmental care and protection.

We talk a great deal about the 1944 economic objectives that governments across the western world have followed – high and stable levels of growth and employment. With the understanding we have now I believe that these objectives are better expressed as high and stable levels of growth, employment and sustainable development.

Good management of public spaces and high standards of urban design are key to creating urban areas that are attractive, sustainable places to live in, invest in and do business in, as John Prescott said. And so too is investing one billion pounds more in housing over the next three years – the most sustained rise in housing investment for 25 years – with an additional four billion pounds for the transport infrastructure, including money for local authorities to provide transport systems that revitalise recently renovated urban areas and improve the quality of the urban environment.

But there is still much more to do.

So, working in partnership with local authorities and regional development agencies, we will designate 2000 new enterprise areas – not the old enterprise zones of the 1980s where property subsidies diverted activity from one area to another, but 2000 new enterprise areas where we encourage home grown economic activity by cutting the cost of starting up, investing, hiring, training, managing the payroll.

In these enterprise areas – the 2000 most deprived wards in the country – I can state that:

First, having already cut stamp duty in these areas, we plan to abolish it entirely with full stamp duty exemption for all business property purchases;

Second, we will give planning authorities powers to create business planning zones that will cut red tape for growing businesses by removing the need to apply for planning permission;

Third, we will offer businesses special investment help through the community investment tax credit – which offers for every hundred pounds of private investment an extra 25 pounds of public investment – and risk capital from the community venture capital fund;

Fourth, we will increase funding for the phoenix fund by £50 million pounds – providing support to thousands of small businesses with special encouragement for women entrepreneurs and entrepreneurs from ethnic minorities

Fifth, the small business service will provide additional help to firms in these areas – a package of advice and support worth at least £2000 for each new businessman or woman;

Sixth, we will make improvements to the business incubation fund to stimulate the availability of flexible managed workspace for start-up companies;

And all businesses will benefit from financial incentives to help them bring their tax and payroll systems on line.

And because we know that to get the deeper and wider entrepreneurial culture we need we must start in our schools and colleges, by 2006 every school pupil will have the opportunity of five days worth of enterprise education, with extra help for schools and colleges in high unemployment areas.

Together, these measures – combined with help for infrastructure and employment – offer substantial additional resources based on a systematic and coordinated attempt to create a stronger economic base in previously run down and high unemployment areas.

And all these measures are underpinned by devolution of power and responsibility – local people making local decisions about meeting local needs – as the way forward.

While it is right for central government to establish clear long term goals, the people closest to the ground in the regions and our local communities should be equipped and empowered with maximum local flexibility and discretion to innovate, respond to local conditions and meet special needs.

That is why the regional development agencies, who have been given responsibility to promote enterprise in their regions, have been given substantial resources and unprecedented freedoms – within a single budget without the old ring fencing – to decide how to use these resources to create the right conditions for local businesses to grow and prosper.

And because it is crucial for city growth strategies to be embedded within wider regional policies for growth and development, we are making regional planning a statutory activity, and setting up regional housing bodies with a single regional housing budget to match policy decisions to the regional housing market, and link policies on housing with decisions on planning, transport, infrastructure and anti-poverty programmes.

Local public service agreements between central government and local councils are also playing their part in regenerating our urban centres.

Across the country, councils are being given additional powers and flexibilities to allow them to tackle national priorities in the way that works best for them locally. Newcastle city council has set a target to regenerate an extra five hectares of brownfield land each year for the next three years – a one third increase. Hammersmith and Fulham are concentrating on working with government agencies to increase job entry and retention rates. And Leeds city council are using their local PSA to close the gap in the educational attainment of Bangladeshi pupils who lag behind those from other communities.

But the true devolution of power goes beyond regional and local devolution to public authorities – it means devolving more power from government altogether, and into the hands of local communities. Giving local people the tools to make improvements to their own neighbourhoods.

Neighbourhood renewal and new deal for communities are excellent examples of policy areas where local communities are in the driving seat; where we know that Whitehall does not always know best. Within a strategic national framework, including challenging floor targets, neighbourhood renewal gives local strategic partnerships both responsibility for deciding what is needed in their area and discretion for deciding how it will be delivered.

And we must also harness the expertise of the private and voluntary sector alongside the public sector. Sure Start, the New Deal, Neighbourhood Renewal, New Deal for Communities, Urban Regeneration Companies – all these programmes are putting these principles into practice.

But any solution based on renewing economic activity in our urban areas must tackle the persistent, often chronic, problems of employment and employability

In the mid 1980s, Glasgow had over seventy thousand unemployed, in Liverpool there were over fifty thousand and in London over four hundred thousand – rising to nearly half a million in the early 1990s — an arithmetic of poverty and deprivation so great that the whole fabric of community life was undermined.

So when we came to power, five years ago, our new programme – the new deal – was not only based on the principle that work was the best route out of poverty and the need for rights and opportunities to work to be accompanied by new responsibilities and obligations to work, but the new deal and our make-work-pay measure – the working families tax credit – was designed to offer special help to people and areas left behind.

Helped by the new deal, and our other employment programmes, 1.5 million more people are in work than in 1997. And I can report that unemployment has fallen furthest, and vacancies risen fastest, in those regions that were hit the hardest in the 1980s. It is a measure of the achievement of the new deal – for which i thank local authorities, voluntary and charity groups and the public services – that in the 1980s 350,000 young people were long term unemployed. Today the figure is less than 5,000. But this is not the time to relax our efforts but to step them up.

Improving employment means improved employability – with more investment in inner city schools, more further education places, a 50 per cent target for young people reaching universities by 2010 with enhanced measures to ensure access, and for the unemployed, literacy and numeracy training and help.

But while more people are in work than ever before, there are still areas of high unemployment in every region of the country, and particularly in our most deprived urban areas where a quarter of the unemployed live.

Our analysis shows that too often side by side with long lists of vacancies are large pools of the unemployed.

In Liverpool, while there are no longer fifty thousand unemployed there are now fifteen thousand people registered as unemployed but eighteen thousand vacancies registered at job-centres over the last six months. In Glasgow, while there are no longer seventy thousand there are now seventeen thousand unemployed, but over thirty thousand vacancies. Here in Birmingham, there are thirty thousand unemployed and over thirty six thousand vacancies.

Too often in too many areas the long-term unemployed have slipped through the net in these areas.

Too often there are workers without jobs side by side with jobs without workers.

Tottenham, for example, has 3,500 men, 4,800 adults, unemployed while neighbouring jobcentre plus districts have seen over sixty thousand vacancies in the last six months, with many more in the wider London economy.

Labour shortages exist today in large numbers in retail, hotels and restaurants, transport and communications and in every region.

To match the unemployed to vacancies we have introduced intensive area-based initiatives in difficult areas:

– fifteen employment zones

– 63 action teams

Which have helped nearly seventy thousand people into jobs so far.

And building on this, we are piloting the step up scheme in fourteen areas, with another six starting in December — obliging the long-term unemployed to accept a guaranteed job which will offer, instead of the dole, secure waged employment. In London and selected cities, we are matching this new regime with mandatory work preparation courses for the long-term unemployed.

But we must go further and so tackling the barriers to full employment and encouraging the unemployed back to work in our most deprived areas will form a major feature of the pre-budget report.

Because we must break the destructive culture that “no-one around here works” which damages both the areas themselves and people’s chances of jobs, we will provide far more help than in the past in these areas, using the sanctions and opportunities available in the new deal and where necessary taking job advisers onto estates, and extending access to the help available through the new deal and equip the unemployed with the skills they need to get into work, including providing training in literacy, numeracy and other basic skills. But in return we will expect the unemployed to take up the jobs that are available.

In pilot areas, we will look to test a more intensive approach to tackling the worst concentrations of unemployment, street by street, estate by estate. As we insist on unemployed adults and young people getting back to work, we will identify the barriers to their employability, offering them training, advice and sometimes cash help, and linking them to jobs in the vicinity.

This will be an onslaught in favour of full employment and against the unacceptable culture of worklessness that ruined some of our communities in the 1980s and early 1990s as we address the underlying causes of poverty in Britain.

So in conclusion I want to match the radical environmental, social and quality of life improvement that you are all contributing to with three changes, economically, over the next few years in our urban areas that will help enhance the quality of life:

More people moving into jobs, with the work ethic reinvigorated in every community of Britain as we advance to full employment not just in one region, but in every region;

More people able to transfer their ideas and hopes into small firm start ups and growing businesses as we create a Britain of high and stable levels of growth and sustainable development where enterprise is open to all;

And more people taking advantage of education, thus true equality of opportunity in education – life-long recurrent education open to all, regardless of where they live.

I want Britain’s cities to be world leaders.

And just as this conference has already shown that public space, quality of life, the built environment and quality infrastructure can help create world class cities, so too I hope I have shown that new economic and employment policies can contribute to urban regeneration with Britain leading the world in its commitment to full employment and enterprise for all.

More importantly I believe this conference shows that working together – central and local government, business, voluntary organisations and local communities – we can, and will, deliver our aim that prosperity should be not for some but for all in every city, every town, every community in our country.

Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, to the CBI National Conference in Manchester on 25 November 2002.

Let me first thank you for your invitation; pay tribute to the contribution you as Britain’s business leaders make to our economy; and say it is a privilege to work with you, both individually and through the CBI, as together we build, for our country, a stronger foundation of economic stability, we increase employment, champion enterprise and enhance Britain’s competitive and trading position round the world.

There is no better time for the CBI to come to Manchester in the aftermath of the city’s success in hosting the Commonwealth Games – on which I congratulate Manchester; and at a time when the North West with its science and innovation strategy is moving to the forefront of the new enterprise economy with, in five years alone, nearly 30,000 businesses created and over 100,000 more people in jobs.

And I am especially pleased to bring with me to Manchester Paul O’Neill, the United States Treasury Secretary, one of America’s most successful businessmen, a great philanthropist, and a most effective finance minister. And it is a pleasure to show Paul at first hand the dynamism of this city and this region, as we cement the strong links between America and the UK.

Paul, I know that your father was born in the north of England, left from Glasgow to go the United States in 1926…so we welcome you home.

Indeed, for centuries, your country and the islands of Britain have been linked not only by history but by ideals that Britain and America hold in common and represent to all the world: a passion for liberty and opportunity; a belief in the work ethic and in enterprise for all; a commitment to being open not isolationist – a commitment which, in our day and generation, increasingly depends, as we shared your grief after September 11th, upon our shared resolve to fight terrorism and totalitarianism; and our shared conviction that economic expansion through free trade and free markets is the key to growth and prosperity.

In this new century our shared values can become our common destiny. And Mr Secretary I stand for a Britain as you stand for an America… outward looking, ambitious to succeed, determined to advance an enterprise culture fully equipped to lead in the new global economy.

Winston Churchill said that those who build the present only in the image of the past will miss out entirely on the challenges of the future.

And I want to suggest now that all of us – businesses and governments working together – should face the great challenges of today’s and tomorrow’s economy not by taking risks with stability but by holding firm to stability; not by resisting change but by empowering people to cope with it; not by protectionism but by promoting open, competitive markets and international cooperation; and not by ever relaxing our guard but acting as one against the terrorist threat.

Since September 11th last year, America and Britain, with Paul O’Neill leading the way, have together taken action to root out terrorism and to root out the sources of terrorist finance. And as I said only last week we stand ready, working with the United States and our allies, to do all that is necessary to intercept and bring to justice those who finance terrorism.

And we have also worked together to move forward the world economy.

Not just because of the tragedy of September 11th, but with events unfolding in Iraq, high oil prices, the problems with the IT sector, continuing concerns on corporate standards, the danger of contagion from further financial instability in emerging markets, and still major current account imbalances among the major economies, the uncertainties facing the world economy are unprecedented in number and more widespread than at any time in recent economic history.

I know the difficulties you as manufacturers and service companies trading in a world economy face when, in addition to exchange rate pressures, twenty of the world’s biggest economies have been in recession this year or last year.

I know the effect on business investment when, continent-by-continent, we have faced the first simultaneous world slowdown for almost thirty years.

I understand how major international companies are hit hard by what has been the sharpest slowdown in G7 growth since the recession of the early eighties — and indeed the sharpest contraction in world economic growth since 1974.

Exporters understand all too well that world trade which grew by 12 per cent two years ago was at a standstill last year and is hardly growing this year. And estimates of growth are being downgraded all over the world.

So we must all be both vigilant to the uncertainties deterring business investment and, because American, German, French, Japanese and other businessmen and women are working under similar pressures from problems that start not in Britain but in the global economy, I know Paul O’Neill agrees with me that in this global downturn all of us, each continent, must play our part, do our duty, and face up to our responsibilities in sustaining and strengthening economic recovery around the world: Japan taking decisive action on financial sector reform; America showing corporate reform working; Europe matching efforts to promote economic reform with efforts to encourage domestic demand; All of us insisting on a new round of trade liberalisation.

Like America, Britain with low levels of inflation and low levels of debt enters this period of uncertainty better prepared than most and better positioned than in the past.

Ten years ago in a world downturn that was less severe for world trade, growth and equity markets, our country was unable to maintain growth because, with high inflation, interest rates had to be kept above 10 per cent for four years and rose to 15 per cent for one whole year.

Then business, Government and the British people all agreed that it was necessary to build a new foundation for stability. And under the new monetary and fiscal system based on the independence of the Bank of England: we imposed an inflation target that is symmetrical, designed to combat both deflation and inflation; then froze public spending for two years; introduced new fiscal rules to put the public finances on a sustainable position; and systematically reduced the burden of debt.

And because this regime has established credibility through consistently meeting our inflation target and maintaining growth and employment, the Bank of England – with seven interest rate cuts in a year – has, supported by fiscal policy, been able to sustain British growth while America, Japan and Germany, and many others, have been in recession — making us this year, as well as last year, among the faster growing of the major economies — and we will remain vigilant both about global risks and domestic risks in the housing market and in pay, public and private.

Both you and I agree on the continued importance of keeping inflation low; we agree on the need for monetary and fiscal stability; and we agree therefore on the need for proper discipline in the public finances. And I can say today that, having made the Bank of England independent, we are determined that we will continue to support the Bank in the difficult decisions necessary to ensure low inflation and the conditions for growth. We will maintain our envied position as a country with low debt; our fiscal rules will be upheld and rigorously honoured; we will hold firm to our policies for stability; and as a country we must move forward together: there is no future for Britain in going back to the bad old inflationary days of both the mid 1970s and late 1980s — inflationary and unaffordable pay settlements, whether in the private sector or in the public sector, and bailed out from the reserve, which so damaged economic stability.

Just as households need stability with low inflation and low interest rates to plan for their future, so too 95 per cent of businesses in the CBI’s new survey rightly say that our hard won and newly won macroeconomic stability is the biggest factor in making investment decisions – and I assure you that we will not take any risks with it.

It is because, as the Deputy Prime Minister John Prescott rightly said yesterday, we are resolved to ensure stability throughout the economy, to keep interest rates low and stable, and to secure reform in our public services, that public sector pay rises must be set at a sustainable rate and justified by productivity — and I urge the local authorities and firefighters to return to talks linking pay to productivity.

Getting the right balance between monetary and fiscal policy has meant that our economy has had continuous growth for all of the last five years. And in a period of world downturn it is not only possible, because of our low inflation and low debt, but desirable to allow the automatic stabilisers to play their full role at each stage of the economic cycle.

Some have suggested that the right approach in the face of slower growth is that, instead of holding firm to our long term course, we should cut spending and borrowing irrespective of the stages of the economic cycle and the need for public investment in transport and our infrastructure – even when inflation is low and the underlying fiscal position is sound. In my view the consequences of such a short termist and deflationary approach would be higher unemployment, depressed demand, and lower growth with, as in the past, capital spending on infrastructure the first casualty of cuts.

When inflation is low and debt is low, such a narrow and short termist interpretation of stability would be damaging and counterproductive to growth, and there is no credible and prudent option other than setting fiscal policy in a sound and long term framework adjusting for the economic cycle. So just as we will resist short term pressures and hold firm in our demand for discipline in pay in the private and public sector, so too we will resist pressure for the old short term quick fixes in fiscal policy and we will hold firm to our tough fiscal rules which have helped deliver stability and sustain growth.

With continued stability the foundation of economic success, enterprise is its driving force.

I think we all agree that Britain, indeed every advanced industrial country, is today being challenged not just by the short term cyclical changes in the global economy but by what we also see all around us – an ongoing, long-term restructuring of global industry and services.

In this next wave of globalisation already upon us, the downside is that low value added production is shifting from the highly industrialised countries to the industrialising countries.

But the upside, to the potential benefit of British manufacturing and services, is that competitive advantage increasingly comes from high value added, niche, precision and technology driven products and services.

And this is our business opportunity as well as our economic challenge.

It is you, as businessmen and women, who generate the wealth, apply the new insights, set up the new companies and create the new products.

And business and government have a role to play together not only in ensuring stability but also in securing investment in education and skills, science and our transport and infrastructure – and by, together, encouraging the widest and deepest entrepreneurial culture.

And it will be the strength of Britain’s science base, the level of business investment in British research and development, the scale and dynamism of knowledge transfer from our universities to our businesses, and, overall, the flexibility of our product, capital and labour markets, that will drive future productivity growth and thus long term prosperity. And having attended the CBI President’s Committee earlier this autumn to discuss how together we can remove barriers to productivity from planning delays to widening work permits from overseas, I am pleased that CBI leaders and Cabinet Ministers responsible for transport, planning and science and technology will now systematically tackle barriers to productivity in our country — and already I applaud your President John Egan’s proposals for removing barriers to higher productivity in the construction industry.

Patricia Hewitt spoke earlier today, and Charles Clarke will speak tomorrow, about investments in science and in education, because to equip ourselves to be at the cutting edge of an economy where innovation is continuous, indeed permanent, demands the continuous upgrading of skills in the workplace and the continuous development of new products and services not just in business but in our universities and research institutes.

To encourage the growth of the knowledge–based company and the business-friendly university, the modern fusion of education and innovation that is at the heart of industrial restructuring, we have already:

– introduced for large and small businesses new Research and Development tax credits;

– announced an extra £1.25 billion investment in science;

– increased capital investment in higher education research to £500 million a year by 2005;

– encouraged with the University Challenge Fund the translation of research into business innovation;

– sought to improve the attractiveness of science and engineering careers;

– and, because we are ready to do more, the Secretary of State for Trade and Industry and I will consult on further incentives enabling business to benefit from a more modern science and skills base, including the expansion of apprenticeships – working with the CBI to test new approaches to workplace training – and the University for Industry, which has provided courses to over half a million adults so far with the aim of reaching one million by 2005.

To remove barriers to productivity growth we must tackle the complexities, delays and anomalies in our physical planning system. And so, with our proposal for new business planning districts where detailed permissions are relaxed, John Prescott is now legislating to make the system quicker, more flexible and more responsive.

Alistair Darling will be investing an additional £4 billion a year in transport by 2006. We will be trying to increase the flexibility of the work permit system and will also be examining one grievance raised with me – the rising costs of employers’ liability insurance.

It is to encourage investment and to reward enterprise that we have cut corporation tax from 33 pence to 30 pence, cut capital gains tax to 10 per cent for most business transactions, cut small business tax from 23 pence to 19 pence and reduced the 10 pence rate to zero, and are abolishing stamp duty for business property transactions in deprived areas.

And when you rightly have raised the question of the national insurance tax rise to pay for healthcare, let me say that in nearly every industrial country rising costs of new medical technology and health care have, as a matter of fact, meant that whether it is in France and Germany through employers social insurance or America through employers private insurance, employers are contributing more – and in America, France and Germany’s case much more – to health care.

In the US, employers can pay health insurance of up to $100 a week for employees and these costs have been rising not by one or two per cent but by over ten per cent every year. In France employers pay around £60 per week for an employee on average earnings and in Germany it is around £30 a week.

In the UK after the national insurance rise averaging around £4.50 a week employers will pay far less than any of these foreign counterparts and I can tell you that in Britain’s case the changes have been costed to fund health care improvements not just for this year and next but to 2008, with the extra money – £40 billion a year extra for health by 2008 – dependent on reform to ensure greater results.

And when nearly 200 million work days a year – at a cost to business of over £10 billion – are lost due to employee sickness and ill health; and when a fitter, healthier workforce will both promote fairness and opportunity for all and raise productivity to the benefit of business and Britain, I hope the business community will join the Secretary of State for Health, Alan Milburn, in ensuring best value for money – not least by supporting the use of private finance – so that every penny we invest in health ensures value for money.

And I am not saying anything to you that I have not said to my party conference: I will continue to tell those who oppose us that the Private Finance Initiative in education, health, roads, rail and infrastructure is here to stay; that the partnership between public and private sectors is vital to investment in our future; and that in every area of our national life we must do more to encourage enterprise.

I will be announcing on Wednesday two thousand new Enterprise Areas where we will deregulate in planning and in tax, and give special help for new businesses to start up, and to invest, employ and grow. And I do so because I believe the answer to creating jobs in high unemployment areas is a wider and deeper entrepreneurial culture and a sense among people in every community that the opportunities for enterprise are open to, and of benefit to, all.

Because we know that to create the wider, deeper enterprise culture we need we must start in our schools and colleges, by 2006 every school pupil will have the opportunity of five days worth of enterprise education. And I want to see our business leaders as role models for our young, our teachers able to teach the value of enterprise, and a recognition in high as well as low unemployment communities that enterprise that is open to all holds the key to their regeneration.

So I want a Britain where you can work your way up from unemployment to employment to self-employment, from micro business to growing business.

And I want people with ideas and dynamism to know that government is on their side when they start or grow a firm and make a profit.

Indeed my aim is to build a new consensus in our country where, from the poorest to the richest community, there is a strong belief in an enterprise culture — in an enterprise economy which is open to all.

For fifty years there was, in our country, a sterile and self-defeating battle for territory between supporters of enterprise pitted against supporters of fairness.

And a view that policies for enterprise and fairness were at odds with each other; in other words that an enterprising Britain was bound to be a more unfair Britain; or that a fair Britain was bound to be less than enterprising.

This ideological argument went to the heart of partisan divisions, defining the very perceptions of the main political parties.

On one side were those who traditionally thought fairness and strong public services could only be bought at the cost of enterprise; on the other side those who claimed that enterprise came only at the cost of fairness.

And one of my missions as Chancellor is that our country break away from these old self defeating stereotypes and I want to make sure that we are all what we always should have been: passionate for enterprise.

Some people said to us when corporate standards became an issue that as a government we should broaden the argument about corporate excess into a general attack on corporate responsibility. I said no. I said to them that while it is important to be vigilant and make reforms where necessary on auditing and accounting, the priority in Britain now is not to undermine support for enterprise but to strengthen it, not to weaken our enterprise culture but to deepen it. And indeed together I believe we can build that shared understanding in Britain from left to right in the political spectrum, as from the poorest to the richest community, so that the belief in an enterprise culture open to all runs wide and deep. A Britain where there is common cause that – because enterprise and fairness are both founded upon opportunity – enterprise and fairness are not mutually irreconcilable opposites but depend upon each other.

I said at the outset that a commitment to world class levels of skills, innovation, investment and enterprise and investment must be matched in the global economy by a commitment to promoting open competitive markets internationally.

Looking inward is not an option in a world where business thinks globally.

That is why we support fundamental economic reform in Europe, including greater financial market integration and a tougher pro-competition regime on products and takeovers. And why we support the principle of British membership of the single currency – and are currently undertaking preliminary and technical work so we can make an assessment of the five economic tests by June next year.

Our commitment to an open global economy is why we are looking for an early settlement of a new world trade round and I assure you that we will support countries who wish to curb costly inefficient and regressive agricultural protectionism.

And it is why we favour breaking down barriers to trade with the United States.

When transatlantic trade amounts to $2 billion each and every day and when the removal of trade barriers would add 1 per cent to Europe’s GDP it is right to see beyond individual disputes, seek to remove the remaining trade barriers in industrial goods and services, create the conditions for a new era of enhanced engagement between America and Europe – a new transatlantic alliance for prosperity. And I am pleased that the Transatlantic Business Dialogue has called for an expert study that will show the benefits in jobs, trade and income of full capital market liberalisation between the EU and the US.

Paul O’Neill has played a great part – in business and in government – in strengthening the ties between Britain and America – and it is my pleasure to introduce him to you.

From Paul’s time in the administration of President Kennedy, later in the Office of Management and Budget from 1967 to 1977 under successive Presidents, in business as President of the International Paper Company and then as the most successful head of Alcoa.

And now as a distinguished finance minister, Paul O’Neill has been committed to bringing business and commercial expertise to the running of government.

And dedicated to reform and progress in the international economy. It is my pleasure and privilege to introduce Paul O’Neill and ask him to address this conference.

Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, at HM Treasury in Whitehall, London on 14 January 2003.

April this year brings the biggest change in children’s benefits for decades.

The new child tax credit that comes in will mean more cash for families earning up to as much as £58,000. In the first year of a child’s life families on up to £66,000 will get some help.

9 out of 10 families with children qualify.

And today Patricia Hewitt and I want to set out in detail the additional support for parents doing the most important job of all – raising their children – and how we propose to do more to help parents as they struggle to balance work and family life.

Instead of being paid through the pay packet to the main earner, normally the father, we will pay the child tax credit direct to the main carer, usually the mother.

And survey results that we are publishing today show that 67 per cent of people believe that all support for children should be paid to the mother, and only 1 per cent think that it should be paid to the father.

Even the vast majority of men – 64 per cent – believe all support for children should be paid to the mother.

When asked who was most likely to ensure that the money goes to the needs of the children, 70 per cent agreed it was the mother.

So just as it is right that child benefit is paid to mum, it is right that all children’s benefits go direct to the mother who often buys the food, purchases the kids clothes and knows the child’s needs best.

So with the new tax credits, up to £2 billion will transfer from dads to mums – providing them and their children with a secure and regular income. Money that – as research shows – is then more likely to be spent on the child by the carer – normally the mum.

It is the biggest financial boost for mothers since the introduction of child benefit in the 1970s and a £2 billion transfer of resources from men’s pay packets to women’s purses.

Transferred from dads, to mums – for their children.

From April most mothers will receive at least £26.50 per week for the first child, made up of the new child tax credit and child benefit. For most families at least £10 a week will be transferred from fathers to mothers.

There is a nationwide advertising campaign in newspapers, on TV and radio.

Mothers who have not already done so should fill in their family’s form to ensure the cash comes on time.

It means more money for the mother and a little less for the father.

But overall child support is increasing fast as we recognise the costs parents incur bringing up their children.

I hope every family will claim and receive the new money for their children.

A tax and benefit system that puts families first in the modern world should not just recognise the family as the bedrock of society, and the rights and responsibilities of parents, but also the very real pressures parents face right up the income scale. It should materially help them balance the needs of work and family and be generous enough to ensure for each child a good start in life.

Our approach applies the 1942 Beveridge principle – that nothing should be done to remove from parents the responsibility of maintaining their children and it is in the national interest to help parents to discharge their responsibilities properly – to the realities and needs of modern family life.

Today many families rely on two incomes and most women work. In over two-thirds of couples, both parents work. More than half Britain’s single-parents are in work. Overall, some 36 per cent of those in work have a dependent child.

And some of the greatest pressures parents face were almost unknown in Beveridge’s time: the loss of income because one parent ceases employment and is at home or works part time after the birth of a child; or the costs of childcare when the mother goes out to work.

April’s new tax credits tailor support for each family and make it easier for parents to choose how to balance work and family life:

if a mother wishes to stay off work longer when her child is born our tax credits, worth more for the first year of a child’s life, make it easier to do so;

– if a mother wishes to work part time there is support but, if couples want to share work to suit them, they can qualify for the 30-hour element if they jointly work 30 hours or more;

– and if mothers return to work but need the reassurance of child care the tax credits also provide better help with childcare costs – with the amount of money responding more quickly to changes in costs and the childcare help available to pay for formal childcare at home, which will be especially useful to shift workers or parents of disabled children.

We are introducing these reforms because it matters to enlarge the range of choices that help balance work and family life and recognise the pressures parents face as they make the trade-off between time and money, family and job.

So tax credits help square the circle by making it easier for one parent to remain at home and care for the children if they choose to, but also making work pay and childcare more affordable if both parents choose to work.

And we enlarge the range of choices for mothers and fathers with tax credits backed up by:

– our rises in maternity pay to £100 a week from April;

– paid maternity leave increasing to 26 weeks;

– Britain’s first-ever paid paternity leave;

– and 250,000 more childcare places by 2006;

All real changes to ensure parents have a real choice in balancing work and family life: a choice to stay at home – especially when children are young; to work part-time; to work full-time with suitable childcare; a choice to share the parenting responsibility between the mother and the father.

And with the work-life balance document published today, Patricia Hewitt and I are looking at ways of enlarging these choices still further:

– making it easier for employers to contribute to child care and for families to use a home childcarer, so that people who are not already childminders can take part. This will increase choice for parents and increase the supply of formal childcare.

– considering whether to allow fathers time off to attend ante-natal care and to extend paid paternity leave

– considering the case for giving a mother on paid maternity leave help with the costs of settling her child into childcare before returning to work.

So putting families first means transferring money from dads to mums – for children; supporting parents as they balance the responsibilities of both work and family life; helping parents as they do the most important and difficult job of all – getting their children off to a good start.

And because it is our objective to make sure no child will go without help, that every child will have the chance to make the most of their lives, support for the first child can rise as high as £54.25 a week.

I will now hand over to Patricia who will talk in more detail about our work-life balance proposals.

And in the proposals we both make today we are responding to the needs of families who in today’s fast changing economy want to know they don’t have to go it alone and who, anxious about doing their best for their children while making ends meet, want a tax-benefit system for families that is on their side.