The comments made by Michael Howard, the Leader of the Conservative Party between 2003 and 2005, on LBC on 20 October 2022.
I really don’t think we can afford to go back to that psychodrama. Boris [Johnson] had his chance and he failed to retain the confidence of Conservative Members of Parliament. That I’m afraid, for all his undoubted talents, I think that has to be bad in terms of Boris Johnson and the leadership of the Conservative Party.
The tribute made by Michael Howard, Baron Howard of Lympne, in the House of Lords on 9 September 2011.
My Lords, at this stage in your Lordships’ proceedings, it is not easy to say very much that is new. However, I want to echo in particular the words of the right reverend Prelate who led our prayers and the noble and learned Lord, Lord Judge, in suggesting that our mourning for the longest-reigning monarch in our history should be infused with a spirit of gratitude. For it is we, the people of the United Kingdom and the Commonwealth, who are the beneficiaries of that sense of duty, devotion to service and dedication to the well-being of her subjects about which so many have spoken. She applied those principles in practice in a way that provided inspiration and leadership without ever trespassing for a second into the realm of party politics. In the words of my noble friend Lord Forsyth, she never put a foot wrong.
Much is said these days about soft power: the way in which a country can influence events without necessarily relying on military or even economic clout. It is impossible to exaggerate the extent to which Her Majesty influenced across the world a positive perception of the United Kingdom. She was soft power personified.
Much has been said about the way she put people at ease, and I had the privilege, with my wife, of spending a night at Windsor Castle when I was leader of the Opposition. I was amazed to find in the library the trouble that had been taken to assemble a collection of objects which related to my constituency, Folkestone and Hythe—objects I had known nothing at all about and which were quite remarkable.
Perhaps the most telling example of the way she could put people at ease occurred when a friend of mine who had been subject to much trauma was invited to lunch at the palace, sat next to the Queen and, in the middle of the lunch, froze. The Queen sent for the corgis and, together, they fed the corgis, and my friend unfroze and was able to continue the conversation.
Much has been said about the way Her Majesty was regarded with such enormous respect and admiration far beyond our shores. I finish with one reminiscence. I was in a Caribbean country when a new governor-general had just been appointed, and the local newspaper published an article giving advice to the new governor-general. It said: “You will have many difficult decisions to make, and we suggest that when you are confronted with those decisions, you ask yourself one question: what would Her Majesty do?”
My Lords, we have lost a great monarch, a great friend and, as she described herself, a servant—our country’s greatest and most faithful servant.
The speech made by Michael Howard, the then Shadow Chancellor of the Exchequer, on 12 April 2002.
May I begin by expressing my gratitude to the Centre for Policy Studies for allowing me to give this, the second of a series of speeches on the framework of economic policy, at the Centre. The Centre has, of course, a long and distinguished history of offering a forum to Conservative economic policy makers. I am honoured to be following in that tradition this morning.
Last month, I made the first of this series of speeches at the Institute of Public Policy Research which is, if not exactly a sister organisation of the CPS, then perhaps a cousin across the water.
In that speech I made three points. First, that the current Government’s approach to monetary policy is an evolution of the policy that the Conservatives began to put in place in the 1990’s and not, as the Government maintains, a decisive break with the past. Secondly, that the transfer of responsibility for setting interest rates to the Monetary Policy Committee of the Bank of England has been a successful further stage in that policy, for which the Chancellor deserves credit. And thirdly, that that evolution must be maintained by implementing even greater objectivity and accountability in framing monetary policy.
My main message was that, in monetary policy at least, there is now a very considerable degree of economic consensus. That consensus, and the stability and continuity which spring from it in economic affairs, is greatly to the advantage of our economy and is a matter for celebration.
Today I want to talk about the framework for fiscal policy. Here too there are some points of consensus and here too that is to be welcomed. Unfortunately, however, the scope for consensus is somewhat more limited in this area for reasons which I hope to make clear in the course of this speech.
In terms of short-term economic management, of course, monetary policy is a much more appropriate tool than fiscal policy. Fiscal policy, however, has a very important and powerful influence on the economy’s medium and long-term performance. And it must be conducted in a manner that supports the work of the central bank in running monetary policy directed at achieving an inflation target.
This leads to one clear and rather obvious difference between the framework for monetary policy and the framework for fiscal policy. While the task of short-term economic management based on monetary policy is now broadly apolitical and the responsibility of the Bank of England’s Monetary Policy Committee, the conduct of fiscal policy remains clearly the political responsibility of the Chancellor of the Exchequer.
But first, I perhaps ought to make clear that there is one area of fiscal policy which I shall not cover at any length or in any detail this morning. I have already set out my firm belief in the proposition that, other things being equal, low tax economies are best. They are, in general, the most dynamic economies, the most innovative economies and the economies which do most to enhance the material welfare of the people who live and work in those economies. Other things are not, however, always equal. There are from time to time moments in a nation’s economic history when other things have to take priority. As I have also said before the present crisis which we face in our public services is, I believe, one such moment. This does not mean that, as a nation, we should pour endless amounts of taxation into the bottomless pits of unreformed public services. It does mean that the public services must be put first and that the provision of the resources which are necessary in order to meet the current crisis may have to take priority over tax cuts.
But today I intend to concentrate on the Government’s approach to the framework for fiscal policy and some of the key principles which Governments should apply in this area.
THE PRINCIPLES OF FISCAL MANAGEMENT
The current Government has set out five principles of fiscal management – transparency, stability, responsibility, fairness and efficiency.
It implies that these principles are somehow new. And it makes yet more fundamental claims. In the recent Treasury book, “Reforming Britain’s Economic and Financial Policy”, which no doubt you have all read and which some of you may realise has now become my nightly bedside reading, the authors Ed Balls and Gus O’Donnell, assert that ‘a consensus has emerged in support of sound public finances as the principle medium-term objective of fiscal policy.’ Such a consensus, they claim, ‘grew out of the experience of the 1970’s and 1980’s which saw a relaxation of fiscal discipline.’
Not for the first time in their volume, they claim too much. The very phrase, ‘sound public finances’ could have been lifted from virtually any of the speeches of Margaret Thatcher or any of her Chancellors. To the extent that there is now consensus around the need for sound public finances, that consensus hardly arose because of Labour’s actions. Indeed, even now, there seems in Government circles to be little recognition of the trade-off between high tax levels and economic competitiveness.
But the principles are nevertheless welcome. And I am happy to endorse them.
THE RULES OF FISCAL POLICY
The principles, however, only take you so far. There is clearly room for huge differences of judgement in the way in which the principles are applied and it is in partial recognition of this that Gordon Brown has attempted to convey at least the impression of rigour by the introduction of his two fiscal rules. The first rule is that the Government will only borrow to finance net capital spending. This is the so-called ‘golden rule.’ The second – the ‘sustainable investment rule’ – is that, over the economic cycle, the ratio of net public sector debt to GDP should be set at a stable and prudent level, defined by the Chancellor as 40% of GDP.
The Chancellor has, of course, made great play of these rules. When announcing them to Parliament in June 1998, he claimed that they would go a long way to ending ‘once and for all’ boom and bust, a claim with which manufacturers and others might currently take issue. This would, in turn, he said, enhance stability and long-term investment in public services, thus enabling the country to achieve its potential.
The casual observer might therefore be left with the impression that these rules are rather powerful. In fact the gloss from the Treasury is such that Gordon Brown is often presented either as a modern day version of Gladstone or as the 21st Century reincarnation of Philip Snowden.
But the principles behind these rules are not new. They build on the approach taken by the Government’s Conservative predecessors. Ken Clarke’s Red Book in November 1996 stated: ‘Fiscal policy’s role is to maintain sound public finances. The Government’s fiscal objective is to bring the PSBR back towards balance over the medium term, and in particular to ensure that when the economy is on trend the public sector borrows no more than is required to finance its net capital spending’ (parag 2.09). Not only was the PSBR projected to fall to close to balance in 1999-2000, with a surplus thereafter, but net public sector debt was forecast to fall below 40 per cent of GDP in 2001-2.
The sustainable investment rule, which constrains public debt, has a particularly interesting pedigree. As early as 1976, Tim Congdon proposed, as part of a wider programme, a maximum ratio of public debt to GDP. He pointed out that a large deficit, which implied a rising ratio of debt to GDP, would result either in the crowding out of private sector investment or inflation. His analysis was incorporated into policy making in the 1980’s.
It is indeed gratifying that the present Chancellor has recognised the fact that an excessive budget deficit might risk excessive debt interest and, consequently, unnecessary taxation. But belated recognition is one thing. Fresh discovery is another. This approach did not start in 1997.
THE FLEXIBILITY OF THE RULES
Nor are these rules the all-encompassing ‘final word’ on fiscal policy that Government rhetoric would imply. The Institute of Fiscal Studies, for example, has said the rules are not ‘sacrosanct.’ It refers to them as ‘probably best regarded as sensible rules of thumb, but they are no more than that.’ I rather agree with this view.
At first sight, for example, there is some logic in terms of intergenerational fairness behind the golden rule. It seems equitable that each generation should pay fully for the spending that benefits them but should not have to pay for the spending that will benefit other generations. But even here, the rule is not perfect. Some spending that does not produce a durable physical asset nevertheless yields benefits to future generations – such as the defence spending during the last War, as Marc Robinson has pointed out in a paper for the IFS. Furthermore there may also be cases where future generations have to pick up the bill in a way that is acceptable under the golden rule – for example in respect of civil service pension liabilities.
But there are yet bigger problems when we look at the rules in more detail.
For example, the golden rule allows the ratio to be defined over the ‘economic cycle.’ This cycle is very difficult to define and as such gives the Chancellor considerable creative scope in assessing whether the rule has been met.
When I recently asked the Chancellor, in a written Parliamentary Question, for clarity on this matter, he referred me to the Red Book. This is what the relevant passage of the Red Book says:
‘Given the closeness of output to trend throughout 1997 to 1999,possible measurement errors and the prospect of further data revisions, it remains difficult to conclude for certain that the UK economy has completed a full, albeit short and shallow, economic cycle between the first half of 1997 and mid-1999. For the purposes of the Budget and the assessment of performance against the fiscal rules, the provisional judgement remains that a cycle may have been completed by mid-1999 when the current cycle is assumed to begin’ (Budget 2001, March 2001, para 2.36).
I am not sure that that makes it very much clearer what the Chancellor means but I hope you understand what I mean.
How is anyone supposed to hold the Chancellor to his test of the golden rule – supposedly cast iron, water-tight, a lynchpin of his entire approach – when it is so difficult to determine, at least until well after it has been completed, when the cycle to which it refers has started or ended?
And of course, the golden rule only constrains borrowing in relation to what is defined as current spending. This means that Governments can spend substantial amounts of money while keeping the golden rule. As the IFS have pointed out: `In the late 1960s and early 1970s, the golden rule was met. This was not because public sector net borrowing was particularly low, but because public investment at the time was high’ (Briefing Note, January 2001, p. 3).
OUR APPROACH TO THE RULES – SCRUTINY AND TRANSPARENCY
So what approach should an incoming Government take to these rules?
The Treasury has itself acknowledged that there is a balance to be struck between ‘a rigid mechanical approach and an approach based on unfettered discretion.’ I agree. And actually achieving this balance – ensuring that the rules are neither unachievable in a recession, nor so loose as to be meaningless – is, I agree, extremely difficult.
Two conclusions follow.
First, no Chancellor should seek to load greater authority onto the rules than they will bear. Gordon Brown’s attempt to dress up these rules as a return to some form of exceptionally rigorous Gladstonian fiscal orthodoxy is, I am afraid, wholly bogus.
Second, the rules need to be buttressed by other measures.
THE NEED FOR SCRUTINY
The best means of achieving this is through improved and more objective parliamentary scrutiny.
I have already proposed improved scrutiny of appointments to the Monetary Policy Committee. What scope is there for improving parliamentary scrutiny in the fiscal area?
One possibility would be to equip Parliament with an agency that could offer serious analysis of spending, borrowing and taxation in a manner comparable to that achieved by the Congressional Budget Office in the United States. It would mean that all the Treasury decisions could be authoritatively challenged by an objective agency accountable to Parliament.
Under the present arrangements, the National Audit Office and the Public Accounts Committee enable the legislature to scrutinise the previous actions of the Executive after the event. This work is exceptionally valuable, but Parliament should also be intellectually equipped and capable of properly challenging the Government as it develops its policies. And there is no more central area for this task than fiscal policy: spending, taxing and borrowing.
THE NEED FOR TRANSPARENCY
But for scrutiny to be effective a degree of transparency is necessary. Indeed, transparency is the first of the Government’s five principles. If this principle is to be achieved it must be possible for the facts on which debate is based to be capable of being established and, if possible, agreed. But one of the worrying developments since 1997 has been the increase in obfuscation from the Treasury. I am not talking here about the repeated reannouncements of spending proposals – those spinning Balls are easily caught.
I am talking about something much more insidious.
As the Financial Times has said: `Unfortunately, in many respects Mr Brown has reduced Budget transparency to a new low. Important tax changes have been omitted from the speech… Statistics have rarely been quoted on a consistent basis. The Budget documentation has been filled with political point-scoring rather than factual analysis. And there has been a continued tendency to classify the collection of revenue as anything other than taxation’ (2 March 2001).
Let us take a few of these points in turn.
We have become accustomed to the phenomenon of discovering after a Budget Statement that some very important measure has been buried in some obscure footnote. The extent of the £5 billion a year raid on people’s pension funds was not mentioned in the relevant Budget statement, with a reference instead to `a long needed reform’ (Gordon Brown, col. 306, HC Debs, 2 July 1997). When the Chancellor introduced the new 10p starting rate in his 1999 Budget he neglected to mention that he was abolishing the existing 20p rate. And nor was his stealth tax on entrepreneurs – IR35 – mentioned in his 1999 speech. Instead, he said: ‘I want to recruit, motivate and reward Britain’s risk-takers’ (Gordon Brown, col. 177, HC Debs, 9 March 1999).
Another example is the far too little known fact that the Government has deliberately excluded the impact of indirect taxes when illustrating the effects of Budget changes on specimen households.
The public accounts themselves are now more opaque and confusing than for many years. The Budget Red Book has been transformed from a coherent document that lucidly explained economic policy to a discursive document that confuses more than it informs. Meanwhile its length has risen from 160 pages when we left office to 225 pages last year. The Finance Bill likewise has risen from 219 pages to 292 pages.
It is little wonder that one of the most serious criticisms that can be levelled against the Chancellor is the increasing complexity of the tax system. The Institute of Chartered Accountants, for example, has said that the tax system has ‘spun out of democratic control’ because of complexity, the number of anomalies and the ‘culture of never-ending change.’
I know that the CPS is looking at this problem of the ever-increasing complexity of the tax system and I very much look forward to your conclusions.
Clearly this also has implications for two more of the principles which the Government has established for fiscal policy – efficiency and fairness.
Complexity in the tax system does not lend itself to meeting either meaning of the term `efficient’: the efficient allocation of resources in the economy or the narrow definition in terms of efficient tax collection. Indeed it is a startling fact that the number of Inland Revenue staff has risen from fewer than 50,000 in 1997 to 64,000 now.
One of the reasons behind this growing complexity is the tendency of the Chancellor to intervene in just about every area where intervention is possible. I accept that there is a proper place for the use of the tax system to encourage particular kinds of behaviour which are regarded as economically and socially desirable. But any such intervention should be used sparingly – both because any tax break for some effectively raises tax rates for others and also because this very process, unless it is firmly controlled, tends to constitute an impediment to transparency.
Yet as the Economist has said: ‘The signs are, in fact, that in microeconomic policy Mr Brown’s every instinct drives him towards complication and activism….. The Chancellor is meddling because he thinks he knows best…. The Chancellor appears to forget that fiscal complexity feeds on itself; that it creates anomalies that call forth new rules and complications’ (The Economist, 13 March 1999).
It is also clear that much of the opaqueness which has arisen in recent years is deliberate. The national accounts and public finances should in principle be presented on the basis of internationally agreed accounting conventions. That is why the Chancellor’s decision to score the Working Families Tax Credit as a credit that reduces income tax and the tax burden rather than for what it is, a social security benefit that increases public expenditure, is so reprehensible. His approach to this question is entirely inconsistent with the internally agreed accounting conventions. The Treasury Select Committee has also noted that, under accounting conventions employed by the ONS, the OECD and ESA95, `…WFTC counts as expenditure’ (report on Budget 2000, April 2000).
Even if the Chancellor’s preference to score the measure as a tax credit rather than a social security benefit were acceptable, he has chosen to treat the WFTC and the old Family Credit benefit, which it replaced, in different ways. In historical data presented by Gordon Brown, Family Credit is scored as a social security benefit and is not netted off against income tax. This of course is the opposite of what he has chosen to do with the Working Families Tax Credit. The result is a higher total tax burden before the introduction of the change and lower one afterwards despite the fact that there has been no change of any kind in the essential approach. That is not transparency, that is deliberate obfuscation.
Where statistics are not consistent Government documents should highlight this and explain the reason for it. This is particularly important where the Government is choosing to present numbers in a way that departs from the agreed international conventions. And where previously available information has been dropped, it should once again be made available and in an easily accessible form.
CODE FOR FISCAL RESPONSIBILITY
The Government has emphasised, in this context, the introduction of the Code for Fiscal Responsibility. Treasury advisers claim that the Code strengthens the openness, transparency and accountability of fiscal policy.
However, it is clear that the principles in the Code – the fiscal principles I listed earlier – are not being observed. The Code itself, although approved by Parliament and supported by the Finance Act 1998, does not have the force of statute.
We may need to look at ways to give effect to some of the rhetoric employed at the time of the Finance Act 1998 and ostensibly enshrined in the Code for Fiscal Responsibility.
I would welcome a public discussion on the lessons that we can learn from our experience since the legislation of 1998, together with the experience of scrutiny that is available for example under the New Zealand Fiscal Responsibility Act and elsewhere.
This would also help to meet the fifth principle of fiscal management: fairness. It is certainly a principle to which I would subscribe. But it is not a principle which is likely to be met under an opaque and complicated tax structure. And the Government’s general performance in this area leaves a great deal to be desired. The tax burden for the poorest fifth of households rose from 37% to 41% in the first three years of Labour Government – the latest figures which are available. That is hardly the record of a Government with an equitable tax policy.
SPENDING
The final point I wish to make about fiscal policy is, in many ways, one of the most important of all.
Both the fiscal rules of course relate to inputs into the public spending equation. Yet the most important issue is the outcome of that spending – its effectiveness.
The Chancellor in the foreword to the Treasury book states that there was a need for `better planned public spending’ in 1997, which focused on `the quality of public service provision’. Yet it is hardly credible to claim either that public spending over the last five years was in fact better planned, or that the quality of public service provision has improved as a result.
There does need to be a rigorous approach to assessing the effectiveness of decisions about public spending and investment. Of course the Government claims that such an approach is already taken. And there is, indeed, Treasury guidance, set out in the `Green Book’, covering the need for cost-benefit analysis of spending decisions.
Treasury advisers also highlight public service agreements as the means by which attention is focused on outcomes rather than inputs. Yet these have not achieved that goal, not least because many of the targets are not being met.
An IMF working paper last year looked at these issues. It stated that UK Government authorities implicitly recognised that the golden rule was about how investment is financed, not about the optimum level of that investment. The paper went on to say: `it is particularly important that the details of how a “value for money” criterion will be implemented are clearly set out. But that is not yet the case in the United Kingdom’. It said, in relation to the Government’s requirement that each department publish a Departmental Investment Strategy, that the first strategies (in March 1999) contained little relevant information other than to refer to existing (non-mandatory) guidelines on investment appraisal.
So it is clear that not enough attention is being given to this vital area, one which is often overlooked in discussion of the fiscal rules.
CONCLUSION
I have today focused on the framework for fiscal policy, and have set out some suggestions for how it might be strengthened.
The Chancellor’s fiscal rules have an important role to play, but their limitations need to be acknowledged. They need to be buttressed through the introduction of a degree of objective scrutiny and transparency into fiscal policy. There also needs to be a greater focus on the outcome of the spending – rather than just the amount which is spent.
I will be focusing in future speeches on non-fiscal aspects of the supply-side economy. But it is important at this stage to recognise that the combination of ever higher taxes along with ever worsening public services, a less transparent tax system and employment regulations that make the labour market less flexible will, in the medium-term, depress the economy’s growth rate.
Beneficial supply-side reforms take a long time before their full effects on an economy are evident. The impact of damaging policies on the supply-side is also only clear after a lag, and the lags involved can be protracted. It is because these lags are so long that we need a properly informed debate about these issues now. The public finances should be accurately and intelligibly presented. And the institutional arrangements for presenting and scrutinising the government’s fiscal polices need to be strengthened.
Measures of this kind will not guarantee halcyon economic performance forevermore. But they would represent a clear improvement on the arrangements that are presently in place. I hope they can form the basis of informed debate during the rest of this Parliament.
The speech made by Michael Howard on 17 May 2022.
Introduction
Creating the right climate for enterprise to flourish is one of the most important goals for any government.
When enterprise is undermined, it is the weakest and most vulnerable who stand to suffer the most. It is the most vulnerable who lose their jobs first when business has to lay people off to pay the latest tax. It is the most vulnerable who get left behind in pay, or in training, because companies have to spend their resources coping with another batch of red tape instead.
But a strong enterprise economy helps those in work and those looking for work. And it helps us to fund the public services on which patients, parents and passengers rely.
Yet that enterprise economy, on which our public services depend, is being undermined. While headline economic indicators have seemed favourable, there are worrying signs beneath the surface. Imbalances are developing in the economy. Problems are being stored up for the future.
It is the Government itself which must shoulder much of the blame for this.
Of course, not everything Labour have done is wrong. And where we agree with what they have done, as in the reforms which have taken place in the setting of interest rates, we will not be afraid to say so. Conservatives will not oppose for the sake of opposition.
Nor will we change things for the sake of change. We understand that it is not in the interests of business or anyone else for economic policy to lurch from one extreme to another, just for the sake of it, whenever a new government gets elected. Where continuity can be achieved it should be nurtured.
But we won’t be afraid to criticise Labour, either, in Westminster and in Holyrood, when we think criticism is justified.
Our criticism on the economy is not that Labour have destroyed it single-handedly, or that they have imposed 98 per cent tax rates as they did in the past, or that they are embarking on wholesale re-nationalization.
Our criticism is that Labour simply don’t understand how business works.
Criticism of Labour on Enterprise
The pace of change in the business world has never been faster than it is today. The prizes go to those who respond quickly and flexibly.
So creating the conditions for enterprise to flourish involves reducing the burdens on business. Which means governments getting out of the way. Interfering less. Limiting the burden of tax. Getting rid of unnecessary red tape. Above all, allowing business to do what it does best: win orders and create jobs.
And crucially, which firm wins the order and creates the jobs is decided at the margin. It is at the margin that the extra tax or new regulation can determine whether a company takes on an extra worker or lays one off – and, ultimately, whether that company succeeds or fails.
That is why each additional business tax and each new piece of red tape from Labour is so damaging. On its own each measure may not seem much. But taken together Labour have imposed £6 billion a year of extra business tax, and another £6 billion a year costs in red tape.
So for all the rhetoric about enterprise, the Government have been slowly undermining Britain’s enterprise culture. Month by month. Measure by measure. Step by step.
Budget: General Effect on Business
And the Budget which Gordon Brown announced last month was one such step. One more step in the undermining of Britain’s enterprise culture.
No Chancellor who understood the needs of business would have introduced that Budget.
Last year, Labour were elected on a Scottish Manifesto which said: `We must make Britain the best place to do business in Europe…. That means… the right competitive framework to support enterprise, small and large, manufacturing and services’.
Then, after that promise, in his very first Budget after that election Gordon Brown lumbers business with a £4 billion tax on jobs and another £1.1 billion in business taxes on top.
It is no good Labour talking the language of enterprise and business and then bringing in a Budget which will do as much to damage the future of enterprise and business as anything else they have done.
And the timing for Scotland – and for the UK as a whole – could not have been worse.
Just two days before the Budget, Strathclyde University’s Fraser of Allander Institute published the latest Scottish Chambers of Commerce Business Survey. It showed that the ‘prospects in manufacturing appear to be improving slowly, but there is still some way to go before growth returns’ (15 April 2002).
In fact, over the last year manufacturing output in the UK has fallen at its sharpest rate for a decade. But just at the time when manufacturing is struggling to emerge from recession, the Government’s reward is a new tax on jobs. This tax is not a tax on profits. It is not a tax on turnover. It is, quite simply, a tax on jobs. A tax which now gives every firm in the land a direct incentive to hire as few staff as possible – and for larger firms to shift employment abroad.
It is little wonder that the reaction from business has been so hostile. The Director of CBI Scotland said members were `very disappointed’ at the further burdens on business. The Deputy Director of the Scottish Chambers of Commerce said: `This increase in national insurance is likely to become an employment tax’.
Even before the Budget, CBI figures showed that, of our five trading partners, only one had higher taxes on business. Now the ability of British companies to compete in world markets will be further undermined.
Month by month. Measure by measure. Step by step. Undermining the enterprise culture in Britain.
Oil Tax and Scotland
And as one who represents a Scottish constituency, Gordon Brown of all people should have known the damage which another of his measures in particular will inflict.
Across the UK, almost 300,000 people work in the oil and gas industry. Many more depend on it for their livelihoods. In fact oil-industry-related employment accounts for around 6 per cent of the total workforce in Scotland, and a much higher proportion in North East Scotland.
The Government’s oil tax – the 10 per cent supplementary charge on profits – has been condemned by all in the industry, many of whom regard it as a fundamental breach of faith.
In fact only a year and a half ago the Chancellor said this: `It has been put to me that North sea oil companies earning higher profits from higher oil prices should be subject to special taxes, but… I am determined not to make short-term decisions based on short-term factors. The key issue is the level of long-term investment in the North sea. This will be the approach that will guide Budget decisions in future’ (Hansard, 8 Nov 2000, column 317).
So much for that pledge. So much for basing decisions on long-term perspectives rather than short-term factors. That is precisely what the Chancellor did not do with his oil tax.
Chancellors come and chancellors go. But investment decisions last for decades. A Chancellor on the look out for new taxes to fill a back hole in his finances should recognise that this decision will have an effect for years to come. The industry has warned that some new fields, on the margin, may not now proceed, and that the tax could deter long-term investment.
To remove an amount eventually totalling, on some estimates, £1 billion a year from the industry is bound to have an effect on investment decisions and on jobs, especially at a time of uncertainty in oil prices worldwide.
Not only that but, despite all the Government’s talk about the importance of consultation, there was no consultation with the oil companies at all.
Until a couple of years ago, Gordon Brown thought users of fuel were a soft target for his stealth taxes. He was proved wrong. Now he is trying to tax the producers as well. Once again he needs to be sent a clear message: hands off our fuel.
Other Taxes
The oil tax is not the only Labour tax rise to hit business in Scotland. The aggregates tax may have a disproportionately negative effect on the Scottish economy.
And it is as a result of Labour’s policies north of the border that Scottish businesses are now expected to pay nine per cent more in business rates than their English counterparts.
Public Services
The great tragedy is that none of these tax increases, whether from Edinburgh or from Westminster, is likely to lead to the real improvement in public services everyone – including business – wants to see.
Every year the Government promise us better public services in return for higher taxes. But every year we just get the higher taxes.
Now, as in previous years, the Government claims the extra money is for the NHS. Of course the NHS needs more resources. But it also needs change and modernization. And without both, the Government wont be any more successful this year in keeping its promises to improve the NHS than it was last year or the year before or the year before that. And, more importantly, patients won’t get the standard of health care which they are entitled to expect.
Anyone in England who doubts this just needs to ask the people of Scotland. Here, spending on health rose by 28 per cent ahead of inflation between 1996-7 and 2001-2. Yet the average waiting time for an outpatient appointment has risen by more than 25 per cent since September 1997.
What’s more, public sector employers across the UK – nurses, doctors, teachers, police and fire officers – will themselves bear much of the brunt of the rise in National Insurance Contributions.
This just goes to show the sheer absurdity of the Government’s position. First they refuse to change and reform the public services, so we will not see the improvements that we all want. Next they increase employee contribution rates for many of the very public sector workers that we are relying on to try to improve these services. And, finally, they hit the services themselves with a £1.2 billion tax bill, in the name of raising more resources for those very same services. The British people deserve better.
Regulations
Higher taxes are not the only ways in which the enterprise culture is being undermined. Last year 4,642 new regulations were introduced in the UK. Not only is that a record. It is an increase of nearly 50 per cent on the number introduced in 1997. That number includes 494 Scottish regulations – up from 203 in 1999, an increase of more than 140 per cent.
I defy anyone to claim that introducing 4,642 regulations in one year is justified. Whether or not a valid reason can be found for each one, the cumulative total is undermining the enterprise culture. Measure by measure. Month by month. Step by step.
Conclusion
And so the Conservative Party north and south of the border needs to put the case for enterprise. In doing so, our themes will often be the same. So are many of our opponents.
But the emerging success story for the Conservative Party in Scotland since devolution is how our shared Conservative themes and principles are being applied to the distinct circumstances of this nation. Our parties north and south are working together for success in the contests each of us face.
The most immediate Parliamentary contest comes next year. This Conference is an important spring board for the Scottish Parliamentary Elections. We are showing how we can apply our Conservative principles to the development of fresh and distinct policies.
Above all, this Conference is helping to demonstrate how Iain Duncan Smith is changing the Conservative Party, and we are getting back in touch with people’s priorities. That means providing better hospitals, better schools, better transport. It means extending a voice to the vulnerable, and opportunity to those who have been left behind. It means making a real and practical difference to the lives of everyone in our communities.
Your task and mine, and the task of everyone who speaks for our Party, is to show how we are getting back in touch with the people of Scotland and England alike.
So that north and south of the border we will have the opportunity to put our policies into effect. And to make a real difference to the lives of the people we serve.
The response by Michael Howard, the then Shadow Chancellor of the Exchequer, in the House of Commons on 9 June 2003.
“The time of indecision is over.” That was what the Chancellor said about the euro six years ago.
It’s time, he said, to “establish clear national purpose”, to show “economic leadership”, to “make . . . hard choices”.
“Divisions,” he said, led to “indecision” and policy that was “inconsistent and unclear”.
Today ministers are speaking with one voice. They are united in common purpose, with one objective only in mind: to paper over the cracks which have riven them apart over the last few weeks.
Is it not clear, from any objective reading of the evidence, including the 18 volumes we were given today, that joining the euro would damage our prosperity, destroy jobs and lead to an irreversible loss of control over our economic policy? That is certainly our view. And it is the view of the clear majority of the people of this country.
Today’s statement is not the result of any real assessment of Britain’s national economic interest. It’s a result of the frantic efforts by the Chancellor and the Prime Minister to cover up their differences. After all, that’s why the five tests were thought up in the first place.
Indeed, the Prime Minister was so determined that the Treasury view wouldn’t be decisive that he thought the unthinkable. He suddenly saw the merits of Cabinet decision-making. There’s a first time for everything. This Prime Minister will pay any price to do down his Chancellor.
There they sit: united in rivalry. Each determined to frustrate the other. Each determined to scheme against the other. Each determined to do the other down. So there’s no clarity in policy. There’s no consistency of purpose. And each of them is the loser.
The Chancellor is losing. The Prime Minister is losing. And much more importantly, the British people are losing.
The Government’s ability to deliver has broken down; on health, on education, and now on the euro. Blair goes one way, Brown goes the other way, and bang goes the Third Way, lost in conflict, compromise and confusion. No wonder so little under this Government ever gets done.
That’s the price we are all paying for the fault line at the heart of this Government. What a humiliation for the Chancellor! Wasn’t it the Chancellor of the Exchequer who briefed there was no reason for another assessment this Parliament?
What if the 1,738 pages of data we’ve been given today had shown that the tests have been passed? How on earth are we to know whether a similar assessment in two or five or ten years’ time would reach a similar conclusion? If the data changes in one direction, how can anyone know it won’t change back again?
If, at any particular moment in time, our growth rate or inflation rate or interest rates are at similar levels to those in the eurozone, how do we know whether that convergence is permanent? Might it not be because our economies were like ships passing in the night, coming together for a moment before moving off in different directions?
The Chancellor predicted that trade with the EU could grow by as much as 50 per cent over 30 years. Will he confirm that his own department’s reports conclude that improved levels of trade are totally dependent on sustained convergence that has not yet been achieved?
At the moment, we can choose to have the same interest rates as the eurozone when that suits our needs. But why on earth should we be forced to do so when it doesn’t suit our needs? Why on earth should we accept the straitjacket of a one-size-fits-all interest rate when it’s not the right rate for our economy?
Competitiveness would be lost. Growth would be hampered. Jobs would be put at risk. And that will be just as true at the time of next year’s Budget and in a year’s time as it is now. Other countries have discovered these truths the hard way.
This party has learnt its lesson from the experience of fixed exchange rates. But the Government has not — despite the fact that the present Chancellor was calling for “early entry” to the ERM nearly a year before we joined. Today the national economic interest took a back seat. As the Government dithers, uncertainty is maximised.
This is the Prime Minister who promised in Opposition not to be derailed by “internal bickering” on Europe. This is the Government whose election manifesto in 1997 pledged that Labour would make a hard-headed assessment of Britain’s economic interests, rather than be “riven by faction”.
This is the Government which promised to “prepare and decide”. But now it’s “not prepare and decide”. It’s not even “wait and see”. It’s just “hope and pray”.
Today they haven’t put off a referendum because they’re against joining the euro or because they think it will damage the national economic interest. They haven’t put off a referendum out of conviction. The only reason we are not having a referendum now is that they know they can’t win it.
Today’s statement comes from a divided Government, a Government on the run. This whole exercise has been an exercise in deceit. The deceit that they had the national economic interest at heart. The deceit that they wanted an objective assessment of what this country needs. The deceit that they were united. It is time for an end to the deceit. It is time for an end to the duplicity.
This is not the end of the beginning for this Government. It is the beginning of the end. And the sooner it ends, the better it will be for the national economic interest and for the British people.
The speech made by Michael Howard, the then Shadow Chancellor of the Exchequer, at the Conservative Party conference on 8 October 2003.
Introduction
I want to begin by thanking my team. Howard Flight, Stephen O’Brien and Mark Prisk in the Commons; Maurice Saatchi and Judith Wilcox in the Lords; Theresa Villiers in the European Parliament; and Mark Hoban, our Whip, have all worked hard to help me expose Gordon Brown’s mismanagement of our economy. I am very grateful to them all.
Of course if you listen to Labour ministers, things have never been more rosy.
And let’s give credit where credit’s due.
It’s true that, where they have stopped taking the decisions, like setting interest rates, the decisions have generally been the right ones.
But where they’ve taken the decisions, they’ve generally been wrong. And our job is to hold them to account.
Public Services
Let’s start with our public services.
In Bournemouth, Labour promised a new Jerusalem for our public services. Just give us more time, they said.
Yet in the very same week, a 72 year old pensioner won a court case against the Government because she had been forced by the length of waiting lists to have her operation abroad.
That is the reality behind the rhetoric.
Six and a half years. And still no delivery.
· 60 tax rises, but one in three children leaving primary school unable to read, write and count properly.
· 60 tax rises, but crime up by almost 800,000 in the last five years.
· 60 tax rises, but almost a million people on waiting lists, and 300,000 people without any health insurance having to pay for their
treatment every year – three times as many as when Labour took office.
Is it any wonder that Trade Secretary Patricia Hewitt said: `When we talked about delivery, that may have been something of a mistake’?
Yes – she did say it.
You see sometimes they do tell the truth – by accident.
As we have seen from the Hutton inquiry, this is a Government that only tells the truth by accident.
Is it any wonder that they’ve lost the trust of the people?
Tax Rises
Tony Blair told the British people he had `no plans to increase tax at all’.
Now, every year they say higher taxes are needed for better public services.
But every year we just get the higher taxes.
· 60 tax rises since 1997.
· 50 per cent more tax than we paid in 1997.
What does it actually mean for the people of our country?
It means:
· Higher taxes for families buying a home.
· Higher taxes on petrol for people driving to work or to school.
· Higher taxes on energy for industry trying to create wealth and jobs.
· Higher taxes on those taking out insurance, including pensioners taking out medical insurance.
· Higher taxes on IT entrepreneurs and on charities.
· Higher taxes for getting married.
· Higher taxes on jobs.
· Higher Council Taxes
Tax rises this year alone cost a typical family £568 a year.
Labour’s Council Tax rises are driving those people on fixed incomes like pensioners into real hardship. Labour talk about relieving poverty – the sad truth is they are creating poverty.
Is it any wonder that they’ve lost the trust of the people?
The fact is that people are fed up.
Fed up with endless tax rises.
Fed up with endless promises.
And fed up with failure to deliver.
Waste and Lack of Reform
And why is it that Labour are taxing and spending and failing?
The answer is simple.
They promised reform.
They’ve talked about reform.
But they have failed to deliver reform.
Without reform of our public services, the extra money Labour have spent just hasn’t made the difference.
That is the central failure of this Government. They have spent the money – taxpayers’ money – but they’ve not carried out the reform.
And here are some facts you won’t find in Labour speeches:
· More bureaucrats than beds in the NHS.
· A 22 per cent rise in health spending leading to a 2 per cent rise in treatments.
· And spending on running government departments up by £6.7 billion a year, nearly 50 per cent more than in 1997 – more than double the annual capital budget of every school in the country.
The cost of running the Treasury alone has doubled.
Gordon Brown
It can’t all have been spent on Gordon Brown’s campaign drinks parties.
Last Monday he delivered his campaign speech.
In one of his less coded sentences, he told the Labour Conference that ‘TB’ was `a curable disease’ – and that he was the cure.
By Wednesday he was looking much less hopeful.
In two days flat he went from the Incredible Hulk to the Incredible Sulk.
From Brown to green with Blair in between.
Further Tax Rises
Now. I want to be perfectly honest with you this afternoon.
There are splits on tax.
Peter Hain says Labour should put up taxes.
Gordon Brown and Tony Blair want him to shut up.
They all want to put up taxes. They just cant agree on whether they should admit it.
That’s the real split on tax.
And that’s what the media should be concentrating on.
Everybody knows that, under Labour, taxes will rise again.
Tax rises are at the heart of Labour. Old Labour. New Labour. Any Labour.
They have put up taxes.
They are putting up taxes.
And because of the failure to reform the public services, they will put up taxes for as long as they’re in power.
Liberal Democrats and Tax
Of course it’s not only Labour that wants higher taxes.
Anything Labour can do, the Liberal Democrats can do worse.
Let me tell you of the taxes they want to pile on.
· A regional income tax.
· New regional NI contributions.
· A new higher rate of income tax.
· VAT on new homes.
· A new Development Tax.
· New toll taxes.
· New parking taxes.
· An energy tax.
· A new capital gains tax on death.
I haven’t finished yet!
· A water tax.
· A higher Landfill Tax.
· More powers for the European Union to levy taxes.
· And last but not least they want a local income tax – meaning families with two people at work will see bills soar.
Of course they don’t spell all this out in their leaflets!
One Liberal Democrat activist was seen distributing a leaflet which said:
`Your local Liberal Democrats have succeeded in having speed humps removed from your street’.
An alert resident said to him:
`Hang on a minute. Weren’t you distributing a leaflet six months ago which said “Your local Liberal Democrats have succeeded in having speed humps installed in your street”?`
The Liberal Democrat looked round furtively to make sure no-one was listening and said:
`You know. You’re the very first person who’s noticed’
It’s an absolutely true story. The alert local resident is closely connected with our favourite newspaper – the Guardian. He’s in the hall this afternoon.
Pensioners
Taxpayers are not the only people counting the cost of Labour’s broken promises.
Gordon Brown’s pension tax has cost 12 million savers on average around £400 a year.
A typical pension saver now retires on just half of what he or she would have received five years ago. Yes. Half!
In opposition, Gordon Brown told the Labour Party Conference `I want the next Labour Government to achieve … the end of the means test for our elderly people’.
But almost 6 in 10 pensioners are subject to the means test as a direct result of the changes he has introduced.
In all up to 25 million people could soon be in households on means-tested benefits.
And that rise in means-testing sends out loud and clear this signal: the more you save, the less you’ll get.
In opposition, Labour said ‘Britain needs a `savings culture’.
But the amount people save has halved since Labour came to power.
Is it any wonder that Labour have lost the trust of the people?
Labour’s Broken Promises: the Economy
And what an example Gordon Brown is setting!
At the last election he said it was partly by cutting interest payments on government debt that he was able to fund health and education.
But just look at him now!
Two years ago he forecast borrowing at £30 billion. Last year his forecast went up to £72 billion. This year it went up to £118 billion – a fourfold increase in two years!
High taxes and falling real incomes mean that families are borrowing more too.
Taken together, families and Government are now borrowing more than 15 per cent of the nation’s income – the highest amount since records began.
Yet this is the Chancellor who said `you cannot build the New Jerusalem on a mountain of debt’.
This is the Chancellor who said productivity growth was a ‘fundamental yardstick of economic performance’.
But, Britain’s productivity growth has almost halved under Labour.
This is the Chancellor who described investment as the `key to future economic success’.
But business investment has suffered its biggest fall for almost a decade.
Is it any wonder that they’ve lost the trust of the people?
Roadshow
Now everyone knows that, since Sweden said no to the euro, British membership this side of an election is a dead duck.
But do you remember the roadshows Tony Blair promised, to sell the euro?
We haven’t seen much of those so we’ve been asking a few questions.
· Tony Blair told Parliament there had been 60 events.
· But Number Ten said none involved him. And none was planned.
· The Treasury said they were too many events to list. But they had all been low-key. There was no specific start date. And they couldn’t actually identify any of them.
· The Foreign Office said they hadn’t even started.
· Then finally the Minister for Europe said it was never meant to be a literal roadshow. That, he said, was just a figure of speech.
Just like all this Government’s promises. Never meant to be taken literally. Just figures of speech.
Lessons for Conservatives
But there are lessons for us in what has happened to Labour.
Lessons on how we should approach government. Lessons for us in opposition too. Lessons we’ve learned under Iain’s leadership.
He and I know we must only make promises we can keep.
Only pledge what we can deliver.
Let me make one thing clear.
We believe in low taxes.
We are the Party of low taxes.
All our instincts are for low taxes.
We know that under Labour, people and businesses have been hammered by higher taxes, and too much of their money is being wasted. We know that people have worked hard for their money, and that Governments must spend it wisely.
We can and we will reform public services. We will always be a lower tax government than Labour. And we do plan to cut taxes.
But unlike Labour’s, our plans will be carefully costed. And unlike Labour’s, they will be clear for all to see.
Their overhyped rhetoric and overblown promises, their `figures of speech’, are not for us. That is not our way.
Fair Deal
Under the Conservatives, as Iain has always insisted, a fair deal on tax and improving the public services will go hand in hand.
Because reforming and improving the public services is the only way to break Labour’s vicious circle of ever higher taxes and ever failing services. It is the key to everything we want to achieve. It has got to be done and we’ll do it.
People want to know there’s a real alternative to Labour’s policy of tax, and spend and fail – not just the Liberal Democrat alternative of tax more, spend more and fail more.
And that’s what the work we’ve done under Iain’s leadership has been about.
A new asylum policy. That would pay for 5,000 more police officers every year.
Increasing pensions in line with earnings. And showing how we would pay for it.
Saving children from being trapped in failing schools.
And giving NHS patients a passport to choose their hospital inside or outside the NHS so that waiting times can be cut for all.
That’s our alternative to tax and spend and fail.
We will give power to the people.
Conclusion
We’re here to make people’s lives better. We’re here to help people fulfil their potential and remove the obstacles holding them back.
We’re here to put principles back into politics.
We won’t do it through flashy smiles or empty promises.
We’ll do it by telling the people the truth. What we’re going to do. How much it will cost.
And by the commitment, the drive and the determination to put these ideals into practice.
Under Iain’s leadership that exactly what we are doing. We are focusing on the things that matter to people. We are winning the arguments over policy.
This next election will be the most exciting for a generation. For the first time in fifty years the people of our country will have a real choice about how our public services are to be delivered.
They can opt for the old failing system or they can choose a newer way which will respond to their needs, which will achieve their aspirations, which will truly improve their lives.
It’s a heavy responsibility. We must show our country that there is an alternative to this deceitful, dishonest, and discredited government.
There is a better way.
We must show that we can save our country from this deceitful, dishonest and discredited government.
We must not be found wanting.
Because my friends, for Britain, for this country we love, nothing but the best will ever do.
The speech made by Michael Howard to launch his leadership campaign at the Saatchi Gallery in London on 31 October 2003.
I am announcing today that I am a candidate for the leadership of the Conservative Party.
I pay tribute first of all to Iain Duncan Smith, to his courage, to his dignity, to his decency and to what he has achieved for us in the last two years.
At its best, we are a party broad and generous -broad in appeal and generous in outlook -a party capable of representing all Britain and all Britons. I will lead this party from its centre. I will call on the talents of all in the party and the party will expect all to answer that call.
We will offer a new kind of politics, for people today view conventional party politics with contempt. We won’t hesitate to give credit to the Government when it gets things right. We won’t oppose for opposition’s sake. People want better than that.
We will expose the Government’s failures not with gleeful pleasure at seeing them fail, but because we passionately want things to be better for our fellow citizens.
We will never place our electoral self-interest before the good of the country. No narrow partisan opportunism for us. I will always tell the truth. I will say it as I see it.
Most of you know that I’m a lawyer. But I won’t argue a lawyer’s case. If something is true but tough, I won’t shrink from saying it. If something can’t be done, I will level with the public.
Rigorous honesty, measured criticism, realistic alternatives. Only that way can we revive people’s trust in politics.
We must look forward not back. Many people have forgotten that in 1979 we won more support among younger people than in the electorate overall. But we didn’t do that by pandering to youth or by trying to be hip or cool, but by showing that we understand how younger people aspire to live their lives, by depicting a Britain of the future where people would have more freedom, more power to do good things for themselves, for their families, for their communities, for their neighbourhoods -a vision of Britain in tune with people’s aspirations.
Today, we know that there are pockets of desperate poverty in our cities, whole communities left behind by decades of failure. No party that aspires to govern a great nation can ignore them. Modern Britain must be a country where those now left behind can rebuild communities rich in opportunity, self-respect and mutual support.
Many of our great provincial cities are Conservative deserts today. It’s my mission to change that. There can be no no-go areas for a modern Conservative Party.
I was lucky. My parents weren’t rich, but I had the chance to go to a good grammar school. Britain offered me a ladder to climb and put the first rung within my reach.
We won’t be afraid to make the case for lower taxes. You don’t just have a stronger economy, you have a more cohesive society when people pay less tax. They do more not just for themselves but for each other and for their communities…
But we will be responsible. Not for us reckless pledges that mortgage Britain’s future. We need to repair Britain’s mortgaged public finances and to respond to the crying need for urgent reform of our public services.
We’ve begun to unveil the policies. Trust the people. That means trusting parents, trusting patients and trusting families, and trusting professionals, doctors, nurses, police officers. Giving choice to all, not just to those who can afford to buy it.
And unleashing the creative powers of innovation to reinvigorate our public services in the next decade, just as we did for business 20 years ago.
Our party will be internationalist in outlook. My parents were immigrants. They saw Britain as a beacon in a dark and threatening world.
Conservative Britain will never flinch from confident engagement with the wider world. We know that while our obligations begin within our shores, they don’t end there. We must look confidently outwards.
If we have concerns about the direction of the European Union, it’s not because we are little Englanders or because we hark back to some bygone Golden Age. It’s because we see it as too intrusive, too rigid for the fast-flowing networks of the era of globalisation.
I wasn’t born into the Conservative Party. I chose it. I chose it because I thought, as I still do, that it offers Britain its brightest future.
I’ve been in Parliament for 20 years now. I think I’ve learnt a bit in that time.
I’ve learnt that if we want to persuade people, we need to preach a bit less and listen a bit more. I’ve learnt that just winning an argument doesn’t on its own win hearts and minds. I’ve learnt that politicians won’t be respected by the public unless they respect each other and that people won’t trust us unless we trust them.
There may be no more than 18 months before the next general election.
We’ve come some way in the last two years. We’ve talented candidates that show us capable of representing today’s Britain in all its splendid diversity.
We’ve begun to renew our policies. But we are still only in the foothills of our ascent. The hard climb still lies ahead. We will need stamina and comradeship. We will need to show respect for each other as well as for our opponents.
In the contemporary Conservative Party that we forge there will be no place for ancient feuds or rankling discords. We will build afresh, knowing that we have no God-given right to hold our place.
Britain deserves better than it has today. It is our destiny to provide it. We must prove that we are equal to that challenge.
The speech made by Michael Howard, the new Leader of the Opposition, on 6 November 2003.
Who was it who said a week is a long time in politics?
This has been a bruising period for the party. Some hard things have been said on all sides. It has obviously been hardest on Iain. All of us here will want to thank him for what he has done, in what I am about to discover is the toughest job in politics.
But now it’s time to move on. To look ahead not back.
And I want to begin by thanking you all for the confidence you have placed in me. It is an immense privilege to lead this Party – the most successful party in the history of modern democracy. But it is also a truly awesome responsibility.
I will work tirelessly not to let you down. But I will make mistakes. And I will inevitably at times upset some of you.
And when that happens – indeed even when it does not happen – there are things we will need to remember. That we are a party broad and generous; broad in appeal and generous in outlook.
We are here to serve – the syllable at the heart of our name, and at the heart of our purpose.
We are here to work – because all of us have been sent here to safeguard our constituents and our country.
And we are here to win. Because if we don’t win we cannot put into practice the things we believe in for the good of our country. If we don’t win we can achieve nothing – and we will be letting so many people down.
And if we are to win we must work together as a team. We must rediscover the habit of thinking the best of each other. We must rediscover the virtues of mutual support and friendship.
Let us, in this party that vaunts its belief in personal responsibility, each resolve that we will, all of us, assume a personal responsibility for the success of our endeavour. No bystanders. No snipers from the sidelines. Every one of us a fully engaged participant in the great battle of hearts and minds and ideas.
Because we have an extraordinary common thread that binds us all together. We all want to see a Conservative Government elected. We are all crew on what at its best is the most superb campaigning vessel politics has ever known.
I said last week that we are all trustees of this party. It doesn’t belong to any of us. We have taken it in trust from those who went before; we are obliged to pass it on in better repair than we found it.
This afternoon I am making a speech in one of our key marginal seats, Putney. I will set out a little further the direction that I propose we should take. You won’t find a huge amount of policy detail. It’s about the over-arching ideas, the arguments, the principles that will inform everything that we do.
We have an enormous opportunity.
People really have begun to see through Labour. Their trust ratings are way down. Their support levels are down. Tony Blair’s own personal ratings are in tatters. Britain is not working properly.
Our challenge is to build up ourselves as a credible and appealing alternative government. And we can do it. We already have a platform of exciting new policies on which to build.
We really can do it. Of course it will be tough, uphill work. The hard slog’s only just beginning. As I said last week, we will need stamina and comradeship, and total commitment. Whether we win lies with us.
We can’t depend on Labour failure, nor with economic downturns, nor any other brigade of the US Cavalry riding to our aid.
But if we are to succeed every Conservative must ask themselves each morning “What can I do today to persuade the people of this country that we can serve them more effectively than this failing and discredited government”.
It is sometimes said that oppositions don’t win elections, Governments lose them. Well yes up to a point. But Oppositions can lose them too. Our high and heavy duty is to ensure that as disillusion with Labour turns to dismay, we are there as the next Government: firm of purpose, clear of mind, united in our common goal. Our destiny, and therefore the destiny of our country, lies in our own hands. Let’s work together to seize it.
The speech made by Michael Howard, the then new Leader of the Opposition, at Alton Parish Hall, Roehampton on 6 November 2003.
A week ago I set out why I was seeking the leadership of the Conservative Party. Today, with a speed and degree of consensus that has confounded the pundits and astonished me, I am excited, if daunted, to find that it has happened.
I wanted my first public statement as Leader to be away from Westminster, here in Putney, on an estate in a constituency where Conservatives must start to win again. And surrounded by those who as candidates will be in the front line of our campaign.
I said I would lead this party from its centre. A party that is uniting around its central principles. Our task is to put these principles to the service of 21st century Britain.
I also said that we would offer a different kind of politics. Something better. Rigorous honesty, measured criticism and realistic alternatives.
A different kind of politics does not mean that there are no longer any differences. Labour’s preferences are still for state control and central diktat. Faced with a problem they are still programmed to tax and regulate their way out of it. Our approach is based on different solutions, on what people themselves can do in their own communities and families. People are already disillusioned with Labour’s approach. They see the inadequacies of Labour’s delivery; and above all they see that Labour continually present public service failure as success. The only result is a growing cynicism about the whole political process, from which we suffer as much as they do.
Our task is to be once again a credible and appealing alternative government. 21st century Conservatives must show they understand 21st century Britain. Of course a great and historic party has a strong feeling for Britain’s history. We feel no need to reject Britain’s past. We are proud of it. We know that Britain’s future has to be built on what is already there.
But we have to look forward, not back. We must understand how Britain has changed in the last twenty years. And that means we have to be respectful of decisions people make about how to live their lives.
I want us to be a party for all Britain and all Britons. Conservatives know that most of what we do is done together – with others, whether in the family, at work, sports, clubs, church. A living thriving community is one where people come together to make things happen. They don’t assume that everything is someone else’s responsibility. Self-help, mutual support, neighbourliness in action.
In Britain today, people are making choices all the time in their daily lives. We live in a free and sophisticated society, in which every day people make myriads of decisions which determine the quality of their lives. They want the opportunity to do the best for themselves and their families. Parents know their own children best, better than any bureaucrat. So parents should have more say and more choice over their children’s education. And greater choice in health care.
And people work hard for the money they earn. They want to keep more of it, to save more, to support better their families and communities.
People want a sense of security. They want to know they can get the health care they need. To feel secure in retirement. To be safe in their homes, and on their streets.
And they want fairness. No one should be over-powerful. Not trade unions. Not corporations. Not the government. Not the European Union. Wherever we see bullying by the over-mighty, we will oppose it, and stand up for people’s rights and freedoms.
There is a growing consensus today that our public services are inadequate.
Let me be clear about what I mean. There are many thousands of talented and dedicated people working in our schools, hospitals and other services. They strive to provide excellence – and often they deliver it.
But the quality of the services used by most people no longer matches our greatly increased expectations.
This is emphatically not the fault of those working on the front line. On the contrary, they are as much the victims of the system as the patients, pupils, parents and passengers.
It is the system of central control that needs changing. For too long, politicians have preferred to offer false assurance and increased expenditure as a substitute for serious thought and action.
I’m quite sure that Tony Blair and some of the people around him now realise that things cannot go on as before.
But he knows that the Labour Party will never accept the reforms needed to build first class public services. For too many of his MPs words like ‘choice’ and ‘competition’ are as welcome as a clove of garlic to Dracula.
Indeed it is an exquisite irony that the Prime Minister who railed against ‘the forces of conservatism’ now finds himself at the head of the forces of reaction.
We are different. We are passionately committed to the transformation of our schools, hospitals, transport and policing.
The modern Conservative approach for modern Britain is to trust people. Trust the users of services to make choices. Not to patronise them by assuming they’re not capable of it. Give people choice and people will generally make good choices.
And trusting those who deliver services to know how best to do it. We’ll cut the fly-by-wire controls that lead straight back to a dashboard in Whitehall. We want the police to be answerable directly to the residents they serve, not to remote target-setters and bean-counters in London SW1.
Central control stifles initiative and innovation. If people don’t have the freedom to make mistakes then they will never have the space to make the huge step changes that fuel human progress.
For as long as I’ve been in politics Labour have claimed that Conservatives would destroy public services. The scare stories flow off the word-processors as if hard-wired into the system. Even Mr Blair’s half-hearted reforms have been condemned as vandalism by trade union reactionaries. And no doubt the same Mr Blair will use the same language to denounce us at the next election.
I don’t think people will be swayed this time. Because the ideas we put forward won’t come out of thin air. They have been tried and tested in other advanced democracies – and have worked.
Britain has the fourth largest economy in the world. We are a first class country with second-class public services. It isn’t good enough, and it’s our challenge to put it right.
But the election won’t only be about public services. It will also be about tax.
Tony Blair said he wouldn’t raise taxes. But he’s presided over sixty tax rises.
We’ll do something different. We won’t promise tax cuts unless they are backed by rock solid savings in wasteful spending. Nor will we play ducks and drakes with Britain’s precarious public finances. Not for us the spend today, pay tomorrow approach into which Labour are now falling.
We will be responsible custodians of the public finances. The next Conservative Government will be a reforming administration. Our priority will be to shape our public services to meet the legitimate expectations of the British people.
Some will say: ‘Why can you not do that AND deliver tax cuts?’
To them I say this: when the public services have been reformed the money will certainly go further. And yes, we would like to cut taxes. I hope we can.
And we will make the case for low taxes. You don’t just have a stronger economy; you have a more cohesive society when people pay less tax. They do more not just for themselves but for each other and for their communities. But we will be responsible.
My approach is a simple one: Promise less, deliver more.
I said last week that a Conservative Party that aspires to lead a great nation cannot ignore the pockets of desperate poverty that disfigure modern Britain. I meant it. The poverty that traps generations is concentrated in inner city neighbourhoods where communities have been failing for a generation or more.
So often these failing communities suffer from very high levels of crime, failing schools, poor quality housing, poor health. Breaking the cycle of failure requires concerted action and strong new local leadership with the power to force through change. I don’t claim for a second that we have all the answers yet. But our policies to enlarge choice and opportunity point the way forward.
It’s not just in terms of geography that we will not accept no-go areas. On policy too we insist on our duty to talk frankly and directly to the voters.
We aren’t going to duck any of the problems that face Britain. No retreat into blandness. No turning the other way.
I am proud of Britain’s history as a safe haven for refugees over the centuries. People have always wanted to come to Britain, as my own family did.
But like every other country, we know that immigration has to be strictly controlled. We have a choice. We either create an orderly system in which those who are entitled to come here are admitted, or we can persist with the chaos of the status quo.
And let no one argue that the current muddle is in any way humane. It is not humane to allow desperate deprived people from the third world to believe that they will be able freely and lawfully to enter Britain, making them prey to the human traffickers who exploit them. It is no kindness to genuine refugees to keep them waiting sometimes for years before their cases are resolved.
I said last week that I had learned quite a bit in my time in politics. I’m probably a bit more mellow than I was. I’ve had more time in recent years to see and enjoy this amazing country of ours; to meet lots of people. I’ve learned quite a lot more about Britain and its people. And I’m constantly inspired by their qualities. Generosity. Respect. Humour. Ingenuity. And sheer enjoyment of life.
Every one of us can do the most astonishing things. But only if we get the chance. If we have the space, the freedom, the education, the good health, the opportunity, to do great things, great things will be done. There is no higher privilege I can imagine than to be entrusted with the government of this country.
It will not be easy to win that trust. The Conservative Party will have to show day by day through what we say and what we do that we are fit to govern. When the day of decision arrives, if we have earned it, we will be called to serve. We must be ready to answer that call.
The speech made by Michael Howard, the Leader of the Opposition, at the Charities Aid Foundation annual conference on 13 November 2003.
First, may I thank you for inviting me to speak at your Conference today. You invited me to address you as Shadow Chancellor. But I am delighted to do so in my new role as Leader of the Opposition. It is, in fact, the first major speech I have delivered since my acceptance speech. That I should do so at a Conference with the theme `Mission Tough, but not Impossible’ seems to me to be rather apt.
Indeed, the qualities which your Conference publicity says are required for getting your job done – namely ingenuity, creativity and resourcefulness – are qualities which any Opposition requires too.
We have much to learn from you. Ingenuity, creativity and resourcefulness have characterised the work of the Charities Aid Foundation throughout its entire history – and, indeed, have characterised the charitable sector as a whole. And the discussions you are having over the course of this Conference, together with the exhibition and Cyber Café, demonstrate these qualities in abundance.
Responsibility
At the heart of what I have to say lies the concept of responsibility: the responsibility that people have towards their neighbours; and the role of government in facilitating and fostering that sense of responsibility.
It is important for politicians to keep sight of both these aspects of responsibility. Government can never supplant the responsibility that people themselves have for each other – as families, as local communities, as a society, and as fellow human beings. I do not accept that personal responsibility can somehow be `nationalised’ or handed over wholesale to the State. But I also do of course accept that there is a proper role for government.
The Conservative Approach
My party has a long and proud record. Social housing provides a good example. Disraeli’s path-breaking legislation in the 1870’s was the start. In the 1920’s and 1930’s Conservative ministers laid the foundations for what later became modern council housing and in the 1960’s it was Keith Joseph as Housing Minister who recognised the potential of housing associations.
Modern social services departments are largely the product of Conservative legislation. The landmark event was the decision by Keith Joseph and Ted Heath to go ahead with Lord Seebohm’s recommendation to set up local authority social services departments. And most of the important legislation that underpins the work of a modern social services department was passed by recent Conservative governments. As a result of the 1989 Children’s Act, we have one of the most coherent and sophisticated legislative frameworks setting out the principles for children’s policy in the world.
The 1990 National Health Service and Community Care Act was an important step in making care in the community a practical reality for people who wanted to choose it and it ended the perverse set of incentives that sometimes obliged people to accept care in circumstances where they had no real choice.
The 1990 Community Care Act directly led to the position where we now have a genuine mixed economy in the provision of social care. The public sector, through local authorities, still directly provides and organises social services itself, but local authority social services departments also fund other organisations like voluntary organisations and charities which directly provide care.
Today many social services departments spend over 50 per cent of their budgets in the independent and voluntary sectors.
There are many occasions where the voluntary sector can provide services in a new and imaginative way or in a way that is more flexible and provides the users of the service with greater choice. These developments in social services illustrate that there will often be occasions when the state should step aside from directly providing the service itself and fund other people like voluntary organisations to do so instead.
Getting the Economy Right
That role of government is many-faceted.
Too often politicians compartmentalise their policies. Much of what I have to say will, indeed, relate specifically to charities and how government can help them – or, at the very least, not set obstacles in their path.
But there are wider responsibilities too. Governments must help to create the economic climate in which people are encouraged to show responsibility for others. That means a climate in which taxes are kept low and enterprise is encouraged.
The promotional literature for this Conference notes right at the start that high consumer debt and economic uncertainty have hit those in the charitable sector, `dependent as they are’, it says `on the surplus cash of their supporters’. It is true that when real net disposable earnings are falling, as they have been doing as a result of the tax rises which came in last April, people will be less able to donate money to the voluntary sector. And people will feel similarly constrained if they are concerned about their future financial security, as a result of the record combined levels of consumer and government debt which now exist.
There are some ironies here. Governments which seek to create an enterprise climate, to keep taxes down, to limit the role of the state, are sometimes accused of fostering selfishness. You will not be surprised to hear that I do not accept that. It is no coincidence that charitable giving is often highest in countries – such as the United States – which have adopted the free enterprise model.
But, while an enterprise economy may assist in the fostering of a responsible society, this is by no means the limit of the government’s role.
Other Government Responsibilities
Governments themselves have direct responsibility for the alleviation of need and for the funding, and in some cases provision, of important services. Of course the last six and a half years have shown that merely levying ever higher taxes is rarely if ever the best way to fulfil that responsibility. While taxes have risen, expectations have been disappointed. We believe that reform is required – of public services and of welfare.
These government responsibilities will not always involve the not-for-profit sector. But sometimes they will. And this brings me to the government responsibility I want to focus on today: the responsibility to protect and promote a vibrant voluntary sector.
The Importance of the Voluntary Sector
Why is this important?
One reason is a practical one. Quite simply, there are some things that charities can do better. They are often more responsive, more flexible, and more innovative than the state sector, as a result of being less rigid and less bureaucratic.
There are also philosophical reasons. Voluntary activity is a vital channel through which people can show responsibility for others in society – whether those next door or those at the other side of the world. That is a healthy thing in itself. A thriving voluntary sector, by virtue of the very fact that it is voluntary, is a sign of society in which people are willing to show that responsibility.
60 Million Citizens
I believe Government can encourage the voluntary sector in two principal ways.
First, it can encourage people to be responsible for others through voluntary activity, by donating their time or their energy or their money to voluntary organisations.
Second, it can give voluntary organisations themselves more freedom, and more opportunity, to serve the communities they were established to serve.
Some policies to back these principles up are set out in our Green Paper, Sixty Million Citizens, which was published earlier this year.
The central idea behind the paper is the need to ‘unlock Britain’s social capital’. That is not referring to the state or to the apparatus of government, but to people giving of their own time, energy, money – and allowing them more say over the resources they already provide.
Here I want to pay a tribute to the work of Iain Duncan Smith. He recognised the importance of the voluntary sector in Britain, and of policies to promote the voluntary sector to the Conservative Party. It is my intention that such policies will become a core component of our programme for government.
The Green Paper sets out a range of proposals. These do not yet represent official Party policy. We have been consulting on them and considering the best ways to take them forward. This work will continue.
Today I want to outline some of these proposals.
They include the establishment of a new Office of Civil Society, championed by a Cabinet minister. We want to ensure that the voluntary sector is no longer under-represented and overlooked when important policy initiatives are being developed.
And they include specific suggestions under the two broad themes I have set out: encouraging people to be more responsible through voluntary activity; and freeing voluntary organisations themselves to get on with the work they were established to do.
Encouraging Individual Responsibility
The work of the Charities Aid Foundation in showing people and business how they can give tax-effectively is invaluable. You have pioneered ideas such as the Charity Account. But the fact that only about one third of individual giving is tax efficient is a sign that there may be room for government action too.
First we have been looking at the costs and mechanics of tax relief on spontaneous giving, in recognition of the generous work of those who collect money through, for example, collection boxes.
The Green Paper also proposes that people in receipt of universal benefits – such as the state pension or child benefit – should be given the option of donating these benefits to charity.
The idea of government-matched funding, focused on endowments for poorer areas, would also encourage other charitable or private forms of giving.
But people don’t just donate money. We want to support those who donate their time to voluntary causes too. As in the case of voluntary activity as a whole, volunteering should be encouraged both for its practical usefulness and for its inherent value as a core component of a responsible society.
So the Green Paper proposes the creation of a volunteer bounty for every volunteer or mentor signed up to tackle certain social challenges and who becomes part of an accredited training programme.
The Voluntary Sector
Those are some of the ways in which a Conservative Government would encourage people to be more responsible for others. But that is not all we need to do. Voluntary organisations themselves need to be given greater opportunity to serve the communities they want to serve.
That means a better legal structure. We have pressed the Government to make room for a Charity Law Bill in its legislative timetable.
Sometimes what is required is just for government to get out of the way – or, at least, to make the bureaucracy of government as straightforward as possible.
We want to see less red tape in the grant-making process, and have suggested a single application form across government departments and less bureaucracy for those organisations which belong to approved voluntary sector umbrella groups. And more fundamentally there is room for a greater emphasis on the results which organisations achieve rather than the precise means by which they do so.
Of course where public funds are involved there are bound to be conditions attached. That is perfectly legitimate – and proper. But we do not want to see an over-zealous interpretation of those rules. Because risk aversion comes with no cost to the officials involved, there is an inbuilt tendency in Whitehall to implement legislation more rigidly than the legislators intended.
Voluntary organisations need someone there to put the other case. Our suggestion of “Bureaucracy Busters” has this in mind. They would have the authority to curb over-zealous application and interpretation of regulations, and the powers to require fast communication and decision-making across government departments. They would also report back on those regulations which could be eliminated.
After all, too much red tape from the centre risks negating some of the very attributes which make the voluntary sector so valuable in the first place. We have seen how the Government’s rigid and centralised target culture is suffocating innovation and local discretion in the public services. The last thing we want is to see it suffocate these values in the voluntary sector too.
There are of course plenty of other ways in which voluntary sector organisations can be encouraged by government.
For example an unfair competition test would protect not-for-profit organisations from being usurped by handsomely-funded government initiatives.
We want fairer treatment for faith-based organisations.
And, more radically, we have suggested a right for community organisations or entrepreneurs first to manage and then to assume ownership of under-used public sector assets such as community halls, parks or vacant land, subject to necessary safeguards. Such Community Asset Trusts could then apply to manage and deliver other local public services.
Indeed, our wider reforms to the public sector, in which more funding will follow the users of the service rather than the providers, will also open new opportunities for the voluntary sector. If voluntary organisations are able to provide services which people prefer to those provided under existing structures, then increasingly they will be able to do so.
Protecting Charities from Government
So these are all ways in which we see government helping the voluntary sector.
But I know that a note of caution is needed. I have already alluded to the fact that too much attention from government can put at risk the very qualities which make the voluntary sector unique – diversity, innovation, flexibility.
Such attention may well be well-meant. But being smothered by an elephant is no less painful if there is no deliberate malice involved.
We must seek to ensure that such smothering does not occur.
In some cases, where government has a specific end in mind, it may well be that voluntary organisations will adapt to meet that end, if given the chance, more effectively than statutory organisations would do so. But we do not want to see an unintended diversion of activity away from those areas where the voluntary sector itself has identified need. We want to encourage – not discourage – social entrepreneurs to find new ways to meet those needs.
Our Green Paper proposes mechanisms to avoid, for example, the problem of `mission creep’ – the diversion of promising community enterprises from their start-up goals and activities. This is made worse by the government’s habit of changing its own mission priorities. Instead, a new system of ‘Mission Reward’ would reverse this ‘mission creep’ and direct the flow of public money and assets to social enterprises that are successfully delivering sustainable community renewal.
Under our proposals, proven successes would win an escalating series of presumptive rights to public funding, control of public assets, and the opportunity to improve delivery of publicly-funding local services.
Conclusion
These are all fresh and innovative ideas which I hope you will find appealing.
But I appreciate that some voluntary organisations will find some of the ideas more appealing than others. All, I imagine, will be keen to embrace our offer of less red tape and less interference. But some, precisely because you value your independence from government, will be less keen to enter into new partnerships for the delivery of services.
And my message is this: our invitation will be just that – an invitation. We will not feel offended if some turn it down! Many in the not-for-profit sector will feel their priorities and ethos would inevitably be compromised in any such partnership with government. And they will continue to fulfil a role which is just as valuable. A thriving voluntary sector, in all its diversity, is an end in itself. It is the very embodiment of the responsible society which Conservatives wish to see.
So I hope that what I have outlined today is a distinctly Conservative agenda. I believe it goes with the flow of the sector in which you work.
It is an agenda based on the concepts of freedom and opportunity. These are often challenging concepts. But they are essential if we are truly to create a society in which people are able to be more responsible for each other. And at a time when people and voluntary organisations alike are looking for less of a stranglehold from the state, they are concepts whose time has come.