Tag: Speeches

The speech made by Gordon Brown, the then Chancellor of the Exchequer, in Manchester on 2 February 2005.

It is a pleasure to be here in Manchester today.

The economic heartland of our country. Once remembered most for its role in the industrial revolution, now the largest and fastest growing city outside London. Home to six higher education institutions and 90,000 students. Leading in high-quality research with specialist facilities like the Daresbury laboratory.

And I want to congratulate Manchester on becoming one of our first science cities nurturing world-beating businesses in hi-tech sectors from biotechnology and pharmaceuticals to digital electronics.

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

And I want to start this morning by welcoming our distinguished international visitors to Britain and by congratulating all the participants here:

councillors

local authorities

regional development agencies

town planners

academics

community groups

companies

specialists in every field and from every continent

on the huge advances that have been made in our understanding of, and action on, what makes for quality of life in our communities: advances in the study and practice of geography, planning, the built environment, the role of cities in regions and – my theme today – understanding of the economic and social forces at work in poorer communities.

And I want to thank you for the work you do, the service you give and contribution you make.

The fact that you have all come together today; that you are focusing on the role of regional development agencies, local government, local communities; that you are discussing how working together we can transform communities into sustainable communities; is a reflection of how both economic policy and how regional and urban policy are being transformed – and you might say humanised – and it is this I want to talk about today.

I think most of you would agree that 50, 20 or even 10 years ago the idea that the Treasury would be interested in issues like public space, the design quality of public procurement, environmental standards, devolution, regionalism and social exclusion would be almost unthinkable.

But we know that not only are these questions vital to successful, economically vibrant communities but they are at the heart of the agenda for social and economic progress.

The goals we seek should be high and stable levels of growth employment and sustainable development.

So I now believe that Finance Ministers faced with the challenge of environmental degradation and the need for sustainable communities have to ensure that economic, social and environmental policies are better in balance than ever before.

But there has been a second major change that Finance Ministers have had to recognise – and it goes to the heart of what you have been discussing in each of your sessions yesterday.

The old idea in regional economic policy was of help directed from the centre.

Think of Britain’s first generation of regional policy, before the war: essentially ambulance work getting help to high unemployment areas – central government providing first aid.

And then the second generation in the 1960s and 1970s was based on large capital and tax incentives delivered by the then Department of Industry and then overseen by Brussels.

When you think back the policies of the 1930s were just about first aid – to paper over the cracks of mass unemployment – and there was little that was comprehensive or organised about the planning behind them.

When a Labour Prime Minister stood up in the House of Commons to explain why four areas of the country had received first aid when faced with unemployment and this region – the north-west – with similar levels of unemployment had been refused he replied: ‘there is no logic in the conduct of human affairs’. At best it was rescue not regeneration.

And so we moved to that second era of regional and industrial policy – all advanced industrial economies trying to attract as much major company mobile investment as possible.

But as with first aid and ambulance help for the depressed areas in the 1930s, so too reliance of incoming multinational investment later did not do enough to close the gap between the areas of high unemployment and areas of low unemployment, and ensure both social and economic regeneration.

That is why just as we have moved macroeconomic policy from simply a concern about high and stable levels of employment to a concern also about sustainable communities, even Finance Ministers are now recognising that supply side or microeconomic policy must be about more than first aid, more than reliance on external investment to solve the problem, more about what I call the third stage of British regional and urban policy where the new emphasis is about local action and using all levers for regeneration.

An emphasis not just on encouraging inward investment – important as it is – but on encouraging investment generally —- building local indigenous strength through encouraging local innovation, local skills and local investment, and doing so at a local level in an integrated way. And that is why both our regional development agencies and local authorities have new freedoms and flexibilities for local people to make decisions based on local needs.

So from the top down centralised systems of regional and urban policy – the dirigiste systems of the mid twentieth century – the focus is on local indigenous creativity.

It is based on the recognition that production need no longer be based where the raw materials or ports are but where there are skilled, adaptable, flexible labour markets. And that it is local attention to skills, enterprise, business creation, innovation and investment that will bring the most jobs, wealth and prosperity.

And so in this third stage of regional policy our emphasis is firmly on people – their skills, their flexibility, their willingness to change, their dynamism.

And so to reduce the persistent regional disparities – to help those on the margins, those whom prosperity has passed by:

we must continue to make the right long term choices about stability and growth and in the next Parliament intensify the economic reform agenda. And when the G7 Finance Ministers meet this weekend we will look at how each continent can contribute to that – Europe by economic reform, the United States by tackling its deficits and Japan by financial sector change;

we must ensure the finance necessary to back reform and modernisation in local public services – the task of last July’s spending review;
and we must also, more fundamentally, tackle not just the consequences of unemployment and poverty and its symptoms but the underlying causes — being aware more than ever before of just how employment, skills and enterprise backed up by investment in innovation and infrastructure are the route out of poverty and deprivation for individuals, towns and cities and regions.

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

So what is the policy agenda that follows from our recognition that policy should be geared to high and stable levels of growth, employment and sustainable development; and that only a focus on local people, their jobs, skills, enterprise and creativity is the way to building strong sustainable local communities?

First, the Treasury and central government generally will continue to devolve power away from the centre.

Leading the way, John Prescott has sponsored regional development agencies, given them responsibility to promote enterprise, employment, skills and regeneration in their regions – and the resources to do so. They now have budgets worth in total £1.8 billion a year, £2.3 billion by 2008 with, I believe, unprecedented freedoms – within a single budget without the old ring fencing – to decide how to use these resources.

Now backed by a £100 million fund, the three northern RDAs are working with business on what is called the ‘Northern Way’ — tackling the £29 billion gap in output between the North and the rest of the UK and creating a corridor for jobs and growth from Newcastle in the North, to Hull in the East, and Liverpool in the West.

Across the country, local authorities are being given additional freedoms and flexibilities alongside new pilot Local Area Agreements that enable local bodies – including councils, primary care trusts, local police and private and voluntary organisations – to work in partnership to target resources on local priorities.

And the true devolution of power also means going beyond regional and local devolution to public authorities and devolving more power from government altogether and into the hands of local communities. Giving local people the tools to make improvements to their own neighbourhoods through programmes like sure start, the new deal for communities and the safer communities initiative.

Second, Finance Ministries must do more to sponsor and support policies to regenerate local environments.

Following the recommendations by Lord Rogers, highlighted by John Prescott yesterday, the Deputy Prime Minister and I have developed a series of measures to renew run down local high streets and urban estates including:

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

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

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

measures to tackle the crime that hits businesses, particularly retailers, in inner city areas;

showing that our objectives for growth and employment are not at odds with but complementary to our objectives for environmental care and protection.

As all of you who have travelled here today know, transport is critical. And this will be discussed in other sessions at this conference.

Good management of public spaces and high standards of design are key to creating communities that are attractive, sustainable places to live in, invest in and do business in. That is why, in the Spending Review last July, we introduced a new target to make communities cleaner, safer and greener – in recognition of the way in which what people call ‘liveability’ can drive a neighbourhood up or down. And through building regulations, planning guidance, our new Code for Sustainable Buildings and the Community Infrastructure Fund we are determined to drive up standards of energy and water efficiency, increase housing density and green space and tackle flood risk, while protecting and increasing the area of Green Belt.

To reverse decades of neglect, the Government has invested over £35 billion more in housing since 1997. We are implementing Kate Barker’s recommendations to increase housing supply. And because the renaissance or our cities and communities depend on us addressing the problems of low demand and the challenge to be more flexible, we have not only established pathfinders to improve the choice and quality of housing available – including refurbishing over 15,000 homes in the north-west – but we are establishing within each region a single body responsible for managing housing markets and housing investment.

Creating a society with opportunity for all demands that we get to grips with the vicious cycle of deprivation in our most deprived estates — where worklessness, poor education, high crime and poor housing are all linked and mutually reinforcing.

So we are investing more than £1.6 billion to improve our poorest neighbourhoods through the new deal for communities, neighbourhood renewal fund, neighbourhood management pathfinders and neighbourhood wardens – all excellent examples of policy areas where local communities are in the driving seat. Within a strategic national framework, including challenging floor targets, local strategic partnerships are being given both responsibility for deciding what is needed in their area and discretion for deciding how it will be delivered.

And I particularly welcome the Deputy Prime Minister’s announcement at this conference that he will pilot the development of mixed community estates in Leeds, London and here in Manchester – a comprehensive strategy to overcome deprivation by mixing housing tenures and incomes, regenerating housing stock to attract new residents, and improving local public services and the local environment.

Third, in pursuit of indigenous economic strength – the route to sustainable communities in every city, town and rural area of our country – Finance Ministries should do more to back local enterprising people and local enterprising firms.

The facts we have to confront are shocking.

For decades many areas have been no-go areas for enterprise.

As late as 2000 the rate of business creation in our high unemployment communities was one tenth of that in our prosperous areas with all the consequences for fewer jobs, less prosperity and less income for local authorities.

If the same rate of business creation prevailed in our poorest areas as in our richest areas we would have over a hundred thousand more small businesses in Britain.

But we have to recognise the problems faced by many people trying to start up businesses in high unemployment communities and the need to put in place the right incentive structure to stimulate business-led growth.

When we considered the challenge we recognised that inner cities areas cities and old industrial areas should not be seen as simply “problem” areas but as new markets where businesses can thrive because of the competitive advantages they often offer – with strategic locations, untapped resources, a high density of local purchasing power and the potential of their workforce. And we want to remove all unnecessary barriers to unlocking this potential.

This has led to our policies for enterprise at the local level to help firms start up, invest, hire and expand, including:

encouraging investment through the Phoenix Fund, new regional venture capital funds and the Small Firms Loan Guarantee Scheme – now more generous to start ups;

more help with hiring, employing and training – the special work of the New Deal and training programme;

support and advice for business – the remit of the new Small Business Service;

cuts in small business tax, corporation tax and capital gains tax;

reductions in red tape by removing the independent audit requirement on small firms, introducing a new flat rate VAT scheme and removing or reforming over 400 separate regulations;

and 2000 enterprise areas in the most deprived wards in the country where we encourage home grown economic activity through stamp duty exemptions, incentives for renovating business premises, fast track planning and community investment tax relief.
Together, these measures offer a systematic and coordinated attempt to create a stronger economic base in previously run down and high unemployment areas.

And in the Budget we will do more to break down the barriers to enterprise and spread an enterprise culture – with Britain now putting in place the best incentives for small business creation, backing a new generation of venture capital for expanding businesses, encouraging every school to value enterprise… and building on the success of enterprise areas we are now consulting with entrepreneurs, business and local and regional government on what more we can do to support, incentivise and remove the remaining barriers to enterprise in our most deprived areas.

And to achieve this requires the devolution of more power to the regions. So regional development agencies now have greater responsibilities for boosting enterprise and science. And from April the business link service will be locally administered by the RDAs – improving the delivery, effectiveness and coordination of business support at the regional level.

But the best ambassadors for this change are not me or you but local people themselves.

Because all their business rates income went to central government, in the past local authorities had no direct financial incentive to encourage new business creation.

Now under our business growth incentive scheme local authorities keep a proportion of the additional business rate income generated by new business creation.

Based on historical data we estimate that in total as a result of this measure local authorities could gain up to £1 billion over the next three years.

A further incentive to encourage local indigenous business creation.

Every community across the country benefiting from more businesses and more jobs.

But encouraging enterprise is also about encouraging innovation and creativity.

And every successful region must encourage its scientists, its inventors and its innovators.

We found in Britain when we looked at the gap between rich and poor regions that some regions spend just 1 per cent of GDP on R&D compared to 3 per cent in others.

In one region it was £650 per head on R&D in another just £100.

With the Government’s 10 year plan for science – and the one billion pounds of additional public investment in science over the next three years – as the foundation, we are already moving from centrally administered R&D policies to the encouragement of local technology transfer between universities and companies and the development of regional clusters of specialisms. And I believe we can do more to encourage the development of new local science and industry partnerships.

Regional development agencies are rightly taking the lead – recognising the importance of science and innovation as drivers of regional growth, and putting science and innovation at the heart of their regional economic strategies.

Building on the model pioneered here in the North West, all regions have now established science and industry councils to forge better links between businesses, universities and other regional agencies and support the development of hi-tech industry clusters.

And in the Budget I will renew our commitment to the best incentives for research and development, with backing for science cities and for stronger links between higher education and the hi-tech firms of the future.

Fourth, Finance Ministries must do as we, the Treasury, plan to do: step up our efforts to boost employment and skills.

Sustainable communities are not just about places but about people — as entrepreneurs, as skilled workers, as employed men and women.

It is about a Britain of ambition and aspiration where there is no cap on potential, no ceiling on talent, to limit to progress. A Britain of ambition and aspiration where because the aspiration and ambition is so enthusiastically shared by all that all have the chance and are challenged to do well.

So any solution based on renewing economic activity must tackle the persistent, often chronic, problems of employment and employability.

When we came to power, seven years ago, our new programme – the New Deal – was not only based on the principle that work was the best route out of poverty and the need for rights and opportunities to work to be accompanied by new responsibilities and obligations to work, but the new deal and our new tax credits were designed to offer special help to people and areas left behind.

As a result of the New Deal and our other employment programmes, 2 million more people are in work than in 1997. And it is a measure of the achievement of the New Deal – for which I thank business small and large, local authorities, voluntary and charity groups and the public services – that in the 1980s 330,000 young people were long term unemployed, today the figure is just 6,000.

But this is not the time to relax our efforts but to step them up.

And after eight years of a national programme I am more convinced than ever that if we are to get more of the long term unemployed and inactive back to work, and more successfully fill local vacancies we need to match our national framework of incentives and sanctions with more local discretion and flexibility.

If we raised employment rates in the three northern regions to the level in the South East, for example, nearly half a million more people would be in work – a huge prize. And we would be closer to full employment than ever, making our goal of full employment come true not just for the country as a whole, but even for previously depressed regions.

So it makes sense for local job centres with local knowledge to develop programmes more sensitive to, and tailor made for, local and regional conditions and to have greater local powers and new resources to match vacancies to jobs more quickly, to meet local employment and skills needs and of course to help all those out of work realise their full potential.

And just as we have tackled unemployment, so too we must tackle inactivity. 90 per cent of people coming onto incapacity benefit want to get back to work. Our task as a government is to help them to do that, building on the successful pathways to work approach, through an active, positive strategy offering incentives backed up by responsibilities so people can meet their own aspirations. The Secretary of State for Work, Alan Johnson, is today setting out details of reforms based on obligations as well as opportunities to give more incapacity benefit claimants the opportunity to work.

And in the Budget, reforms in maternity rights – higher pay, more time off, better children’s benefits – will be matched by closing the loopholes that prevent mothers benefiting from these new rights.

Improving employment means improved employability. And because some regions have 18 per cent of the working population with no formal qualifications compared to just over 11 per cent in others, at the coming election we will make a historic promise: for the first time guaranteeing to every single member of the workforce and every unemployed man and women who is without basic skills, the resources and the learning facilities to acquire the skills they need, giving them the choices they need to make the most of their talents.

Building on the 100,000 individual success stories of those given time off for training through the employer training pilots – the majority of them women, the majority of them with no prior skills, the vast majority of them successfully attaining their qualifications – we are rolling them out to the whole country creating for the first time a national employer training programme.

But we increasingly understand that policies to engage many thousands of businesses and millions of adults with new opportunities for skills cannot be run from central departments or agencies but must directly engage with regional priorities, local needs and individual businesses and workplaces.

Already 90 per cent of the learning and skills budget is devolved to the regions and the new regional skills partnerships will play a key role in setting priorities for expenditure and making the right connections within each region between skills needs and the wider productivity agenda, with regional development agencies and local learning and skills councils working much more closely together.

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

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

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

more people living in better quality housing in safe and sustainable communities;

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

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

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

The speech made by Gordon Brown, the then Chancellor of the Exchequer, on 4 February 2005.

Let me welcome distinguished guests who have come here today from every continent to join our dialogue on global economic change.

The starting point of this conference today is that no country can take its future prosperity for granted.

Nations will rise and fall depending on their willingness and their capacity to face up to the difficult long-term decisions about the future.

And I believe that if here in the United Kingdom we – business and government – listen and learn from each other, work closely together, and forge a shared long term economic purpose, we have the strength – because of our stability, our scientific and creative culture, our commitment to education, our global reach – to be one of the most successful enterprise centres of the world.

Over the last year I’ve made it my business to meet as many businesses as possible from as many continents as possible – and many of you are here today. You’ve told me how much you value the stability we’ve created in Britain since 1997. You’ve told me about the importance of removing all barriers to an enterprise culture. And you’ve also told me that change in the new world is so fast in its pace and so pervasive in its impact – and now the rise of China, India and Asia so important – that an economy like ours has to become more flexible, more adaptable, more skilled and more outward looking.

The facts that we will hear this morning from our guests from China, India and Asia are that within twenty years half the world’s manufactured exports could come from developing countries and within a decade 5 million US and European jobs could be outsourced. Indeed China is already consuming half the world’s cement, over a quarter of the world’s steel and a third of the world’s iron ore. And between them China, India and the rest of Asia already account for nearly a quarter of the world’s trade.

And so for companies like yourselves, there is hardly a product or increasingly a service you produce that is not subject to global competition. And these global competitive pressures are now such that at every point you have to look not just at where you source your materials, labour and skills but where your competitors source their materials, labour and skills.

And in this global restructuring that focuses advanced industrial nations away from low skill, low tech products and processes to the technology driven and high value added, Britain will not only have to be more enterprising and recognise there is no escape from an uncompetitive position by resorting to protectionist shelters or tolerating the old inflexibilities but we must also understand that as emerging economies their technologies – even now India and China produce 125,000 computer science graduates a year and Britain only 5,000 – Britain will only attain a new and competitive place for ourselves if we strive for, and win, world leadership in science and skills and enterprise.

Churchill warned of countries facing change who were so timid that they were ‘resolved to be decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all powerful to be impotent’. And he also said that instead of building the present upon the image of the past, we must face up directly to the challenges of the future.

Indeed to those who want to postpone long term decisions and want guarantees about the status quo and then tell us that there should be no change without security, we all know the answer: there can be no security without change.

So there are important long term choices about our economic future as a nation which – because these decisions need to be made, acted upon and followed through on a sustained basis – require a consistency of purpose and direction in the British national interest that goes beyond one year or even one parliament and demands a shared vision and a common purpose – in a non-partisan way – across all sections of British society: a shared commitment to become world leaders in stability, science, skills, enterprise and the creative industries.

I can tell you that at a time of rapid global change and uncertainty I agree with Alan Greenspan who will address us this afternoon, with Mervyn King and with all of you who run businesses, that the precondition for Britain’s economic success is locking in economic stability for the long-term.

To those who question whether Britain’s seven high growth years must inevitably be followed by lean years, let me answer directly: our new monetary and fiscal framework, this British model we have created – strategic decisions we took to make the Bank of England independent, impose a symmetrical inflation target, cut the national debt and entrench long term fiscal rules – will continue to make us well placed to cope with the ups and downs of the economic cycle.

In the last seven and a half years inflation – once more volatile than almost any other industrial nation – has been consistently nearest to target and the least volatile of any country.

Of the major industrialised economies, only Britain, once the stop-go economy of the industrialised world, has maintained growth free of recession in every quarter.

And we not repeat the mistakes of the past and will do nothing to put at risk our new won and hard won stability.

Any government in which I am Chancellor will complement monetary vigilance with fiscal discipline.

Let me tell you where we stand today. Debt has risen to 44 per cent of national income in America, 46 per cent in France, 55 per cent in Germany, and 84 per cent in Japan. But in the UK debt is just 35 per cent.

The deficit in France is 3.7 per cent of national income, in Germany it is 3.9 per cent, in America 4.4 per cent, in Japan 6.5 per cent. Our deficit is just under 3 per cent falling to 2 per cent. 10 years ago the deficit in Britain was the equivalent in today’s money of £90 billion, today it is just a third of that —- and we will meet our fiscal rules.

So while at this stage in the economic and political cycle past governments have resorted to short-termism in fiscal policy and raised the rate of spending in a pre election spree, I can assure that we will not go down that short term road.

You – leaders of business – know that it is right to invest sensibly for the long term and that to fail to do so often catches up with you. And if you run a company you know you have to make decisions on priorities. So in can confirm that while we will be prudent in borrowing for investment we will maintain the national debt at a low level and we will achieve over this and the next economic cycle a current balance or surplus.

But world leadership in stability is not enough to guarantee success in the new global economy. It is a necessary but not sufficient condition for economic prosperity.

So if I can encapsulate my message today and my mission in government in one thought it is this: we want Britain to be not only the most stable environment but the most attractive location to do business and to create new business.

And to win this prize, we are prepared to remove any unacceptable barrier, legislate any necessary reforms and introduce far reaching new incentives.

This is not rhetoric: it is our considered and determined view.

We have much to build on.

The fact – and this might surprise you – that of 800 multinational headquarter relocations since 2002 Britain has secured 20 per cent, 50 per cent more than the USA, more than any other country.

With 1 per cent of the world’s population we have over 11 per cent of the world’s most cited scientific papers.

And more than at any time since the first decades of the industrial revolution we are now turning our scientific genius into technology led economic growth for Britain.

I can tell this audience – and this too may surprise you – that today a higher share of our growth is delivered by science-based innovations than in any other industrial nation including the United States of America. And Britain has the highest share of R and D coming from all over the world than any of our major competitors.

And because of our successes in business and financial services, today the UK exports twice as much business services as we import and four times as much financial services.

All of this shows us that we in Britain now have the chance, if we make the right long term decisions, to become the best location for scientific research and development and world leaders in the new enterprises of the future.

Measures I will announce in the Budget will reinforce our determination that our incentives to attract research and development are the worlds best, our universities are world class, and we should aim to lead the world in strengthening the links between higher education and the hi-tech firms of the future.

I can tell you that more than ever our investment effort, both for inward and indigenous investment, will focus on encouraging and stimulating creative firms that are high value added, research based, and technology led.

We will continue to welcome qualified people with skills from other nations to study in and contribute to Britain.

And I want Britain to lead the world in resolving the controversial issues of genetic research, animal experimentation and GM foods — so we can value and celebrate science and the joy and excitement of scientific discovery.

We are developing plans for science cities. And the ten year framework for the advancement of British science – announced last year and which has already led to £2.5 billion pounds more science investment – will be constantly updated to meet the challenges of a rapidly changing world of knowledge.

As part of our commitment to make the UK one of the leading world centres for pharmaceuticals, biotech and the life-sciences, the newly created UK clinical research collaboration already embraces the NHS, business and universities. Our aim is to make the UK the premier location for new research from medical trials to the tracking of results. And we will also take the necessary steps to become the world’s number one research centre for genetic and stem cell research.

I want Britain to be not only a centre for the science-based industries of the future but also the hub for creative industries as a whole.

Here too we can build from solid foundations. In the last decade Britain’s knowledge intensive sector has grown twice as fast as the overall economy.

By adopting new digital media and harnessing the entrepreneurial flexibility which makes our inner city areas new ‘knowledge factories’, we are creating a critical mass of creative industries with global reach – so that one in every five new jobs here in London is now in these sectors.

Creative industries from digital electronics and communications to film, design and fashion – once only 1 per cent of GDP – now contribute 8 per cent of the UK GDP.

This growth highlights extraordinary talent. And the opportunity now is to build on its extraordinary promise —– by backing risk takers with new incentives for new enterprise and with a new generation of venture capital for expanding business.

And our challenge is not just to encourage creative industries, our priority is to encourage all industries to be creative. It is both about maintaining the entrepreneurship and creativity within established large businesses and about doing more to enable those who want to start up new businesses to turn their ideas and ambitions into reality.

In Britain today 4,000 new businesses start every week. There are 300,000 more businesses now than in 1997. But with our rate of business creation still half that of the USA, we still have a long way to go.

If we are to have enterprise in our boardrooms it must start in our classrooms. In 1997 less than 15 per cent of schools offered enterprise education. Now half of all schools do. By 2006 every school will.

Today only 1 per cent of college or university students are engaged in enterprise. I want to see every college and every university twinned with a ‘business champion’.

And if the UK could achieve the same levels of female entrepreneurship as the US – and today’s action plan is designed to improve business creation rates – Britain would gain three quarters of a million more businesses.

I want a Britain of ambition and achievement where there is no ceiling on talent, no limit to potential, no cap on aspiration.

And, celebrating enterprise, we are today, after a nationwide competition, naming the rejuvenated town of Ollerton in Nottinghamshire as Britain’s town of enterprise for 2005.

Every one of you here who runs a company – large or small – knows that you must draw on the potential of everyone in your company to be successful; its no different for a country. Skills are the new commanding heights of the economy. And by acquiring better skills employees can become the beneficiaries not victims of globalisation.

Our mission not just that of British government but that of the whole British society must be to make our people the best educated and most skilled in the world.

I believe this is the shared and settled view of every section of British society

And together we are prepared to support the long-term decisions necessary to achieve this aim.

So I commit us to moving our education system up a gear: demanding, in return for investment, the highest standards in our schools and colleges; making university and college funding a priority in the next Parliament; working with you – the leaders of business in this country – to invest in employee training… all the time encouraging and incentivising a work-your-way-up ethos of self improvement and self reliance.

What happens in schools is critical to our long-term future. But we cannot just leave education to the schools. Of the workforce we will have in 2015, 80 per cent have left school and are already in work. And it is their skill levels and flexibility that will, over the next decade, determine the prosperity of our country.

Learning from successful training policies amongst our European competitors, we have already witnessed over 100,000 individual success stories of those given time off for training through the employer training pilots – the majority of them women, the majority of them with no prior skills, the vast majority of them successfully attaining their qualifications. And I would like to congratulate all the businessmen and women who have contributed to this success. Now we are able to go further and announce their roll out to the whole country creating for the first time a national employer training programme.

I said earlier that the modern task of government is not only to make all necessary reforms but also to remove all unnecessary barriers: with our emphasis on stability, education and science to do what needs to be done but to do no more than what needs to be done.

So let me tell you how the Budget and our programme will reflect this – our shared agenda.

Planning: we must make our planning laws quicker, more flexible and more responsive – and we will.

Transport: we must work with you – private and public sectors together – to tackle decades of under-investment and lack of commitment —- and we will.

Flexibility: we must and will do more to encourage local and regional pay flexibility.

Competition: we must and will build upon what we have already created – the most open competition regime in the world.

Regulation: a problem raised in every industrial country for many years where there is, as you know, always invariably a tension between the flexibility you need and the standards the public request.

It is because we recognise the limits of government that we have already removed the independent audit requirement on small firms and moved to a more simplified system of VAT.

And for all businesses large and small we have removed or reformed over 400 separate regulations; the Financial Services Authority have introduced a series of reforms to reduce compliance costs; and in the budget we will do more.

I have set in train a major review – led by Philip Hampton – of the complex, often out of date systems by which regulations are inspected and enforced.

And in the Budget I will set out proposals not just about the burden of regulations but about the volume and flow of regulations.

My position is that in this new global economy government must of course do all – principally through stability, education and infrastructure – that it is necessary to do but no more – and we will continue to remove barriers that are not justified.

So it is in the national interest that we continue to resist inflexible regulation from the European Union.

Flexibility is the best way forward so we have agreed with Ireland, the Netherlands, Luxembourg, Austria and Finland to put regulatory reform at the heart of our six EU Presidencies through to 2006, putting every new and existing regulation through strict new tests for their impact on enterprise and competitiveness.

And in our Presidency of the European Union we not only hope to sign up all 25 EU countries to our deregulation initiative but I want to consult at every stage with you, the businesses of Europe.

As we tackle regulation to create the best environment for business to thrive, we also have to design our tax system to encourage and reward work, savings, investment and enterprise.

To pay for improvements in health care we have raised national insurance by 1 per cent – but to put the costs in context, business costs for health care have been rising much faster in the US – by more than 10 per cent each year – and in France employers pay health insurance of around £60 a week for an employee on average earnings and in Germany around £30 a week, compared to just over £10 a week in the UK.

But as far as corporation tax, capital gains tax, small companies tax and personal income tax, we have cut corporation tax from 33 pence to 30 pence, cut long term capital gains tax for business assets from 40 pence to 10 pence, cut small companies tax from 23 pence to 19 pence and we have also cut the basic rate of income tax by 1 pence.

And we will continue to look with you at the business tax regime so that we provide incentives for investment in wealth creation and rewards for success.

Indeed, we have an opportunity before us now to create a consensus on tax as well as well as on stability to make the Britain the best place to do business.

Twenty years ago companies thought mainly of national markets and were considering new opportunities in European markets.
Today the success stories are companies who have transformed themselves to succeed in global markets.

Britain was the pioneer of free and open trade.

Now to take advantage of the vast opportunities global markets offer we must lead the way again in breaking down international barriers to trade and commerce.

We are pressing for a successful and ambitious conclusion to the world trade talks.

Because 55 per cent of our trade is with the European Union we will, in our presidency of the EU, push forward our proposals to liberalise the single market, the greatest single market in the world.

Because transatlantic economic relations are worth over $2.5 trillion dollars each year, I can tell this audience that we will use our EU Presidency to push forward a new transatlantic trade and investment partnership to remove regulatory and other barriers between the European Union and the USA including in financial services.

Today we welcome to our conference representatives from four of the major emerging market economies – China, India, Brazil and South Africa. Because only 1 per cent of our exports go to China and only 1 per cent to India – now two of the largest economies in the world – we are instituting a new Asia Taskforce – business and governments together working to maximise trade – and in the fast expanding financial services, we will match the successful UK-China Financial Dialogue with a new UK-India Dialogue that India and the UK are agreeing today.

Conclusion

And what has been, and can be, achieved in this area and other areas at the Treasury for employment, investment and prosperity must be centre stage in the national debate on our future in the months to come. And I look forward to it being the central issue we will take forward in the coming Parliament.

I said at the outset that together we have to rise to the global challenge. And to do so we have to build a shared economic purpose.

Successful companies achieve this.

The successful countries of the future will have to achieve this.

And my vision is that if we, government and business, work together, we can build in Britain a progressive consensus.

World leaders in stability.

World leadership in science, skills and enterprise.

A Britain that looks outwards to Europe and the international economy.

Then globalisation is indeed made for Britain and British prosperity.

And we can be one of the global economy’s greatest success stories and look forward to a twenty first century of British achievement.