Gordon Brown speech to CBI 20 May 1997

http://www.hm-treasury.gov.uk/speech-chex-200597.htm

It is a pleasure to be here this evening at the CBI dinner to give my first speech outside Westminster since I became Chancellor.

You are the leaders of British business and industry and through your dynamism, creativity and hard work - and that of your employees - you hold the key to the future success of our country. So I could not have chosen a more appropriate audience with whom to share tonight, my vision for the long- term future of Britain, and the practical steps the Government will take to equip us for that future.

Laying foundations for long-term prosperity

Every successful business man or woman has always planned for the long term. And in our modern global economy, of massive international trade and capital flows and rapid technological change, long-term vision is now more important than ever before.

This is as true for governments as it is for business. Too often in the past, British business has been let down by the short-termism of governments. This Government will match the long-term commitments British industry makes to long-term British success.

So under this Government there will be no unsustainable dashes for growth, no out-of-control booms no risk-taking with inflation, no quick fixes, and no short-term manipulation of the economy for political ends. Our commitment is to the long term .

That means - first and foremost - building a solid and lasting foundation of economic stability. Without stability, and the prospect of future stability, businesses cannot plan confidently or effectively for the long term.

Monetary Stability

That is why my first act as Chancellor was to put in place a monetary policy framework specifically geared to the long term.

It is precisely because inflation is the enemy of long- term investment and planning that I decided to reform the role of the Bank of England.

By making the Government responsible for the inflation target and the Bank responsible for setting interest rates to meet that target, I have put monetary policy on a credible, long-term footing. From now on monetary policy will be more open, more accountable and, very importantly, free from any hint of political influence.

Long-term interest rates fell after my announcement. And I hope that the immediate welcome from the City and from industry will be matched by a recognition, over the long term, of the importance of what we have done.

Fiscal stability

The starting point of my first Budget will also be the long-term needs of the British economy. I will set tough rules for government borrowing and for government spending to achieve deficit reduction over the medium term. And by honouring our promise to open up the books for inspection, I will also take action to enhance the credibility of the public finances.

Today I have invited Sir John Bourn, head of the independent National Audit Office to comment on the assumptions and conventions that lie behind the current forecasts for the public finances. No British Chancellor has ever done that before. Their views will be reported before the Budget. I plan to invite the NAO to look at the books again, in future Budgets.

There will be no more hiding behind obscure forecasting assumptions. We will not leave ourselves open to accusations of accounting tricks, dubious figures, or rigging of the rules. I believe not only in sound public finance but in honesty and openness in public finance. It is time to rebuild public trust about the management and use of public money.

Stability is necessary for our future economic success. The British economy of the future must be built not on the shifting sands of boom and bust, but on the bedrock of prudent and wise economic management for the long term. It is only on these firm foundations that we can raise Britain's underlying economic performance.

But stability for the long term needs to be matched, in my view, by a new drive for dynamism and adaptability in industry, and by a new approach from Government to wealth creation, employment and welfare. And we need to revive in all our people those qualities that throughout history have made Britain great. The British genius

If you ask the British people what qualities they would identify as specifically British, they will tell you: the British are inventive, creative and adaptable, they work hard and learn fast. The British have a strong instinct for fair play - for opportunity for all. And the British, at their best, are outward looking and international in outlook - open and tolerant to new ideas and new cultures.

These are the traditional, historic, permanent British qualities. They are qualities that have been evident in the British character over centuries, making up what George Orwell once called the British genius.

These qualities - inventiveness, adaptability, hard work, love of learning, fairness and openness - explain Britain's success in the 19th Century. And they are precisely the qualities that are required for a country to succeed in the 21st Century. Global markets and the information age call for inventiveness and creativity; a capacity for hard work alongside an adaptability in face of ever more rapid change; a culture of learning and a belief in fair play and opportunity for all; and an ability to look outwards. These are the qualities that make up the British genius.

In recent years these great British qualities have been undervalued and sometimes even shouted down. Instead, a narrow and mistaken sense of what it is to be British has found favour - a distrust of foreigners, verging on isolationism, has influenced our dealings abroad. And a belief that there is no such thing as society has encouraged a crude and counterproductive self interest in our dealings with each other. This does not get the best out of the British people, it belittles them.

We need, as a nation, to recognise our best qualities - inventiveness, adaptability, hard work, love of learning, fairness and openness - and to reaffirm them, to rediscover the British genius. It is time to build again, through economic success and an outward looking policy, our pride in being British and our ability to show leadership abroad, by emphasising what are the best qualities of Britain.

Encouraging creativity and innovation

We must encourage the creative and the innovative. Britain gave the world the key inventions of the industrial revolution, we pioneered modern capital markets and led the developments that saw the dawn of the computer age. Britain is capable of leading again today in the knowledge-based, creative industries where value is added by talent and sometimes by genius.

We are world leaders in many research-based industries - from pharmaceuticals and medical imaging technologies, to some of the environmental and information technologies. In fashion, British designers are taking the French couture houses by storm. British music - where there has been massive research and development - is once again conquering America. The British film industry - as we all know - swept the boards at the Oscars this year.

These are great British successes and should be celebrated. They show that Britain can lead the world in many of the new, creative and talent-based industries. But across the full range of industry and services, we simply do not have enough world leaders in Britain. We have modern high technology capacity in many areas, but not enough capacity all round. And we have not had governments that have sufficiently valued scientific innovation and artistic creativity.

I am determined that Britain's potential is translated into Britain's achievement. What the Government needs to do is not pick winners, but nurture economic success. Across all sectors, I want to see the good idea being rewarded by becoming the good product and eventually the good export.

The British people need a Government that is as enterprising and dynamic as many of its people are. We will not pursue a policy of 'Whitehall knows best' but will be a supporter and friend of all that is best in British entrepreneurial culture.

We will identify the barriers to growth and productivity, and then we will relentlessly work to remove them. Whether the problem is a lack of research, or difficulty in applying what we know; whether the constraint is the available technology, or if what is needed is help for exporters and small businesses - we want to help now.

Geoffrey Robinson, the Paymaster General, will head an enterprise and growth unit within the Treasury which will work with business to nurture innovation and entrepreneurship.

As a senior director in the car industry, then Chairman of TransTec plc and now Paymaster General - Geoffrey's CV is something of a public-private partnership. So it is wholly appropriate that he is also responsible for the Private Finance Initiative. He has asked Malcolm Bates, formerly Deputy Managing Director of GEC, to undertake a thorough-going review of the Treasury arrangements for PFI projects to ensure quicker and better decision making.

David Simon, who has led BP with distinction, is our new Minister for European trade and competitiveness. He has been Businessman of the Year for the last two years. But he has now decided to give someone else a chance, and I am very pleased he has.

At the request of Margaret Beckett and myself, David has agreed to take forward the Government's competitiveness agenda in Europe. He will chair a British Presidency working group, on which the CBI will be represented, which will work to complete the Single Market and promote flexible labour markets across the European Union.

It is important that young people learn business skills at school. Budding entrepreneurs need the encouragement and the know-how to put their ideas into action. Alan Sugar has offered to travel to each region of the United Kingdom to speak at seminars for young people interested in business. With his great success as an innovator and entrepreneur, he has a wealth of experience and knowledge to offer to our next generation of entrepreneurs - the household names of the future.

All these announcements signal our commitment to building a modern and dynamic economy in partnership with business.

Strengthening the work ethic

Part of the British genius is our belief in the value of hard work and self improvement. These are traditional virtues which have served us well over centuries, and as we approach a new century they are needed as never before. 34.The Government will restore the work ethic at the centre of our welfare state and modern employment policies. The work ethic has been undermined in large tracts of our cities and regions by the destruction of opportunity. And, as a result of an unreformed tax and benefit system, unskilled people can work 40 hours a week and can actually be worse off than if they had done no work at all. The Government must ensure that hard work is encouraged and rewarded at all levels.

So, as I announced yesterday, a Government task force - headed by Martin Taylor, the Chief Executive of Barclays - will set about improving the opportunities and incentives to work in our inner cities and towns. It will streamline and modernise the welfare system to help achieve the Government's objectives of encouraging hard work, reducing poverty and dependency, and strengthening community and family life.

Equipping the British people to cope with change

To face the challenges of the future, we also need to combine this willingness to work hard with flexibility and an ability to respond to rapid change. Fortunately the British are well-equipped to face the challenges of a new, and more competitive global economy.

Our history shows that we are an adaptable people. Whatever challenges Britain may face today, we have triumphed over greater challenges in the past. We progressed with ease and confidence from the merchant economy of the 17th and 18th centuries to the pioneering industrial economy of the late 18th and 19th centuries. And I am confident that, with the right leadership, we can move successfully from the industrial age to the information age economy.

Education and opportunity for all

Government must not seek to protect or insulate people from this change, just as it must not leave its people unaided and powerless in the face of progress. The role of Government in the modern world is to equip people to master change.

The most flexible worker is a skilled worker - able to adapt - not an unskilled worker unable, unqualified, and ill- equipped to respond to new opportunities.

This is why the British culture of learning, allied to our sense of fair play, are so important. Both these qualities come together in our strong educational traditions which favour opportunity for all. A decent education for all its people equips a modern economy for success, but education can no longer finish in the schoolroom.

The pace of technological change means that education can never again be seen as a one-off acquisition of skills - it must be seen as lifelong opportunity to learn new skills.

Many large companies firms have introduced training and education to the work place. Unipart have lead the way with their own University, "Unipart U", there is the Ford EDAP programme and the Rover Learning Business.

I invite British business to join with the Government in what I believe will be a path-breaking project: to create the University for Industry as a public private partnership that will make lifelong learning a possibility for everyone. Using the latest technology, will bring education and training to the home, the workplace and the community. And it will do for workplace education in the 1990s what the Open University did for second chance university education from the 1960s onwards.

A constructive approach in Europe

Part of the British genius is that we have been an outward looking nation, tolerant and pragmatic about where our national interests lie.

But in recent years some have tried to deny these very British qualities, they have tried to suggest that our instincts are to withdraw, to be detached and even to glory in isolation. Some have tried to redefine what it is to be British - in purely negative terms - as being anti-European. This is not only historically inaccurate, but as business knows very well it damaging to our commercial and strategic interests.

Europe is where we are, where we trade, and where we make our living. It is where we must plan our future. 60 per cent of our trade and 3.5 million jobs depend upon it.

The flows of inward investment that Britain enjoys do not come here just to supply 59 million British consumers. They come because Britain enjoys access to 370 million of the world's richest customers, in the world's largest open market. And some inward investors have made that abundantly clear.

Let me put the Government's position on Europe beyond doubt: we are in for the long term; we are in to stay. And it is in Britain's essential interests that we now play a leading role in shaping Europe's future.

The idea that Europe could revert to being only a free trade area - a return to the position of 1950s - is an illusion. We should not give up the benefits both of the single market and the institutions that make it work. Equally, the idea that we could become the Hong Kong of Europe, or a tax haven serving the major trading blocks - Britain as a greater Guernsey - is even more absurd. Europe helps us defend and advance our interests better than we could on our own.

Suspicion and distrust of Europe has for years also suppressed any sensible debate on Economic and Monetary Union. It has been hijacked by extremists - dogma competing to be heard above prejudice.

British decisions on Europe and EMU need to be taken on the basis of intelligent, well-informed debate among all our people on what EMU will mean for British national interests in terms of jobs, investment and growth.

I would like to commend the CBI on their efforts to anchor the single currency debate firmly in economic reality. Your regional seminars, in collaboration with the Bank of England and the regional Chambers of Commerce, are helping to inform business about the practicalities of the single currency. The CBI are also consulting widely on the pros and cons of a single currency. I look forward to hearing the views of British Business in the summer. I hope that we can build on this work.

And I believe the British qualities that I have underlined - our creativity, our willingness to adapt, our belief in hard work and education, our openness, tolerance and tradition of looking outwards - have much to offer Europe as it develops. I believe that we should have the confidence to engage with Europe and make it better and - dare I say it - more British: more open, more competitive, more willing to adapt, more favourable to extending opportunity to all. And in so doing I believe we can encourage others in Europe to set their sights on higher productivity, growth and employment, just as we will do.

British Genius

I hope tonight I have made clear that the historic record of Britain is one of adaptability, innovation and achievement, over centuries and in the face of changing circumstances. These qualities that made us successful in the 19th century are, more than ever, the qualities that equip us for the challenges we face. Rather than denying these qualities, or shouting them down, the Government must recognise and reaffirm them.

The Government's plans for an enterprise and growth unit in the Treasury; our plans for reforming the tax and benefits system; our plans for a University for industry; our plans for completion of the single market - all demonstrate that the old sterile debate about public versus private is behind us.

We have moved beyond the old dogmas. We will work in partnership with British industry and the British people to set a prosperous long-term course for Britain.

By harnessing the very best British qualities, this Government will unleash the potential of the British people, to lead in Europe and in the world in the 21st Century.