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Howard: A Britain in which business can flourish

Speech to the British Chamber of Commerce

"It's good to be here. First, I want to thank you, companies up and down the country, for what you do. You are the job creators and you are the wealth creators. Without you, there would be no health service, no schools, no defence. Because it is you, not politicians or civil servants, who provide the resources for our public services. Business is the lifeblood of Britain.

I have a very clear view. Business men and women know how to run companies. Politicians don't.

The job of government is to help business. Business needs a government that is on its side - not in its way.

So today, I want to spell out what a Conservative Government would do.

The Basics

Business needs government to ensure the basics. A government that spends within its means. A government that doesn't take risks by over-spending and over-borrowing. A government that won't hand over control of our interest rates to the European Central Bank. We are the only major Party pledged to maintain the independence of the Bank of England. Not just 10 days before a general election. But because for years we have seen the importance of interest rates being set in Britain for the benefit of the people of Britain.

Getting rid of unnecessary government

And let me tell you what else a Conservative Government is going to do. We're going to do what every decent manager in every business does - cut out waste.

There are two Britains today. Private sector Britain, where people are working harder just to stand still, struggling just to make ends meet. And bureaucratic Britain, where money is no object, you spend what you like and employ who you like.

So where we can do things more efficiently, we will. Where government is doing things that shouldn't be done at all, we'll stop doing them. And the Value For Money Review undertaken by David James - the most comprehensive exercise of its kind ever done by an opposition party - has identified where all the savings can be made.

The Regional Assemblies will go.

The new Supreme Court will be scrapped.

There will be no Small Business Service. Most of the small businesses I talk to have never even heard of it.

There will be no New Deal.

And in the process, 168 public bodies will disappear and 235,000 bureaucratic posts will go.

I heard your President on the radio this morning. He asked for specifics, not the generalities. Well these are the specifics.

Some of the decisions we've taken are tough; I don't deny it. But they're the right decisions if we're going to keep spending under control, borrowing under control, and taxation under control.

Let me spell out very clearly what we've done. We've identified total savings of £35 billion. Of that we are ploughing back £23 billion into priority areas and front-line services. That leaves us with net savings of £12 billion.

The Government's Black Hole

We could have used all that £12 billion to reduce taxation. There were certainly enough voices urging us to do precisely that.

It might have been popular. The question we asked ourselves was: is it responsible? And the answer is no.

Why?

Because Mr Blair's Government has a gaping black hole in the public finances. Almost every independent body - from the IMF to the IFS - agrees.

The latest warning, published today, is from the ITEM Club sponsored by Ernst and Young. And I should emphasise that they use the Treasury's own economic model.

These are the warnings they give.

First, they say it is likely that Gordon Brown will be in breach of his own golden rule which stipulates that, over the economic cycle, he should borrow only to invest, not to fund current spending. So much for Mr Brown's prudence.

Second - and this is a warning to business - if Labour get back, `the ITEM Club expects taxes or NI Contributions to go up in the 2006 Budget'.

Will Gordon Brown try to plug the gap by putting up National Insurance after the election? You bet he will. Mr Blair promised not to before the last election. And in the first Budget after the election, National Insurance went up.

When Mr Blair was asked during this election campaign about National Insurance, he refused to rule it out. So nobody should say they haven't been warned.

Mr Blair may be prepared to take risks with the economy. He may be prepared to put up business taxes in next year's Budget. I am not.

Regulation

Next, regulation. Mr Blair has introduced more regulations than any of his predecessors. In his first seven full years, he introduced over 27,000 regulations. That's 15 new regulations every working day.

The biggest complaint I get from business right across the country is that regulation and red tape are damaging business, damaging competitiveness and damaging jobs.

The desire to over-regulate seems to be embedded in the bricks and mortar of Whitehall. Only a serious and systematic approach will keep it at bay. Fewer regulators and fewer bureaucrats will mean fewer regulations.

And we have to curb the enthusiasm of the lawyers in gold-plating EU regulations.

We will take action:

• For the first time ever, there will be in the Cabinet a Secretary of State for Deregulation. His job will be to deregulate. It'll be exactly what it says on the tin.

• There'll be strict regulatory budgets for each government department to cap, and then cut, the cost of regulations that they issue each year

• We'll impose sunset Reviews for new regulations - setting a date on which they must be revalidated or abolished

• We'll exempt small businesses from regulations wherever possible

• We'll reintroduce Deregulation Orders, which Labour abolished, to remove or minimise a burden on business

And on top of that, we will tackle EU over-regulation by:

• Reviving our opt-out from the EU's job-destroying Social Chapter

• Stopping the elaboration, or 'gold-plating', of EU rules in Whitehall

• Only supporting EU regulation that is costed

If you want to know how out of touch Mr Blair is on this, let me tell you what happened last week in the European Parliament. There was a vote to abolish the individual opt-out from the working time directive which allows two million employees to work the hours they choose and ignore the EU's mandatory maximum 48 hour week. What did Labour MEPs do? They voted to abolish the individual opt-out - and to impose still greater costs and regulation on British business. Why on earth didn't Mr Blair stop them? Why on earth didn't Mr Brown stop them?

The Great Irony of Gordon Brown

I don't want British business to be burdened with all the regulation and red tape that weighs down on business in continental Europe.

When you hear Gordon Brown going on about the need to make the European economy more like America's, you might think he agreed with me. The great irony is that he's actually making Britain's economy more and more like those of continental Europe. Europe should be a market for British business, not an economic model.

The truth is that if you look at the major English-speaking economies, Britain is growing slower than any of them. And our income per head is now - for the first time - lower than Ireland's.

We have dropped from fourth to eleventh in the world competitive league.

I don't want the British economy to follow the European model. Labour, for all their fine words, do. I want Britain to change direction.

Education

I talked about getting the basics right for business. One of those is education.

My driving ambition is to give people real opportunity - the opportunity to make a success of their life.

And education is the key to all opportunity. I know. I come from an ordinary family. My parents ran a clothes shop in Llanelli. We didn't have any special privileges. But we were lucky enough to live in a town with a first class state school.

At Llanelli Grammar School, discipline was at a premium. Teachers were respected. We all learnt the basics. Ambition, excellence and hard work were encouraged. It was the best start any child could have in life.

Fifty years on, I want everyone to have that quality of education. Let's be clear - the quality of Britain's education system today, will determine our success as a society tomorrow.

When I travel round the country, perhaps the most heartbreaking sight I see is the children who've dropped out of school. Youngsters going off the rails - each of them a story of lost opportunity, but also a warning of the kind of country Britain will become if we don't change direction.

If children don't learn respect for authority in class, they're much less likely to respect others when they grow up.

If youngsters aren't taught to read or write properly at school, they'll find it that much tougher to get a job when they leave - so the chances of their getting into crime are that much higher.

And if British companies can't recruit employees with the right skills, they'll find it even harder to compete.

Examinations should be a guide to help companies recruit the right people with the right aptitudes. The complaint I hear frequently from business is that all too often examination results are more a smokescreen than a guide. That's why we will restore confidence in our exam system. We will retain and strengthen A-levels and retain and strengthen GCSEs.

Vocational Training

One of the tragedies of our education system is that we have overvalued the importance of an academic qualification at the expense of a technical or practical skill. It is not a mistake that countries like Germany have made.

I believe this is one of the root causes of truancy. If youngsters who know they are never going to make it to university cannot learn a practical skill, should we be surprised when they get angry and frustrated with an inflexible academic curriculum which seems only to highlight their failings?

It's time to end that snobbery. Further Education should no longer be the forgotten garden of the education world. Our education system must recognise that every person is different, with different aptitudes, skills and ambitions.

A skilled craftsman, an accomplished electrician, a capable plumber - these are people our society needs.

Ask anyone whom they value most: a good lawyer or a good plumber?

I'm a lawyer. But I can tell you what their answer would be. It's not my profession.

The way to build esteem for these trades is to raise the quality and standard of education that the system provides. Then everyone knows that a young person who has chosen a vocational route, and come out of it with flying colours, is talented, skilled and proficient.

In our manifesto we said that "vocational education does not have the status it deserves".

And this is how we're going to give it that status. We will establish a network of skills Super Colleges.

We will provide them with extra funding by abolishing the Learning Skills Council and a whole raft of centrally-directed initiatives and regulation.

And we will enable 14 and 15 year olds to start on a vocational path from school and let FEs provide specialist courses for them.

Detailed plans. Detailed action. A timetable for action.

A government that will do what it says.

Governments make a difference when their values are the same as the broad mainstream of the country.

I want everyone, whatever their background, to have the chance to make a success of their chosen career; the opportunity to fulfil their ambitions; and the opportunity for children to have a better life than their parents.

Education is, for me, more than a policy area, it's a passion. A passion rooted deep in my own experience - my own education.

Every child is good at something. The challenge of education is to unlock the individual talents that each child has within them.

Pensions

The other great challenge is pensions.

"When Labour came to power we had one of the strongest pension provisions in Europe and now probably we have some of the weakest".

Not my words, but the words of Labour's first Welfare Minister, Frank Field.

That's the truth about the state of Britain's pension system after eight years of Tony Blair.

Just consider these facts.

Millions of pensioners have been driven on to means-tested benefits.

Nearly half of Britain's work-force are not putting any money aside for their retirement.

And by 2050 there will be only half as many workers to support each pensioner as there are today.

No wonder so many people in their forties and fifties worry that their pensions won't be enough to support them in retirement.

Conservatives will take action to tackle the pensions crisis Mr Blair has created. We will reform the state system to provide a bigger pension, create new incentives to save for retirement and provide better support for company pensions.

In our first budget, a Conservative Government will act to boost savings by giving people extra tax relief on their pension contributions.

For every £100 people put into their pension, whether it's a personal or company scheme, a Conservative Government will put in an extra £10.

If you are in your late twenties, you're on average earnings and you work until you're sixty five, our savings boost could increase your pension by as much as £500 a year when you retire.

So under our scheme people won't get something for nothing - they'll only get something out, if they put something in.

Initially around 10 million working people will benefit.

This savings boost will come into effect from April 2006 and it will apply to starting rate and basic rate income taxpayers.

I believe in rewarding people who do the right thing and help themselves.

Conclusion

I believe Britain has got to change direction.

That's why we will:

Cut government waste.

Reduce government borrowing.

Lower taxation.

Cut regulation.

Strengthen our exam system.

Improve vocational education.

And boost saving for pensions.

It's time to reward those who do the right thing.

So think about a Britain after five years of Conservative Government. A country which recognises that personal responsibility is the bedrock of a healthy society. A country where everyone can climb the ladder of opportunity. A country where the prosperity earned through work and risk-taking creates wealth for all.

A Britain in which business can flourish.

That's what will happen with a Conservative Government. That's why I believe the country needs a Conservative Government after May 5th."

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