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Hague: Conservatives will cut Labour's Damaging Burdens on Industry and Business

It is a great pleasure to be here at your awards lunch today and I am very grateful to you for your kind invitation.

It is particularly good to be in the North West again. This is a great opportunity for us to celebrate the success of business across this region. Whether it is in the North West's impressive pharmaceutical industry, your small but growing service and e-commerce sector, or your established manufacturing sector, this region is full of individual success stories. And it is those successes that we are here to celebrate today.

It isn't only the large, multi-national companies or the small new e-businesses that form the backbone of today's British economy, it is all of you who are investing, taking risks and making jobs in the North West. And you all deserve to have your hard work in wealth creation for this region recognised.

I know that the CBI North West is one of the most active in the country; it has a national reputation for promoting best practice and the interests of its members.

The CBI this week has been at the forefront of calls on this Government to roll back the burden of business taxation on its hard-pressed members.

Nobody should underestimate the importance of the economic choices the North West and the rest of Britain face today. They will determine whether Britain meets its greatest economic challenge - whether we can lead Europe in the new, global economy, or whether we drift along only to find ourselves overtaken by our competitors.

All of us are aware of the opportunities presented to us by the global economy. But with those opportunities come dangers - while it gives businesses greater freedom of choice over where they locate, it also allows them to be more choosy about it than ever before.

The lessons for Governments hardly needs spelling out. In a fiercely competitive world wherever countries pursue inappropriate economic policies they will be punished. Potential inward investors will simply go to a country where the economic package on offer is more attractive.

In responding to the challenges of the new economy we are currently ahead of the rest of Europe. But we are still way behind the United States. And even with regard to Europe, if we stand still, or make the wrong choices, we will be quickly overtaken. The last thing Britain can afford is complacency.

If you strip away the rhetoric and the spin, what emerges is a picture of a British economy that could, and should, be doing so much better; an economy that is nowhere near to reaching its full potential. As one economist put it recently in the Wall Street Journal, 'Mr Brown's performance is lacklustre indeed'.

Under three years of Labour, growth has been lower than the average for the previous fifteen under the last Government. It has grown at about half the rate of the US economy and at a lower rate than euroland. Two-thirds of our tax advantage against Europe has now been eroded. Unemployment is still higher than in 13 OECD states. The labour market has become more rigid due to the suffocating increase in the burden of regulation. Productivity has grown at just over half the rate at which it grew in the previous Parliament. Our share of world exports has dropped. And the savings ratio has slumped.

Here in the North West, as people actually involved in trying to run businesses, you will be acutely aware that reality bears little resemblance to the version pumped out by the Downing Street spin doctors.

And it isn't because hardworking businesses in the North West are failing to grasp the opportunities presented to them - it is because the Government is.

The biggest boost to manufacturing and to business in general would be a change in direction by the Government away from high taxes and over regulation to a dynamic, flexible and enterprise economy.

Here in the North West the tax bill is set to rise by some £4.1 billion over the course of this Parliament. It seems that the only people who haven't been hit by Labour's stealth taxes are those who don't drink, never smoke, are not paying for their own home, aren't married, don't have a pension, don't drive a car and never pay for their own petrol. And the only people in Britain I know that fit that description are all members of the Cabinet.

And it's not just families that are being clobbered. The CBI estimates that an extra £5 billion a year has been imposed in taxes on business - including hikes in fuel duties, the abolition of dividend tax credits on pension funds, changes to the administration of Corporation Tax and the iniquitous, unwieldy and ultimately futile Climate Change Levy.

The Climate Change Levy is a serious threat to manufacturing across Britain. One local horticultural company - in South Ribble - recently told us that it alone was facing a £100,000 tax bill because of the Chancellor's Energy Tax. And I know that across the North West, the tax is hitting manufacturing industry hard.

So just at a time when we should be reaping the benefits of Conservative reforms that turned us from a high tax economy into a low one, the Government is putting us in reverse and squandering our competitive advantages.

If spending continues to rise at the current or planned rates, then inevitably the tax burden will have to rise even more, making us increasingly less competitive. And this Government is increasing spending at an ever faster rate than the average growth in the economy.

The Chancellor has failed to set a sustainable course for public spending. The next Conservative Government will plan for public spending to increase in real terms year on year, but within the economy's trend rate of growth. We can and will offer better public services, at the same time as reducing taxes; we must tax less, spend better and deliver more.

But it's not just tax. This country needs a Government that is committed to reducing the regulatory burden on business too.

In its charm offensive before the last election Labour pledged 'not to impose burdensome regulations on business because we understand that successful businesses must keep costs down'.

Instead, British businesses is now struggling with an extra £5 billion a year in increased red tape generated by this government. As the Chairman of the CBI said recently: 'regulation is the most dominating feature of running business. It is no longer creating wealth, it is about having to deal with regulations'.

It's not just one piece of red tape on its own but the cumulative burden - statutory trade union recognition, the working time directive, making business responsible for administering the working families tax credit - that is now strangling the life out of many firms.

And the burden is falling disproportionately on small businesses, the innovators and risk takers who create wealth and jobs. What it shows is that, despite the warm rhetoric, Labour still do not understand business.

They have no idea what it's like for people trying to cope with mountains of government-imposed paperwork. They just don't know what it's like for the small businessman, who can't afford the luxury of a finance department, struggling late into the night to complete complicated VAT returns. They haven't a clue about the problems they've created for the businessman who said to me 'at this rate, we are going to have one man working in this country and 55 million checking up on him.'

But then none of this should surprise anyone here, because the straight truth is that not one senior member of the Cabinet has ever worked in business. Not a single one of them has ever made anything, run anything, and the only jobs they've ever created is for more politicians and spin doctors in Whitehall.

The Government has failed to cut the burden of regulation on businesses. The next Conservative Government will cut that burden.

We'll free business from the administration of the WFTC by paying it as a benefit.

We will establish, through an independent audit, the total cost of regulation to the economy and then set declining regulatory budgets for each Government Department that will bring the cost of regulation down year on year.

Our aim is simple - not just to stem the rising tide of regulations but to be the first Government in history actually to turn back that tide.

There will be some who look at the difficulties facing manufacturing in the North West and see salvation in membership of the euro. It won't surprise you to hear that I disagree. Our competitive position would not be improved by rushing headlong into a one-size-fits-all interest rate that might be totally unsuited to our own conditions - a problem the Irish are now grappling with. If the current exchange rate is a problem for business now, then locking ourselves forever into that exchange rate would be ultimately catastrophic. Nor would joining the euro promote greater stability when it has been so notoriously volatile so far.

It strikes me as odd that the same people who argued that we must have the euro because our currency would be too weak to compete with it, now argue that we have to go in because the pound is so strong.

Business for Sterling and Chantrey Vellacott have calculated that the cost to the North West of converting to the euro will be £3 billion. For businesses already struggling under an extra £5 billion a year of red tape and an extra £5 billion a year of higher taxes, the extra costs imposed by Labour's dogmatic determination to join the euro will be even more unwelcome.

Conservatives believe that we should keep control of our currency and with it control over our monetary and fiscal policy. Only by doing that can we continue to set our interest rates to suit British economic conditions. So at the next election the Conservative Party will be the only party committed to keeping the pound.

This is the choice that Britain must make if it is to get and stay ahead - lower taxes, lighter regulations, sustainable public spending and keeping the pound. All of them essential if we are to make the most of our advantages and fulfil our economic potential. All of them essential if we are to create jobs and spread prosperity not just across the North West, but throughout the entire country. All of them essential if we are to fulfil the ambition of the Conservative Party to make Britain the best place in the world to do business.

You in the CBI are at the forefront of business life here in the North West. You are the people who take the risks, create the wealth and bring in the jobs. So it is with a deep sense of gratitude and admiration, that I pay tribute to all that you do and wish you every success in the times ahead.

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