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Hague: Europe's New Economy Capital

I am delighted that so many industry leaders are here at this CBLU reception. This is a tremendous opportunity to stress the still closer, stronger links that the Conservative Party is building with all of British industry - a relationship built on a true understanding, and our willingness to listen. The CBLU e-commerce survey, on which David Heathcoat-Amory will speak, is part of that on-going effort.

Across the world, a revolution is taking place in the way we do business. Governments everywhere are slowly waking up to a new economy. It is not just another part of the old economic equation; it radically alters the way we do business and the pace of economic change. Because e-commerce has the potential to transform the economy at such an astonishing speed, governments need to be quicker than ever to respond to the needs of business.

Britain can be - it must be - a leader in that new economy. And the challenges ahead are clear. No longer can we can take our businesses for granted. In the virtual world, national boundaries become meaningless: firms can and will go anywhere fast. To be on the new electronic frontier, governments must act with urgency to give business back their freedom.

Britain began in poll position: our lower taxes and lighter regulation put us far ahead of the rest of Europe. So did your excellent software skills and entrepreneurial spirit.

But we are losing that lead. Today, internet access in Britain lags behind that of the United States and much of Europe. And American internet sites dominate that competitive landscape.

This is a direct consequence of the Government's policy. In Britain, access costs are higher and the speed of services is slower. The Government has failed to deregulate our telecoms market; it has dawdled on granting licences to new operators; it has been slow to opening up competition. E-commerce simply can't afford this leisurely pace.

But Labour hasn't been slow to tax: even Downing Street admits that the tax burden has risen under this Government. And e-commerce hasn't escaped lightly, with the imposition of the IR35 stealth tax - the government's brain-drain tax on IT consultants. Across the country, small IT companies have been telling me that they are deeply concerned by this New Labour tax.

Today it is clear that our forecasts are coming true. Already consultants have been forced overseas - Labour Ministers get postcards from them all the time. There hasn't been a brain-drain on this scale since the 1970s, and Labour still hasn't learnt those old lessons. The outgoing Chairman of the Professional Contractors' Group said earlier this year that he fears IR35 will deal a massive blow to Britain's enterprise culture. It is the worst example of Labour's failure to understand how business and the new economy work.

Politicians cannot take credit for e-commerce: they didn't invent the internet; they don't make the jobs or take the risks. So government must get out of the way fast to let e-commerce flourish. This is my vision for the new economy. We need to be ruthless in cutting regulation, and fighting Labour's stealth taxes. And we must put Britain back in the lead on skills and education.

Less regulation works, we know that. Just look at what Governor Jeb Bush is achieving in Florida's "Silicon Beach" by building a low tax, low regulation, high-skill business environment. Only by freeing our industry can British-based firms once again compete with Silicon Beach, even without the sunshine.

We will be quick to act where the Government has failed. The next Conservative Government will ask the Competition Commission to review BT`s market power in local internet connections.

We will deregulate telecoms, particularly with the advent of digital television. We will consider establishing a single regulator for our converging communications industries - we await the Government's forthcoming proposals with great interest. And we will speed up the DTI`s procedures for granting licences to new telecoms operators.

The new economy demands a fresh approach to education. And Conservatives are ready to offer that too. We will free our schools so that they can deliver crucial IT skills earlier. And we will introduce vocational options as part of a simplified National Curriculum.

Only by giving our universities the funds and the freedom to develop will they be at the leading edge in research and technology. Our policy to progressively endow our universities, to end their dependency on the Government, will we make them once more the best in the world.

The next Conservative Government will act swiftly and decisively to let enterprise and innovation flourish. We will build an environment where the UK will be the best place in the world for e-commerce. Lower taxes and lighter regulation are right for all businesses, new and old. I promise the vision and the action to put Britain back at the front of the global economy.

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