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Yeo: Britain's businesses deserve better

Speech to Conservative Party Spring Conference

For the first time in over a decade since Britain's ignominious exit from the ERM we have the chance to win back our reputation as the Party which knows best how to run the economy. The long honeymoon which the Labour Government enjoyed with the business community is well and truly over. Because of that now is the time to focus on the Government's approach to business, the damage this is inflicting on our competitive position and on Labour's handling of the economy.

Let's start with Gordon Brown, the Finance Director of Great Britain plc. We remember, we shareholders, don't we? How our Finance Director was always telling us how prudent he was. His reputation doesn't look quite so hot now. He's been rumbled. And on April 9th, the Finance Director will be issuing a profits warning, his second profits warning in five months. If Gordon Brown was Finance Director of a FTSE 100 company, instead of GB plc, he'd be out his job by now, ejected by angry shareholders, instead of looking for ways to ease his way into the Chief Executive's chair. And even if shareholders didn't have something to say then the Financial Reporting Council might because Gordon isn't only issuing profits warnings as his rose-tinted forecasts are exposed by events, he's been caught fiddling the books as well. He's piling up hidden off-balance sheet liabilities at a rate that would leave even Enron breathless. The Institute of Fiscal Studies estimates that by the end of this Parliament the amount of public debt the Chancellor has concealed will amount to £46 billion. That's over £3,000 for every family of four in Britain. Debt on which, directly or indirectly, you and I will pay the interest. Debt which our once so prudent Finance Director doesn't want to admit to.

I'm afraid some of his colleagues on the board of Great Britain plc have been rumbled as well. Take my opposite number Patricia Hewitt. She knows how to talk a good game. She says - I quote - she "wants to help build an enterprise society". "To improve the economic performance of all regions". Shall I tell you what's really happening? At the start of this year I set her five tests. I challenged her to tell me which ones she will pass in 2003. After six years of Labour government Britain's deficit in traded goods is the highest since records were first kept in 1697. After six years of Labour government business investment is falling faster than at any time since the present series of statistics were started in 1966. After six years of Labour government Britain's productivity growth rate has halved. During six years of Labour government an average of 2,000 manufacturing jobs have been lost every single week. And after six years of Labour government more days were lost through strikes last year than in any year since 1991. That's the reality of this government which claims to be pro-business. Deteriorating trade, collapsing investment, slower productivity, weaker manufacturing, more strikes. My guess is that Patricia Hewitt will keep failing these tests. Trade, investment, productivity and manufacturing are all heading in the wrong direction. All these trends are ringing alarm bells about the future. Take jobs. According to the Government's own Labour Force Survey private sector jobs are now falling as a proportion of total employment. You don't see that in the overall unemployment figures, of course. Because jobs in the public sector are rising. All those extra administrators in the NHS, for example. An economy which is shifting jobs from the wealth-creating sector to the sector which the taxpayer has to pay for is on an unsustainable trend.

There's another trend that's worrying. It's the upward trend in tax. You remember all the pledges Tony Blair made to reassure us that he wouldn't be another tax and waste Prime Minister. I reckon Gordon Brown thought if he held the basic rate of income tax steady we'd think he'd honoured that pledge. He's been rumbled on that one too. Under Labour tax has gone up. Under Labour tax is going up. Under Labour tax will go on going up. And nobody knows that better than business. Higher National Insurance Contributions. Gordon Brown's pensions tax undermining the very foundations of what was once the jewel in Britain's savings crown, our occupational pension schemes. Many businesses are also burdened with the climate change levy, too. Under Labour business pays more and more tax. £47bn extra, according to the CBI. I dare say Digby will have something to say about that in a moment. And what business knows today the rest of the community will find out tomorrow.

Next month we'll have the biggest rises in Council Tax since its introduction over a decade ago. Back home in Suffolk the Labour Liberal Democrat controlled County Council has raised Council Tax by a whopping 18%. I've been asking people as I go round helping our council candidates if they've noticed 18% more police on the street? 18% more teachers in the schools? 18% more home helps? Surprise, surprise, they haven't. But there are another two hundred bureaucrats in Ipswich at County Hall. More tax, more spend, more waste. It's the same here in Harrogate. The Liberal Democrat controlled council is hitting people with a 17% hike in Council Tax. May 1st is our chance to get this council back under Conservative control. Labour, Liberal Democrats - they're all the same when it comes to squandering other people's money. And the tax rises won't stop with Council Tax next month. Every employee will have less in their pay packet because of the hike in National Insurance Contributions. Under Labour the whole country pays more tax. The share of our national wealth taken in tax is rising. The Conservatives will always be a lower tax Party than Labour. Today we have an historic opportunity to make sure the case for lower tax. All around, every day, people can see that the extra tax we are paying is being wasted. Wasted by Ministers, wasted by Labour and Liberal Democrat Councils. Let me put it like this. The level of public spending is no longer the best measure of the effectiveness of government action in the public interest. It is what the money is actually spent on that counts more than how much money is spent. A neat summary, but not actually my words. The words of Tony Blair in Labour's 1997 Election Manifesto. Words he now seems to have forgotten, like so many others. Is one business better than another, just because it spends more? Of course it isn't. What makes a good business is the right management, the right structure, the right organisation. That's why we'll tackle the issues Labour have flunked. The public service reforms, without which more money will simply be wasted.

Let me tell you what's the right approach for the Department of Trade and Industry. The DTI is the only department in Whitehall which is there to stand up for business and enterprise. Its role should be to make Britain a better place to do business. Not surprisingly the Liberal Democrats want to abolish it. The Secretary of State for Trade and Industry should be the Cabinet Minister that the rest of the Cabinet hates because he or she should insist that the policies of every other department are tested by one criterion: do they make Britain a better place to do business? What is their impact on Britain's competitive position? For 18 years the last Conservative government fought to make Britain more productive. Almost single-handedly Margaret Thatcher changed Britain from being a laughing stock, the sick man of Europe, into one of the world's strongest and most competitive economies. As a businessman in the late 70s I travelled abroad on business and was almost embarrassed to say where I came from. By 1997 that had changed and I'm proud of that. That was the achievement of a competent Party, a principled Party, a responsible Party. A Party which understood that everything we want for our country depends on a successful economy, depends on a thriving business base. So my job in government will be to make sure that every other Government Department remembers that a Conservative government must make Britain a better place to do business. And that goes for the DTI itself too. We used an energy policy which recognises the sea change Britain is experiencing as we move from exporting oil and gas to being dependent on imports instead of one which relies on wishful thinking. Like Patricia Hewitt's White Paper last month which exposes Britain to the risk of power cuts a winter or two hence. We need a communications policy which accepts that broadband is now as much part of our infrastructure as roads or telephones instead of Ministers who last week refused even to require the new regulator OFCOM to promote competition between broadband suppliers.

As for regulation I hardly know where to begin. There isn't a group of business people I've met in the last eight months who haven't told me how their businesses are damaged by red tape. The regulations imposed by Labour are costing business an extra £20 billion, according to the British Chamber of Commerce. Lots of business people are pretty cynical when politicians promise a lighter touch. I understand that. It's why I've started to tackle this problem at the micro level. The panel of Better Regulation Advisers I announced last month have started to examine proposals for the abolition of specific regulations. I hope I'll soon be able to announce some regulations which the next Conservative government will repeal within weeks of taking office. And if you've got any suggestions you'd like the panel to look at, let me know. When this initiative is well under way we'll look at more systemic changes which'll go to the heart of the red tape mentality pervading this government. I don't pretend I can get rid of every regulation which burdens British business but unlike Patricia Hewitt I've run a business myself. I know what it's like at the sharp end, if the owner of a small business gets home an hour earlier on a Friday night or has one or two fewer forms to fill in each week, if the costs of any business are cut by a couple of percentage points. Because of what I'll be doing as Secretary of State I'll know I've made a start on the process of making Britain a better place to do business. And I'll be proud to do so because as a Tory I believe in wealth creation. I believe in it for its own sake as a legitimate goal in its own right and I believe in it because I know that everything else we want - the teachers, the doctors, the nurses - regardless of whether they're in the private sector or the public sector, all depend on wealth creation. The pensions, the roads, the railways, the police, the environment, all depend on wealth creation. That's why we must make Britain a better place to do business. That's why we must halt Labour's regulation juggernaut. That's why we must fight their tax and waste policies. That's why we must seize the best chance we've had in years to expose the incompetence, the superficiality, the opportunism, which are becoming the hallmark of this Government. The people of Britain deserve better. They deserve a strong and effective Opposition which calls the Government to account. We will provide that Opposition. And with the help of every man and woman in this hall we will take our message to every corner of Britain and in doing so we will earn the right to govern this country once more.

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