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Whittingdale: Time to liberalise and deregulate

Speaking today to the Conservative Party Conference, John Whittingdale MP, Shadow Trade and Industry Secretary, said:

"It was a great honour to be asked by Iain four weeks ago to take on the position of Shadow Secretary of State for Trade and Industry. It will be my job to give a voice to the thousands of businesses, large and small, on whom the wealth and prosperity of our country depend.

In doing so, I shall be carrying on the superb work done by my predecessor, David Heathcoat-Amory. All of us will feel sadness at his decision to step down from the Shadow Cabinet and will want to wish him and his family well.

I am also fortunate in having the support of an excellent team:

- Philip Hammond, who brings real experience of what it takes to run a small business;

- Rob Key who has Ministerial experience across Government;

- Nigel Waterson who has done tremendous work with our Conservative Councillors;

- and, in the House of Lords, that doughty campaigner who needs no introduction to this Conference, Doreen Miller.

With Charles Hendry as our whip, they will prove more than a match for the eight Ministers now serving in the DTI.

The outlook for business and commerce in this country is now more uncertain than it has been for many years. Even before the terrible events of four weeks ago, there was growing evidence of an economic slowdown and problems ahead.

Manufacturing output has been falling since the beginning of the year. Productivity growth is slowing and our balance of payments is in record deficit. Many sectors far beyond farming have been hit by the devastating effects of Foot and Mouth. And already this year, we have seen major job losses from such famous names as Corus, Motorola and, in my own constituency in Chelmsford, Marconi.

But without question, the difficulties facing the economy and business have been made much greater as a result of the terrorist attacks in America. Coming on top of the terrible loss of life, the damage done to jobs, livelihoods and prosperity will continue to be felt for months to come. Consumer confidence has been badly shaken. Savers, those approaching retirement, mortgage holders will all feel the effect of the fall in the world's financial markets. And companies too will have less to invest and will have to adjust to a likely drop in demand.

Such a climate is a challenge not just for those in business but also for those in Government. With a slowing economy, we should ask how Government can best help to minimise the effects on businesses and their employees. Some will instinctively look to Government to intervene. They will reach for the comfort blanket of subsidies, protection and regulation. It is a temptation to which this Labour Government has already succumbed time and again. But the effect is to make it harder for companies to survive and to prosper in a globally competitive world.

The Department of Trade and Industry has a critical role in ensuring that the needs of business are heard in every corner of Government. But under this Government, as the size of the Department has increased, its influence has decreased. In the past four years, the DTI's budget has grown by more than 50 per cent. The number of civil servants is up by over 1,500. But, at the same time, its voice in Government has become weaker.

While the DTI suffers a crisis of identity, it is the Treasury and Gordon Brown that have been dictating industrial policy, social policy, employment policy, competition policy and every other policy for which it claims to be responsible.

Gordon Brown makes much of his priority of the enterprise and productivity challenge. Labour's manifesto, both this year and in 1997, talked of the need to cut business tax and red tape. Only last week, Patricia Hewitt was at it again. But their actions have achieved exactly the opposite.

Instead of reducing taxes paid by business, the Chancellor has piled them on. Instead of cutting the burden of regulation, Ministers have continued to add to it. And instead of making the climate for business easier, the Government has relentlessly increased the workload, the pressures and the demands on entrepreneurs.

The effect has been to squander much of the competitive advantage so painfully won during our own period of office. After climbing steadily up the world league table of competitiveness, Britain has now fallen back ten places to 19th.

Having promised to cut business tax, this Government has increased the tax bill for British business by £5 billion every year. A windfall tax on the utilities. Higher stamp duty on commercial property deals. Increased fuel duty on road transport. A new aggregates tax on materials. The IR35 tax, which will hit the very people in the technology industries whose skills we so desperately need. And from this April, a £1 billion energy tax which is forcing up the costs of manufacturing industry just at the time when they are finding it hardest to compete.

And it doesn't end there. With the tax laws now running to 6,000 pages, businessmen can spend more time working out how much tax they have to pay than actually earning the income to pay it.

But if you think the cost of extra tax on business is bad, the cost of extra regulation is even worse: £15 billion according to the British Chambers of Commerce. All too often dreamt up in Brussels and then enthusiastically implemented by Ministers and Civil Servants, the flow is relentless.

Limits on working hours, entitlements to parental leave, rights for part time workers: each one may sound like a sensible and civilising measure which no caring employer should refuse. But when Government imposes these rights by law then taken together, the effect on competitiveness, on wealth creation and on employment is devastating: Higher costs, lower profits, lost exports, fewer jobs. Yet the flow continues with plenty more in the pipeline.

The real test is not in the good times, when everything seems to be heading in the right direction. The test is the economy's ability to bounce back from recession or the type of shock we've just had and start creating new jobs. It is then we will see the full extent of the damaging effect of this welter of regulations.

Government has made the businessman's job harder. But if that was not enough, business is being asked to do the Government's job as well. Employers are now expected to administer much of the welfare state. Working Families Tax Credit, Student Loans, Child Support, Stakeholder Pensions, training schemes - instead of being administered by the Government, it is the poor old employer who now has to do the job. And once again it is the small businessman - who does not have a payroll manager or Human Resources Director - who carries the heaviest burden.

And of course, the Government now wants to impose on business another straitjacket - membership of the Euro. Now I realise that the Euro is a divisive issue. Last week, the Prime Minister once again spoke of his enthusiasm for joining as soon as possible. Yet, just a couple of weeks earlier, sources close to the Chancellor were quoted saying "We need maximum flexibility …. The European Central Bank is the last place you'd find flexibility and fast footwork in a crisis". As usual, it was the sources that were right.

There is an alternative. The alternative in difficult times is to look to reduce the burden of Government interference and to promote free trade. To liberalise markets, to cut taxes and to deregulate. That is the Conservative approach. And it is the approach that has been shown time and again to be the best guarantor of economic success, prosperity and jobs.

The choice of the World Trade Center as the target for the terrorists was no accident. They recognised that the prosperity and freedom we enjoy is built on free trade and the capitalist system.

So our answer to them must not be to turn inward - either as Little Englanders or as Little Europeans. Instead, we must redouble our efforts to reduce barriers, to open markets and to do away with protectionism. That is the best help that we can give not just to our own industries but also to those in the developing countries.

For too long the interests of business have been ignored. Its voice has been too weak. Our job is to speak up on its behalf. Not in opposition to the interests of labour, or welfare or the environment but because we understand that those interests are best served by flourishing and successful businesses. It is they who earn the money that will pay for more policemen, new hospitals and better schools. More than ever, business needs a champion and we will not flinch from the task."

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