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Hague: Don't Kick the Government, Kick the Government Out

It is a great pleasure to be here at your dinner tonight and I am immensely grateful to you and to your President, Nigel Sherlock, and your Chief Executive, Michael Bird, for their kind invitation.

Nobody should underestimate the importance of the economic choices before Britain today. Because it is those choices that 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 challenges, and with challenges come dangers. For example, in the information age old concepts of the importance of location have been transformed. But while that gives businesses greater freedom of choice over where they locate, it also allows them to be more choosy about it than ever before.

The lesson of this 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.

Some might think this is all rather alarmist. After all, whenever the Chancellor of the Exchequer speaks, you could be forgiven for believing that he has delivered an economic miracle of biblical proportions.

What is certainly true is that the current Government inherited an economy that was fundamentally sound, with sustainable growth, falling unemployment and low inflation. They were the most favourable set of economic circumstances inherited by any government in the past hundred years. Yet, Gordon Brown's policy decisions over the past three years are seriously putting that inheritance at risk. Rather than exploit our advantages he seems intent on throwing them away.

Because if you strip away the half truths, the phoney accounting, the rhetoric and the spin what emerges is a picture of a British economy that could, and should, be doing so much better. It is a portrait of 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 previous fifteen under the Conservatives. The tax burden has risen faster than in any other industrialised country. 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 is falling. Our share of world exports has dropped. And the savings ratio has slumped.

Before we hear the next set of economic boasts from Gordon Brown when he delivers his pre-budget report next week, perhaps we could be treated to a greater degree of honesty when it comes to the facts.

Here in the North-East, all of you are acutely aware, as people actually involved in trying to run businesses, that the harsh reality bears little resemblance to the version pumped out by the Downing Street spin doctors. Try telling the 23,000 people in the region who have lost their jobs in the past two years that under Labour 'Britain just got better'.

Like other parts of the country, North-East has had to make the difficult transition away from a heavy reliance on traditional industries and attract new investment. And there have been some notable successes, for example in car manufacturing. But we need to attract more.

I agree that regional assistance can be an important element in regeneration and bringing in new investment. But I don't believe the Government's Regional Development Agencies are the right answer. Every region now has one, including those where they are not really needed. This has created a situation where each part of the country now competes for its share of the same pot of cash. So the next Conservative Government will abolish the RDAs and instead concentrate assistance in areas where it is needed most, and that will of course include many parts of the North East.

There will be some who look at the difficulties facing manufacturing 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'd 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.

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

Next week, when the Chancellor delivers his pre-budget statement, he has the chance to signal that change. Instead, what will doubtless be served up is another conjuring trick in which we are told taxes are going down when they are going up, spending is prudent when it is running at unsustainable levels and that public services are improving when everybody in the country knows they are getting worse.

So, in order that he can't complain about the advice he is being given I thought I might try and help Gordon Brown by telling him some of the things that should actually be in the pre-budget statement next week.

He should make it a clear objective of Government policy to reduce the burden of taxation that is hitting millions of hard-working families and businesses throughout the country. This is the Government that said it had 'no plans to increase tax at all' and yet through its cynically directed stealth taxes has increased the burden of tax on a typical working family by £670 a year.

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.

But 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 - things like 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.

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 the Chancellor won't commit himself to delivering lower taxes, the next Conservative Government will.

At the next election there will be a clear choice between Labour's stealth taxes and a Conservative Government committed to cutting taxes. The next Conservative Government will be a tax cutting government.

If the Government doesn't cut fuel tax, we will. The fuel crisis in September was entirely of the Government's own making. For behind the blockades there was a widespread taxpayers' revolt by decent, law-abiding people throughout Britain who were sick to death of being fleeced by the Chancellor every time they had to fill up their vehicle.

We all remember how the Government sought to spin its way out of trouble. First the taxes were necessary to save the environment. Then they were vital if we were to sustain spending on the NHS. And now the Home Secretary tells us that high fuel taxes are vital if we are to avoid increases in interest rates. Nobody was fooled by Labour's spin in September, and they are not fooled by Labour's spin now.

The public understand full well that the Chancellor could act to cut fuel duty but through a combination of stubbornness and arrogance he has refused to do so.

Now the Prime Minister is going around giving newspaper interviews saying he understands the pain that people are suffering because of the high cost of fuel.

Who does he think inflicted the pain in the first place? Who has increased petrol taxes by a third so that our petrol is the most expensive in Europe? Tony Blair is now so remote and out of touch that he no longer knows nor cares about the suffering which his stealth taxes are causing to hard working families making do on tight budgets. Only a Prime Minister who no longer fills his car up could dismiss what happened in September as the actions of a small minority of protestors.

I did not support direct action by the fuel protestors, but I believe that the great majority of them acted with dignity and restraint. I also believe that they made a powerful point; that they won overwhelming backing for their case; and that the country was on their side. The Prime Minister was even forced to concede that he might listen - not that he has shown any signs since of doing so.

Instead the Government has made the situation worse. By their talk of bringing out the Army, timing the pre-Budget statement so close to the sixty day deadline and now Jack Straw's appeal to the emergency services to stockpile fuel, they are in danger of creating a climate of anxiety throughout the country.

My message to the fuel protestors next week is this: so far the vast majority of you have conducted yourselves with dignity and restraint, and you have won the support of the public because your cause is just. Petrol tax is too high and must be cut. Peaceful protests in the future will also win the sympathy of millions of people, myself included. But protests that involve direct action, that are not peaceful, that are not legal or that cause suffering to hard-working families will rightly lose the support of the public. Do not go down that route and do not let the Government provoke you into taking it.

Instead, understand this Government in a way that they do not understand you. The thing Labour Ministers fear most is not that you won't be able to drive your car about; it is that they will no longer be driven about in theirs. So if you want to hit New Labour where it hurts, don't kick the Government - kick the Government out.

The right way to settle arguments over tax in a democracy is through the ballot box. And the country has a clear choice. If the Chancellor continues to refuse to act on fuel duties, the next Conservative Government will cut fuel duty by at least three pence a litre.

That is what the mainstream majority of the British people want, and if Labour won't do it, we will.

Next week the Chancellor should commit himself to cutting tax. He should also commit himself to planning increases in public expenditure that are sustainable and within what the country can afford. Yet the Chancellor is doing the precise opposite, by increasing spending at a constantly faster rate than the average growth in the economy.

It's these increases in public spending that are the reason why the tax burden has already risen sharply in the past three years. 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.

If the Chancellor won't set a sustainable course for public spending, the next Conservative Government will. We will plan for public spending to increase in real terms year on year, within the economy's trend rate of growth. We can and will offer better public services, at the same time as reducing taxes.

And you can dismiss immediately the ludicrous and discredited charge put about by the Government that our plans will mean £16 billion of spending cuts. That simply will not happen. It does not form any part of our plans. Nobody should attach any seriousness what the Government says about our spending plans when their own figures are regularly plucked out of a fantasy world.

Between now and the election members of the shadow cabinet will be working on policies that will enable us to reduce taxes, match whatever Labour spends on health and devote more money to other priority areas. We've already made some significant progress. David Willetts has already announced a package of reforms, such as privatising industrial injuries benefit, which would save £3 billion from the social security budget.

The difference between the parties is clear. Labour have taxed more and delivered less. The next Conservative Government will tax less, spend better and deliver more.

Next, the Chancellor should commit himself to reducing the regulatory burden on business. 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'. The Trade and Industry Secretary said only last year that 'I guarantee that we will not allow regulation to stifle enterprise and innovation'.

Instead, British businesses is now struggling under an extra £5 billion a year in increased red tape imposed 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 - things like 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.

If the Chancellor won't cut the burden of regulation on businesses then the next Conservative Government will. 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 cut them

These are just some of the things that the Chancellor should be doing. But there are many more.

He should commit himself to a strategy that will make Britain the IT capital of Europe building on the advantages we have, instead of giving them away. He should outline policies genuinely to reform welfare. He should put an end to his gimmicks on pensions, redirecting the money that saved into the basic state pension, and he should be allowing the pensioners of tomorrow the chance to build up a funded alternative to the state pension.

And I believe the Chancellor should make clear that Britain will maintain its economic flexibility by keeping the pound. They might be split on tactics, but they are totally united in their determination join the euro early in the next Parliament. This is without ever having seen it work in good times and bad or properly assessing how it might affect our ability to continue governing ourselves. At the same time they are wasting millions of pounds of taxpayers money, and forcing businesses to waste millions of pound their own money, on the National Handover Plan.

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.

These are the policies that the Chancellor should be committing himself to next week. And if won't, the next Conservative Government will. 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-East, but throughout the entire country. All of them essential if we are to fulfil the ambition of my Party to make Britain the best place in the world to do business.

You in the Chambers of Commerce are at the forefront of business life here in the North-East. 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 for all that you do, that I ask you now to join me in raising a toast to Commerce, Trade and Industry.

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