Speeches recovered from the Conservative party’s online archive More…

George Osborne: We need change in the economy

At the weekend we said we were going to turn the spotlight onto Labour's economic record and the choice facing voters at the election. That work begins now.

This week, we will focus on what five more years of Gordon Brown will mean for the people of this country - for their prosperity and their standards of living. I think everyone knows where the Prime Minister's reputation is most vulnerable.

We know he destroyed our pensions system. It was his £100 billion tax raid that turned one of the strongest pension provisions in Europe into one of the weakest.

We know he failed to fix the roof when the sun was shining, because we went into the recession with one of the biggest budget deficits in the developed world.

We know he is the first Prime Minister in modern history, indeed since the second world war, to preside over a fall in our prosperity during the course of a full Parliament.

Ask yourself that famous question: are you better off now than you were five years ago?

And the answer, for the average Briton, is no: national income per person today is lower than it was in May 2005, when the country last went to the polls.

We know how he trebled the national debt. In 1997, net debt was £347 billion. In 2012, it is forecast to be £1,139 billion. And we know how he gave us the largest budget deficit in our peacetime history.

This year, Gordon Brown is borrowing almost twice as much, as a proportion of our national income, as when this country nearly went bankrupt in the 1970s.


We know all these things. But what's really interesting is when you look at the things people still think he's done quite well on.

For example, there's his response to the financial crisis.

When the crisis broke we, the Conservative party, myself, David Cameron and Ken Clarke, supported the bank recapitalisation and the guarantees - in fact we were the first to suggest them.
However Gordon Brown failed to get the lending in return that would have helped to support our economy and he failed to implement the National Loan Guarantee Scheme that would have helped businesses stay afloat and saved jobs. Indeed, for many small and medium sized companies there is still a credit crunch.

What's more, some people still entertain the idea that under Gordon Brown, the fundamentals of our economy have been strengthened. A close look at the evidence suggests otherwise. And today I want to take five key indicators and show how on each, Gordon Brown's claim to economic greatness is shown to be something of a sham.

First, productivity.

On face value, our productivity seems to have improved as a country. Between 1999 and 2008, GDP per worker increased by fifteen percent. But when you compare that to other countries, the spotlight is less forgiving. All G7 countries except Japan are more productive - that is they achieve higher GDP per worker - than Britain.

And in the public sector, things are much worse - productivity has actually fallen. From 1997 to 2007, it shrank by 3.4 percent.  Indeed, if productivity in the public sector had grown at the same rate as in private sector services, we would have the same quality of public services for £60 billion less each year.

Second, employment growth.

Gordon Brown likes to repeat the claim that he created three million new jobs. It's made in a way that suggests that a dynamic, private sector-led economy was taking people off unemployment rolls and into work.

But if you look more closely, you'll see that's not what happened. Of these jobs, nearly four in ten were created in the public sector and just under two-thirds went to migrant workers from abroad.  Indeed, if you look just at people of working-age, all in all, 1997 and 2009, the number of employees born in the UK and employed in the private sector actually fell.

Let me say that again: not the proportion, but the number - the number of working age British people employed in the private sector actually fell.

That's why you got the economic law-defying situation in which during a decade of economic growth, nearly five million people remained on out-of-work benefits.

Third, the balance of our economy.

In his first ever Budget as Chancellor in 1997, Gordon Brown cautioned against "the imbalance between strong growth in the consumer and service sector and weak growth in the manufacturing and exporting sector" and said his aim was to put Britain "back on course for a more balanced and more lasting recovery." Yet over the decade that followed, manufacturing declined at its fastest rate ever.

Labour dispute this, but here are the figures. Between 1980 and 1997, manufacturing's share of the economy fell by 6.1 percent. Between 1997 and 2009, it fell by 9.3 percent.

What's more, almost 1.7 million manufacturing jobs have been lost under this Government and more than a fifth of manufacturing firms have disappeared.

Fourth, skills, let's look at the record.

The number of people taking Level Three apprenticeships, that is the Advanced Level apprenticeships, the level that even the Government says is the most important, that has fallen. At the beginning of the decade, 84,600 people started an Advanced Level apprenticeship in Britain. Last year, that number was 81,400.

Compare this figure to Germany and France. In both those countries, over half a million people start the equivalent of a Level Three apprenticeship every year.

Fifth, research and development. 

Gordon Brown likes to talk about innovation hubs, hi-tech manufacturing, widening our science base. But again, the evidence shows that under his economic stewardship we have failed to keep up with our competitors.

According to the OECD, the UK's share of patents has declined, whereas our competitors' have grown steadily. And business R&D spending has failed to match our competitors. Between 2001 and 2007, average annual real growth of business R&D was only 2.3 per cent. That wasn't just a lower growth rate than China, the US, Japan and Germany.  Actually, it was lower growth rate than Russia, Ireland and Greece too. 


So that's the compelling case, with the hard evidence, of why Gordon Brown has failed our economy.

Not just in the areas where we know he got it wrong - but on those things where he still thinks he's got right. But just in case anyone is still not convinced, let's put his record in context.

Let's hold it up against what's happened around the world - and see if that redeems him.

When he took over as Chancellor, we were ranked 7th in the world for the competitiveness of our economy.

Now we are 13th.

We were 4th in the world for our tax and regulation.

Now we are 84th and 86th.

To top it all off, we were the last G20 country to emerge from recession and we see one of the weakest recoveries.


I believe any balanced, fair-minded and objective look at these facts can lead you to only one conclusion: Gordon Brown is not the economic genius he claims to be.

Indeed, I'd go much further, and say his claims to credibility on the economy lie in tatters. The financial markets obviously think the same way, and that's what Ken is going to talk about.

So it's clear: this country can't afford another five years of Gordon Brown.

His economic policies helped lead us into this mess. And now, his debt, waste and taxes are holding us back and threatening the recovery with higher interest rates.

That's why we need change in the economy. We need to bring back aspiration and opportunity for all. We need action now to cut the deficit, help to keep mortgage rates low and get the economy moving.

And we need to get Britain working by boosting enterprise.

And at the coming election, that is the change the Conservatives will be offering.

Keyboard shortcuts

j previous speech k next speech