News from The Labour Party

Full text: Peter Mandelson’s speech to the Institute of Directors

Peter Mandelson, Labour’s Business Secretary, speaking at the Institute of Directors’ Annual Convention today says:

“Can I say how delighted I am to speak to the Institute of Directors. I first did so in 1998 when I was at the Department of Trade and Industry.

“I am determined that these occasions which I enjoy so much should not provide the book ends of my ministerial career!

“As Miles has said, we’re coming out of recession into a world that has changed dramatically over the last two decades.

“That has been my message ever since I came back to government. I spent four years in that fast-track as Europe’s Trade Commissioner. I know what’s happening. And we have to step up our game.

“We are competing not just with Europe and America, but with China and India and others.

“Competing not on wage costs, but on skills, technology, sophisticated knowledge and innovation, at the high value end of the market.

“This challenge must dominate everything that the next government does.

“I believe that Labour has a strong record on business. In the 1980s, let’s be frank, there was only one choice. But we learned.

“Corporation Tax is five percent lower than it was in 1997, the lowest in the G7.

“We rank first in Europe for ease of doing business – fifth in the world.

“British entrepreneurs can now benefit by two million pounds, tax free, from their effort and investment companies they create.

“Looking ahead there are some big challenges. Securing the recovery comes first. Put that at risk this year and we won’t have growth next year.

“Repairing the national finances. The biggest recalibration of public spending in a generation will have to take place over the next few years, and beyond.

“I know your message on this.

“We need to respond directly and forcefully to the fiscal situation. And we will.

“Since the start of this election, the Opposition have clocked up £38 billion of further tax giveaways, compounding the problems we have.

“I agree with Ken Clarke when he said in January last year: “Anybody who stands at the next election on a platform of tax cuts is asking for trouble”. I wish George was listening.

“We are planning for a £78 billion turnaround in the public finances.

“We’ve already set out plans to make efficiency savings of £15 billion this year. With another £11 billion already planned by 2012-13 – before we’ve even done a spending review.

“So, yes to cutting waste. But no to withdrawing support for the economy this year.

“When the Opposition say they want – in an Emergency Budget – to take out of the economy – this year – ten times as much as it grew in the first quarter, I believe they are putting the recovery at risk.

“This isn’t about the public sector vs private, it’s about demand. It’s about having a strong recovery driven by the private sector by managing our affairs properly and responsibly in the public sector.

“We’re making tough choices. My department has had to find more than half a billion in cuts this year.

“I’ve been criticized by universities for forcing cost reductions. But tough decisions are needed.

“I do not apologise for telling everyone in the public sector that belt-tightening is the order of the day.

“I know we have been criticised by some for our plans to raise NICs by an extra penny next year once growth is a lot stronger, forecast at 3%.

“But don’t tell me that taxes should not go up and at the same time tell me that the number one priority is fixing the public finances.

“As I say, tough choices.

“And it’s not just a deficit plan we need, it’s a growth plan as well. In the recession, business needed government to intervene. That smart, strategic activity by government is needed still to secure our future.

“We need to re-balance the economy. Less financial engineering. More real engineering.

“We must keep the UK as one of the best places in the world to do business.

“We must keep our corporation tax and capital gains tax regime competitive.

“We’ve cut more than £3 billion in annual red tape costs over the last five years. We must keep at it.

“We’ve held off unwelcome European initiatives like the working time directive.

“We have to continue to be hard-headed about this and in our dealings in Europe more widely.

“But we are competing on more than just the top line tax rates and labour market flexibility.

“We’re competing on access to capital for growing firms; on new, modern apprenticeships, our skills and science base, on the way we protect and reward intellectual property.

“We’re competing on our infrastructure – digital and concrete.

“We’ve invested heavily in all of these things over the last decade. We must not put it in reverse.

“Our competitiveness will be built on these kinds of structural capabilities and matter more than ever in a globalised world. Along with extending Heathrow. Transforming our planning system that can be so slow and cumbersome.

“And with all due respect to the Conservatives I have to say that that is why I think scrapping investment allowances – or “complex tax reliefs”, as George said this morning – at this point to pay for a headline cut in corporation tax is not right.

“It is, they admit, a £3.5 billion tax on business.

“The EEF calls this a disaster, especially for manufacturers, and I can see why.

“Finally, I want to end by saying this to you. I really believe that the next decade needs to be built on strong companies – well managed, thinking long-term, able to pride themselves on their corporate stewardship.

“The kind of companies the men and women in this room have devoted their lives to running.

“I was really glad to see the IOD support my proposals for raising the voting threshold for hostile takeovers to two thirds.

“It’s not about foreign vs domestic. We shouldn’t shield bad management from responsible shareholders.

“I think the change protects good management from having their companies and employees turned into vehicles for short term speculation and fast-buck financial transactions.

“So, my pledges are pretty simple.

“From a Labour government you can expect the same open and competitive business environment that you’ve seen from us to date.

“You can expect tough discipline on the budget.

“You can expect a commitment to sustaining our skills and science base and infrastructure.

“You can expect a government to go the extra mile to keep world class firms like Rolls Royce, or Nissan or Siemens, or Airbus, or Mitsubishi or GSK, or GE here – not least because of the thousands of British firms in the supply chains they sustain.

“And I won’t be told that going that extra mile is picking winners – it’s keeping winners here when these days they have the blandishments of the rest of the world to tempt them. You can be too purist about that.

“And we’ll back anyone who wants to build a strong company, create jobs, build things, champion new industries.

“That’s what will keep us on the road to recovery.

“Let me say this in conclusion.

“This election is not about whether one party is more or less pro-business. That argument belongs to the past.

“It’s about judgement and economics.

“Judgement about re-capitalising the banks. About the stimulus to ward off a slump. About the affordability of tax cuts when repairing the deficit.

“In short, it’s not about choosing the pro-business party but the pro-judgement party.

“That’s what I ask you to do in the coming week.”

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