How do you know whether a politician is actually going to do what it is they say they'll do? You can only look back on their track record.
Making promises is easy, but if you really want to know what someone is going to be like, look at what they did when they had the chance.
I'm speaking to all of you today, not just as leader of the Conservative Party, but as a former business secretary.
Many of you would heard me talk about how we needed to deregulate, and you would have seen examples of how I tried to lift the burden off businesses, often arguing with other parts of Government, or trying to stop them bringing in yet more well-meaning but burdensome regulation. I saw myself in that role as your champion around the Cabinet table.
It is because I know that it is not government that creates growth, It's business.
Government often needs to get out of the way. But this is a very difficult argument to make. People want the government to fix everything. They want the government to solve everything. And if you ever sound hesitant, you are made out to be a cruel, unfeeling person. This is partly how we have got ourselves into a state where debt is at record levels, and we are spending more on debt servicing than on education or on defence.
That needs to change. We need growth.
Too often we use the word growth as a throwaway comment without actually thinking about how we can actually create it or what it even is. Many times, when I'm speaking to members of the public, they just assume money comes from the government. The concept of productivity is not one that many people understand. They think all jobs are economically equal, whereas as business, you will know that some jobs are productive, and others less so. And I believe that we need to rewire our economy into one where the vast majority of jobs are productive and those that are not change.
This is what I'm here to speak to you about today.
But first, I want to acknowledge that the reason why I'm standing here, not as a government minister, but as the leader of the opposition, is because we Conservatives got things wrong…. and unless we explain where we got things wrong, we will repeat those mistakes.
My father was a GP. He always told me if you get the diagnosis wrong, the treatment won’t work. And that is what I fear is about to happen in the UK – we haven’t done the work which is needed to understand what the root causes of our problems actually are. And I am worried because the Labour Party are not just repeating many of the mistakes which we made in Government, they are doubling down on them and combining them with an unprecedented raid on business.
Today we are all talking about the consequences of the Budget, but we do not yet know what the full consequences of their legislation programme like their employments rights bill, designed by the trade unions, will be.
But there is no point in me just complaining about Labour, when it was obvious that we Conservatives lost the confidence of business. I was not surprised at how many people attended Labour’s prawn cocktail or smoked salmon offensive last year. It is because you thought that we didn't understand what your needs and concerns were…and you knew we were going to lose….
As a first step, to fix that, I have made sure that the two people who are the most business facing in my shadow cabinet are people who have run companies themselves. My Shadow Chancellor, Mel Stride was the widely-respected Chair of the Treasury Select Committee. Before Parliament, Mel founded a successful business, which he expanded into the US. And our new Shadow Business Secretary Andrew Griffith is a former Treasury Minister and chartered accountant. He’s been a successful financial analyst and asset manager – and has serious board room experience.
During the leadership contest, many people kept asking me - What are my policies? This was something that I resisted answering, because there is a lot we need to fix before we start with new policies. I believe that we need to begin with first principles. If you are thinking about opening a restaurant, you don’t start off with the menu.
So what are our principles?
I believe that we need to have free and fair competition, not monopolies, not rent seeking, not corporatism…. but a genuine competition that allows new entrants in ….and those who are no longer productive to evolve….or leave the economy. That is what free enterprise is about. We Conservatives must be the party of business, not just big business, not just corporates, but small businesses, too. Every big business started out as a small business, and that is why I am so concerned that the burden on them is still increasing, with taxes - corporation tax, employers National Insurance, and new regulations. The new Government believes that invisible businesses can absorb these costs, but it's everyday people who bear the brunt, either in higher prices or lower wages, sometimes both. We may see the jobs which are lost as a result, but no one ever sees the jobs that are not created.
So I am here to make sure that you know that I understand businesses’ values. I'm not here to represent business interests, but to let you know the Conservative Party shares your values.
I'm often criticised for talking about capitalism. Someone once told me that capitalism is old fashioned. I don’t think so. I think it is important that we explain what capitalism in a free market environment means. Capitalism is not a dirty word, wealth is not a dirty word, profit is not a dirty word.
But, we need to start explaining how these things deliver for the people out there, who often think that we are in it for ourselves, or that business is all about greedy fat cats, rather than people who are working hard - entrepreneurs, and those who are making life better for all of us one way or another.
Growth per capita
Secondly, we have got to be more precise when we talk about “growth”.
It is not just about increased GDP. It is not even just about increased GDP per capita.
You can increase GDP by increasing immigration, but no one feels richer, in fact some get poorer. You can increase GDP per capita by getting more millionaires and billionaires to move to your country. But that won’t necessarily make everyone else feel better off.
In fact, there are many studies that show, even when nothing has changed, we are more likely to feel worse when we compare ourselves with those who are much wealthier than us.
I’m talking about REAL growth. Growth that people can see, and feel.
Seeing an improved environment around them as well as having more money in their pocket to spend. Knowing that we have enough money to provide security, to protect our families, but also our country in increasingly dangerous times. The bottom line is that economic growth is NOT the end in itself. It is a means to an end. The end is to make people’s lives better.
We are not the only country to suffer from low growth. It is plaguing almost all developed countries.
As Trade Secretary, just after COVID, I travelled all around the world, and in Italy, Mexico, Japan, the US, Australia, France, people were talking about the same thing – a higher cost of living, higher inflation, difficulties controlling mass migration. We are not alone in these problems. But we are unique in our circumstances and our ability to get things moving.
That is going to require a change of mindset. That starts with our politics.
The system is broken
Politics needs to accept boundaries.
Every day in the legislature, someone has a great new idea that sounds nice in principle, but in practice, creates more red tape, more bureaucracy, more burden. The way to fix things is not just about creating new laws. We must not be a bureaucratic state. We need to get a proper diagnosis of what is going wrong.
Why is capital investment so low? Why is productivity still so stubbornly stalled?
I have read endless reports and many reviews with all sorts of potential solutions - improving skills or getting our pensions working harder for us, and we have brought in regulations and policies to address this, and yet, still, things are not getting better.
I think we need to look again.
I'm not standing here telling you that we have all the answers. I am letting you know that I have seen the system from the inside, and it is broken. We are trying to fix problems with the wrong tools. We are using a mindset and a paradigm that worked well in the late 20th century, but does not work well when we have aggressive competitor economies like China…and when, there is rapid technological innovation.
Our society is getting older and the birth rate is too low. More quangos, more interference, more regulation, more laws will not fix that.
We need to ask ourselves, what is the role of the state? What can we do to create a level playing field and allow you to go out there and fix the problems.
Finally, Government itself must change what it does, if growth is ever properly to return. We didn’t address this when we were in Government, and if Labour does not they will fail. Government is going to have to learn from business about how to work better, quicker, and more responsively.
We can no longer tolerate a situation where building roads takes decades. Where Treasury decision making means railways don’t get built. Where the planning system stops investments being made by you and your colleagues.
Over the last two decades, you have all had to transform your business models to account for massive societal and technological change. It’s time that Government does the same, because what we have now isn’t working. We need an alternative strategy, so we can finally unleash the power of business to make our country better. I believe in the immense power of business to do good. You may not be the public sector. But many of you deliver critical services for the public. So I will stand up for the values of business.
It’s time to defend free enterprise and capitalism, to defend lower taxes, less borrowing, and healthy, real competition.
It is time to recognise that business is a force for change.
It is time to acknowledge that to get growth….real….meaningful growth that improves the lives of everyone in Britain – we will have to change what we all do.
And that’s what the Conservatives, under my leadership, are now about.
