“This is a crucial moment for the Conservative Party, but also for the country. Earlier today, Boris Johnson set out his vision for the future of Britain and I was proud to be there supporting him. I believe that now is the moment for a Prime Minister with the energy and optimism to lead this country to a successful exit from the EU – but far beyond that, toward the successful, free enterprise economy that will transform prospects for millions of people across this country.
That starts with growth. Getting growth up is crucial for putting more money in people’s pockets and into public services. And we know what the best recipe for faster growth is. It’s not telling entrepreneurs what to do, or setting them targets, or paying them public subsidies; it’s removing the barriers to enable new ideas to flourish and keeping taxes low so that people have an incentive to put their own money on the line. It’s making it easier for small businesses to scale up and take on the established players.
In the last couple of years, Brexit paralysis has held back investment and created risk aversion and uncertainty. Business taxes and red tape are barriers to companies growing. The productivity and jobs potential of other cities and regions lags London. Britain’s latent potential has been on a leash. And more than that – an anti-success, anti-aspiration, anti-business narrative peddled by Labour has taken root – where profit is seen as bad, wealth is seen as something that is necessarily undeserved.
But I believe we can defeat this negative ideology with a positive vision for the future. It is in our hands. Britain is well placed for the new wave of technological and social change that is sweeping the world. Unemployment is at its lowest rate since 1975. We top the table of European countries for foreign investment. We have more entrepreneurs than any other country in Europe. We are the best place in the world to start a FinTech firm. We have a young generation who are starting up new enterprise at a record rate: the latest data shows that the UK now has 85 per cent more 18-24 year old entrepreneurs than in 2015.
As we leave the EU, we will have more freedom to chart our own economic course, and control our own rules and regulations. This can be done. The US has succeeded in getting economic growth to three per cent through a combination of supply side measures, regulatory reform and tax cuts. We too, can tap into the massive unrealised potential in our country.
To do that, we need to be resolute. Firstly, by properly preparing for and delivering EU exit by 31st October. Secondly, by living within our means, maintaining our strong finances and not piling up ever more debt. And finally, by a achieving a step-change in Britain’s competitiveness through a programme of reforms and a clear vision of where we want to be heading in future.”
A Prepared Exit
“We need to leave the EU by the 31st October. The delay so far has exacerbated business uncertainty and decreased trust and faith in politicians and Government. Today we’ve seen Labour trying to frustrate Brexit yet again, and we cannot allow a dangerous vacuum to develop where confidence could be further undermined.
Instead we need to have a prepared exit by the 31st October and critically a plan on what we are going to be doing in the years that follow Brexit. Much has already been done, with over £4 billion spent by the Treasury to prepare for all eventualities. We have arrangements in place at the border and to ensure that businesses and communities will have the support they need. Of course we will seek further agreement with the EU, but this should be alongside rather than instead of preparations for exit.
In financial services, both the government and businesses themselves have taken the necessary steps to allow transactions to flow. We have the customs wherewithal for businesses to trade with the EU. Our new immigration system has been established. But we should go further – a major campaign will be needed to ensure the 300,000 businesses that trade with the EU have done the necessary preparatory work prior to day 1.
On trade, the Trade Remedies Authority will oversee independent UK trade. Tariff rates have been set and numerous trade agreements have been signed. Being a part of trade agreements which set international standards will put British firms at the cutting edge of globalisation and international free trade.
In addition to preparing for the new trading arrangements, we should also be using the new flexibility that not being under EU law will allow the UK. Our approach can be more agile, more ready to respond to opportunity, more in tune with the concerns of the people in this country. For example, we should look to set up Freeports, where customs and planning freedoms can enable manufacturing to be brought back to UK shores. They could be transformational for communities across the country.”
A strong fiscal framework
“Over the last nine years – we have succeeded in bringing the public finances under control and are now paying down our national debt as a proportion of GDP. We have a strong macro-economic framework with a clear inflation target for the independent Bank of England, and fiscal rules that have guided our spending and tax decisions.
At a moment of great change for Britain, there is a temptation to change course and start piling on the debt, somehow imagining that this time it will be different. Thanks to the hangover from the Labour years, debt is now over 80 per cent of GDP, up from under 30 per cent at the turn of the millennium. It must come down. A debt-fuelled spending splurge of the type Labour have proposed would be a disaster for our country, leaving future generations to pick up the bill for our profligacy.
There may be the need for some measures as we leave the EU. But we must remain committed to bringing the debt down as a proportion of GDP in normal times. We need that strong anchor to maintain our economic credibility as a party and international credibility as a country.”
A competitive economy
“There are no shortcuts to faster growth. The only way to ensure Britain’s success and prosperity is for our economy to become ever more productive, more competitive and more agile. This means removing the barriers that are preventing enterprise investing and growing, and tackling the longstanding structural weaknesses in the British economy.
First, we should use the fiscal headroom to bring down taxes that are holding back economic growth such as income tax, stamp duty and businesses rates. We should resist the clarion calls to impose new taxes on digital sales which would simply jack up costs for consumers. Instead I believe we must simplify the tax system to unlock growth and make it harder for companies to avoid tax.
Second, we should reform the way we regulate businesses. We have seen regulatory creep over the past few years which tends to benefit large companies with big legal departments. This is no good for consumers, who rely on choice to find better services at cheaper prices. To be an unapologetically pro-market party, we must champion and represent the small, challenger businesses who have always driven us forward. So we should consider a moratorium on new business regulation and review those regulations that are currently scheduled to be put in place. We should give more teeth to the competition authorities and simplify the regulatory landscape to boost competition policy and encourage new entrants.
Third, we should use the next Spending Review to refocus spending on those areas that will generate more economic growth, especially infrastructure and education. As well as allowing towns to expand with sensible planning reform, we need more and better infrastructure in cities and counties outside London, investing in the local roads and urban transport systems that bring both social and economic benefits. And we should start the full-fibre rollout in towns and rural areas, where it can have a significant impact on productivity.
On education, as well as demanding high standards, we should increase schools spending by real terms per pupil to reflect rising costs and raise up the lowest funded schools. But this doesn’t mean breaking the bank – as Chief Secretary I know there’s still waste to cut, and big areas of spending like the business support budget of £18 billion that are in need of reform.”
“The next year is going to be critical for Britain. It’s an opportunity for us to reignite the spirit of enterprise and ingenuity that will help us succeed and grow in the modern world. The only realistic way forward is for us to prepare to leave the European Union, have the confidence to take advantage of the new freedoms it offers and get on with the huge task of unleashing our creativity. Only then can we deliver higher wages and a better standard of living for people as we move to a hugely exciting economic era outside the EU.”
This speech was made today to the Economic Research Council.