The newly-appointed shadow business secretary Ken Clarke gave his first speech in his new post today, to a conference hosted by the think-tank, Reform, at the London Stock Exchange.
In typical Ken style, he opted to speak off the cuff for 15 minutes, so no text was released in advance (or afterwards, for that matter).
However, I have managed to obtain a transcript of several key passages, which are reproduced below.
The current crisis is not the end of free markets
“My reaction to this crisis is that I have not lost my conviction in the values of capitalism. I believe in free markets, free trade and globalisation, which I think have collectively led to some remarkable changes in living standards here and across the world in the last twenty years.
“We are going to have to argue that case. The reaction of many people to this crisis is that we have to challenge the fundamentals, that the markets as a whole have been proved to be wrong. You will find that argument deployed across very wide fields. It is the wrong reaction to what is a failure of banking, a failure of credit markets, a failure of money markets and failure of regulation.
“This, then, is not the end of free markets, but it must be the end of free markets without effective regulation of banking and financial services.”
The problems with regulation
“Everybody managing or investing in an enterprise in
this country will tell you that a key problem is regulation. The
tripartite system turned out to be a mistake and the FSA has been
completely useless at regulating banking. But that does not mean that
other sectors of industry should be excessively regulated. Indeed what
was wrong with banking regulation was not the lack of quantity of
regulation – all kinds of box ticking nonsense went on – but what was
wrong was the quality of the regulation.
"Huge amounts of trivia and process were explored in great detail
without the big questions of risk management being challenged and the
banking fraternity being looked in the eye and being asked to explain
the business models that they were using and whether everyone totally
understood what they were exposed to off balance sheet in the
“The regulator waited to read in the newspapers that people were
queuing around the block outside Northern Rock and did not appear to
have enquired about the business model.
“But the excessive regulation of the rest of the UK economy should
not be off the agenda. All those Fabians and other natural bureaucrats
who say that more regulation is required in every sphere of activity
“It still matters that it takes twice as long to set up a company
in this country as it does in France. It still matters that everyone
managing a company complains to us about the burden, the cost and the
conflict between different regulations and we have to address that.”
"Rapid movements in exchange rates are always disastrous… There are upsides but, on this occasion, we’ve got most of the
downside. The upside, in theory, is that our exporters’ goods become
cheaper for customers – but that’s assuming that there are customers.
What’s happened is just that our exports are cheaper, imports are more
expensive, and our trade deficit remains defiantly the worst since the