29 January 2001
29 January 2001
Speech by Gordon Brown MP, Chancellor of the Exchequer
It is a pleasure
to be here in Manchester this morning.
For two centuries
Manchester and the North West have been a world wide centre for manufacturing
strength. This region led in the 19th Century and now it can
And let me say
how pleased I am to be speaking here at UMIST. Founded early in the
nineteenth century by the business community of Manchester, it enters
the Twenty First Century a leading centre for scientific research,
its links with business stronger than ever - promoting growth, jobs
and opportunity for the North West region and beyond.
Today I want to
show how in the North West and the other regions of our country, the
high ideals and public purpose contained in the economic goal of 1944
can be achieved.
- defined as in 1944 as 'high and stable levels of employment' - was
a reality for the country as a whole for twenty years after the Second
But not only did
rising unemployment in the 1970's and beyond undermine these goals
but so too did persistently higher unemployment in our regions
As recently as
1997, one in five working age households had no one in work in seven
of our twelve regions and nations.
Some believe that
full employment can be achieved onlyby a return to macroeconomic
that in the new more open economy governments cannot hope to meet
the 1944 objectives.
I reject both
the dogma of insisting on old ways and the defeatism of abandoning
the objectives. But to achieve full employment in all the regions
is a large and ever present challenge and demands new approaches not
the old ways.
So since 1997
the new Government has been putting in place a new framework to deliver
our growth and employment objectives.
Last year I set
down four objectives:
stability - a pro-active monetary policy and prudent fiscal policy
to deliver the necessary platform of stability;
employability - a strengthening of the programme to move the unemployed
from welfare to work;
productivity - a commitment to high quality long term investment in
science and innovation, new technology and skills;
responsibility - avoiding short termism in pay and wage bargaining
across the private and public sectors, and building a shared sense
of national purpose.
- requirements for stability, employability, productivity and responsibility
- are and have always been the necessary conditions for full employment.
The first condition,
stability, is needed to ensure a sustainable high demand for labour.
The second , employability, promotes a sustainable high supply of
labour. The third, raising productivity, provides a sustainable basis
for rising living standards. And the fourth, responsibility in bargaining,
ensures a sustainable basis for combining full employment with low
But there is a
fifth condition I wish to discuss in detail today - the need for regionally
balanced growth, essential if there is to be opportunity for all in
Now the first
generation of regional and urban policies - starting in the thirties -
amounted essentially to ambulance work - first aid measures,
urgently needed assistance and relief in areas of high unemployment.
The second generation
of regional policies came in the sixties when then the emphasis was
on large capital grants and tax incentives for regions anxious to
encourage mobile capital into our regions as inward investment.
Now we are entering
a third generation of regional policies inaugurated by Stephen Byers,
David Blunkett and John Prescott, where we concentrate on
indigenous measures - strengthening, within the regions, the essential
building blocks of self generating growth. And on tackling the imbalances
that prevent economic strength:
bridging the investment and enterprise gap;
bridging the skills gap;
bridging the technology gap, including support for e-commerce;
bridging the employment gap.
Indeed, as these
challenges suggest, now, as the economy starts to strengthen, is the
perfect time to think not in a short termist way about our economic
future but to think and plan long term; and to bring together strategic
plans for our future.
And I want to
suggest that with the creation of the new regional development agencies -
for which I believe John Prescott deserves our congratulations -
we are not only recognising the many regional centres in Britain today
and giving them new strength and powers. But we are creating, at a
regional level, the economic policy instruments of the future: the
measures that will foster innovation, develop the skills for the twenty
first century economy, build a strong enterprise culture open to all
and help us lead in the digital revolution and ensure all of us benefit
fully from our participation in Europe.
But the emphasis
is not simply on local needs but on local initiative. Our reforms
show that we are entering an era in which national government, instead
of directing, enables powerful regional and local initiatives to work,
where Britain becomes as it should be - a Britain of nations
and regions where there are many and not just one centre of initiative
and energy for our country.
development agencies and the flexibilities we are offering them there
is for the first time both a shared understanding of the challenges
the region faces and a strategic means of meeting them.
In our Pre Budget
consultation we welcome further proposals for encouraging enterprise
in high unemployment areas.
The 2001 Budget
- and our future plans will continue this Government's policies to
offer greater incentives to business, remove unacceptable barriers
that prevent people with enterprise getting on and, from the classroom
to the boardroom, widen and deepen the spirit of enterprise in Britain.
ambition is to make opportunity for all the foundation of a more dynamic
enterprise economy, breaking free of the old dependency culture in
high unemployment areas.
In an enterprise
Budget we will consider extending capital gains tax relief and the
In an enterprise
Budget we will consider extending our R and D tax credit
by examining proposals to do so from the CBI, EEF and others interested
in improving Britain's R and D effort.
In an enterprise
Budget we will consult on new reliefs for corporation tax including
for intellectual property.
As we move to
an enterprise Budget we will consult on capital gains tax relief for
the sale of substantial shareholdings.
As we move to
an enterprise Budget we are considering improvements in our enterprise
management incentive scheme, the share options we offer new and dynamic
As we move to
an enterprise Budget we will consider new incentives for urban renewal
and inner city development.
And an enterprise
Budget means measures to encourage an enterprise culture in high unemployment
areas where the greatest need is not more benefit offices but more
businesses as we move from a dependency culture based on entitlements
to a dynamic business culture based on enterprise.
Instead of acquiescing
in the old giro culture - simply paying benefits to compensate
people for their social exclusion - we must back success rather
than accept failure. And to do that we must extend fiscal and other
financial incentives that open up economic and business opportunity
in high unemployment areas, and encourage and reward new enterprise.
If we are to achieve
higher start-up rates in high unemployment areas, economic stability
is critically important to business confidence, as we found in the
early nineties when the recession not only destroyed existing businesses
but discouraged new ones.
So in the Budget
our aim is to create the stronger enterprise culture that America
enjoys, reduce the costs of business failure and address the sharp
regional and local divergences in small business creation.
Behind the creation
of regional development agencies is our view that the way forward
is one of empowering local people with skills and confidence.
Indeed, our old
cities and estates should be seen as new markets with competitive
advantages - their strategic locations, their often untapped retail
markets, and the potential of their workforce.
And so it is right
to put in place the best possible incentive structure to stimulate
business-led growth as well as much bigger flows of private investment.
So, to meet the
challenge of increasing private investment in high unemployment areas
by one billion pounds, we will now consult before the Budget on targeted
tax incentives in four areas - cuts in stamp duty, reduced business
rates, changes in capital gains tax and a new community investment
But changing our
culture to one that favours enterprise in every area needs not just
incentives but a real shift in attitudes too. And that will come about
quickest if it starts, not in the boardroom, but in our schools.
I want every young
person to hear about business and enterprise in school; every college
student to be made aware of the opportunities in business; every teacher
to be able to communicate the virtues and potential of business and
I want businessmen
and women to visit our schools and talk to their enterprise classes;
I want every student to have a quality experience of working
in a local business before they leave school. I want management training
scholarships to be available even in the poorest areas and I want
every community to see business leaders as role models.
Regional coordination and accountability
But let me say something more on our proposals for regional co-ordination - which will form our next five years' programme for economic growth in our country - and the central role we see for regional development agencies as the strategic leaders of economic policies in the regions - in employment, skills, innovation and regeneration.
The New Deal has
already brought into being new partnerships between companies, the
world of education and training, and the employment service.
to the delivery of the New Deal and to training will become ever more
centres mean companies, universities and government must work together.
The regional approach
to venture capital funds, coordinated by the regional development
agencies and the small business service, again requires business and
government to work in partnership.
To benefit fully
from the university for industry, companies, educational authorities,
schools and colleges themselves will want to form new partnerships.
And local government -
casting aside any idea that it should look inwards - must, as
it looks outwards, be involved in all these initiatives.
And we are ensuring
the resources andflexibilities that regional development
agencies need, but in return we are demanding strenuous targets be
met in skills, innovation, business creation, new technology and employment.
This is the new regional policy - locally sensitive and locally delivered,
local people meeting local needs through local agencies.
At every regional
level, businesses, local authorities and the world of education will
want to work together on their bids for funds and resources, and at
the same time to make their case not just in Britain but abroad.
And in making
this happen the new local and regional centres of initiative in this
country will show that leadership in Britain can come from every regional
capital as much as from London itself.
But as we develop
regional policies that are locally generated and managed there has
to be local and regional accountability too.
and Northern Ireland moved from 1997 to elected bodies. The Manifesto
on which this Government was elected set out the options for elected
regional government in England where there is popular consent for
As we expand regional
institutions - regional government offices, regional development agencies
- so too we must expand regional accountability.
and I believe that in the consideration of new and better regional
systems of accountability we need a greater role for both the House
of Commons and the regional chambers.
I hope that the
regional chambers established in every region will hold annual hearings
to examine the RDAS''' annual reports and review progress against
their published strategies - and report back on their findings. We
should ensure they have the resources to meet this duty.
By extending the
scope for region by region initiatives and by complimenting these
with greater accountability at a regional level and through the select
committee system in the Commons, we are improving our ability to ensure
that regionally set objectives are met.
our national economic policy measures for stability, productivity,
skills and responsibility, the third generation regional policy that
I am describing is in my view the route to full employment in each
region, that is employment opportunity for each region's citizens.
More than that,
these are the means by which Britain is becoming a Britain of regions
and nations with a new dynamism and where for locally generated initiatives
we learn anew from each other, and where our diversity can become
a source not only of new energy but of national strength.
So our new development
agencies both make sense of regional sentiment and respond to the
challenges of the next millennium.
new strengths from the ground upwards.
Regions not looking
in on themselves but looking outwards to the challenges of the global
Regions in which
we make the connections so that schools and colleges, companies and
local authorities work in a coordinated way for the same objectives -
addressing inequalities within our regions.
I believe what
is happening in each region today is showing the growing vitality
of a new Britain, where there are new local and regional centres of
initiative leading Britain.
We are moving
away from the old Britain of subjects where people had to look upwards
to a Whitehall bureaucracy for their solutions - to a Britain
of citizens where region to region, locality to locality we are ourselves
in charge and where it is up to us.
And where as a
result Britain becomes stronger as each nation and region learns from
In so many areas
of our national life individual regions are leading the way.
And what a strong
country we can be when we are enriched by the different cultures and
centres of initiative which together make up Britain.
We are indeed
stronger together, weaker apart.
So, this morning
I have suggested how we can strengthen our regional and national economy.
I have said we
must rediscover the national purpose that allows us to break from
the old conflicts which have divided us.
I look forward
to a Britain in which instead of public versus private, state versus
market, management versus workers, we have public and private, government
and markets, employers and managers and workforces working together
for the high levels of growth and employment we need for long term
I have pointed
the way to full employment in this region in our generation.
It is a challenge
for all of us, a challenge that together we can meet and surmount.