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Speech to the Liberal Democrat Business Dinner, London 1997

Paddy Ashdown (Liberal Democrat)

Location: London

Ladies and gentlemen, we are now just weeks away from the last election of the twentieth century.

And as we stand on the eve of the next Millennium, we should be focusing on how we make the next century a century of lasting economic success. On how we again become, as Britain was in the nineteenth century, a powerful economy of innovation, enterprise and international trade - outward-looking, playing its part in the world, and creating new wealth and opportunities for the British people.

The role of Government in this process is complex, but central. There are seven key areas where the right approach from Government is crucial for business success and sustained national prosperity in the years ahead.

First, in providing economic stability.

Second, in creating a culture of long-term investment.

Third, in ensuring that Britain has a well-educated, highly-skilled and adaptable workforce.

Fourth, in improving flexibility in the economy and labour market.

Fifth, in creating a competitive domestic economy, in which innovation and enterprise flourishes because small businesses are given the help they need to succeed.

Sixth, in securing benefits for British business from our membership of Europe.

And seventh, in fostering a culture of partnership in the British economy.

Getting the right approach from government in each of these areas is vital if we are to put Britain on a better course for the next fifty years.

Tonight, I am going to focus on two. Education and Europe.

First education. Government has a crucial responsibility to improve the education and skill levels of the British workforce.

In a world of footloose capital, the skills of a nation's people are far and away its most important asset.

Yet statistic after statistic exposes Britain’s underinvestment in education, and the extent to which we are now lagging behind our competitors in skill levels.

Last year Britain fell from 35th to 42nd in the world education league table, slipping below Argentina, China and Turkey.

It is no surprise to discover that some British firms wishing to expand are finding it hard to recruit workers with the skills and basic education they need.

That is why the Liberal Democrats see investment in education and training as the nation’s number one priority, and the number one call on our precious national resources. Our aim is to make Britain the world’s number one learning society.

That is why the Liberal Democrats - alone - opposed the 1 penny cut in income tax in the last budget. We opposed it on the grounds that the £2 billion pounds released into consumption would overheat the economy and spur inflation.

I made the prediction at the time of the budget that interest rates would rise within four months. That tax cuts would have to be reversed within a year. And that inflation would be rising again in 18 months.

It gives me no pleasure to find that those predictions look more and more likely to come true. Or to note that, despite their self-proclaimed prudence those two new economic bedfellows, Clarke and Brown, seem to prefer to wish the classic boom before the election followed by the classic bust afterwards than to tell the public about the true state of the nation’s finances.

But that £2 billion tax cut was not only wrong because of what it did do, it was also a lost opportunity because of what it could have done.

That money could have been used to give every three and four year old in Britain pre-school education, reduce class sizes, improve education in our schools, and create better training opportunities for adults in and out of work.

High-quality education is vital if we are to give people in this country the core skills to make them adaptable. And it is vital if we are to generate a competitive economy to compete with our European partners in the Global market place.

Which brings me onto Europe.

For forty years, British governments have been the ambivalent Europeans - uncertain and uncommitted, laggards on the sidelines, when we should have been leaders at the heart of Europe.

It is absolutely vital for Britain's financial and business communities that we are at the centre of Europe, shaping events, rather than forever having them shaped by others.

This country’s greatness has never come from looking inwards; from retreating behind our island walls and shouting insults at foreigners. It has come from going out in the world and making things happen - trading, exploring, settling, building bridges, making fortunes, shaping the world’s laws and building its institutions.

And the same should be true in the next century within our own continent of Europe, where we have so much to gain and so much to contribute.

What is undoubtedly true is that the interests of British business are best served - not by alienating our partners with insults and phoney fights - but by Britain being inside Europe, resisting old corporatist ideas, putting the case for a more flexible approach - at a time, incidentally, when the debate in Europe is moving in Britain’s direction on many economic issues.

In the words of Dick Evans, Chief Executive of British Aerospace: “The United Kingdom has to work to change those aspects of Europe which it doesn’t support from inside the Community rather than from outside”.

On the crucial issue of the single currency, Britain’s interests have been undermined by Government divisions.

The Foreign Secretary says the Government is hostile to a single currency.

The Chancellor of the Exchequer says that this was a ‘slip of the tongue’.

The Party Chairman says the Foreign Secretary was speaking on behalf of the Cabinet.

Yet the Deputy Prime Minister says the Cabinet is not hostile to a single currency.

This is the sort of farce you’d expect from an Ealing Comedy - it’s certainly no way to run a government. How can this sort of confusion be in the interests of British business?

Meanwhile, from the Labour Party, this week has seen another exercise in synchronised swimming, to put as little light between the two parties as possible.

The Conservative and Labour Parties treat the single currency like an embarrassing relative no-one wants mention. Unfortunately, the problem won’t go away and has a habit of turning up at the most awkward moments.

Yet the decision whether or not to join a single currency will be one of the most important decisions this country has to face in the next few years, with key decisions having to be taken within weeks of the General Election. Yet from the Conservative and Labour parties we have a conspiracy of silence?

Well, the Liberal Democrat position is crystal clear.

We believe that being part of a successful single currency would give Britain lower interest rates and lower inflation, and that staying out would give Britain less inward investment and less influence.

This is not just a matter of abstract statistics in the Treasury and in the City of London. It will have an effect on the budget of every household in the land, lower inflation and interest rates means lower mortgages and more secure jobs.

And with the government debt having doubled to £350 million over the last six years, reducing Britain’s long-term interest rates to French and German levels would make every family in Britain £10 a week better off.

So, if a single currency is formed, firmly grounded on the Maastricht criteria, and the British people say ‘yes’ through a referendum, then we should be part of it, because that is in Britain’s interests.

I've been in politics long enough to understand why business people have been nervous about alternatives to the Conservatives.

But there is now, I believe, an important change in British politics. Instead of being frightened of change, British business should look on change as an exciting opportunity - and on the Liberal Democrats as a source of reassurance.

There are the things the Conservatives have done over the last seventeen years which needed to be done, and which should not be undone - like reducing Trade Union power, and liberalising our economy.

But when you consider the economic mismanagement, the underinvestment, the boom-and-bust, the two deep recessions, and the Government’s damaging European policy, I do not believe you can say any longer that this was a government which had been GOOD for business.

I believe that Britain needs change and needs it badly. But we must ensure that change enables the country better to face its challenges rather than to retreat from them.

The Liberal Democrats are crucial in this.

The Liberal Democrats are the guarantee that Britain after the Conservatives does not return to economic mismanagement, punitive rates of taxation and favours for the Unions.

But the Liberal Democrats are also the guarantee of a different economic approach to what we have had for the last fifty years.

Only the Liberal Democrats will stop politicians messing around with the economy, by giving the Bank of England the independence and responsibility to maintain economic stability.

Only the Liberal Democrats will reform the absurd Treasury rules that currently hold back long-term investment.

Only the Liberal Democrats will guarantee the hard cash that is needed for a skills revolution in this country.

Only the Liberal Democrats are united enough to effectively represent the interests of British business in Europe.

Only the Liberal Democrats are free from the vested interests of unions and big business donors that is essential for effective partnership.

And only the Liberal Democrats are clear and united on Europe - the biggest decision this country has to take in the next two years.

In all these ways the Liberal Democrats will be the backbone and the driving force for the modernisation of Britain - for our culture, our practices and our institutions.

In an these ways the Liberal Democrats will make the difference.

Our aim is a flexible, market-based economy; a sustainable economy; strong on competition; dynamic in the small business sector; an economy built on political and economic stability; driven forward by long-term investment in the skills of our people and the ideas in their heads; and anchored firmly at the heart of the European partnership.

The kind of economy, in short, which enables Britain to see the challenge of the global economy, not as a threat, but as an enormous and exciting opportunity.

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