Iain Duncan Smith – 2002 Speech to the West Midlands Institute of Directors

The speech made by Iain Duncan Smith, the then Leader of the Opposition, at Villa Park on 16 May 2002.

Speaking as I am in Aston Villa territory, I am conscious that some of you will have viewed the recent play-off success of Birmingham City with mixed emotions.

What I found heart-warming were the headlines plastered all over the newspapers: ‘Blues on the way up’.

Even West Brom have got in on the act. Not only have they won automatic promotion this season, their supporters topped the BBC’s recent ‘Test the Nation’ IQ quiz.

At an average of 138, their score was thirty points higher than the English national average.

Figures were unavailable for politicians and I resist the temptation to speculate.

Having three sides in the Premiership will provide a multi-million pound boost to the local economy. It is also another sign of this area’s predominance.

Birmingham is the 12th largest wealth-producing district in Europe. It is a great commercial city, vital not just to the West Midlands but to the whole UK economy.

And the West Midlands Institute of Directors has an extremely important position.

I welcome your long-standing efforts to advance the argument for competitive enterprise as the essential building block of lasting prosperity.

The IoD has a motto: ‘enterprise with integrity’.

Britain badly needs a Government that practices what you preach.

When politicians talk about integrity, you probably start counting the spoons.

But it cannot be right for a Cabinet Minister to be given red carpet treatment when he has lied on national television.

And it cannot be right that the same Minister misleads Parliament and then refuses even to apologise for it.

There are few enough opportunities for the public through their MPs to hold the Government accountable in the first place.

Whatever our political disagreements, if the Government of the day isn’t straight and seen to be so, it is public confidence in our democracy and business confidence that will suffer.

Integrity matters. And so does an understanding of enterprise.

This Government talks relentlessly about ‘enterprise’.

The title of the Budget Red Book was ‘Investing in an enterprising, fairer Britain’.

‘Enterprise and fairness’ is one of the Chancellor’s favourite phrases. But what exactly does Labour mean by ‘enterprise’?

As far as I can see, they mean companies. The private sector. Business, commerce and industry.

For me enterprise is a much broader concept. It is a culture, a way of doing things. It is about thinking creatively in order to make better products or deliver better services.

As Bob Michaelson said, what you have in this region is the spirit that created the industrial revolution. This is the spirit of enterprise, and it was no different when it was about 19th century technology than today, when it is about the hi-tech industries of computing and telecommunications.

Yes, enterprise is about making profits, but it is also about making peoples’ lives better. It should be as much a feature of the public sector as it is of the private sector.

It’s just as much about building new ways of delivering better public services as it is about building new structures for business.

This is the real difference between Conservatives and Labour today.

We are prepared to be enterprising. We are prepared to think differently and creatively to make peoples’ lives better.

This means holding our hands up and recognising that Britain does not have a monopoly on good ideas in the delivery of public services.

On the contrary, in the research we have undertaken so far in our policy review, we have found that many other countries have better methods for delivering core public services, particularly healthcare.

Germany has no national waiting lists.

Denmark gives people a legal right to treatment within four weeks of seeing their GP.

Stockholm gives patients the choice of doctor and the hospital they go to. No one can do that in the UK without going private.

Of course, if Britain could boast similar achievements, we might be justified in ignoring the record of other countries and simply carrying on with what we’ve got, without meaningful reform.

But the reality is that the quality of the service the public actually receives has deteriorated.

The NHS has more managers than beds.

Accident and Emergency waits have grown longer.

The number of operations is at a standstill.

We are now confronted with a two-tier Health Service where record numbers of people – a quarter of a million last year – are paying for their own operations, not through insurance but out of their own pockets.

And all despite this Government increasing NHS spending by nearly a third in real terms.

Any businessman or woman would question the underlying soundness of an enterprise that produced these sorts of returns on that scale of investment since Labour came to power.

If you had experienced no appreciable rise in output, and a marked decline in customer satisfaction you would surely look at the underlying approach of your business before committing more investment?

And if there was clear evidence that your overseas competitors were getting better results, you would surely swallow your pride and have a look at how they did things in other countries.

Sadly, the Government has done none of these things.

The result is as depressing as it is unoriginal: a return to tax and spend.

The Chancellor has embarked on a great experiment to prove that the only thing lacking in the NHS is money.

And yet we already know that this isn’t true. The evidence is on our own doorstep.

Taxes will increase by around £8 billion pounds next year with no hint of any real change in the way the Health Service is run.

Over the next five years Gordon Brown plans to bring average UK health spending into line with what Wales and Northern Ireland spend now. This is the same as France, more than Denmark and Sweden and slightly less than Germany.

But the treatment of patients is nowhere near as good. Indeed, in Wales and Northern Ireland waiting lists are worse than in England.

The Chancellor’s only recipe is to spend more generously and police more rigorously the centralised NHS we already have.

In contrast, Conservatives are prepared to take the genuinely enterprising approach, opening our minds to alternative ideas for reform, looking abroad at examples of where other countries and other systems produce better results.

The key is to push power down and to place more trust in the people on the frontline.

If we are to renew the promise of an NHS that delivers the best quality of care to people regardless of their ability to pay, need should be determined by patients working with doctors, not by politicians and civil servants.

That means decentralising power and making the Health Service genuinely accountable.

Creating modern public services is a priority for the people who rely on them – particularly the most vulnerable in our society – but it should be a priority for business as well.

It is certainly a priority for the Institute of Directors. In your Budget submission, the IoD made a range of arguments about the Government’s record on health with which I would strongly concur. In particular, you highlight the galling inconsistency of the Government’s decision to raise employers’ National Insurance.

As your Budget submission says:

“Both the Prime Minister and Chancellor have criticised European social insurance schemes for health, on the grounds that they would impose significant extra costs on business. They have then proceeded to introduce an extra tax on business – of just under 0.5% of GDP per annum – in order to pump money into the state run NHS.”

On countless occasions in the Commons in the months leading up to the Budget, senior Labour Ministers taunted us for even daring to look at other health systems on the continent. They told us that most European health systems relied on some form of social insurance which was ‘a tax on jobs’.

So what is the £4bn tax on employers’ National Insurance if it isn’t a tax on jobs? Moreover, it is a tax on wealth creation. It says a great deal about what the Government really thinks about enterprise.

Most importantly, this is the price you pay for a Government that refuses even to countenance other ways of delivering public services.

That is why genuine health reform is ultimately so important for business, because only fundamental reform offers a way out of the endless cycle where businesses are taxed more to pay more for sclerotic public services.

And it is an endless cycle.

This Budget was not the first time Labour have increased taxes on business. They’ve done it every single year since 1997 without fail, it’s just that previously they did it by stealth.

Almost as soon as Tony Blair first got into office, his Government introduced a £5bn windfall tax on the utility companies, undermining massive investment programmes for some of the most vital infrastructure in the country.

In their first year, Labour also introduced the tax which Bob Michaelson referred to, the £5bn abolition of dividend credits on pension funds.

Bob is not alone in criticising this particular tax change. There is currently an Early Day Motion circulating in Parliament criticising the pension stealth tax, stating that it has cut the dividend income on dockers’ pension funds by 33 per cent. The signatories include: Peter Kilfoyle, Jeremy Corbyn and Dennis Skinner.

Clearly, MPs of all persuasions recognise the harm that this measure has caused.

As the last Parliament got into full swing, fuel duty soared to record levels, hitting businesses just as hard as everyday motorists.

Contractors were hit with IR35; National Insurance was levied on benefits-in-kind, and the Climate Change Levy provided extra costs at the worst possible time for energy-intensive industry.

But it’s not just taxation.

A recent IoD survey in the West Midlands found red tape to be the greatest obstacle to enterprise in the region.

The Government’s own ‘Red tape Czar’ shares this view. The Financial Times recently carried an article by David Arculus, the new chairman of the Better Regulation Task Force. He warns of Whitehall ‘drowning companies in a sea of red tape’.

He recounts his experience of asking one Government department if it could consider giving advice on employment regulation to employers. Incredibly, the department replied that ‘it could not possibly know everything there was to know about employment regulations’.

But as Mr Arculus says, ‘this is exactly what the government expects of employers’.

What I find so staggering about this article is that, after five years of Tony Blair saying he would cut red tape, the Government’s own agency for dealing with the problem is absolutely damning in its assessment of Labour’s achievements.

Quite simply, since May 1997, you have been subject to an unprecedented tide of both red tape and taxation. In that period, business has been burdened with £11bn of new taxes and regulations every single year. Struggling manufacturers, new hi-tech start-ups, care homes for the vulnerable; small, medium and large businesses; they have all been hit.

Nothing more starkly highlights this Government’s complete failure to understand the nature of enterprise than this unremitting burden on the freedom of business to create wealth.

As Conservatives we remain committed to free enterprise, where the burdens on business are minimised instead of ramped up at every opportunity.

But we also know that we have to get the other fundamentals right: sound infrastructure, reliable transport, stable monetary policy and an education system that gives our people the skills to meet the challenges of today’s competitive workplace.

On all these areas we are making progress in developing policy as part of the review I set up on becoming leader.

On education, Damian Green has started to reveal our plans for addressing the failings of our worst schools by offering greater opportunities for vocational training.

On the pressing issue of health reform, we are visiting other countries to see how they provide better services.

Michael Howard has confirmed our support for an independent Bank of England.

And I want to reaffirm our commitment to keeping the Pound.

The Prime Minister has hinted at a referendum on the single currency next year. I gather this afternoon he sent Stephen Byers to brief journalists that he would start the referendum process this autumn. When that news broke the Prime Minster panicked and denied all knowledge. What a way to run a Government, more spin becomes more chaos.

At a time when everyone is concerned about the state of their schools and hospitals, when we feel threatened by the rise in violent crime, he should focus on these issues and stop playing games over the Euro.

If the Prime Minister wants Britain to adopt the single currency, he should say so and name a date for the people to decide.

We will campaign vigorously for a ‘no’ vote because replacing the Pound means giving control of British interest rates, taxes, and public spending to politicians and bureaucrats in Brussels and Frankfurt.

It would cost us in higher unemployment and lower living standards, and it would mean boom and bust for the British economy and businesses.

It also means British people giving away control over politicians. Now, people can kick us out if they don’t like us. Inside the euro, it wouldn’t matter how people voted.

These are the arguments that I believe will prevail.

We can then get back to the urgent task of making this country fit for the century we are living in.

The bottom line is that we are opening our minds to new ways of doing things in order to make peoples’ lives better.

All Labour have done is opened your wallets.

Britain deserves better.

It is the business of the Conservative Party to make sure it gets it.