Iain Duncan Smith – 2003 Speech at the British-Swiss Chamber of Commerce in Central London

The speech made by Iain Duncan Smith, the then Leader of the Opposition, on 19 May 2003.

It’s a great privilege to be here to speak to you today. The British-Swiss Chamber of Commerce has a vital role to play in developing business relations between Britain and Switzerland.

It’s a role you play with distinction.

I would like to address three issues which are of common interest to all those concerned with the future- its business environment and, its place in Europe.

In turn, I want to deal with our competitiveness, the euro and the proposed European Constitution.
I have three propositions for you today.

First, that Britain’s competitive position is being undermined…

both by the micro-economic management of a Government that does not understand how business works and by the impact of its failure to reform our public services on our tax position, our public finances and our quality of life.

Second, that addressing these root causes of declining competitiveness is what matters most to Britain and its business economy – not focusing on joining the euro. Labour’s political obsession with the latter is to the detriment of us all.

Third, that Europe will not be improved by deeper integration and the strengthening of its institutions – but rather by bringing democratic power and accountability closer to all the peoples of Europe by reinforcing the autonomous power of nation states.

We will lead this fight.

Competitiveness

Britain does not enjoy the quality of life it should.

· There are a million people on Britain’s hospital waiting lists.
· One in four children leave our primary schools unable to read, write and count properly.
· Thirty thousand children leave our secondary schools without a single GCSE.
· 39 out of every 40 crimes go unpunished by a conviction.
· And British people spend longer commuting to work than any other people in Europe.

The Labour Government’s only answer has been to spend more and more taxpayers’ money.

By the end of their current plans, real terms spending on health will have doubled — and on education will have risen by 50 per cent.

That’s why the government tax take has already risen by the equivalent of an extra five and a half thousand pounds a year for every household in Britain.

And that’s why public borrowing is now spiralling upwards too.

This is nothing less than a massive tax and spend gamble.

And our competitiveness is fast being eroded.

Britain is once more becoming a place where people do not want to do business.

Business investment is falling and savings have collapsed.

Burdens on business are up and our competitiveness and productivity growth are down.

The CBI believes Labour’s extra tax and regulations have added as much as £15 billion a year to the cost of doing business in Britain.

And since 1997

· we’ve lost over half a million jobs in manufacturing,
· we’ve seen the number of days lost to strikes increased sixfold
· and we’ve fallen from 9th to 16th in the World Competitiveness rankings.

But more than this, we understand that competitiveness is not just about economic efficiency.

To compete means being a country where people want to live and where businesses actively choose to locate their operations.

A place that can attract and retain the best talent and the most investment.

A place with something extra to offer.

To compete means being a nation with a well educated, highly qualified workforce that doesn’t waste weeks every year, off sick, or stuck in traffic jams.

As a global competitor, we have lost a lot of ground.

With taxes up, we’re a more expensive place to do business.

With regulation up, we’re no longer an easy place to do business.

With our public services in decay, we’re no longer a magnet for talent or investment.

So how would a Conservative administration be different?

First, we are, by nature, a party of lower tax.

We believe that governments should measure success not by how much money they spend, but how well – and how carefully – they spend it.

Second, a Conservative Government will not second-guess everything business does.

We will not be over-interfering in the way businesses are run.

Third, on public services we are committed to a strategy of real reform — widening choice and rooting out bureaucratic waste.

This is what it will take if we are to begin to deliver a fair deal for everyone.

And if we fail, Britain will be a less competitive place as a result.

Euro

My second proposition is that rather than addressing these problems, the Government is obsessed with the euro.

Look at the mess they are in.

Last Wednesday, they told the BBC they had reached an agreement.

By Thursday morning they were having to deny that.

And shortly afterwards, they announced that the Chancellor’s conclusions on the euro would be delayed until June 9.

In the meantime, special Cabinet sessions have been called to thrash out the issue.

The Chancellor, the Prime Minister and their factions are still clearly miles apart on whether they will rule out a euro vote before the next election.

And Cabinet Ministers have been contradicting each other every other day.

Last Sunday, John Reid said it was a question of when Britain would join the euro.

Then on Wednesday, Jack Straw said it was first of all a question of if Britain should join.

On Thursday, John Prescott said they hadn’t even decided whether the question itself was if or when.

On Friday, the Prime Minister and the Chancellor were so concerned about the depth of the splits that they issued a joint statement to deny there were any splits at all.

And yet we now hear that the Prime Minister does not want to hold a full Cabinet discussion on the euro until he has marched members of the Cabinet in one by one to beat up the Chancellor in private.

I have a simple message for the Prime Minister and the Chancellor – let us all see the available evidence now.

That way, we can weigh all the facts up for ourselves and come to our own conclusions.

The Conservatives’ position is clear.

We would not take Britain into the euro because we believe that giving up our ability to set our own interest rates would be…

· bad for British jobs…
· bad for the British economy….
· and bad for the British people.

We believe Gordon Brown’s five tests are a sham.

Of course the Chancellor is right to say that it would be damaging to join the euro…

· without the necessary convergence or flexibility…
· or if joining would be bad for investment, financial services, or jobs.

But there is no case for saying that any of these tests have been met.

France has 2.5 million people unemployed; and Germany nearly double that.

It is impossible to see how the Government could argue that joining the euro would be good for jobs.

In fact, the opposite is true.

But, of course, these economic tests are no more than an elaborate smokescreen.

Because the only test that matters to the Government is the political one.

They may pretend that they want to join the euro for economic reasons.

They may argue that remaining outside the euro will damage our economic prospects – hitting our competitiveness, our trade performance and our ability to attract investment.

But the fact is that despite being outside the euro, Britain remains a more attractive destination for inward investment than any eurozone country.

We remain the world’s third favourite location for inward investors, after China and the United States.

Not being in the euro has done our investment performance no harm at all.

And the example of Switzerland, for that matter, shows that it is possible to live prosperously alongside the euro, at the heart of Europe, without adopting the single currency.

But we will not retain our position for long if our domestic competitiveness continues to be undermined and we cease to be an attractive place to do business.

Our trade performance tells the same story.

In the euro’s first three years, British goods exports to the eurozone grew by 26.4 per cent – faster than France, Germany or Italy.

But again, in the long term, our trade performance will depend on our ability to provide goods and services to a competitive standard at a competitive cost.

So long as our productivity growth stagnates as it has for the past five years, we are in danger of slipping behind our competitors.

And by that I do not just mean our competitors in the EU, but all those around the world.
As we speak, the current uncertainty is doing damage to our competitive position.

The Government is split and concentrating on healing political rows rather than on healing the public services.

And, meanwhile, business is crying out for more certainty.

My message to the Prime Minister is simple.

Ever since becoming Prime Minister he has made it clear that he is in favour of the euro in principle.

If, despite all the economic evidence, and despite all the splits in his Cabinet, he remains determined to take Britain into the euro, then…

…he should admit that his is an entirely political decision…
…and he should get on with calling a referendum so the British people can have their say.

If not, he should forget about it and get on with what matters to the British people – delivering sustained prosperity and world-class public services.

Constitution

I am going to turn now to my third and final proposition – that the Government’s policy on the European Constitution, like its policy on the euro, threatens to give people a raw deal.

The Convention on the Future of Europe is drawing up a draft constitution that may determine the shape of Europe for the next half-century.

But right now, Europe faces tougher challenges than it has for many years.

For a long time, we Conservatives have argued that the European Union is faced with a crisis of democracy and accountability.

Turnout in European elections has fallen below fifty per cent across Europe.

The peoples of Europe feel little ownership of European institutions.

But at the same time the Europe Union is growing.

Ten new states will join next year, increasing the EU’s population to four hundred and fifty million.

We have always seen enlargement as one of the European Union’s most important tasks.

But I fear that the direction being taken by the draft European Constitution will do little to serve the interests of the people of Europe, present or future.

The peoples of Europe, and most particularly those in enlargement states, want jobs and prosperity — but the EU’s economic performance has been poor, and unemployment is far too high.

Across the EU, people also want to feel connected to the laws and institutions that government them — but at present, our democracies face a great challenge — people feel alienated from the political process.

Economic reform and political connection – these are the two points a modern, forward-looking EU should focus on.

But though it is clear — and almost universally agreed — that the EU is in desperate need of reform — the Convention is looking backwards towards a vision of Europe that is wholly outdated.

Now is not the time for more centralization and deeper integration in the EU.

It’s time, as can be seen so clearly from the health of democracy in Switzerland, to reinforce democracy in nation states.

The Conservative Party has a different vision of the future of the European Union.

We want to see the decentralising of powers back towards national parliaments.

Not least because, in the case of many of the new, enlargement states, these Parliaments are young, hopeful institutions we should seek to support, not to undermine.

That way we can achieve a Europe that is more democratic, more accountable, and better suited to enlargement.

And it is because we believe so passionately in an alternative and, we think, better vision of a modern Europe…

…because we believe in the dream of a prosperous, harmonious, enlarged Europe that works for all its people…
…we believe that the people of Britain should have the opportunity to vote on any proposed European Constitution.

Since the current Labour Government came to power in 1997, there have been 34 referendums in Britain.

Referendums have been held on everything from devolution to elected mayors – and have been promised on regional assemblies.

In short, referendums have become the norm wherever changes have been proposed to the way people are represented and governed.

But when it comes to the European Constitution – a constitution that will decide how every person in this country is governed, regardless of where they live – the Government doesn’t think the British people need a say.

The Government’s defence is that the European Constitution will merely be a ‘tidying-up exercise’.

Let’s challenge that assertion.

The Prime Minister meets Giscard d’Estaing tonight.

If this is merely a tidying up exercise, then a lot of what is currently being proposed must be dropped.

Not least the plans for…

· a single European foreign minister
· a Constitution with legally enforceable fundamental rights
· the establishment of legal status for the EU – the prerequisite of a state
· the bringing of foreign, defence and home affairs, including asylum and immigration policy, under European jurisdiction
· the extension of EU competence over criminal law including the establishment of an EU public prosecutor.
· the adoption of qualified majority voting, rather than unanimity, as the default mode of European decision making
· and plans to establish a fixed term five year presidency of the EU, even if that means Tony Blair having to reconsider what he will do with his retirement.

Unless these, and other, items are dropped, then this cannot be called mere tidying up.

As things stand, there can be no doubt that the draft constitution proposes deep and dangerous changes to how the British people, and all other peoples of Europe, are governed.

What could strengthen the Prime Minister’s negotiating position more, and what could reassure those who fear what will emerge from this Convention more, than a commitment to giving the British people the right to make up their own minds on a proposed European Constitution?

In just six years they have held 34 referendums.

And there are many more to come.

But on the only two issues of absolutely crucial importance to every single person in Britain – membership of the euro and signing up to a European Constitution – the Government is playing political games.

On the euro, it has promised a referendum – but is clearly planning to call one only if and when it believes it can win.

On the Constitution it speaks volumes that the Government has so arrogantly dismissed calls for the British people to have any say at all.

It refuses to grant them a referendum.

Contrast this with Switzerland, where a series of referendums were held only yesterday.

Conclusion

Historically, Britain is a great trading nation.

Globally, we were the forefathers of free trade.

We retain close and important ties with Switzerland and with so many countries across the world, within the EU and outside it.

At home, a Conservative Government will recognize that it is the flexibility and innovation at the heart of our economy that determines our ability to compete internationally, far more than whether or not we share the same currency as others.

We believe that if we hold no-one in our society back, we will be better placed to achieve this competitiveness and to ensure that no-one in our country is left behind.

Internationally, we recognize that people don’t want a European super-state that leaves them feeling alienated from the faceless institutions that make their laws.

The people of Europe deserve to live in a harmonious union of free moving, free trading nations, fostering prosperity and stability.

The nations of Europe should settle for nothing less.