George Osborne's Speech To Tory Conference 2011
Today, all around our country - indeed, all around the world - people are anxious, worried about their jobs, their families, how they're going to pay the bills.
I come to you with words of resolve, determination, confidence and belief.
Belief that the British people will overcome this challenge as we have overcome so many before.
Together, we will ride out the storm.
I don't want anyone to underestimate the gravity of the situation facing the world economy.
But I also don't want anyone to think that the situation is hopeless; that there is nothing we can do.
Yes the difficulties are great.
But we should be careful not to talk ourselves into something worse.
And we should never take our eyes off the prize:
A British economy freed from its debts; growing strongly; spreading prosperity to all our people;
so we can fulfill that solemn promise to the next generation:
we will leave the world a better place than we found it.
Our economic problems were not visited on this country by some cruel act of god or blind force of nature.
They were created by the mistakes of human beings.
And the endeavor of human beings can put them right.
What were those mistakes?
There were three above all - and they are all connected with each other.
First, the last government borrowed too much money.
They thought you could borrow without regard to ability to pay, spend without regard for value for money, all on the premise that boom would never end in bust.
They saddled the country with the worst debt crisis in our history.
What a catastrophic mistake. Let us make sure it never happens again.
"Economic advisor to Gordon Brown".
I'm not sure I'd put that on my CV if I were Ed Balls.
It's like "personal trainer to Eric Pickles".
Although I have to say, when it comes to chasing down council waste, no-one runs faster than our Eric.
The second mistake was made by banks who ran up staggering debts of their own, buying financial instruments even they couldn't understand.
The banks and those regulating them believed that the bubble would never stop growing, that markets were always self-correcting, that greed was always good, that their ponzi schemes would never collapse, and that none of the debts would ever turn bad.
The message from this hall is clear: they let down their customers, they let down their shareholders, and they let down their country.
And there was a third mistake.
Our European neighbours plunged headlong into the euro without thinking through the consequences.
How could they believe that countries like Germany and Greece could share the same currency when they had vastly different economies and no mechanism to adjust?
For generations to come, people will say: thank god Britain didn't join the euro.
Let us recognize the foresight and the fortitude, the street stalls and the leaflets, the pavement pounding and the canvassing, of the people in this hall today, who campaigned to keep the pound.
And there's one man here today, who precisely saw the consequences, warned of them, campaigned against them, put his reputation on the line to oppose them, was ridiculed for it, but who stuck to his course and was proved right - my friend, William Hague. I've waited ten years to say that.
And it's thanks to the leadership of someone else here today that we have kept Britain out of the eurozone bailout of Greece, and out of their permanent bailout fund - our Prime Minister, the country's leader, David Cameron.
And this also is my opportunity to thank my Treasury team, Mark Hoban, Justine Greening, David Gauke who you have just been hearing from, Greg Hands, and of course Danny Alexander. They are diligent and dedicated in their service of our country.
Tomorrow morning I will travel to a meeting of European Finance Ministers in Luxembourg.
My objective is clear.
The eurozone's financial fund needs maximum firepower.
The eurozone needs to strengthen its banks.
And the eurozone needs to end all the speculation, decide what they're going to do with Greece, and then stick to that decision.
Britain is not immune to all this instability.
Indeed, the resolution of the eurozone debt crisis is the single biggest boost to confidence that could happen to the British economy this autumn.
The time to resolve the crisis is now.
They've got to get out and fix their roof, even though it's already pouring with rain.
A debt crisis in government.
A debt crisis in the banks.
A debt crisis in the euro.
We in Britain are paying a high price for these mistakes.
The price of jobs lost.
Of careers never started.
Of hopes dimmed.
And our covenant with the British people is this:
We will not stand by and let it happen.
We will do everything, work with anyone, overcome every obstacle in our path to jobs and prosperity.
So that together we will ride out the storm.
Each day, people suggest to me things we should be doing differently.
Some say, borrow more for more spending.
Or they say, borrow more for temporary cuts in tax - so you'd have to put taxes up even more later.
I'm a believer in tax cuts: permanent tax cuts, paid for by sound public finances.
Right now, temporary tax cuts or more spending are two sides of exactly the same coin - a coin that has to be borrowed.
More debt that has to be paid off.
I know we are asking a lot from people.
And I want them to know that when these arguments are put to me, I consider them carefully.
Don't think I haven't thought hard about what more could be done.
That I don't explore every option.
But borrowing too much is the cause of Britain's problems, not the solution.
That the world is in the grip of a debt crisis has not undermined that argument - it has made it stronger.
So let's say we added to the structural deficit with more borrowing.
We'd be gambling the priceless fiscal credibility that this government has earned with the international markets on the bet that borrowing a few billion pounds more would make all the difference.
We'd be hazarding our precious low interest rates on a change of course that would put those rates up in the full knowledge that any extra billion pounds of public spending would be wiped out by billions of pounds more in higher interest costs for families, businesses, and taxpayers.
We'd be abandoning the deficit plan that has brought us the stability other nations today crave, for say five, ten, twenty billion pounds more of borrowed spending ...
... on the illusion that such sums would transform our economy when we're already spending three trillion pounds over the next few years.
We'd be risking our nation's credit rating for a few billion pounds more ...
... when that amount is dwarfed by the scale and power of the daily flows of money on the international bond markets, swirling around - ready to pick off the next country that lacks the will to deal with its debts.
Conference, we will not take that risk.
We are in a debt crisis.
It's not like a normal recovery.
You can't borrow your way out of debt.
The fact that the world is in a debt crisis has not undermined that argument. It has made it stronger.
For too long, Britain has been running away from its problems.
We have to face up to them.
We can confront them.
We must fix them.
We must deal with our debts.
We can unblock our banking system.
We will help business create new jobs.
First, we will help the Bank of England keep interest rates at record lows while the economy is weak.
In a debt crisis it is the most powerful stimulus that exists.
Nothing would be more fatal for an economy as indebted as ours than a sharp rise in interest rates.
Look at our neighbours today.
In Greece market rates are 20%.
In Portugal they are more than 10%.
In Spain and Italy they are now over 5%.
Our budget deficit is bigger than the lot of them - but here in Britain our market interest rates are today just 2.5%.
Fiscal credibility is not some abstract concept - it keeps families in their homes, firms in business, people in their jobs.
A 1% rise in our interest rates today would add £10 billion to family mortgage bills alone, at the worst possible time.
We have a deficit plan that commands the confidence of world markets and has brought stability at home.
It is a plan flexible enough to respond to good times and bad.
A plan independently verified by our Office for Budget Responsibility.
Backed by a Government united in delivering it.
And a Parliament that has legislated for it.
Very few countries can say that today.
The fact Britain can is thanks to the resolve of this Party.
And we are generous enough to say this: it is thanks to the resolve of the Liberal Democrats too - working as a Coalition, together in the national interest.
Keeping interest rates as low as possible for as long as possible is crucial for dealing with a debt crisis.
It's the first part of our plan.
But because banks are damaged they won't lend at the current low rates.
It's like putting your foot on the accelerator but because the transmission mechanism isn't working properly, the car wheels don't respond.
So this is the second part of our plan.
We've got to get credit flowing in our economy.
Credit means investment. Investment means jobs.
We're making sure that British banks are strong enough, holding enough capital to cover loans in an emergency.
We've expanded loan guarantees.
We've struck a deal with the big high street lenders to increase lending to small businesses by 15 per cent this year.
But all this may not be enough.
Of course the Bank of England have their own independent judgement to make on quantitative easing.
I've said many times before I will follow the procedures of my predecessor and give Treasury approval if they ask.
But there is more the Government itself can do to get credit flowing and encourage investment.
David Cameron and I have always said we would be fiscal conservatives and monetary activists.
Everyone knows Britain's small firms are struggling to get credit and banks are weak.
So as part of my determination to get the economy moving I have set the Treasury to work on ways to inject money directly into parts of the economy that need it such as small businesses.
It's known as credit easing.
It's another form of monetary activism.
It's similar to the National Loan Guarantee Scheme we talked about in opposition.
It could help prevent another credit crunch; provide a real boost to British business;
and over time help solve that age old problem in Britain: not enough long term investment in small business and enterprise.
And if this party is anything, it is the party of small business and enterprise.
And this brings us to the question about the kind of economy we want to see, and the kind of banking system we want to serve it.
We all know what kind of banking system we don't want.
Let's look at what happened at the Royal Bank of Scotland.
A bank where one individual was so focused on his own success and self-aggrandisment that he put at risk:
- the livelihoods of the 200,000 people who worked for the bank
- the 15 million people who entrusted the bank with their life's savings
- and the 60 million taxpayers who had to bail out the bank.
That's what I mean by irresponsibility in business.
It's what I mean by irresponsibility in government, when they don't properly regulate banks, don't control public finances, and leave our country exposed to the whims of the international money markets.
So I ask Ed Miliband, you say you wouldn't bring back Fred Goodwin to run our banking system, so why on earth would you bring back Ed Balls to run our economy?
There are business practices that are irresponsible, and we will deal with them with a regulatory system that works.
But Labour's latest policy, that there should be two newly created rates of tax is frankly ridiculous.
- one for producers, one for predators;
- one for companies a Labour Chancellor likes, and one for companies a Labour Chancellor doesn't like
Imagine a Labour Chancellor sitting there in Number 11 every morning, with a copy of the Financial Times in one hand and the Guardian in the other, weighing up corporate Britain on some homemade scales of justice.
What a completely unworkable idea.
I think it's the moment when, as an opposition, Labour ceased to be either a producer or a predator.
You know, there was a time when Labour seemed briefly to realise that to win elections it had to accommodate itself to the real world, stop being anti-business, make peace with middle Britain.
Not now. It's over.
Once they cheered Tony Blair, now they boo him.
I fought three elections against Tony Blair, and I know the damage he did to our country.
But it wasn't just him they were booing last week.
They were booing the millions of voters who once turned to Labour because they thought Labour had changed.
They were booing the business people who thought Labour wanted to work with them.
They were booing all those people who thought Labour had finally woken up to the modern world.
But to all those people who heard those boos and realised they were aimed at them...
... for all those people who aspire, who want a strong society and a strong economy ...
... to those people abandoned by Labour today...
... I say the Conservative Party will be your voice.
So we are repairing the damage of an age of irresponsibility.
Ending the something for nothing society that flourished during it.
Reforming welfare yes, so that those who work get more than that those who refuse to.
But also introducing the first ever permanent bank tax;
the first ever higher levy for long stay non-doms;
the first ever treaty with Switzerland to get back tax money owed to this country.
I want people to be successful.
To create wealth and jobs.
To get the most out of society - and to put something back.
But I'll tell you what this Conservative Chancellor says to rich people who evade their taxes:
We will find you.
And we will find your money
The days of getting away with it are over.
Just as tough on tax evasion as benefit fraud.
We are all in this together.
And that includes the banking sector.
Yes, we want Britain to remain the number one international centre for finance, employing thousands of people across the country.
Driving that business to Hong Kong or New York or Zurich would be completely self-defeating.
I understand the anger people feel about what happened.
I share it.
But ramping up the populist rhetoric is not going to stop banks failing.
We've got to do the real work to ensure that Britain's largest industry is no longer the British taxpayer's largest risk.
That's why we're abolishing Labour's failed tri-partite system and putting the Bank of England back in charge of monitoring debt ...
... a responsibility that should never have been taken away from them by Gordon Brown.
It's why we've committed to the principles in the Vickers Report we commissioned, to ring fence our high street branches to protect them from their riskier trading floor activities.
We changed our Party for this moment.
So we can tackle the banks without fear;
So we can speak truth to power and wealth;
And so that the society and the economy we build works for everyone.
Reforming finance. Keeping interest rates low. Getting credit to small business. Helping fix the Eurozone crisis.
These are all essential for growth.
And that would be ambition enough for most governments.
But they are not enough for us.
We have to help business create tomorrow's jobs.
My children are eight and ten years old.
I don't want them to read about how China has just built the world's most advanced aircraft; how India is leading the globe in computer design; and have to say to my children: that used to be Britain.
I want Britain to be the home of the greatest scientists, the greatest engineers, the greatest businesses - a land of innovators. And we can be.
The sacrifices we make, that's what they're for.
The determination I show, that's what drives me.
Tomorrow's world is being shaped here in Manchester.
Manchester, the first City of the Industrial Revolution.
The city where the first computer was built.
Where Rutherford split the atom.
And the Miliband brothers split the Labour Party.
Manchester, home to the two brilliant scientists I met this morning who have just been awarded the Nobel Prize for physics.
Their prize was for the discovery of a substance called Graphene.
It's the strongest, thinnest, best conducting material known to science, to be used in everything from aircraft wings to microchips.
The inventors could have gone anywhere in the world to conduct their research.
But they chose the University of Manchester.
Now countries like Singapore, Korea and America are luring them with lucrative offers to move their research overseas.
But they want to stay here, in Britain.
They think it's the best country in the world for them and their work.
We've already protected the science budget.
And today, I am confirming that on top of that we will fund a national research programme that will take this Nobel-prize winning discovery from the British laboratory to the British factory floor.
And we're going to fund the frontier of high performance computing as well to give the best tools to our designers and engineers.
Let's stop thinking that the only growth that can happen in Britain takes place in one industry in one corner of our country.
We're going to get Britain making things again.
I've never believed the Government should just stand on the sidelines, that it has no role in fostering enterprise and creating jobs.
I will intervene when the market doesn't work, and set it free when it does.
We've been doing a huge amount in the past sixteen months to make Britain open for business.
We're cutting business taxes to one of the lowest rates in the developed world.
We're cutting income tax bills for over twenty million people - and taking over a million of the lowest paid out of tax altogether.
At a time of deficit reduction we're actually increasing capital spending on roads and railways.
We're creating a super-fast broadband network.
We're reforming our planning laws so they work for our economy and our countryside;
We are reforming the tax system so multinationals are coming to Britain not leaving;
We are creating more apprenticeships than this country has ever seen;
We are simplifying our tax code;
For small businesses we're freezing rates, cutting taxes, stopping new regulations in their tracks.
Don't tell me this Government isn't going for growth.
And that's not it.
We are today extending mobile phone coverage for up to six million people.
The new Right to Buy and housing plans David Cameron announced yesterday will build 200,000 new houses and create 400,000 jobs.
We're launching new enterprise zones.
We're helping unemployed people get jobs through our Work Programme; helping them start businesses with our Enterprise Allowance.
We're reforming welfare; transforming education.
And we're reforming public sector pensions so they are generous to public servants and also fair to taxpayers.
Let me say this to the unions: to go on strike in economic times like this, when you're being offered pensions far more generous than most other people could ever afford, will hit growth, will cost jobs. It is totally irresponsible.
We've made all these changes in the space of just sixteen months.
But it's not enough.
I know that.
We need to do more.
We need to make it easier for businesses to hire people.
I know it's important to respect employment rights.
It's the heritage of our party.
136 years ago it was a Conservative politician under a Conservative Government who introduced the Chimney Sweepers Act that brought an end to children becoming sweeps...
Unfortunately, unlike today, in their long battle our predecessors did not always have the good fortune of being supported by the Liberals.
But we also respect the right of the unemployed to get a job and not be priced out of the labour market.
And we respect the right of those who have spent their whole lives building a small business not to see that achievement destroyed by a vexatious appeal to an employment tribunal.
So we're now going to make it much less risky for businesses to hire people.
We will double to two years the amount of time you can employ someone before the risk of an unfair dismissal claim.
And I can tell you today we are going to introduce for the first time ever a fee for taking a case to a tribunal that litigants only get back if they win.
We're ending the one-way bet against small business.
Now we know that a decade of environmental laws and regulations are piling costs on the energy bills of households and companies.
Yes, climate change is a man made disaster.
Yes, we need international agreement to stop it.
Yes, we must have investment in greener energy. And that's why I gave the go ahead to the world's first Green Investment Bank.
But Britain makes up less than 2% of the world's carbon emissions to China and America's 40%.
We're not going to save the planet by putting our country out of business.
So let's at the very least resolve that we're going to cut our carbon emissions no slower but also no faster than our fellow countries in Europe.
That's what I've insisted on in the recent carbon budget.
And there is one more thing I can tell you.
We've had to make difficult decisions about public spending;
and careful choices about what to protect.
So by relentlessly eliminating waste, we could afford to protect funding for Conservative priorities like the NHS and schools.
Two years ago I stood here and said we would cut the cost of central bureaucracy by a third.
Some were skeptical of politicians who said they could cut waste.
But we're doing it and we're ahead of plans.
So I can tell you that next year we will again freeze the council tax.
When so many bills are going up, council tax can be the one bill that doesn't.
That's help for families, so together we ride out the storm.
Resolve, Determination, Confidence, and Belief.
Resolve: that we will deal with our debts and reshape our state to live within our means.
Determination: that we will see through our policy, keep interest rates low, and get credit flowing.
Confidence: that there are things we can do, and measures we will take to get the economy moving again and create jobs.
We do all this because we believe.
We do all this because we believe that our country's best days lie ahead of us.
We do all this because we are optimistic for the future.
We do all this because we know that the sacrifices our country makes will not be made in vain.
That the difficult choices we have made will not have been made for nothing.
We do all this for a better Britain, and a stronger economy.
To which everyone can contribute; from which everyone will gain.
An economy that works for all.
I don't pretend to you that these are not difficult days
and that there are not difficult days ahead;
but together we will ride out the storm.
And together we will move into the calmer, brighter seas beyond.