RT HON DR LIAM FOX MP SPEECH TO THE MIDLAND INDUSTRIAL COUNCIL, BIRMINGHAM –
FRIDAY 26TH APRIL 2013
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It is a pleasure to be back, again, in the Midlands talking to many of the business men and women who make this region the industrial heartland of the United Kingdom.
It is you, in this room, who understand instinctively the sort of economy that we need if we are to encourage businesses of all sizes to develop and prosper; you understand the need to manufacture and trade goods of a suitable quality at a price customers are willing to pay; you understand the relationship that we must have with our neighbouring nations and the importance of building new relationships with emerging economies across the globe; and you understand that to achieve this, you need strong leadership from a Government that supports private enterprise and encourages the entrepreneurial spirit that makes this region great.
Most importantly, you understand that we need to stop talking simply about growth but start talking about wealth creation instead. There is a subtle but important difference between the two. Growth can be achieved by borrowing and spending more but it is not wealth creation. It is not sustainable - simply an economic illusion and cruel political mirage. It is Labour’s way, not ours.
THE THATCHER LEGACY
The events of the last few weeks will have caused many people to consider just what a huge political and historic figure Margaret Thatcher was and how she rescued the British economy from the quicksand of socialist thinking.
We have also been able to recall what hard left hatred looks like and why we must defend against it.
Many people in this country will also have been reminded why they were drawn to the Conservative cause under Margaret Thatcher’s leadership. Their values have not changed and neither have ours but we are currently lacking the language to reconnect with them. We are their natural home and they are our natural supporters regardless of what background or part of the country they come.
It should be an article of faith for Conservatives that defence and security of our people remains the first duty of government.
It is up to the political and business minded people amongst us to explain clearly and repeatedly that we should not live beyond our means; spending what we do not have. Leaving the present financial burden to the next generation is simply not the Conservative way. We must stand by those who understand that you should always be better off working than not working - those who put away something for a rainy day, making sacrifices today to protect themselves in times of need.
We must be clear that those who can stand on their own two feet should be encouraged to do so but we must always be willing to help those who cannot help themselves.
We need to be the champions of both aspiration and opportunity. Without opportunity, aspiration can merely result in disappointment and bitterness. It was the opportunities that we provided in the Thatcher revolution that changed the face of Britain. We must believe that we can do so again.
Someone from my own background would not have been as attracted to the Conservative party in the days before Margaret Thatcher. She powered into a meritocratic era, determined to ensure that wealth and ownership were not the preserve of a privileged few and, with a policy of council house sales and wider share ownership through privatisations, the Conservatives liberated millions from the limited aspirations that are so much the hallmark of socialism. In my own family, my grandfather, who was a miner in the west of Scotland would have thought it unimaginable that his grandson could possibly become chairman of the National Conservative party. Improved social mobility is one of the most important achievements for which the Thatcher years should be remembered.
The greatest tribute we could pay to Margaret Thatcher is not to create a cult of personality – something she would have regarded as immodest and vain - but to ensure that her intellectual legacy and fearless commitment to her ideals remains strong.
UKIP
Next week, many parts of the country go to polls in local elections. I don’t want to make this a party political broadcast but in the weeks following the loss of Lady Thatcher and with claims being made that her intellectual heritage now sits outside the Conservative Party, I think it important, as a friend, to nip that particular sentiment in the bud straight away.
So let’s be clear; Lady Thatcher used to say that she was born a Conservative, would die a Conservative and would fight for her beliefs inside the Conservative Party. I think she would be disappointed, if not appalled, to see Conservatives switching to UKIP rather than argue their case inside the Conservative Party. But worse, she would be horrified to think that such switching could open the door to power locally and nationally to her mortal enemy, the Labour Party. If we lose some of our excellent councillors because of protest votes, then it will be local residents and taxpayers who will pay the price.
There is not a council chamber in the country that affects our national policy on EU membership, immigration or any of the other Ukip cause celebres. Next week’s elections are for local people to choose between local candidates and their views on local issues. A moment of anger at the ballot box could have very lengthy repercussions indeed.
LABOUR AND DEBT
Incredibly, we are confronted with a Labour Party that has learned nothing from its catastrophic management of our economy. Labour’s answer to our debt crisis – still – is to borrow even more money, like alcoholics trying to drink their way out of addiction.
At the end of this financial year, our public sector net debt will be around £1,200 billion and we will be paying over £47 billion in interest payments alone costing each taxpayer around £1200 per year. Our debt interest is now the fourth biggest recipient of public money in Whitehall. What is worse, the year after next, our debt interest will be bigger than our education budget and the third biggest recipient of taxpayers’ money.
It is Labour’s real legacy that we will spend more money servicing our debt than educating our children.
And yet the Miliband and Balls answer to debt is to borrow more, pushing us even further in the red.
We must start to talk about what debt really is - it is simply deferred taxation. Someone has to pay it back some time and while the Conservatives want our young people to be free and strong to take part in the global race that will determine their and our country’s future, Labour would shackle them with the ball and chain of more debt – or more deferred taxes - to burden their adult lives.
The instinctive support amongst Conservatives for reforms to Inheritance Tax demonstrates just how keenly we aspire not only for ourselves but for the generations that follow. We believe in handing the baton on to the next generation whilst in the lead, setting them up to continue our successes. We want to work hard so that they get a head start. There’s no shame in that. It is a deeply held Conservative conviction and it stands in stark contrast to the over taxed, over borrowed, bloated state dominated economy that Labour seek – one that a would see the baton handed over with the next generation of Britons lagging well behind the rest of the world.
HOLDING COURSE
Although the arguments at the core of the economic debate have been won in our favour, there are still people, beyond the Labour Party, attempting to advocate a return towards spending beyond our means. It has been something of a depressing spectacle to see the IMF, in particular, reverse their previous views of British economic policy.
With the Eurozone predicted to contract further, something that will have an unavoidable impact on UK demand, the British government would be wrong to risk the UK's longer term financial stability in response to short term Eurozone failure. The Prime Minister and the Chancellor are right to continue to focus on deficit reduction as it is the more robust and debt-free economies that we will have to compete within the global race. We must break away from a Eurocentric view of our economic difficulties. The world does not end at the southern border of Greece, it begins there. The world’s growing marketplace lies in India, Turkey and Australia as well as the East Asian economies. That is who we are competing with for our future prosperity.
Yesterday’s GDP figures show how our economy is slowly recovering in a challenging international environment. Given our sluggish growth, it is all the more commendable that the Conservative led coalition has been able to reduce income taxes and business taxes, to begin the much-needed reform of our labour markets and to usher in a revolution in the welfare system, including the historic benefits cap.
The government is to be congratulated for a sound beginning to the process of welfare reform. It was not just that Labour created millions more people dependent on the welfare state that has produced today’s problems. Their real crime was to do it on purpose trying to create a client population dependent on an ever larger and hungrier state.
GOING FUTHER
Despite the coalition government’s recent reforming initiatives, I believe we remain over taxed, over regulated and we still spend and borrow too much. I have said before that we should aim to freeze public spending for at least three years and probably more. Such a move would, in that time, see baseline spending totals £70.4 billion lower than today. If we were to go further still and freeze public spending for five years at 2012/13 levels, annual spending would be £91.2 billion lower in 2017/18 and the cumulative saving over five years would be an incredible £345 billion. It would go a long way to putting us on a sound and sustainable financial footing.
The longer our deficit continues, with our debt still mounting, the larger our annual debt interest payments will be. As interest rates rise, as they surely will, there will be an added upward pressure on spending. Before the last election, we talked about the need to share the proceeds of growth. We need to do so again. But this time, instead of sharing the proceeds between spending and deficit reduction, we need to share the proceeds of any growth between tax reduction and ultimately debt reduction.
As well as controlling government spending, we need to begin a systematic switching of universal benefits into tax cuts. We must end the iniquitous multi-taxing of the same money. It is not right to tax people’s income and then their savings on that income; to tax the movement of assets through capital gains tax and stamp duty and then tax them again through inheritance tax if they have the audacity to die.
And as we look forward to the next general election and the next Conservative manifesto, we need to take a radical view of what government does, and does not, need to do. The Adam Smith Institute has suggested candidates for asset sales such as Network Rail, Channel 4, Royal Mail, the 49% stake in NATS and the Scottish, Welsh and Northern Ireland Water industry. Then, of course, there are our shares in RBS and Lloyds worth around £50 - £100 billion. We have oddities like the Commonwealth Development Corporation which means the British taxpayer owns hotels in the Caribbean and we have hardly made a start on the abolition of quangos.
One of our brightest young councillors, Harry Phibbs, has been leading the argument calling for sales of government land, a rethink of the size and structure of Whitehall and the civil service, as well as a radical deregulation programme.
All of these would help foster a climate where wealth creation would be encouraged not seen as something to be embarrassed about as Labour seems to.
It must reward the risk takers, without whose creativity, we cannot move forward.
It must ensure that success and failure are not equally rewarded as they were in our banking system in the run-up to the crash.
And we must ensure proper access to capital so that those who need to invest today to create wealth tomorrow are able to do so.
I believe it is entirely possible for the Conservative party to win an overall majority at the next general election if we show political courage, intellectual creativity and party unity.
Those of us who were drawn to the Conservative party by Margaret Thatcher’s desire to free people from the pigeon holes that they had historically been put into, able to exploit their own talents in a country that valued opportunity, creativity and hard work, have a duty to make that message heard in the next generation as well.