Philip Hammond: A stronger, greener economy

Speech by Shadow Chief Secretary to the Treasury Philip Hammond MP to the Welsh Conservative Party conference 2010.

“It’s good to be back here in Llandudno.

The Conservative Party has been coming here for many years – in the good times and the bad times.

When we were not much more than a footnote in Welsh politics.

And now, after your superb achievement in the June 2009 elections, as the largest party, in terms of popular vote, in the country.

We found on the internet some Pathe News footage of the Party’s conference here in 1948 - in the middle of the gloomy post war era.

Winston Churchill was here, and Harold Macmillan and RAB Butler.

Then, Britain had a Labour Government – and was in deep financial trouble.

The delegates sat in the conference hall under a huge banner bearing the slogan “The Tories will Clear Up the Mess.”

Maybe 60 years isn’t such a long time in politics, after all.

One of the delegates at that 1948 conference was a bright young woman, representing Oxford graduates.

It was during a lunchtime stroll along the pier that she was persuaded by a few of her fellow delegates to enter national politics and apply to be a parliamentary candidate for the first time.

She did. And of course, went on to become one of our greatest Prime Ministers.

So that Llandudno Conference had a significance beyond what any of the participants could possibly have known at the time.

And here we are again. Labour Government; deep financial trouble; Metaphorically at least, that same banner over our proceedings: “The Tories will Clear up the Mess”

Because in 9 weeks’ time, British electors will vote to decide our country’s future in the most important election for a generation.

The choice they face is clear.

A choice between a strong united Conservative Party, led by David Cameron, with the vision, the energy, the determination and the competence to get our country moving again.

(Just as that young lady from the 1948 conference got our economy moving again in the 1980s).

Or Gordon Brown’s exhausted, divided, dysfunctional Labour Party, which has brought this country to the brink of bankruptcy.

A choice between a Party offering change; and one offering more of the same.

So over these next 9 weeks, our task is to convince people that the change the Conservatives offer is real – and that it will make a difference to their lives.

But to make real change, we must first show we are ready to take the tough decisions to repair our public finances, deal with our debts, and build a new, sustainable, economic model to get our country open for business again.

And we must explain to people why Britain simply cannot afford another five years of Gordon Brown.

That’s a challenge that I know Cheryl and Nick have already taken to the Welsh people with relish. And when it comes to the economic debate, in David Melding and Kay Swinburne, you have two first class advocates for Wales. It’s a privilege to be here with this team in Llandudno this weekend.

We’re now in the 13th year of a Labour government.

13 years of Gordon Brown throwing our money at every problem.

13 years in which he has borrowed and taxed and spent on an industrial scale, blinded by his own rhetoric into mistaking a bubble for a real boom.

They say that 13 is an unlucky number.

It certainly has been for Britain.

And what is he doing now?

Apologising for his mistakes?

Actually, no.

He’s asking for another five years so that he can repeat them.

The man who destroyed our pensions; gave away our gold; raised our taxes and wrecked our economy is asking us to give him another chance.

The man who claimed he’d ended ‘boom and bust’ – but took us into the longest and deepest recession in our postwar history.

Who said we were “well placed to weather the storm” – and that we would “lead the world out of recession”.

But whose policies kept us mired in it longer than any other G20 country.

In North Wales just days ago, he claimed his priority was ‘jobs, jobs, jobs’.

But 20%  of young people in Britain cannot find a job and unemployment is 400,000 higher than when Labour came to office.

He boasted of his ‘prudence for a purpose’ – but we have the biggest budget deficit in the developed world and our triple A credit rating is now under real threat.

He talked about ‘opportunity for all’ – but this is the first full Parliament since the war when national income per person has actually fallen. And under Labour, social mobility has ground to a standstill.

Enough is enough.

We see the need for change.

But Gordon Brown’s still digging. Planning to borrow £3.5 billion a week this year – and next.

Increasing public spending by £30 billion in the next year alone.

Increasing National Insurance, the tax on jobs, in an economy that desperately needs more, not fewer, of them.

Stubbornly ignoring the warnings of the Governor of the Bank of England, the OECD, and the CBI that we need a credible plan to reduce the deficit now.

By 2015, our national debt will have trebled to hit £1.5 trillion - £23,000 for every person in this country.

Wales’ own share of that debt is a staggering £72 billion.

True to form, like every Labour government before it, this one has run out of money.

And like every Labour government before it, it will leave office with unemployment higher than when it came in.

Of course, Gordon Brown claims Britain was the innocent victim of a global crisis created by foreigners.

But it wasn’t foreigners who put in place the failed tripartite regulatory system and stripped the Bank of England of its powers to call time on levels of debt in the economy.

Allowing our banks to become more leveraged even than the American banks, and our households to get deeper into debt than those of any other major economy in history.

And it was he whose reckless spending and monumental borrowing right through the ‘boom’ meant that when the crash came, we were hopelessly ill-prepared.

Because the economy that Gordon Brown built was massively unbalanced: overdependent on unaffordable growth in public spending, an unsustainable property bubble, an unsafe financial sector boom, and lumbered with the highest household borrowings and one of the biggest budget deficits in the industrialised world.

While our manufacturing sector has lost another million and a half jobs on his watch.

The truth is, Gordon Brown has no credible plan to get us out of the mess we’re in.

His idea of the best way to deal with an economic crisis is to unleash the ‘forces of hell’ against his own chancellor in the middle of a recession.

At least he’s even-handed: when he was Chancellor he fought with the Prime Minister, and now he’s Prime Minister he fights with the Chancellor.

He dares label the Conservatives the ‘do nothing party’ – when in fact it is he who refuses to take action to deal with the debt crisis he created.

Putting party interest ahead of national interest. Something we will never do.

Shirking his responsibility to face up to our debt crisis – in favour of putting off the tough decisions until after the election.

Risking higher mortgage rates for families.

Higher interest rates for businesses.

More homes repossessed.

More businesses going under.

More people abandoned on benefits.

And more investment deterred from coming to Britain.

Now, I know there’s a lot of talk in the media at the moment about the volatility of opinion polls.

And amidst all the talk of marginal seats and hung Parliaments, it’s easy to forget that there’s another, different kind of opinion on Gordon Brown’s economic management being tested right now.

Not just here in Britain – but right around the world.

That’s the opinion of the financial markets.

The creditors who buy the bonds that fund our deficit and the people who invest in sterling.

And they have been voting with their feet.

Why? Because the world’s financial community is scared stiff at the prospect of another five years of Gordon Brown.

Any time an opinion poll appears to suggest there could be a hung Parliament - or worse still, that Brown could somehow cling on – another sell-off is triggered.

It is only the prospect of a Conservative Government that is stopping international investors rushing headlong for the door in a mass exodus.

As one leading City economist said last Tuesday: “Unless we get a Conservative government with a clear majority, we think gilt yields will have to rise to about 4.75% and possibly higher if inflation remains a threat”


Let me just spell out what that means: higher mortgages, tougher business loans and cost of servicing our National Debt, already expected to reach £63 billion by 2013, rising to over £80 billion.

Forcing more unnecessary cuts in public service spending simply to pay the interest on our debts.

The investment community knows that only a Conservative Government can get Britain’s public finances back on track.

They know that we will not delay in tackling the challenges we will inherit.

Because we have pledged to set out a credible plan to eliminate the bulk of the structural deficit within a Parliament – starting in 2010.

Safeguarding Britain’s credit rating with a responsible fiscal policy that will help keep mortgage rates lower for longer.

Within 50 days of taking office, we will deliver an emergency budget that will set out overall spending levels for the future – and spell out the immediate measures we will take to start dealing with the deficit in 2010.

Indeed, we have already taken some tough spending decisions:

Imposing a cap on the biggest public sector pensions.

Freezing public sector pay for one year, while exempting the lowest paid.

Bringing forward the rise in the state pension age, which will help us afford a more generous state pension for all

Stopping tax credits for people earning more than £50,000 a year and cutting child trust funds for all but the poorest third of the population.

Shrinking the House of Commons by 10% and reducing the salaries of Ministers.

Meanwhile, our independent Office for Budget Responsibility will ensure that no Labour Government can ever again bankrupt this country with profligate and irresponsible behaviour.

Clearly, delivering major spending reductions while protecting frontline services requires real reform.

Reform that Blair promised and Brown blocked.

So it will fall to a Conservative Government to reform our public services so that they deliver more with less – making them affordable and sustainable for future generations– without needing crippling levels of tax to pay for them.

And make no mistake, we will leave no stone unturned in the war against Government waste and inefficiency.

As David said this morning, the search for efficiency is in the Conservative Party’s DNA.

We will scrap Labour’s tired top-down approach of targets, bureaucracy and centralisation….

And bring in a fresh, new, Conservative approach dedicated to ending Labour’s spendaholic culture for good.

We’ll shine a light on wasteful spending - by publishing every item of public spending over £25,000 online and publishing every significant government contract in full.

We’ll incentivise public service delivery organisations to spend your money more effectively by paying them according to the results they deliver and allowing them to share in the savings they make from being more efficient.

And we’ll give public sector workers the freedom to be innovative – for example by giving them the chance to form their own co-operatives.

We will embed a culture of innovation that will drive productivity growth in the public sector, matching the best that the private sector can deliver.

As we’ve shown in local authorities across the length and breadth of Britain, “Good Government costs less with the Conservatives”.

But we know the challenges we face go beyond getting the public finances back into balance and restoring confidence to the markets.

For a start we must reform our system of banking regulation so that the risky lending practices that did so much damage to our economy are never allowed to occur again.

We will scrap Gordon Brown’s failed tripartite regime and put regulation of our banks back where it belongs – with the Bank of England.

And we will take action to get credit flowing again to the small and medium-sized businesses that are the lifeblood of our economy.

We also need to send a clear message that this country is once again open for business.

And who better to do that than Ken Clarke, as SoS for Business, Innovation and Skills?

Building the new economic foundations that will make Britain, once again, the location of choice for international business.

Attracting the investment that will allow us to build a balanced economy and sustain our prosperity in the future.

Creating the conditions for higher exports, business investment and saving.

Our ambition is to make Britain Europe’s leading hi-tech exporter – and we have asked Sir James Dyson to establish a taskforce to help us achieve it.

We have set out our pledges for getting Britain open for business again – and we expect to be judged on them.

We have pledged to improve Britain’s international rankings for tax competitiveness and business regulation (after the disastrous decline of the last decade) – abolishing the tax on new jobs created in start up businesses, cutting the small companies’ tax rate and reducing the main corporation tax rate by simplifying complex allowances and reliefs in our first Budget.

And here in Wales, as Nick has announced, a Welsh Conservative Assembly Government would go further to boost enterprise in Wales by exempting from business rates firms with a rateable value of up to £10,000.

We’ll tackle Labour’s dependency culture by reassessing all incapacity benefit claimants to make sure that support is going to those who genuinely need it.

And we’ll get Britain working by creating more apprenticeships; more university places; and a single back-to-work programme for everyone who is on out of work benefits.

We’ll reduce the burden of red tape, make it easier to start your own business, and open up government procurement to small and medium sized enterprises.

We’ll raise the private sector’s share of the economy in all areas of the country.

And we’ll build the infrastructure of a greener, higher-tech economy, reducing our carbon footprint while increasing our share of global markets for low carbon technologies,

And underpinning business growth across the UK with a high speed rail network, superfast broadband and a new generation of technical academies.

That’s the way to create the investment, the entrepreneurs, and the jobs that will get this country open for business again.

We understand the scale of the task ahead.

We know this discredited and incompetent government will stop at nothing in their desperation to cling to office.

And we know some voters will be superficially attracted by the Brownian proposition that, somehow, the free lunch can go on for ever; that someone else will always pick up the tab; that the party is never over.

But in their hearts, they know it is a fantasy.

That the time has come for change.

For facing up to the facts.

For accepting our responsibilities.

For starting to live within our means.

So let us send a message to Gordon Brown:

We’ve done what you asked. We’ve taken that ‘second look at Labour’ you pleaded for. And we’ve reached our conclusion:

You got us into this mess. You are not the man to get us out of it.

It’s time to make way for someone who can.

Because we cannot go on like this.

And, the good news is, we don’t have to.

In just 9 weeks, the British people face a choice.

A choice between Gordon Brown and more of the same.

And a new, Conservative Government under David Cameron.

A Government that will take the tough decisions to put Britain back on her feet.

And set her on a path to a proud and prosperous future.

Yes, we will “clear up the mess”, as that 1948 banner promised.

And we will go on to build a better, fairer, greener and more prosperous Britain to bequeath to our children.

So let’s get out there and make the case for a vote for change.

Thank you.”