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CBI Annual Conference 2022: Director-General Tony Danker's keynote speech in full
CBI Annual Conference 2022: Director-General Tony Danker's keynote speech in full.
Good morning, everybody and welcome to the fabulous city of Birmingham.
Today we bring you television. We bring you economic vision. But sadly, we cannot bring you Eurovision. That went to Liverpool.
But what a city and region. Still buzzing from this summer’s Commonwealth Games. The Midlands is home to some of the UK’s most successful firms and cutting-edge industries.
And I’m thrilled that we’re joined today by the Mayor of the West Midlands, Andy Street – a man who has not only brought real leadership to this city; he always paid his annual CBI invoice on time.
We have a packed two days ahead of us. With business experts to inform us. Political leaders to inspire us. And an England World Cup match to remind us that it’s always the hope that kills. But don’t worry, we can all be Wales fans later.
This year, I’m honoured to be joined by CBI President, Brian McBride – attending his first CBI annual conference in the role. He may be a Scotland supporter, but Brian brings a wealth of knowledge and experience. You’ll be hearing more from him directly tomorrow, alongside the Leader of the Opposition, Keir Starmer.
This morning, we are also delighted to have the Prime Minister with us. I know I speak for many of you when I say how much I admired how Rishi stood by his beliefs this summer despite the political cost.
It’s a trait we saw, working closely with him as Chancellor. He’s a man of integrity and conviction. And in our time working together I have found him to be warm, frank, and a true partner in government. Now, he takes the role at a most challenging time. And while we won’t always agree with him, we will always support him in his endeavour to first stabilise and then grow our economy.
It’s a pleasure to be his warm-up act here this morning.
I must also thank our strategic partners, Accenture and Hays – whose long-standing collaboration and wisdom we value greatly. They keep coming back for more – even after Peppa Pig – and we love having them. I also want to thank our corporate partners, Phoenix Group, Related Argent, Shell, and Visa. We are incredibly grateful for their support not only as sponsors, but also as members.
All of them are businesses with a great story to tell about the potential and the transformation of the UK economy.
IS THE GROWTH PLAN ENOUGH?
We come together, once more in extraordinary times.
Britain is in the middle of stagflation – hit with rocketing inflation and negative growth – for the first time many can remember. Now, we know how to fight inflation. We know how to fight recession. But we don’t really know how to fight them together.
And the predictable reaction is to choose which ‘evil’ is worst. But that just leads to different kinds of problem.
Ignore inflation to get growth going and we’ve seen what happens. You get immediate trauma. Ignore growth to get inflation down? You get prolonged pain.
And I reject the idea that you have to choose. I say you daren’t choose.
Aggressively getting inflation down is the right thing to do, especially after the market response to the mini budget. Market stability is a precondition to growth. And I pay tribute to the Prime Minister and Chancellor for taking the tough choices needed to achieve it.
But what about growth?
The painful reality about growth is that it can’t be stimulated overnight. That’s what the mini budget got wrong. Across the board tax cuts. Immediate demand stimulus. Relying on the old British strength − consumption − at the expense of the perennial British weakness − investment – and that’s what has given growth a bad name.
But growth is good. It’s a precondition to a stable society. Without growth the NHS gets worse not better. Without growth, people’s lives get worse not better. Without growth, we lack the resources we need to transform ourselves to a zero-carbon world.
Yet Britain’s had 15 years of low growth and flatlining productivity. We can’t afford a repeat.
To the Chancellor’s credit, he knows the importance of growth. And last week he made some incredibly welcome announcements. First, on business rates relief – something we’ve been campaigning for since the 16th Century. And he’s staying the course on vital infrastructure, such as Sizewell C, HS2, East-West Rail and Northern Powerhouse Rail.
But even with these, the OBR’s forecast has concluded that the Statement will not alter Britain’s trend growth of 1.7%. Now, trend growth is a statement of our true growth rate, without the variations of inflation. And not only has the OBR not changed its assessment of our trend growth since March, lower forecasts for investment and productivity are dragging this down. The only thing holding it up, actually, is higher hours worked, due to higher immigration.
People are arguing against immigration but it’s the only thing that’s increased the potential growth of our economy since March.
Remember that GDP is a simple multiplier of two factors − people and their productivity. And it’s time to be honest: we don’t have the people we need nor do we have the productivity.
People I will return to. But as for productivity, it’s something I have worked on my whole adult life. And I’ve rarely seen a better prospectus for what we need than the Prime Minister’s Mais lecture earlier this year. The central thesis? That without stimulating investment in capital, people and ideas, we won’t improve it. Well, the Prime Minister was right. But these proposals did not come to fruition in last week’s plan.
Look, I don’t think I’m going to struggle to convince anyone in this room that we need to go for growth. But it’s time for all of us to confront a very new reality.
When fiscal policy is tight, and it must be. And when monetary policy is tight, and it must be. How do you get the economy growing again? After last Thursday’s statement, this is now the central question of British economics and politics.
It will take us a while – let’s be honest – to get the answer to this question right. It may even take a little sherry around the Christmas fireplace to get the juices flowing on that.
But I’d like to make a starter for ten this morning.
HOW BRITAIN GOES FOR GROWTH
In May 2021, the CBI set out a new vision for the UK economy. It had as its destination a more competitive, dynamic, and future-focused economy.
Now achieving this, without the boost of public finance, requires fresh thinking for the next five years. We’re out of road on both fiscal and monetary support. We need to find a new way around this.
I believe there are three imperatives. One of them for us in this room. The other two for Rishi Sunak, Keir Starmer and the politicians.
The first, is greater business ingenuity. You here in this room. Entrepreneurs, business owners, growing businesses, multinationals. In the past two years, you have shown more resilience, imagination, bravery and agility than ever. And the bad news is you can’t take a break. Greater business ingenuity has to become the new normal for UK plc.
But second, we need government to be the great unlocker of private sector investment. You, the Government, are the market mover. You, the Government direct the flow of traffic. The tax incentives you set determine where business invests. The risks you underwrite actually create new markets. If we have less public money to invest, then we need a Treasury obsessed with stimulating private sector investment.
And third, we need government to set pro-growth rules – not anti-growth barriers. You, the Government decide what we regulate and what we don’t. You decide the skills we import or don’t. You decide where we build or where we don’t. And you decide who we trade with and who we don’t. And today, let me be honest, those rules don’t work for growth. You relied on fiscal firepower to avoid those tough choices. They can’t be avoided any longer.
Right, let me come back to the first imperative: greater business ingenuity
Let me tell you why you should invest.
UK plc. has not begun to realise the £700 billion in prizes we identified for 2030 in our landmark economic vision published last year – Seize the Moment.
Let me give you some examples.
Take decarbonisation, where the UK can be a winner in the global race to net zero. We can genuinely be market leaders in green tech and clean energy – and a global centre for sustainable finance.
In innovation, the UK can push our lead in science and technology. Win increased global share for UK Fintech and leverage our domestic AI expertise.
On trade, there’s much untapped export revenue to be won by pressing the UK’s advantage in high-growth global markets.
In our regions and nations, we can win global share by playing to the distinctive, competitive strengths of each part of the UK. We think the path to this is clusters – something I’m delighted to say the Chancellor wants to get behind.
On workforce, we are all getting really serious about talent – from recruitment and retention to training.
And in health, employers are a new frontline in physical and mental wellbeing, and we have the potential to grow our life sciences and our wellness sectors massively.
Now, this is the growth potential of Britain. Six prizes, still very much in our reach. Last year, we saw it in the statistics. But this year we’ve seen it in your stories. There is so much to play for.
Let me talk about our second imperative: government unlocking private sector investment
Our government spends £1tn per year. Now I’d love it to spend £20bn more with a higher return. I have some plans. But that nice man Jeremy said no. Yet that doesn’t mean there aren’t very big choices within that massive £1tn.
The first choice is about the principles of business taxation.
When Rishi as Chancellor told me he was announcing the super-deduction alongside the increase in corporation tax, the principle was very clear. If you choose as a firm to invest less and make a bigger profit, that is your choice. But you’ll pay more tax. If you choose to invest instead – you’ll pay less.
Corporation tax rates will jump 6 points overnight in April – but now without the incentives – yet that principle should be staying the same. Our analysis shows us that a permanent full allowances regime alongside that jump – would unlock an extra £50bn in capital investment per year by the end of the decade.
Now, the second choice is government using its balance sheet to crowd in private sector investment. Not government picking winners, but government making markets.
Take UK Offshore Wind. Private sector ingenuity, skills and money built the industry. But it took government to put in place the right finance models, like Contracts for Difference, and the right investment bodies to help make this a highly investable market.
And we can do it again – in hydrogen and Sustainable Aviation Fuel.
This is the power of Government as market mover: Seeing the market. Sharing the risk. Creating investible propositions.
Let me finish with my third imperative: government setting pro-growth rules.
Our politicians make anti-growth choices every day in pursuit of other political goals. And I respect that. But when we confront stagflation and its massive impact on the cost of living, it’s time to kick the tyres on those political choices.
Let me give you some examples.
Immigration. Let’s be honest with people. Our labour shortages are vast. First, we have lost hundreds of thousands of people to economic inactivity post Covid. And anyone who thinks they’ll be back any day now – with the NHS under this kind of pressure – is kidding themselves. Secondly, we don’t have enough Brits to go round for the vacancies that exist, and there’s a skills mismatch in any case. And third, believing automation can step in to do the job in most cases is unrealistic.
So, let’s be practical. Let’s have economic migration in the areas where we aren’t going to get the people and skills at home anytime soon. In return, let’s make those visas fixed term. And let’s agree a skills policy that works to fill these roles from the UK in the medium term. A shortage occupation list that not only goes to the Minister for Immigration. It also goes to the Secretary of State for Education. And to us, in business who take on the mantel alongside them in our training budgets.
Let me give you another political example, regulation. I know that some Conservative politicians today feel that this issue is the fault of Europe. But the biggest regulatory barriers facing businesses today are based on British laws, created by a British parliament, and administered by British regulators. And the regulatory regime today is gold plated and bureaucratic. It is not outcomes based – it’s rules based. It’s not proportionate – it winds us all up in an overzealous process of enforcement. And too many regulators still think that growth and investment is someone else’s responsibility.
Here’s another, planning. The UK planning system should be a key economic enabler – helping us to get the essential infrastructure and major projects required. And yet in Britain today, planning is broken – slow, fragmented, rife with local politics. And that has to change.
Then, finally, we have trade. Right now, our trade as a percentage of GDP is the lowest in the G7.
Now, Boris Johnson achieved a deal with the EU that allows us to continue to trade tariff- and quota-free with our biggest trading partner. There’s some good stuff in there. Currently locked up.
Because still, we argue over the Northern Ireland Protocol. Still, we argue over sovereignty. Get round the table; do the deal; unlock the TCA. And I say to Brexiteers, the best guarantor of Brexit is an economy that grows. And its biggest risk is one that doesn’t.
Now I know that some of these things will not be popular with politicians. But while, I have no problem with Government taking tough choices to bring stability, I also want them to take tough choices for growth.
So, look, this is day one of a new discussion friends. How the UK grows when our fiscal and monetary policy shrinks.
Government may not have new money. But they have lots of choices. And until they take them, we’ll keep pushing.
And you – our members – the country’s wealth creators – who pay the salaries, make the electric cars, build the wind turbines, finance the loans, sell the food, print the textbooks – we ask you to build on your greater resilience; we ask you to follow through on your confidence and we ask you to extend your ingenuity.
Just like you did two years ago. When the economy closed down.
Because no-one ever got up a hill by taking their foot off the accelerator.
This isn’t a moment to fear. It’s a moment to seize.
Growth gives everyone a path out of difficult times.
And it’s what will make the UK the more competitive, dynamic and future-focused economy – we all want it to be.
The CBI will be with you every step of the way. So, let’s go for growth. Together. Thank you.
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