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1996 - Mr Major’s Speech at the ‘Your Business Matters’ National Conference

Below is the text of Mr Major’s speech at the ‘Your Business Matters’ Conference, held at the Queen Elizabeth II Conference Centre in London on Monday 11th March 1996.


PRIME MINISTER:

Last year I set out my aim to make Britain the unrivalled Enterprise Centre of Europe: to do that we need an efficient economy, a de-regulated economy, the lowest possible corporate and personal tax regime, minimum burdens on employers and an array of supply side measures to boost enterprise and competitiveness.

That challenge is for our whole economy. It can't be met without a successful small business sector, which is why we set up this consultation exercise, the first fruits of which we can announce today.

Small businesses are not some minority interest - they are the backbone of our economy and the main source of future jobs.

They are central to the enterprise culture.

I was brought up in a family whose livelihood depended on a small business. I know the passion and hope and commitment that goes into them; the uncertainty and risks that come with them. The courage and tenacity of the men and women who run businesses is a huge national asset. I want to see it receive support and reward. I do not want to see it loaded down with taxes or tied up in red tape.

I was delighted that you chose as the title for the conferences "Your Business Matters". Because that is literally true. Your businesses do matter. They matter to you, they matter to me, they matter to your customers and employees, and they matter to this government. And they are crucial to the future well being of the United Kingdom.

Some might think that is putting it too strongly. I don't: and I'll tell you why. We all have ambitions for ourselves and our families - security, opportunities, higher living standards, first class public services and so on. We can only achieve these if business succeeds. And business is most likely to thrive in the face of fiercer global competition than we have ever known before if we pursue policies that create wealth and encourage enterprise.

We are involved in economic warfare. And to win that war government should remove unnecessary shackles from business. That doesn't mean a complete "laissez faire" approach. Where Government can help, it should. These conferences have enabled business to say how we can help.

Now we have heard. My commitment to you is that we will respond to your concerns point by point. I shall make a start today and more will come later.

Twenty years ago, if you asked what bothered businessmen, you'd have had a predictable response.

Wildcat strikes. Unemployment. Crippling taxes. Spiraling inflation. Today we've seen strikes fall to the lowest level since records began. We have the lowest main rate of corporation tax in Europe.

Unemployment - though still too high - is far lower than most of our European competitors.

We've seen the longest period of low inflation for fifty years. The lowest mortgage rates for a generation.

We're number one choice in Europe for foreign investment.

And we're exporting more per person than Japan and the United States.

These are the foundations upon which we are turning Britain into the Enterprise Centre of Europe. We are getting the basics right.

- Low inflation.

- Low interest rates.

- Low taxes.

- Keeping Government off the backs of business.

- Making it worthwhile to create jobs.

Education driven by what parents demand and industry needs.

Enterprise depends on Government to keep taxes down by controlling public spending. We are steadily reducing the burden of spending. At around 40% of national income, government spending takes going on for 10% less than the European average. Good, but not yet good enough. It must fall further.

That may sound like some abstract point that only matters to the Treasury. But it's not. For if we spent at the average rate of most of our European partners, we'd have to raise an extra £60 billion in taxes.

Our policy is precisely the reverse. Ken Clarke and I have both made clear that we intend to get spending down lower still so we can cut taxes again, when it's safe to do so. We intend to exploit our growing advantage.

Capital gains tax and inheritance tax are high on our list. Because they are a huge disincentive to business growth and job creation. We cannot expect you to take risks, to put your homes, your savings and your futures on the line, only then to see a great slice disappear in tax when you pass the business on.

In the last Budget, we took an important step in dealing with this. We took shares in private companies out of Inheritance Tax completely. Now Britain is one of the few countries where you can pass on your business without paying tax. But we want to go further. We want to cut capital gains and inheritance tax further, and, when possible, abolish them.

But these are not the only taxes that you're unhappy about. You've also sent us a very clear message about business rates - about their level, and how they are calculated.

That's a message we take very seriously. We'll look very carefully at all the points you have made. It will take time, because of the complexity of the matter but if we are persuaded that there is a better way of doing things, or that the burden on small business can be reduced, whether in the short-term or the long term, then that's what we will do. We said we'd listen, and we will.

We'll look at all the points you've made on tax. But there's more to the tax problem than the size of the bill. What has come out of our consultations is frustration with the labyrinth of forms and rules businesses have to master for the taxman.

Taken together, the combination of PAYE, National Insurance and VAT are the greatest administrative burden government imposes on business. To tackle this problem last year we instructed the Inland Revenue and the Contributions Agency to work together more closely. Today, the results are starting to come through.

From next month new businesses will no longer have to register separately with the Inland Revenue, Contributions Agency and Customs and Excise. They will be able to sign up with all three in one go with one simple form. It comes with one leaflet telling small businesses all they need to know about tax, national insurance and VAT. We will shortly be starting a national programme for new employers to help them with PAYE and national insurance. Every new employer will be able to get free advice, on their own premises, before their first pay day.

We intend to streamline the tax and national insurance systems in other ways as well. And to do it soon. More joint information. One audit visit, not two, to save you time. A single help-line to answer queries on both systems. And a fresh look at other ways of helping small businesses run their PAYE and NICs systems with minimum difficulty.

These are bread and butter changes that will bring real benefits to small businesses. Simplification and deregulation are hard work. Their hallmark is painstaking pruning; cutting away what is not needed and cannot be justified.

Let me make you this promise. Wherever we can, we will bin rules. Get rid of them. But there are areas where there is a legitimate public or business interest in having regulation - to protect the consumer, the environment, maintain fair competition, or whatever. In these circumstances wherever we can we will simplify .the rules and make them understandable. Written, I hope, in plain English!

But in many cases, the problem isn't only the rules: it is the way they are enforced. Business has consistently said that and I believe business is right. We intend to deal with this.

In dealing with regulations, business deserves rights. Let me spell out for you what I believe they should be.

First, businessmen have a right to expect that enforcement will be consistent and fair.

Second, they should be told not just what they need to do, but why.

Third, they should have reasonable notice.

Fourth, a chance to challenge an inspector's judgement and;

Fifth, the right to appeal against it.

I intend to make these rights a reality. We've already applied them to health and safety regulations - the great regulatory bugbear. Today I can tell you that, by June, we will apply them much more widely:

to environmental standards,

food safety,

building regulations, and,

a little later, consumer affairs.

All these are areas business has complained about. I hope this action will make the system fairer and less burdensome.

When I launched this programme of conferences at Downing Street I was very struck by a point one of the small business representatives made. He pointed out that small businessmen are expected to know all about every regulation that applies to them, they're expected to abide by it, and they can often be guilty of a criminal offence if they don't. But we don't expect a single inspector or regulator to have that same encyclopaedic knowledge.

Well, that seemed to me to be a pretty good point and I've looked at it carefully.

Take the criminal sanctions point first. Obviously they have a role to play in some cases. But in others they are plainly inappropriate and we should find another way. We shall be looking at this further.

But, as we do so, we've already decided that where a sanction is needed in future there will be a presumption that the least burdensome sanction will be applied -consistent with Community law - and civil sanctions will always be considered as an alternative.

We've also looked at whether it would be practical to set up only one inspector for all regulations. We've concluded that the remit would be too wide, though it is a good ambition to aim towards as we reduce regulation. But I can announce some action now.

I've already mentioned what the Inland Revenue and Contributions Agency are doing to offer a joint service. We're going to carry this principle further in other areas.

We shall start with planning and building regulations. You all know the story. You're expanding; but you and your builder are frustrated beyond belief as you have to talk to the planning inspector one day, the building control officer the next, then you find the fire and health and safety officers want to know what's going on. And heaven only help you if it's a listed building!

These control systems each have a proper role to play but working out what they mean for your business shouldn't be a life's work. It's not what you went in business for.

So we intend to pilot a single "one-stop shop". This will bring together all the different enforcers, including fire safety, environmental standards, listing, planning and building control, and coordinated approvals for all local authority rules on planning and development. After gaining experience from this pilot, we plan to adopt this approach more widely. I believe that, pretty soon, we can make this whole process a great deal simpler.

The time a small business most needs help with the regulatory maze is when it's just starting up. It does nothing for morale or enterprise if your first few weeks is spent traipsing round libraries and making endless phone calls trying to find out what rules apply to you.

During consultation businessmen have suggested making more use of computers and the Internet to provide more information about regulations. I agree. And we are developing exactly that. As Roger Freeman will be telling you later, we've developed the prototype of a computer based system to provide a single point of information about regulations and licences, designed particularly for start-up businesses. The prototype is on display here for the first time today, and over the next few months we plan to ask business what they think of it, and then take it forward.

Every year the Government spends hundreds of millions on helping small businesses, through a huge number of different support schemes. You've told us these are too complex and I agree. So we intend to simplify them.

So, to do this, I have set in train a radical review of all the government's schemes to make them simpler and easier to understand. Work will begin immediately. It will be carried out speedily so that we can have early action. We will set out where we've got to in June, and then consult you fully on what we propose to do.

We will also look at how these schemes are delivered and how we can improve communication. In your consultations you have told us to build on the network of TECs and Business Links. I agree - and that is what we shall do.

Let me turn to the problem of late payment of bills. In our consultation the conferences were generally - not universally - against introducing a statutory right to interest. The DTI are examining all these responses. The problem is that many of the possible solutions cause as many difficulties as they solve. We have to make sure that what we do makes things better not worse.

There are no easy answers to late payment. But that does not mean that there is nothing we can do. There is.

I was very struck by the quotation in your conference report, quoting a businessman who said that "Rather than legislate, we should manage by embarrassment".

There is a lot to be said for that; peer pressure does work. So I believe we should take steps to generate embarrassment amongst those who wilfully and continually pay late.

We intend to start by consulting again on whether companies should be required to publish their payment performance, as well as their policies. Personally, I think they should.

The last time we looked at this issue, many businesses were in favour, but without agreement on how to achieve it. It may be difficult to design a perfect measure of payment performance. But the results of your conferences suggest that mandatory disclosure is something we should look at again, so we will. If consultation supports the idea we will implement it.

But whether or not business collectively wants to go ahead with this requirement for itself, I am sure we should apply it to the public sector. It is simply not acceptable that the government should be a late payment culprit.

We have done a lot to improve our payment performance. For example by the end of this month all Departments should have signed up to the CBI Prompt Payment Code. But I believe we can do better.

So I intend to instruct all Departments to pay promptly and, to ensure they do, we will publish each year a league table of all Government Departments' payment performance - not their aspirations, but the record of what they actually achieve, measured on a consistent and rigorous basis, and combine this with tough targets to ratchet up the weaker performers.

I would like to do the same for local authorities, all too many of whom emerge from the conference reports as bad performers too. I have asked David Curry, as Local Government Minister, to pursue this urgently with local authorities and the Audit Commission. I hope they will agree to have league tables published on their performance. If not, we'll consider requiring them to.

Late payment is also a big issue for small firms in the construction industry. The construction contracts legislation, going through Parliament now, will tackle their problems head-on by banning the unacceptable practice of "pay when paid" contracts.

Late payment leads me to enforcement of debts, about which the conferences also had plenty to say. It is clearly unacceptable if businesses feel they can't enforce debts effectively even after a court has judged in their favour. We have to do something about this. The Lord Chancellor's Department is currently conducting a review of civil enforcement agents, such as bailiffs and sheriffs. This will be reporting soon, and we will have some positive changes to announce.

Later today, Ian Lang and Roger Freeman will have further announcements to make, all of them intended to tackle the concerns you have raised with us. There will be more changes to come later as we work with you to help small businesses prosper.

Low taxes, and less bureaucracy to pay them.

More tax changes to come when we can.

Pruning back rules.

Fairer enforcement.

A one-stop approach to regulation wherever we can.

Using new technology to help cut the paper-chase.

A range of measures to help with late payment in both public and private sector.

Mr. Chairman, I know it's very easy to talk of enterprise, competition and the markets, but refuse to live up to it when it comes to hard-edged action. But the future of Britain's business will not be secured by sound-bites. It will be secured by sound policies that help business win orders, take on more workers and invest.

Many of the right policies do not win short term popularity.

You can't fight inflation without tough policies. Words won't do.

You can't get spending down if you get out your chequebook every time a special interest group comes knocking on your door.

You won't get taxes down if you attack successful businessmen.

You can't get more people in work if you load more and more regulations on [remaining section missing].