12 September 2006

Business is Beating Heart of a Successful Society, CBI Director General

Richard Lambert, the new Director General of the CBI and opening keynote speaker of <a href="http://www.printcongress.com/agenda.html">Print Congress 2006</a>, made his inaugural speech on Tuesday 5 September, stressing that if the UK is to meet the challenges of globalisation, politicians and the public must realise that business is the “beating heart” of a successful society.

Lambert expressed fears that too few politicians and policy-makers recognise the fundamental social role of business. Instead companies are over-taxed and over-regulated at the expense of profit, investment, jobs and national prosperity. He declared that the prize to aim for is a free trade, low tax, high skill economy. Failure would bring an inward looking, protectionist state bedevilled by high unemployment and high taxes.

Business is an attractive source of tax revenue for governments because companies do not have a vote and the public doesn’t care about increases in corporate taxation, especially if companies are unpopular, said Lambert.

As business taxes have increased the UK has slipped down the league of international competitiveness, to which Lambert responded: "We need an urgent and high level debate on this matter which, for too long, has been the Cinderella of our economic policy."

At the same time, concern over business behaviour often prompts attempts to regulate it, which can have a negative and unintended impact. On climate change, for example, Lambert said: “The challenge is to strike the right balance between meeting our treaty and moral obligations to future generations on the one hand while protecting jobs and investment on the other. If business is seen as the villain of the piece there is a serious risk that this balance will not be struck. Too much of the burden for reducing pollution will be thrown on the corporate sector, and we will all pay the price as jobs and investment shift to more business-friendly climes, with little benefit to the environment."

There must be a better understanding by the public of how business is tackling climate change, how much action it has taken, and how citizens and consumers have to shoulder part of the burden too.

In his speech the CBI Director-General said that the world is on the brink of a "Third Industrial Revolution" driven by the easy flow of information, over great distances and at low cost, which will vastly expand the scope of services that can be traded and delivered to people.
But the UK must adapt to take advantage of the moment, Mr Lambert said: "The challenge will be to create the skills needed to fill the new jobs that will emerge in this coming period of transition to replace those that have gone offshore."
This will require "a step change in the quality and quantity of training" available to the workforce with both business and government playing their part. "What won’t work are protectionist barriers. Government could do a great deal of harm to the economy as a whole by trying," Mr Lambert said.
It is vital that business now persuades the public that its success is integral to the well-being of the country and that it is part of society, and should not be disregarded as a vested interest.

Mr Lambert continued "It’s our job to take every opportunity to remind people that business is not a separate vested interest, operating on the margins of society. Its interests are not different from those of the general public. A healthy business sector lies absolutely at the heart of a healthy society. And society won’t work as well as it should if it regards this prime source of its wealth, jobs and taxes with distrust or suspicion."

The future of the UK depends on how these factors come together, Mr Lambert said: “Looking forward ten years, I can imagine two very different societies here in the UK. In one, distrust of business will have climbed further - and with it, the burden of regulation and constraints. Protectionist barriers will have been thrown up in a vain effort to check the rise in tradeable services: the financial services sector among others will have paid a heavy price. Unemployment will have risen as capital investment shifts to friendlier places, and taxes will represent a significantly bigger share of the overall economy. Politics will be inward looking, and ugly.

“The alternative is a society which will be successfully managing the transition to big changes in the workplace. We will have a better-trained, more productive workforce. Regulation and the tax system will be simpler than they are today, and continued growth will have increased tax revenues while reducing the size of government as a share of the state. Competition policy will be tough, but business will be trusted to manage its own affairs within a fair and proportionate regulatory framework. The UK will be an outward looking society, the champion of free trade and open markets. This second vision is achievable. And it’s something we all have an interest in striving for.”

For Richard Lambert’s full speech please log on to <a href="http://www.cbi.org.uk">www.cbi.org.uk</a>. You can hear Richard Lambert’s views on the future of the UK economy, globalisation, climate change, the public sector and much more at Print Congress 2006 on Monday 9 October and Tuesday 10 October 2006 at the millennium Mayfair, London W1. For full details please log on to <a href="http://www.printcongress.com/agenda.html">www.printcongress.com</a>