Can I first congratulate the award winners, the runners-up and all of those who put in for this competition, not only congratulate you but thank you because the jobs for the future are going to come from new business and small business and expanding small business to become big business. Most of our large companies will be able vastly to increase their production with new technology on their present workforce and if we are to find jobs then we have to find the product of the future in the businesses of the future. You are those businesses, you have to be efficient, you have to watch the pennies and pounds and you have to go out and get the business and not wait for it to come to you. I just have some inkling of the tremendous burdens you bear because I, myself, was born and bred into trade and married into industry and for a time worked in industry. It's a very good background for politicians because you know what politicians don't know and that is the first sign of wisdom in politicians.
You know that you have to get good management and good co-operation with your workforce, and that doesn't come from rhetoric. It comes from having good managers on the shopfloor. You know if you don't create new jobs by just keeping factories open, you know that you only create them if they produce something that will sell and you go and fetch customers who are willing to buy at that price and that design. You really are the seedcorn for the future and so we not only congratulate you, but we thank you for your tremendous effort. It's appropriate too that I should thank you for your efforts last year and look forward to even better ones this year. Last year we believe that world trade went down, all the statistics—I know they're not always right but the trends are usually right—showed that world trade went down by a few percentage points last year, nevertheless our performance in volume of exports actually rose and that is thanks to the professionalism and expertise that you are demonstrating. Having said that, I wonder if now I might turn and say a few words about the budget, you won't mind, Mr. Chairman? … . I think it's still in the news and I think you might be disappointed if I didn't say a few words about it and I would be disappointed if I didn't take the opportunity.
The background, to start with, wasn't a bad background to present a budget. There were signs that manufacturing output was rising, there were signs that retail sales were up, that construction was up over a year ago, that new houses were starting to be built at a faster rate, that the car registrations not to say that it helped when interest rates came down a half per cent yesterday and of course that inflation was down. All of these things were a very good background and may I say that we are one of the countries which the world knows does not have problems with large budget deficits or problems of public expenditure out of control. Now that is a very very big plus and you think that when you hear practically every economist and a lot of politicians pontificating, they're talking about high deficits in other countries leading to high interest rates, they are talking about public expenditure being out of control. That is not true in this country, we kept our deficit well down, we kept our public expenditure well under control and therefore in the whole of the Western world we are a force of stability and it is known that we are building a basis for future prosperity, not a basis for bubble and bust and [illegible word] jobs but a basis for steadily rising prosperity, sustainable growth and that, indeed, owes a good deal to the policies which have been pursued over the last three or four years. [end p1]
What we're after is more jobs that will endure, by getting into the businesses of the future and the products of the future and I suggest to you that that is the only right way to do it, and so how did we approach this budget? Everyone wants a bit more of their own money back, and may I make it perfectly clear the Geoffrey HoweChancellor has no money of his own to give away, and I always get really rather irritated when people say—how much is the chancellor going to give away? He hasn't got any money, it's only much more of your own money is he able to let you keep, because usually you can spend it better and more profitably than governments can. And there are two ways of doing it—you have to look at it, both as industry and commerce on one hand and then as people on the other and of course the two overlap. We chose to do something, to try to do something for each—but above all we felt we really had to help, to continue to help the costs of industry and commerce. I hope you will think that's right. May I make one party political point, it's very sound, all the points I make are sound, but this one too is sound—all the points I make … . every time we haven't had a conservative government in the last twenty years the other government has a put a tax on jobs. Remember something called a selective employment tax, a tax on jobs, put on in the government from 1964 to 1970. And in the period 1970 to 1974 we had steadily to take off that tax on jobs. Come 1974 to 1979 they were at it again, a new tax on jobs, called national insurance surcharge, and ever since we've had to set about taking it off because that tax on jobs adds to your costs and if it adds to your costs it makes you less competitive, so every time the other side's been in, they've put a tax on jobs and have added to industry's costs and each time we've steadily had to take that off. Now our purpose and what we did for industry this year, is to try to reduce your costs and to try therefore to create more jobs for the future, by reducing the national insurance charge, we've reduced your costs. You know if we'd put it all on to personal tax reliefs we could actually have taken down the rate of income tax by two pence in the pound, instead of which over the last four years we've taken the national insurance charge down by two billion—that's two billion off your costs. Not a bad start—but we also in fact have on costs, on the subject of costs, we've also I hope helped by having this small deficit which has taken interest rates down and I think therein lies a tremendous amount of hope for the construction industry and that is one of the reasons why we are seeing increased work and increased building in that industry. So we've taken costs down by taking national insurance surcharge down, by having a prudent budget so we keep the deficit down, to get interest rates falling and of course by steadily bringing down inflation and do not under-estimate that achievement or what it means for confidence in the future—confidence for investing in the future, the amount you can put into stocks, the amount you can put into new equipment. This was all to help you and to help you to create more jobs. [end p2]
That's on the general front, and then in industry to help to create new jobs we did certain things for several sectors. Now you know the problems of North Sea oil, indeed the problems the oil industry, when there's a glut it's not easy to get people to explore and to invest in the future, so what did we have to if we were to help to provide new jobs in that industry, what could government do? It could, in fact, reduce the tax on the North Sea oil industry, so it made it more profitable for them to continue to explore and therefore more possible for there to be more jobs in all of those industries that back up North Sea oil. That was done, it took quite a bit of money but the purpose was to get new jobs in that industry … . we had quite a package, secondly, for small business, and I hope you're pleased with it, we think, indeed we know, that the package of help to small and new business is second to none the world over and still this time we went to improve it. Lower corporation tax for some of the companies, the tremendous successful scheme under which government guarantees the loans to small business has been extended enormously from three hundred million to six hundred million—again to help those who want to invest, can't easily get the money from banks, and therefore we stand behind them and say, right, we'll guarantee that loan to the banks. Not everyone will succeed, but if you're in a risk business some won't. But if you're going to get the jobs you have to take some of the risks and we did therefore what we could to help. That's the second bit in the specialised sector. And then of course we've added to the incentives for those who wish to put their own money into risk capital and that scheme has been greatly extended. The third thing to try to get jobs going in specialised sectors, there's something called the small engineering firms investment scheme. It was so successful last year that people took it up so fast they ran out of our budget for it. Now I understand that hitherto it's been run on the basis that only certain firms in the sort of sub-division of some particular division, some particular regulation were eligible and only certain equipment in some sub-division of some sub-section of something else was eligible. Well, that pernickity stuff is going. It doesn't help anyone, it doesn't help the administrators. [Words missing?]
And is going to be available for small engineering firms who employ five hundred people or under, for a much wider range of equipment and the grant towards that equipment's going to be a third. Now that's very good, because it helps the engineering firms to the latest equipment and it helps the people who sell that equipment to get it against competition from overseas. And we've allocated a hundred million pounds for that. I've seen it working, I've seen some of the firms that have taken advantage of it and I can tell you what most of them do, they don't spend less themselves than they were going to because of the grant, they take the grant and add it to what they were going to spend and get the better equipment and it helps them and it helps those who produce it. So I hope everyone's going to buy British and buy it from the engineering companies in this country and if they're all as good as you are then they're going to get a lot more business and that means a lot more jobs. Now I do see how much we're doing for jobs, in this budget—I have to highlight it, because other people haven't spotted it yet—like you I hope they will … [end p3]
The fourth thing under this heading, jobs, we've got something called an enterprise allowance. One of the things that encouraged me immensely in the last few weeks is that our surveys show we've got more self-employed people in this country than ever before. Of course I'm pleased because we're a country that knows how to take initiatives, knows how to start up businesses, but somehow we were going through a period when too many people were saying, “I have a problem what's the government going to do to solve it?” and the only way the government could solve it was by getting money from successful firms and handing it out to others. But the enterprise allowance said to people who were on the unemployment register or had been made redundant, look, if you want to start up in business I know what the difficulty is, you'll lose your unemployment benefit so we'll carry on a £40 allowance for a year—that helps you to start up. Many companies such as your … like those represented here, have started enterprise trusts in some of these towns. I was up in Rossendale the other day, there's an enterprise trust there started up with local bankers—local businessmen, they know where the premises are, they know how to advise young people starting up. They've advised some four hundred people to start up on their own. We've had pilot schemes and this enterprise allowance scheme's been going well, so we're extending it up and down the country to help people to start up on their own and it's not only a thing that will help this year, it's a thing which should take off and be the seedcorn again of new businesses starting. Again something governments can do to help people to start up, and not only starting up, on their own but we found on average that at the end of the year they were employing more people, maybe only one or two, but this again is how you're going to get jobs of the future, another scheme.
Then there are a whole set of miscellaneous allowances in this budget all designed to help industry of the kind which help to get the latest equipment and technology in. Again, I stress, if we are to get the business we've got to be a step ahead of our competitors and that, again, is where government can't do it, they can only in fact give incentives for other people to take up. One other thing, there is a whole range of particular tax reliefs designed to help some companies which were suffering from anomalies in the taxation system and some of those were paying taxation both overseas and at home and those anomalies have gone. Now that's what this budget has done to help industry, the general things: the reduction of costs, national insurance surcharge, keeping the deficit down to keep interest rates down, keeping inflation down, but particular things on north sea oil and on all of the things which I have just given you, on the North Sea oil, the enterprise allowance, the special engineering firms scheme and so on, all are designed to give the jobs of the future. That's one aspect of the budget and I notice that it has been very well received by industry because I think you realise it was sound in providing prosperity and jobs for the future. We also had to remember that industry and, indeed, the whole country, that industry is a living structure of human beings and they've got to feel that they are getting fair deal and so, yes, we had to put the thresholds up because really taxation was bearing very heavily on personal incomes, so we put the thresholds up considerably, indeed eight and a half per cent over and above inflation so that people could feel that they—themselves—had more to go for. [end p4]
We've put up mortgage relief because we found in some of the big cities that some of the mortgages, particularly in London, thirty per cent of the mortgages were over and above the amount on which people could get tax relief and it's pretty awful for them if, when they've exhausted their tax relief, they then have to pay interest out of nett taxed income, that is a great penalty upon them, so we put up mortgage relief. We also had great regard for the family and so we put up the family benefit to a higher level than it's ever been before. That helps between those people who are in work and those people who are out of work because sometimes those people who are in work felt they weren't getting enough over and above some of the supplementary benefits that were available to those who were out of work. If I might say, we also helped grandma—we helped grandma in two ways: grandmas are very important people—and grandpas—first, some of the people in the old age pensioners' organisation came to us, particularly those from pensioners voice and said— “look, when you do our pensions on the forecast method really you governments get forecasts wrong” —that's quite right, we do. In the last seven years we've only got the forecast of inflation right twice and so a whole new jargon had been built up, it went like this: undershoot, overshoot, and claw-back, and so they said— “we don't like this, please couldn't you say that whatever is the inflation rate between … . on certain months, on a certain date, that will be the amount by which the pension goes up?” now that's exactly what we've done. The latest date on which we can take it is June 17th because there are nine million pensioners, you have to do the books individually and it takes about four/five months to do them, so the increase in pension will be whatever is the annual inflation announced on June 17th, that actually is the may figure but it's announced on June 17th, so there won't be any undershoot, overshoot, claw-back or anything like that. They'll keep the bonus they had last year and get that amount upgraded for the next year and it will be actual and I hope they will be pleased with that. But also there's substantial improvement in the age relief because, you know, that that thresholds at which elder folk have to pay taxation are considerably above those in which those in work have to pay and for a married person it's now gone up to £3,755 so the married couple on age relief will not now begin to pay tax until their income is £72 a week. Now I hope therefore that you will feel we took the right structure, the basically sound background, to help for industry on costs and specific sectors, all designed for jobs of the future and the right structures to give incentives to people, whether it be the family person, the single person or the older person and also having a look at the mortgage relief because the family house is perhaps the most important purchase in your life and makes a tremendous amount of difference. I think we may say—and having lived with it for quite a time now—that the budget indicated, both at home and overseas, that this government plans for a long term, that we don't make sudden promises for popularity, that what we did was to face the problems in a way which indicated and demonstrated quiet confidence, honesty and fairness. A government can't please everyone but you can be fair to everyone, you can be honest and you can carry on your business or your government in such a way that it gives confidence, not only for the present but confidence that you're building for the future. In that respect we share the ways of running our respective businesses. I see before me people who are confident, who are honest, and are fair and who are successful and I must thank and congratulate you, to emulate some of your tactics and to emulate for future years your success.