INTRODUCTION
Thank you Sir Trevor HoldsworthSir Trevor for your warm welcome.
It is a great pleasure to attend this CBI occasion during your first year as the National President. I am delighted that you have taken over the reins after David Nickson 's most successful term of office. You are well placed to tell us how to face [end p1] the challenges of the future. At GKN you presided over the transition from a traditional engineering company to one which meets the needs of the Nineties. And now as Chairman of British Satellite Broadcasting you are involved at the forefront of technology.
Your work is a splendid example of the energy and innovation that built a great [end p2] industrial and commercial nation.
It is also a great pleasure for me to be in Glasgow again. Few of us can fail to have heard that “Glasgow's miles better” . Or I am told it is better to say “Glasgow's miles better” . What I saw in May demonstrated just why it is a city of growing confidence and [end p3] pride. Recently, I was greatly impressed by a piece of research carried out at Glasgow University which concluded that the city with the highest quality of life—not just in Scotland but in Great Britain as a whole—is … . Edinburgh! Clearly Glasgow is also a city whose people show great magnanimity. [end p4]
SCOTLAND'S SUCCESS
So both Scotland's largest cities are thriving. As is Scotland as a whole. And I need hardly tell this audience that business in Scotland is doing well. —It is true of manufacturing—where investment is rising again this year, and your productivity record is better than that of any of the seven Summit countries. [end p5] —It is true of Scottish building and construction where orders were up by over 25 per cent in the last year. —It is true of Scottish financial services—where employment has risen by a third since 1979. —And—Mr. Chairman—it is true of the transport sector, where I understand you too have had a very successful year. [end p6]
And it's good news for everyone that unemployment is falling. We know that in Scotland three out of four jobs are in the private sector. So no-one is more concerned about jobs than the business community. Moreover you create the wealth that finances public spending. For to have good public services you first need a flourishing private sector. [end p7]
Earlier this year I visited Greenock and Dundee and saw new jobs being created. Since then there has been news of many more companies coming to Scotland or expanding here. For example —Last week BP renewed its confidence in Scotland by its decision to move a part of its work from London to its Britoil office in Glasgow, creating more jobs [end p8] here. —JVC have established their European colour television facility at East Kilbride and they have plans for further expansion. —Tenma, a Japanese plastics company, has chosen Cumbernauld as its base to expand into the European market. [end p9] —ICI Films have announced a further investment of £16 million in Dumfries. —And British Telecom have shown their confidence in Scotland's high tech reputation by establishing their systems and software engineering centre here in Glasgow. [end p10]
So I come this evening to congratulate the people of Scotland and the businesses of Scotland on your achievements. Scotland has rediscovered enterprise—indeed you could say it was invented here.
I see that last week's “Scotsman” introduced a new weekly feature with two whole pages dedicated to “Enterprise Scotland” . Marvellous news. [end p11] A true sign of the times. [end p12]
THE ECONOMY
But success is an active thing. You have to work for it constantly. You can't sit back, either in business or in Government.
You will expect me this evening to say how I see the economy developing. [end p13]
Government's first task must be to ensure sound economic policies. The battle against inflation has to be the top priority. For inflation is a threat to savings, investment and jobs.
Unless we, and the other Economic Summit countries, had got inflation down in the early 1980s we could not have had the [end p14] present prolonged period of economic growth.
But Government can never relax its efforts against inflation. Once there is any sign that inflationary pressure is building up, Government must take the necessary action to stop it. [end p15]
Last October, in the wake of the Stock Market crash, we faced a different threat. There was a very real fear that a world recession would follow, if monetary conditions were too tight. So the Economic Summit countries took the right action at that time, which was to reduce interest rates. As a result the danger of world recession was averted. [end p16] That was a great achievement.
But now it is clear that the fundamental strength of the world economy has come through even more strongly than we had expected. And the UK has continued to be one of the fastest growing economies, with a combination of strong investment growth and very high consumer demand. [end p17]
The strength of investment is encouraging. It will enhance our capacity to produce more—both for home and export markets.
But the rapid growth of consumption is less welcome. It has led to imports growing much faster than exports and to a substantial trade deficit. Moreover, too much of the buying has been [end p18] financed by too much borrowing. And that, at a time when savings have fallen sharply.
The Government has cut its borrowing to the bone. Indeed last year, we actually repaid debt. And this year we are likely to repay even more. [end p19]
But the personal sector needs to save too. Beginning of section checked against BBC Radio News Report 2400 9 September 1988:
So the Nigel LawsonChancellor has taken the action necessary at this time. The higher interest rates will give a substantial incentive to savers, and a disincentive to borrowers—because, Mr. Chairman, it is in everyone's interest that we get the balance between savings and investment right. [end p20]
It will take a time.
But we had to take decisive action —against the danger of renewed inflation —to help correct the current account deficit —and to enable growth to continue. [end p21]
Mr. Chairman, this Government will always take whatever action is needed. And stick to it as long as is necessary. End of section checked against BBC Radio News Report 2400 9 September 1988. [end p22]
1992
Let me turn to another challenge—the prospect of the Single European Market of some 320 million people.
You may comment—that's what we joined the European Community for, why has it taken so long?
You would be right. [end p23] It is taking a time because we have to agree on standards that are acceptable in all our countries for goods and services. And agree to rules that ensure competition will be fair.
That's a big task. As Government, we have to see that the standards are reasonable for our businesses in the United Kingdom. [end p24] And we have to make sure that there are no hidden subsidies or invisible barriers left in any country in the Common Market.
There are nearly three hundred agreements to be reached, of which over a hundred have already been concluded. We are trying to keep them as straightforward as possible. For the object of the founders of the [end p25] European Community was not to increase bureaucracy but to remove the constraints to freer trade between us.
We shan't wake up one morning and find that everything has changed. It's a gradual process. But we must prepare now for the new opportunities which are opening up before us. [end p26] For that is what French firms, West German firms, Italian firms and all our other competitors are doing. Businesses have now —to plan the products for the new markets —to build the sales organisation needed in other countries —and, hopefully, to become more proficient in other European [end p27] languages.
Scotland is rising to these challenges. I understand for example —that the Scottish Knitting and Clothing Export Council has been formed to bring together your woollen and clothing industries; —that firms like Christian Salvesen are expanding their European activities; —that Sco-fro Foods and Walkers Shortbread are just two who this year have received The Queen's Award for Export Achievement for their efforts; —and that many of your other businesses are already well established in Europe.
But some have asked, how can Scotland compete in Europe when it is on the very edge of the Community's borders? [end p28] Well, how often do we hear Japanese companies complaining that they cannot export to Europe or North America because they are too far away? Or firms in Sweden and Finland saying they cannot compete because they are too far north? It is companies like Norfrost of Caithness—exporting nearly half their production of freezers—who have said it [end p29] can be done, and have proved it. And they have shown too that success in Europe is not the sole preserve of large companies. Although we can harmonise the rules and regulations thank goodness that the tastes and customs of the different peoples will still be as varied as ever. It is very often the smaller businesses, with their entrepreneurial flair, which [end p30] are best placed to respond—and respond quickly—to the manifold opportunities.
1992 is about getting barriers down inside Europe. But let me stress it is not about putting barriers up outside Europe. Throughout its history the United Kingdom has always been outward looking. And our interest is in having more world [end p31] trade not less. That is the way to ensure that the United Kingdom remains strong and that we secure our objectives in the wider world. [end p32]
EDUCATION, TRAINING AND THE COMMUNITY
But as we look forward to the 1990s let us remember that our quality of life and economic success will depend above all on the people—the individuals—who create it. They will only be able to do so if they have the right approach and the right skills. [end p33]
That is why our education reforms are so important. A good, broadly based education for all our people is essential. It provides the basic grounding for the world of work and enterprise. But more than that. Coupled with the security and values of the family, it forms the basis for citizenship and the standards of our [end p34] national life.
Business has its part to play in forging closer links with our schools and colleges. I warmly welcome the enthusiasm shown for developing compacts between employers and schools. Young people respond when they can see the purpose of their work and the practical [end p35] opportunities ahead. Your personal interest in individual pupils is rewarding for them and deeply satisfying for you. We all need to know that we matter—and young people most of all.
But schooling is only the start. Over the next seven years demographic trends mean that the number of sixteen to nineteen [end p36] year olds in Scotland will fall by over a quarter. Skilled labour is becoming scarce, and could become scarcer still. It is imperative that we have the right training.
Last week the Government launched the new Employment Training programme, an important initiative which requires the [end p37] closest co-operation between Government and business. It should command the support of all those who are genuinely interested in getting unemployed people into work and in putting the United Kingdom right ahead. The new programme identifies the aptitudes of individuals and—by the necessary training—matches them to the jobs of the present and future. [end p38] Beginning of section checked against BBC Radio News Report 2400 9 September 1988:
Let me make it absolutely clear that, whatever may have been said in Bournemouth, the Employment Training programme will go ahead. The Government has committed £1,400 million to it, and employers and other organisations have come forward with the 300,000 places we need. We shall stand by our commitment to unemployed people, ensuring that they have [end p39] the chance to train and get back into work. End of section checked against BBC Radio News Report 2400 9 September 1988.
For enterprise to succeed, people must have the right skills, including management skills. Machines and technology, important as they are, can't provide leadership, motivation or inspiration. People will remain our most precious resource. [end p40]
You Mr. Chairman are leading by example. The proposals you have put forward for Scottish Enterprise have linked enterprise and training in a new and exciting way. Linked them not only at the top, but even more important linking enterprise and training at the local level. Because the involvement of local business people is crucial. [end p41]
Your belief, and I share your view, is that if people can see for themselves the benefits that come to their local communities, then many more will come forward to help than could do so nationally. Witness for example the excellent work done by Scottish Business in the Community. [end p42]
Like you, we believe that most is achieved when people are given responsibility and can see the results that flow from their efforts. Mr. Chairman, you have identified a Scottish solution to respond to Scottish needs.
My approach to your stimulating ideas is not to magnify the difficulties, but to grasp the [end p43] opportunities. We are working on your proposals urgently, with a view to a positive result. [end p44]
PERORATION
Mr. Chairman, the achievements of the past few years and the present dynamic performance give us great confidence that we can face whatever challenges lie ahead. I know that in this audience you will respond vigorously, in the true spirit of Scottish enterprise. I ask you to rise and drink the toast to the CBI Scotland.