In his keynote speech at the British Chambers of Commerce’s Annual Conference, Director General, David Frost, said:
"The real excitement from this job comes not from the day to day work here in Westminster, but in getting out around the country, escaping the hubris of Whitehall and Westminster, and meeting those people who run businesses that are the backbone not only of local communities, but of the economy of this country.
“These companies, members of Chambers of Commerce, are not the household names that dominate the newspapers, but they are the family businesses employing between 50 and 500. They trade globally, they have huge commitment to their employees, the owners play a personal role in their community, and they provide jobs which hold local economies together. They always have been and always will be at the heart of the “Big Society” as they provide the jobs that are vital if we are to have a cohesive society.
“I would argue that their contribution to this country is simply not recognised. I cannot be alone in being fed up with the seemingly endless media coverage about the implications of cuts in the public sector. Where was the media interest when a million jobs were lost in the private sector? Way beyond the expected 350,000 to be lost in the public sector. And of course we should not forget that the public sector put on over 800,000 jobs in the decade between 1997 and 2007.“What is consistently lacking in this country is a narrative that says: we all want high quality public services but to do that we have to create wealth and jobs. Those people in work, and the businesses that employ them, pay taxes that allow the Government to spend our money on delivering those services. Importantly, unless we have a successful business base in this country we will never be in a position to have the quality schools, hospitals, police and defence services that we all desire. As an example, I look at our own operation. We not only employ 50 staff, but we and our employees pay over one million pounds in tax through National Insurance, PAYE, VAT and business rates. The contribution that business makes to society needs to be recognised.
“It can only be business that creates wealth and jobs and the focus over the coming years has to be on re-building our business base. If you want decent public services, then you need strong businesses. It would also be rather good if the Coalition could get over to the public that total public expenditure will continue to rise over the coming years. Walk around any town centre and ask people what they believe is happening. I would suggest that ‘significant, savage, deep, huge cuts” would be words used to describe what is happening to public expenditure over the coming years.“Yet if you look at the documents that accompanied the Budget at the end of March, you will see that total managed expenditure rises from £669m in 2009, to £694m in 2010 to £710m in 2011 to £720m in 2012 to £730m in 2013 to £743m in 2014 and £763m in 2015.
“Savage cuts? Try telling that to our businesses who had to carry out some very real cuts in 2008 and 09 in order to survive. We have a state, the size of which, we cannot afford. And then of course there is debt interest. Surely, if it was explained, people would understand that we cannot go on as a country borrowing £150bn more than we bring in from taxes. We have to pay interest on these borrowings which is estimated to rise to £66.8bn in 2015, a third of total income tax receipts. Or put another way one pound of every three we all pay in income tax in 2015 will not be spent on public services but will simply be wasted in paying interest on national debt. And there are those that say we should take longer to bring down our national debt. I don’t think so, and neither do the businesses I talk to the length and breadth of the country.
“The coalition has to get this message across and then move rapidly and decisively to an unapologetic focus on business. It is essential that this country spends the coming years meeting business needs, re-building the business base of this country. This is why the BCC took the decision last autumn to make 2011 The Year for Growth. To move away from the negative language associated with cuts, to focus on giving business confidence.
“We are concentrating our work on four themes: making it easier for business to recruit people – vital at a time when we have over a million young people unemployed. What we know is that the relentless tinkering and layering of more and more employment legislation simply frightens business and puts them off recruiting people. They are worried that they make a simple mistake and end up being called to an employment tribunal. Too often I hear the plaintive cry from a small business “I will do anything rather than recruit another person”.
“So we are really encouraged that the Government has heard this message with plans to reform the tribunal system and to introduce a moratorium exempting small business from new domestic regulations for three years. But it must do more. Just three days ago, 50 new pieces of employment legislation took effect. This has to stop. And we have the culture that seems to stifle risk. I don’t know if you saw one of the photographs that came out of the tragic disaster in Japan. It was a before and after. It was a major Highway that had been ripped apart by the earthquake. Seven days later the second photo showed the road completely re-built - a terrific achievement. My immediate thought, can we achieve this here? We undoubtedly have the civil engineering skills – you see our companies across the globe. But could they re-build a major section of the UK Motorway network in seven days or would we still be carrying out a risk assessment? I think we know the answer.
“Secondly, we need to increase business investment. I do not want to enter into a round of bank bashing. It seems to me however that we have lost sight of the role of banks. Too much focus on the contribution as a percentage of GDP, to UK plc, and not enough on their vital role as a lubricant for the economy. We need the banks if we are to grow the economy. From our work and my travels around the country, what appears to be the missing link is the lack of effective relationship management. A local manager working with businesses of some scale, who not only has an understanding of business, the people who run them and stake their livelihoods on making them successful, and a manager who has some real authority. Call it localism for the banks. There is a big prize out there for a bank that can deliver this.
“The Government should also be congratulated on introducing Enterprise Zones. Based on the success that I saw they had in the early 1980’s, I have been pushing for these for the last three years. Learning lessons from the past they will work, and it is hugely encouraging to see the interest from across the country in establishing them.
“Thirdly, exports. We need to export more. We are again encouraged by the Government’s moves to introduce some new trade finance products through ECGD, the lack of which has allowed our competitors to gain a foothold in some global markets.
“Again, we are encouraged to see that the Government wants to develop a more entrepreneurial culture within UKTI. The Chamber Network can help here with our global brand, our recent success with the Inward Investment contract is another step. But we should go further. We must go further. “Those who know me understand my deep admiration for the German Mittlestand sector, that group of family businesses that power the German economy. Most manufacturers, global leaders, with a huge export market.
“One reason for their success is the support they have overseas, often provided by the state backed German Chamber Network. DIHK, the equivalent to the BCC, has 200 staff in China alone. This country needs to export more and Chambers of Commerce have a vital role to play.
“Finally, our fourth theme is to free up the planning system. Over the last few weeks, I have spent time on the road and I have seen developments that are ready to go. Developments that will often create hundreds of much-needed jobs. But the planning and legal system is not fit for purpose. These sites are left vacant for too long, costing investment and costing jobs. How can it be that after a lengthy and detailed planning process when a final agreement has been reached between a developer and the planning authorities, a single individual can call for a judicial review and when that has been carried out and it has failed, then appealing. This delay is costing money and costing jobs. So the introduction of a powerful new presumption in favour of development and measures to streamline the planning system have to be welcomed, but we need to see rapid evidence that this new planning framework delivers growth.
“I have been on the National stage for nearly a decade and two huge areas still remain to be tackled. Progress over many years has been painfully slow. Despite the billions that have been spent over the last decade, business relentlessly be-moans the lack of skills available. What they are really describing is a failure of the education system. A system where half of all kids fail to get five decent GCSEs simply means that five years later we spend billions offering them remedial training to make them work ready.“On the back of that we have a system where vocational education is not valued and the result is that we simply move the deckchairs around relentlessly inventing new agencies with new acronyms. In my career we have had the Training Boards, the MSC, The Training Agency, the TECs/ The CCTEs/ The LSC (4 iterations of) / The Skills Funding Agency/ The YPLA. It goes on and on.
“Again, compare and contrast with Germany. A key reason for their industrial success is a highly skilled workforce – the famed dual system with Chambers of Commerce at the heart. Introduced in 1956 it has simply been tweaked. The answer – a similar system for the UK. High quality apprenticeship training with Chambers of Commerce, and their members, playing a central role.
“And what of the education system. Well, I am hugely encouraged by the introduction of University Technical Colleges to provide that vocational introduction. And if we really want to focus on social mobility rather than just internships why not re-introduce grammar schools? They provided the escape route for bright working class children. I appear to be a lone voice on this subject, and find little support. But high quality state academic education coupled with high quality vocational education provided through the UTCs under an academy system would, I believe, make a major contribution to the future economic performance of the UK.
“Secondly, transport. The Business Infrastructure Commission, which the BCC set up last year has highlighted the need to unlock much greater investment. We have to build HS2. It is not about shaving time from Birmingham to London but about giving much-needed capacity to the country, about opening up areas of the North, about connecting the Midlands and the North to Europe.
“And we have to develop Heathrow as a hub airport. Air traffic will grow and we need to benefit from this. The idea that it is not sustainable to allow further expansion is nonsense. That expansion will simply go to our European competitors and bit by bit Heathrow and this country will become less competitive.
“This is my final Conference as Director General of the BCC. I was brought in eight years ago to sort out the organisation and give it focus. This has been done and it is time for new leadership. What message would I leave the organisation. Simply this.
“We need as a country to celebrate the contribution that business makes to the economy. Business is a positive force for good. The whole country has to understand this. The Government is now rightly focusing on growth and it cannot be allowed to be diverted from this. The Chamber of Commerce Network will continue to hold Governments of all persuasions to account.
“Finally, what I have learnt is that Chambers of Commerce and the businesses that they represent are at the heart of successful communities. Chambers are as relevant now as they were when they were formed and are ready to step up to the plate to play our part in ensuring a successful future for the UK.