Business Secretary Lord Mandelson's CBI Annual Conference Speech
Nobody would have predicted at last year's CBI Annual Conference that we would be meeting this year in quite these circumstances.
Arguably no British Secretary of State for Business has addressed senior British business leaders at a time of such economic disruption since the Second World War. Then and now, events demand a serious and bold response from government, when it is only government that can take the measures required.
We rightly describe this financial crisis as global, but its impacts are local. Behind the headlines are tens of thousands of companies fighting for cash-flow or credit. Looking for the investment and orders they need to survive.
Depending on each one of those businesses are workers in families that are now trying to stretch household budgets.
The government is determined to support business through these tough times. Indeed, the best way in which we can stand up for workers and their families is by standing up for business. It is not one or the other. We stand or fall together.
Standing up for business
That means helping strong and viable businesses stay alive in business. It means doing everything we can to ensure that demand in the British economy is strong.
That there is work on the order books and there are customers in the shops. And that supply chains are being kept in business.
In the weeks since the credit crunch came to a head in early October, when wholesale lending markets almost completely collapsed, the government has acted decisively:
* to get our banking system working again. We have given the banks the cushion of recapitalisation to protect them through the downturn.
* Britain under Gordon Brown's leadership has led the push for a coordinated international approach in monetary and fiscal policy to boost growth and confidence.
* The Prime Minister has led the drive since the Asian crisis at the end of the 90s for reformed and renewed institutions of global economic governance.
Right now, as I speak, the Chancellor is setting out a bold fiscal stimulus package in his pre-Budget report that sets out measures that will help company cash flow and put money into people's hands. It brings forward government investments in Britain's vital infrastructure.
It provides direct assistance to SMEs;
* It sets out targeted tax measures that will help small firms;
* a transformation of the Small Firms Loan Guarantee system into a Small Businesses Financing scheme that will make working capital available at cheaper rates and at longer terms for SMEs;
* and measures that will help smaller firms meet their running costs.
This builds on the £4billion deal we have agreed with the European Investment Bank to provide money to banks to back SMEs. Seven British banks have already applied for £1billion of this.
And it is prudent about the need for fiscal discipline in future, once this crisis has passed.
Economists will all have different views on the effects of the governments chosen tax changes both now and in our plans for the medium term. These are difficult calls. Every decision has been taken in the national interest - with a necessary sense of fairness - and certainly not out of envy or spite.
Your response to the government's package today both individually and institutionally will have a crucial impact on encouraging a positive consumer reaction. Our task now is to persuade people to have confidence in these policies so that demand in the economy is strong.
I must say this also to the banks.
* If, locally, the banks are tightening their grip on credit at precisely the time when we need them to start lending again;
* If the stories that banks are unilaterally reorganising overdrafts or withdrawing them altogether are true;
* If it's the case that new terms are being issued by email, with immediate effect, or 48 hours to comply, sometimes without even a face-to-face meeting being granted;
If these things are true then they will mean real damage to the economy. Banks would be cutting off their noses to spite their faces.
I don't want to overplay this. I've also heard stories of banks that have been flexible to help small businesses.
I welcome the RBS move over the weekend to freeze overdraft rates and the acknowledge the BBA has reported a rise in lending to small businesses in the third quarter.
I want to establish the facts. The banks have agreed to provide government with data on their business lending that will allow us to get a real sense of the scale of the problem.
I am also inviting the Regional Development Agencies to report to me in total confidence on cases of companies they come across in their day to day dealings with the private sector where in their view access to finance has been unreasonably denied or the terms on which it is being made available changed without proper justification. I believe I have the agreement of all the main banks to set up a call centre hotline so that people have someone to turn and talk to.
We need bank relationship managers to be empowered by their management to act with confidence and discretion. Future profits - including the banks' own - depend on good lending decisions being taken now.
In Britain, we need our bankers to be good, plain, bankers. As they get back into their stride - and they will - our economy will get back into the game and optimism will return.
So rebuilding trust is absolutely vital.
Putting knowledge at the centre
Inevitably today our minds are on the current crisis. But my job is also to look to the future.
It is important to recognise that the foundations the government and business have put in place in Britain over the last decade will serve us well in moving from this downturn to recovery, and beyond. But we cannot take that for granted.
Your willingness to invest in skills and innovation has boosted the productivity of UK companies and workers over the last decade. Since 1997, the UK has consistently outperformed its main European competitors in terms of productivity growth.
The UK continues to attract massive foreign direct inflows - $224 billion in FDI in 2007. The World Bank ranks us sixth in the world for ease of doing business - and second in Europe.
That achievement is really very precious to all of us, - as I remind my colleagues when their minds turn, as they occasionally do, to regulation.
After the crisis we have seen unfold in the last year, there is no merit in kneejerk assumptions that "all regulation is bad and free markets are automatically good". We need better regulation in future, conscious as we now are that markets can and do fail. Regulation only where possible. Government only where necessary.
But regulation where it's necessary should be smart: it musn't stifle. And new rules should be developed in close partnership with the private sector, so we get things right from the outset. Though it is ultimately the best judgement of the public interest that must prevail.
I sometimes hear the term 'post-industrial economy' used to describe the UK.
Frankly, I barely understand what it means, and I hate the term because it doesn't describe where Britain is, or where it is going.
