Today, the Government seems to be waiting for the first signs of world economic recovery to float it off the economic reefs.
But is rescue going to come that way? The prospects of renewed world expansion, even at much more modest rates than in the past, still lie some way ahead.
In fact, although here in Britain people could be forgiven for missing it, for the past three years we have been living through a gradual recovery period after sharp recession—or, rather, other people have been doing so. [end p1]
In this country the period when we were supposed to be recovering from the impact of the oil crisis, has left us with industrial production below the level of the three day week, the worst unemployment record in Western Europe, productivity static, the average family man paying more than twice the income tax of his counterparts in neighbouring countries, £5,000 million more going in tax than when we left office.
That is bad enough, but what worries me even more is this. We are emerging from the present phase with our economy worse equipped than when we started. [end p2]
New businesses have been deterred from starting up; and more unprofitable jobs in old industries are being preserved, and at higher cost to the taxpayer, than ever before.
The vast adaptation of our industrial structure, and of attitudes in industry, which are so necessary if we are to compete in the much tougher world markets of the eighties, has hardly begun.
Absurd public relations exercises, like the so-called Industrial Strategy, have been used as the cover-up for inertia; for flat output and flat prospects. [end p3]
Management has been demoralised; incentives to build up new wealth hacked away.
Now there is likely to be a pause in the world economy before things start picking up again. And will Britain be any better placed to participate through vigorous competition in expanding world prosperity next time than it was this time?
The answer on present trends and with present policies must I fear be No.
Having wasted the convalescent period since 1975 we now head for the 1980's hobbled with Socialist handicaps. [end p4]
I sometimes wonder whether my political opponents understand what competition is all about. Perhaps some of the more dogmatic of them would even prefer the nation to have a lower standard of living, arising from Government planning and decisions, than a higher one from a flourishing free enterprise and competition policy.
But I know that many of you here understand competition very well indeed. You have to, because you live it. Competition involves constant change. It is not a static idea, or an economic condition to be arrived at via government strategies, Plans and White Papers. [end p5]
There are no permanent winners under a properly competitive system. No firm, however big and well established, has a right to continuing existence unless it can stay on its toes at peak efficiency and keep its doors open to new ideas, continually researching and producing new ideas and new products at a price the customer will pay.
Those who talk of planning agreements with top companies, or of cosy partnerships between industry and Whitehall, plainly do not seem to grasp this. They seem to see major firms as great bureaucratic institutions, secure and impervious to outside pressures.
There may even be business leaders who believe that some kind of ‘safe’ arrangement can be tied up with the State to see them through the next phase. [end p6]
If they think that way they will have no business to lead in a few years time.
To compete in the period ahead we are going to need a fresh and lively approach, a new vital economy. The old one, set in aspic by Labour policies, is going to be of less and less use in helping the people of Britain sustain their living standards.
The new conditions are going to demand a much more flexible and rapid response to market demands. Here at home and in world markets people are going to insist on more and more choice and on new and better products and more ingenious and satisfying services—and nothing is going to stop them. [end p7]
And if we don't provide these goods and services our foreign competitors will.
We must not settle for a future in which the nation of Lord Nuffield drives Japanese or German cars—if it can afford them.
We will need a host of new businesses run by talented young people who are prepared to work night and day in return for big rewards if they succeed.
But it is not enough to have a bright idea—and we are second to none in our capacity to innovate—it requires cash and resources to convert that idea into a successful market product. [end p8]
These can only come from sufficient profits on other products: or from people having enough of their own money left after tax to save up and back their own or someone else's ability, directly or through the money market.
But what has been the experience of your industry over these past few years? Your profits have been cut back by the activities of the Price Commission, in real terms almost to nil; whilst penal taxation has made it almost impossible for anyone to save out of earnings.
The result has been the very lack of investment and shortage of jobs that the government, trades unions and the rest of us are so concerned about at the present time. [end p9]
When government policy produces this sort of result the last thing that industry needs is politicians or permanent officials interfering in their business. After all, we are the people who chose not to go into industry and commerce.
Of course, the Government of the day does have a role to play, an important role, in ensuring that competition operates freely and fairly, so that the benefits work through to the consumer in prices and in choice.
But that role is very different to Labour interference, and Labour controls, and Labour planning. [end p10]
Government interference serves only to distract businessmen from their proper job of providing the customer with what he wants. Competition will control prices more fairly and effectively than the Price Commission. And what has Labour planning achieved?
No government plan ordained, or even foresaw, the immense success of our service industries, which make us now the world's second largest exporter of services, after the United States.
No Whitehall planner did anything to help the great success of British retailing methods, especially food retailing. These are techniques which we are exporting the world over and which bring the world to our door. [end p11]
And if you ask me where the big opportunities will come next, I can only say that I don't know and I can't know. But given the freedom and the prospect of gain, many companies, many individuals will seek out and exploit those opportunities.
And I hope they reap a rich reward for their insight, their determination and the risks they will have taken; and for the genuine jobs they will have provided for others.
It is not even right to predict, as has been the fashion in some government circles, that the expansion will only come in new, high technology products. Why should we assume that our efforts will be so circumscribed, or that we cannot be efficient in mass or volume production when other advanced industrial nations can? [end p12]
The whole range of products, old and new, should be for industry to choose from as it thinks best. The whole world should be your market place.
The encouragement you need is not another industrial policy, with some trendy name, cooked up by Government. That is not the way to meet Britain's persisting problems.
Rather, the right way is to cut the taxes on earnings, savings and capital. It is to make it pay to work again, to educate our young people to understand about enterprise and to see that profits are the greatest engine of social progress—and to give them full scope to turn that understanding to advantage. [end p13]
The right way is for Government to ensure that Competition is the protector of the consumer: and to leave business to the businessmen.