The Institute of Directors (IOD) have an annual jamboree at the Albert Hall and this year’s event was filled with high-powered speakers from one of the founders of LinkedIn, Reid Hoffman, to Michael Dell.
There were also some other folks there like Sir Stuart Rose, CEO of British institution Marks & Spencer, and Peter Jones, one of our Dragons from Dragon’s Den.
Finally, there were a few influential leaders changing the landscape of Britain including Sebastian Coe, leader of our 2012 Olympic movement, and Boris Johnson, mayoral head of London and expert in wiff-waff.
Then there was Alistair Darling, Chancellor and uber-fuehrer of our taxation system.
All the speeches, including video clips, MP3 downloads and more are available on the IOD showcase page.
As Mr. Darling’s speech is the one we all wanted to hear, here is the transcript as well:
“I would like to set out my view of how things are at the moment. In doing that I would like to try to strike a balance. That balance is between recognising the extraordinary conditions in which we now live and in which you operate in businesses, and remembering at the same time that when you look at the front pages of the newspapers and when you listen to the broadcast reports, that despite these extraordinarily difficult conditions, there are still many strengths.
“When I speak to businesses up and down the country, people say to me, ‘Yes, it is tough and yes, it is difficult, but we are still here and we are still working, we are getting orders and we are coping’.
“It is important that we strike that balance between realising that we have to deal with difficult conditions, while at the same time recognising that in the businesses of this country, there is extraordinary resilience and determination, skill and expertise, which we will need and upon which we can depend in the future.
“When we look at what is happening in the world at the moment we have seen within a comparatively short period – a period of about 18 months or so – an extraordinary downturn which is affecting us and affecting every country in the world.
“The sheer scale of what is happening is brought home when you consider that world trade has decreased by over half just in the last few months; it is brought home when you consider that a country like Germany – which is the powerhouse, in many ways, of much of Europe – has seen its industrial production down by 20% and France by 16%.
“When you consider these facts, it really emphasises the sheer scale of what is happening.
“Five million people have lost their jobs in the United States in the last year alone. We have seen unemployment increase in this country and yet it is worth bearing in mind that even now, in this country, the majority of people who lose their jobs manage to get back into work within a few weeks. I hope that this demonstrates the point which I am trying to make: we have difficulties, but even in these difficult times, I believe that there are underlying strengths upon which we will need to build in the future.
“That is why I allocated more money in the Budget to help people to get back into work, because we remember from the eighties and nineties that if you do not do that, then the cost of leaving people unemployed is not just – to my mind – socially unacceptable, but it also comes at a tremendous economic cost.
“Now looking at the problems which we face today, we have to understand what the cause of the problem was before we can cure it.
“You all know that the problem which we have had here and in other countries is a complete failure of the banking system: the banks overstretched themselves and in doing so, they overstretched many countries as well. The result of this was that last October the banking system was almost on the verge of collapse, which was something which we have not seen since the beginning of the last century. That is why we and other countries had to intervene to ensure that we had the banking system back and functioning.
“We did not put the extraordinarily high sums of money into the banks for their sake, we did it for us, for you as businesses, for you as individuals, because without an effective banking system there cannot be an effective economy.
“Put simply, if you do not fix the banking system, then you will never fix the economy.
“Fixing the banking system is an essential precondition. This is why last year we were prepared to take steps which might have been unimaginable as little as 12 months ago.
“If 12 months ago I had stood here and told you that this time next year we would own not just one, but four banks, including one of the biggest in the world, then people would have thought that I was exaggerating. That demonstrates the scale of the problems we face and of course the banking problem has spread into the wider economy over the last few months with the consequences that we can all see.
“What, then, is our approach?
“Both in the pre-Budget report last November and in the Budget last week – and the two do need to be seen together – I wanted to do two things.
“First, I wanted to help people to get through this difficult time. That is why, for example, we reduced the basic rate of tax for basic rate tax payers, why we reduced the rate of VAT, why we brought forward construction projects to help to keep people in work.
“At the same time, I also wanted to ensure that we helped businesses. That is why we introduced the ‘time to pay’ scheme, which is benefiting over 100,000 businesses to the tune of something like £2 billion worth of tax. That is why we have changed the rules to allow people to carry back losses over a three-year period, and other measures have been put in place all designed to help in the immediate problems which we face.
“Last Wednesday, I also announced measures which I hope will help businesses in the future, for example to invest in the low carbon technologies, where we are already world leaders and where we can continue to be leaders in the future.
“The second part of what I wanted to do is important as well.
“The consequence of this downturn is very obvious. The reason that we have very high borrowing and why our debt levels are increasing is exactly the same reason as other countries have these problems: a quarter of our corporate tax receipts used to come from the banking sector. It follows, therefore, that if banks are not making profits – even if some of the bonuses are coming down – there will be adverse consequences on what we receive in terms of revenue. Our stamp duty revenues are obviously down.
“So, as a country, yes, we need to support the economy now, we need to support you as individuals and as businesses now, but as a country we have to live within our means.
“That is why, at both last November’s pre-Budget report and last Wednesday, I announced measures to reduce the rate at which we spend public money. That is something about which Miles (Director General of the IOD) has just been talking and it is something he will want to explore with me, and that is something which is going to be difficult.
“It will involve choices being made as to what we can and cannot do, and the rate at which we do it. But I did not only announce measures to reduce the rate at which we spend money: I have also had to
“Let me say this: no one and no Chancellor wants to raise tax if he can avoid it – one does not tax for the sake of it. But in a situation like this, where we face extraordinary circumstances and where, yes, public spending will take the major strain of the share over the next years, it is also necessary to raise revenue. I did not want – and I do not want – to put up taxes when it is not necessary to do so, but at a time like this we do need to bring in extra revenue to support the economy now, but also to make sure that we live within our means.
“I am very conscious of the point which Miles made: I want to ensure that people inside this country can aspire to do as well as they can for themselves and their families; that people want to ensure that if they do a hard day’s work then they get a reward for it, and I want people from outside Britain to continue to invest in this country and to see this country as a good place to do business.
“Sometimes, however – and every government in the world is going to be confronted by this – difficult decisions have to be made and, frankly, it is fair to ask those with the broadest shoulders to shoulder some of the strain, because every one of us at the end of the day has an interest in making sure that as a country we have sustainable public finances in the medium and the long term.
“Despite everything that we see today and despite all the difficulties which we face today, I do remain confident that we will come through this and that our economy will start to grow and because of the skills base and because of the investments that you make and the investments that the public sector make, I am optimistic about our future. World trade is expected to double in the next 20 years; Britain has a huge expertise in advance manufacturing and pharmaceuticals and low carbon industries, as well as in financial services which will come back, so I believe that we do have a good future, but it does mean that you and governments need to work together so that we can get through this difficult time and we can make a difference.
“I have a vision for this country: a strong, prosperous, successful country and we can aspire to that and we must aspire to that. We have much going for us and despite the difficulties which we face, I am confident that we will get through it.
“Thank you very much indeed.”
There is then a Q&A with Miles Templeman, including this interesting little dialogue:
Miles Templeman: “One of the areas which you touched upon is the fact that you now have ownership of virtually all banks. How will that be managed? One of my concerns is that having a large state stake in the banks means that those banks might not be able to operate fully competitively and actually we are disadvantaging tax payers’ money by that process. How do you handle that?”
Alistair Darling: “This is difficult, because when anyone in this hall goes to see their MP to complain about what the bank manager did, and when the MP comes to see me, I have to say at one and the same time both, ‘Okay let us see what happened’ and, ‘We cannot stand in the shoes of individual judgements’. I cannot decide whether your business is good or not so good. That is why we are determined that these banks should be managed at arms’ length.
“Yes, we do own the majority of shares in RBS and in economic terms, certainly the Lloyds Group as well and Northern Rock. These banks do need to be run commercially and at arms’ length and what we cannot do is allow people to start making judgements that they would not make on a commercial basis because that will get us into precisely the problems which caused initially the situation in which we find ourselves now.
“The second point is that I have always made it clear – and I did so in the House of Commons yesterday – that our objective is to return these banks to the private sector, when it is right to do so. We have to make sure that we get the value back for the taxpayer because we have put a large sum of money into it.
“The other point I would add is that whether we like it or not, the banks need us and we need the banks. There are going to have to be some changes in culture, and there are going to be changes in approach. The banks cannot just imagine that after everything is over we can just go back to business as usual.
“Because the public have put so much in, this will simply not be possible.
“We have to strengthen the supervision and regulation. We have to make sure that we have far more safety built into the system to try to avoid this. These banks have to be run on a commercial basis. I do not think that the state should, or can, directly run banks; we are only doing this because of the extraordinary circumstances and because if we had allowed them to collapse then the consequences would have been calamitous.”
Miles Templeman: “That is absolutely right and we would totally agree on that, and I also think that we recognise, as I mentioned, that companies and particular banks – but I think it affects companies in general, particularly publicly listed ones – must restore their legitimacy. It is part of what the Financial Reporting Council (FRC) will be looking at and presumably something which you would be very keen on?”
Alistair Darling: “That is true.
“If you take RBS, for example, which on one measure is the biggest bank in the world and which we own, collectively in this hall, this had a disastrous acquisition of the Dutch bank, ABN. It has new management in there and they have taken a very realistic view and think that there is a good core bank in there and other areas of business which they will seek to dispose of when the time is right; but it is a far more realistic approach.
“It is a classic case that you fly too close to the sun and disaster follows.
“We, collectively, need to learn from this. There are lessons to be learned, as I have said, on many occasions, on the part of everyone – from bankers to governments to supervisors and everyone.
“What we have to ensure is that an effective, efficient banking system is essential for every single person sitting in this room and indeed in this country.
“That means we have to make sure that as we come through this we do not end up repeating these mistakes, and we also take the steps which are necessary to ensure that we have a properly, effectively and well-regulated banking system.”
* The Financial Reporting Council is the UK’s independent regulator responsible for promoting confidence in corporate governance and reporting.