Inclusive growth is one of the most pressing challenges facing advanced economies, where stagnant real wages are squeezing living standards.
At the Centre for Progressive Policy’s conference, CBI Director-General Carolyn Fairbairn highlighted the business role in delivering more widespread prosperity in the decade ahead – through a focus on people, planet and place.
Good afternoon – it’s a pleasure to be here. It’s traditional to look back at this time of year, over the good and bad of the past twelve months, and consider our hopes and fears for the next.
A practice perhaps thrown into even sharper relief right now, not only because (as Vince said), we’re in the middle of the most important general election in a generation. But that also, we’re coming to the end of a quite extraordinary decade.
One we might not be so sorry to see the back of. Starting with the fallout of the global financial crash. A crisis of productivity that has kept living standards in check. Brexit redrawing the political map, and still unresolved. Too many people feeling a sharp-edged sense of unfairness.
Yet, it’s also been a decade of great progress. With giant leaps forward in science, healthcare and technology. And a UK economy working hard to make the most of its strengths, from our world-class universities to global leadership in the industries of the future.
So, as we look ahead to the decade to come, the big question is how we build on that progress, those strengths to ensure inclusive growth, and that prosperity is more widely shared?
A common call for change
The good news is that, while our country does feel so divided this is an important area where we can find some common ground. Where everyone, whatever their politics, postcode or priorities in life seems to agree things must change.
Too many people have lost trust in a system they don’t see working for them.
And in response, we’ve seen ideologies from both left and right emerge to fill the gap, pushing the debate to the extremes, offering only superficial solutions to complex issues, and, crucially, deepening rather than resolving the divisions between us.
The reality is that capitalism remains one of the most powerful tools we have to generate the opportunities people need to get the life they want. But like everything else, capitalism must evolve to survive.
It needs to be fairer, more inclusive and show it can offer concrete solutions to the long-term issues people most care about.
That shift is starting to happen. But it’s not going fast, or further, enough.
Inclusive capitalism needs to be bigger and bolder than the other ideas out there. And to work, it needs to be built on a strong partnership between business and government, employer and employee, state and citizen, all parts of our society.
Recreating a sense of common purpose. And united around the goals that connect us.
I’d like to suggest there are three that stand out as defining issues of our age:
- How we ensure our young people have the skills and opportunities to thrive.
- How we protect the environment.
- And how we end the blight of inequality across our country.
People. Planet and Place.
Each of course featuring very strongly in this current election. Each a huge challenge on its own. And not one of them can be achieved without business. Purpose-led, passionate, competitive businesses working with government, to generate the investment, innovation and long-term solutions needed.
We have seen what is possible.
Ambition, focus and action
So many of our most successful industries, whether aviation or automotive, were built on a bright idea from business, backed by smart regulation from government.
It was growing tax revenues fuelled by thriving businesses that supported the NHS when it was in its experimental infancy in the 50s. It was private companies that built the 300,000 homes a year, needed to meet Harold Macmillan’s ambitious housebuilding programme. And private sector finance, combined with the right legislation, that made the Channel Tunnel possible.
While, twenty years ago, it was collaboration between employees, business and government that made the National Minimum Wage possible, transforming our labour market.
We need that same level of ambition, focus and action now.
Profit with purpose
Business is already challenging itself to respond. Last week, at the CBI’s annual conference, what was really striking was how many of the over 1,500 business leaders there, were challenging themselves, each other, and those outside the room to do more on fairness, diversity and inclusion, and employee wellbeing.
For example, in one of our most popular sessions, Greg Craig, CEO of Skanska, discussed the organisation’s work to tackle the issue of mental health in the construction industry. Supporting their employees, so they could talk honestly about the problems they face, without stigma.
Day in, day out, businesses like Skanska are demonstrating the power of profit with purpose. And we’re seeing the impact on people’s lives. With public trust in business rising. But we know there is still a long way to go.
Reskilling a generation
Today, we stand at the foothills of an AI and robotics revolution. As many as 9 in 10 people currently in work will need to be retrained or reskilled by 2030. That’s a gargantuan task.
It will cost around £130bn over ten years. But get it right, and we could add 10% to our economy.
Most importantly, we can give people the roadmap they need to prosper throughout their working lives. But it’s going to take the scale of a new Beveridge plan with the same ambition for lifelong learning that this had for launch of the welfare state.
We must start now.
It needs to be the partnership of the century between business and government. The world won’t wait for us to catch up…
And, moving on to the challenge of our planet, neither will climate change.
Here the UK has a strong story to tell. Cutting emissions by 40%, while still expanding our economy by 77% since the 1990s. And emerging as a global leader in offshore wind. A quiet miracle, many thought impossible — even ten years ago.
It shows what can be achieved, when government creates the right policy framework. And business invests alongside world-class research. Turning our transport and heating green must come next.
And, next November, we have the very helpful deadline of hosting the UN COP26 climate change conference. Let’s use it to kick-start the UK’s net-zero plans and see how much we can achieve in the next 12 months.
Reinforcing the UK’s position as a global climate leader. And showing the sheer scale of the UK’s low-carbon ingenuity and expertise
Unlocking regional growth
The third uniting ambition of our age I want to touch on is how to make our country fairer along the dimension of place. And how to tackle the productivity crisis that holds so many of our regions and people back. Across the country, businesses are working with local leaders and educators to change that.
One inspiring example is Hull, emerging from its difficult recent history to become UK City of Culture in 2017. A centre for cutting-edge technology. And ambitious to be a global force in renewable energy.
Or South Wales, transforming its local economy from coal and steel in the 20th Century to become the biggest cyber security hub outside London. With companies in Newport, Cardiff and Caldicot also competing with Germany and China to develop the technology behind 5G, robotics, FinTech and driverless cars.
We know what’s needed to build on those strengths and replicate that success elsewhere. It’s better infrastructure — connecting people to jobs and opportunities. It’s a devolution framework that unlocks a new wave of regional deals empowering regional leaders to work for their communities. And it’s building local industrial strategies that are long-term and ambitious in every part of our country.
A return to competitiveness
People. Planet. Place — complex challenges that demand long-term solutions. Business will do its part. But we also need government to step up.
So, whoever heads into No.10 on December 13th, we need a return to the world of evidence-based policy. Not ideology, opinion or wishful thinking — but evidence. And we need that strong commitment to work with us.
Last week, we heard the three party leaders make their pitch to business at our conference. All of them recognised the difference we can make together, setting out welcome proposals on skills, infrastructure and innovation.
But the picture overall is mixed. While there are some encouraging signs from each party, including commitments to build more affordable housing, strengthen R&D investment, revitalise vocational training, drive our low-carbon revolution and tackle broken systems such as Business Rates and the Apprenticeship Levy. On too many of the fundamentals, we’re still seeing ideology win out.
On the right, there remains the threat of — even preference from some for No Deal as the destination of our Brexit negotiations. And on the left, a plan for the biggest programme of state intervention and renationalisation this country has seen in decades that would deter investment and create uncertainty for taxpayers and customers. With the most vulnerable in society paying the price.
So, at the CBI, we’ll keep arguing for the priorities that we know can make the biggest difference. To both business and our country. Whether it’s following through on big national infrastructure projects, like HS2 and Heathrow expansion. Or developing a UK immigration policy that values contribution, not numbers.
And — central to all of our success, of course, is action to secure the right Brexit deal. One based on frictionless trade, aligned regulation with our biggest trading partner, and support for our vital services sector.
So, to end, 2020 is an opportunity for us to reset our course. We must take it.
Making this a decade of action, and tackling together, the challenges that connect us. Ensuring every region and every person in the country gets the chance to benefit, progress and thrive.