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- The Reformer Blog
27 November 2014
Well thank you very much. It’s great to be here at the Reform dinner.
When it was set up in 2001, Reform was the organisation of upstarts, of outriders. I know it’s hard to believe it now but there was a time when Andrew Haldenby was unfashionable.
He and Nick Herbert were the Brian Clough and Peter Taylor of their day—shaking up the comfortable view of things, drawing attention to the fact that as a country we were spending more money than we were earning.
They made it clear that if you spent, put money into public services without reform then you wouldn’t get value at the end of it.
And look where we are now thanks to these luminaries. The Reform view is now the establishment view.
The government is overhauling welfare to make sure it pays to go to work, it’s bringing uncompromising rigour to school standards, improving our national infrastructure—and reducing the deficit.
And of course Lord Hill, who is not mentioned in the list of Reform associates but was on the Reform board when I was Deputy Director of the organisation, is now a European Commissioner, bringing that reform to Europe. And we expect him to be very successful indeed, don’t we Andrew? And no doubt you are on the phone telling him what he ought to be doing.
But I think in 2014, it is even clearer now than it was back in 2001 that technology and globalisation are dominant factors in our future.
That our competition is growing intensely from China, from India, Southeast Asia and South America.
That as the Prime Minister put it – we must do or decline.
I am certain as a country that we are equal to that competition. That we can take on our rivals.
And one example of this is the food industry. And if you look at the food industry it contributes £100bn to our economy and employs one in eight people.
It’s the largest manufacturing sector, it’s larger than cars and aerospace put together and I have already been lobbying Andrew Haldenby that more Reform pamphlets should be about this great industry and how we free it to even do better.
But what I think the food industry shows is that a highly competitive UK market with very demanding consumers creates a product that is very innovative and successful. So food producers bring 16,000 new products a year to the market and invest £1 billion in research and development.
Food manufacturing productivity has outstripped the rest of the economy, it has increased by 15% since 2000.
When I say I want more British food to be sold in Britain and overseas – I don’t mean telling people what they ought to buy as I don’t believe in that.
I mean our food should be so compelling, so tasty – such good value that it is irresistible to consumers.
And the exciting news is that this is happening…
So take one example of Symington Foods which produces noodles. Now this amazing producer has repatriated the production of noodles from China to Yorkshire.
It found that due to the transportation costs and the time taken to get those great-quality noodles to market it was actually better value to move its factory to Hunslet, Leeds away from Hangzhou province.
We are seeing similar stories across manufacturing because as technology increases, as robotics increases, this is a very high tech industry, there are huge opportunities there.
Our farmers are also honing their competitiveness. Our grain fields have higher yields than the Canadian prairies. The dairy sector’s international success is growing, exports have expanded 60% in the past five years.
And Yorkshire Wensleydale cheese, originally made by Cistercian monks in the 12th century, it’s still produced using traditional methods and local milk. But they’re now selling to America and all over the world. It’s a fantastic export business and I was actually at the food fair in Paris, the largest fair in the world, and I saw the Wensleydale stand inundated by Asian buyers wanting a piece of the Yorkshire Dales.
So they do have a fantastic product and Just to give you another example our strawberry growers are innovating so they are able to produce strawberries virtually all year round and now Two thirds of the strawberries we eat in Britain are produced in Britain.
And why is this important? Well it’s important not just to get high quality food on our tables – but also for jobs and for the millions employed in it. So In the past 12 months 140,000 new jobs have been created in our food industry.
Food is also really important for the wider rural economy which is worth £210bn.
It helps maintain our beautiful landscapes, which drives tourism, transport and shops and it also creates a buzz of entrepreneurship. And in the digital age using technology it is no longer as vital to migrate to the city to set up a business.
You can set up your business in your village in your home and that is the huge opportunity that we have with the rural economy.
Overall our economy is growing at 3%, and it’s the fastest in the G7. We have gone up from 13th to 9th place in the World Economic Forum competitiveness league.
Businesses are feeling the benefit from what we have done to fix the economy and from our long-term economic plan.
But we are not complacent and I recognise the challenge laid out by Reform. We need to compete with the best in the world and ensure our regulation is the best-designed and most-forward looking.
That’s why we have a cross-Whitehall review of rules and regulations called the Red Tape Challenge.
Now Defra represents less than one percent of the government’s total budget – we are a highly efficient, sleek department – but in the Red Tape Challenge we actually have twenty five per cent of the regulations to deal with which shows what has been happening in the past.
We are taking a chainsaw to the red tape thicket. We have cut inspections on dairy farms by 10,000 a year, leaving those who play by the rules to get on with it, not face multiple visits by different inspectors.
We are getting rid of four fifths of the 100,000 pages of guidance we have cranked out.
Things like the 400 pages across 37 documents on how to look after bats. Now those bats are still protected, they are just protected in a much simpler fashion.
Now of course much of the regulation that we deal with comes from Brussels.
And next year, Europe’s new Common Agricultural Policy comes into force. Now it’s not quite as bad as it was, we don’t have the butter mountains and the wine lakes we used to have. But the new Common Agricultural Policy still leaves a lot to be desired. And I think it would be a useful exercise for Reform [inaudible] 40% of the EU budget to look at it its efficiency and work.
So let me give you One example the “three-crop rule” which I am fighting to get changed and I have already been into bat with the new agriculture commissioner to tell him exactly what I think of this policy and how he would be the most popular agriculture commissioner ever to serve in that job should he get rid of this crazy rule.
The three-crop rule says that if you farm more than 30 hectares of arable land, you have to grow at least three different things on it – in a single year.
Now I think that consumers and the market should be dictating what our farmers grow – not bureaucrats in Brussels. We are lumbered with a rule designed to deal with monocultures abroad, when in England and in Britain we’ve had crop rotation since the days of Coke of Norfolk and we know how to manage our soil.
This rule is not even going to have the environmental impact that’s claimed.
A paper earlier this year in the journal Science warned: “this measure is unlikely to deliver benefits to biodiversity or soil quality, or to prevent further landscape homogenisation.”
And that is a classic example of regulations that don’t achieve the outcome and lumber businesses with costs.
And the wider environmental legislation we deal with doesn’t just affect food and farming, it affects all our businesses, whether you are Jaguar Land Rover or a small corner shop.
If you look at the cost of complying with those environmental rules, about 80% of them come from Brussels. It costs businesses £4.6bn a year and it’s 1,161 laws, regulations, directives and decisions affecting the environment – so water, air and waste. It really is a huge body of regulation and legislation.
Now we have made some progress in reducing the burden. We have been able to change the Waste Framework Directive, allowing us to exempt small and medium sized businesses from having to become officially registered waste carriers if they are transporting small amounts of perfectly safe rubbish.
This saves nearly half a million businesses in this country from a needless cost.
The future of regulation has to be much smarter and more outcome-based, with more decisions being made at a UK level.
One of the technologies I am most excited about is Copernicus, which is a £3 billion system of earth observation satellites coming on stream between now and 2017. This will give us unprecedented day-to-day monitoring of our farmland and natural environment using cameras and radar.
We’ll be able to keep a check on the health of our marine life, map every habitat and see what crop is in every field.
And this will enable system-level improvements through local, micro-level decision-making. It will help industry get much better data on productivity and impact. It will help us design smart, targeted rules based on principles like the polluter pays.
I think it will be a major leap forward for our modern, wired-up British countryside.
Our future resilience also depends on trade. Nowhere in Europe is better placed than we are to lift our gaze to the wider world, to compete with – and learn from – countries like China, India, Brazil and Singapore.
Our food exporters are going to have huge opportunities, even if you look just at what is happening to world population – there are 7.2 billion people today, forecast to grow to 9.6 billion by 2050.
And as the middle classes grow in developing countries, so demand for food grows.
As the Prime Minister said last week, “red warning lights are once again flashing on the dashboard of the global economy”—and I think that makes it even more important we have more eggs in more baskets.
So let me give you an example. When Russia imposed a ban on the import of agricultural products including fish, this was a concern for our £170m mackerel industry, mainly based in Scotland. Since August, we have been pressing Nigeria successfully to grant more mackerel import licences.
This has opened up a market worth millions of pounds that has been closed to Britain. By the end of the century, the Nigerian population is forecast to grow from 170m today to more than 900m. It’ll be almost as big as China.
This shows the vital importance in our work to secure trade agreements, giving our businesses security against the unpredictable ups and downs of global politics and economics.
Since 2010, we have signed international agreements to open some 600 new food markets, giving British producers more outlets for their products.
We are close to opening up Thailand to beef and lamb and we’re making good progress with China, where I’m going next week to Beijing for talks on opening markets for dairy, beef, lamb and pigs’ trotters.
And you might ask why am I seeking to open up the market for pigs’ trotters? Well the answer is it is a really important part of productivity for our farming industry, pigs trotters are not a widely consumed delicacy in this country – they are in China – to make sure we use the whole carcass opening up those markets is really important.
I think the most exciting opportunity on the horizon is the Transatlantic Trade and Investment Partnership, TTIP, the opening of markets across the western world which is being negotiated with the United States.
TTIP could boost our economy by up to £10 billion a year and our food industry by hundreds of millions of pounds.
We have nothing to fear from free trade. We are good enough to embrace it.
We have always been at our most successful when we have been buccaneering and outward-looking.
Like in the days of the Elizabethan explorers, Drake, Raleigh, Hawkins –sailing the oceans, opening new trade routes and bringing back exotica like the potato – which we now claim as our own and we are very, very proud of that in Norfolk
Then in the 19th century, a long era of burgeoning prosperity was ushered in by self-confident businessmen from London, Glasgow and Manchester who in 1820 petitioned parliament for free trade.
They told MPs that scrapping the whole apparatus of national protectionism like the corn laws and the navigation acts would send the economy soaring, not wreck it.
And they were right. And the same principles and opportunities hold true today.
Our global outlook is why we have such an important role to play in the TTIP negotiations: pro-science and pro-free trade.
We must not allow protectionist lobbies on either side of the Atlantic to hack away at the freedom of trade and the new prosperity that this agreement promises.
Mr Chairman, Mr Haldenby, the Reform agenda is being made a reality in today’s Britain.
Barriers are coming down, and government is doing more with less.
As technology brings the world closer, we are becoming ever more outward looking and building the foundations for more of our companies to become world beaters.
Nowhere is this more true and nowhere is it more important than in food and farming.
And for us in government, free trade and technology bring great opportunities.
Competition has driven this country’s greatest successes.
We should not be afraid of globalisation and technology–on the contrary these forces are securing our future and enabling Britain to rise again.