Chuka Umunna speech in full

Read the first speech of Labour's new shadow business secretary in full on

Thank you for inviting me to come and speak to you this morning.

I can think of no better place to come and give this speech than one of the world’s leading providers of business news.

And we should be proud that Bloomberg’s European headquarters are located in our financial centre, indeed the world’s financial centre, here in the City of London.

We meet at a time when many of those who watch and subscribe to Bloomberg services will tell you how very hard it is being in business today.

That’s what so many businesses owners and business leaders tell me. They tell me they can’t remember another time when it was so difficult to grow their businesses. They tell me it is harder to build market share, harder to take on new employees, harder to deliver for their families and therefore, harder to pr! ovide for ou r country as a whole.

We have got to ask why this is.

We – policy makers and people in business – need to consider how we address this together.

We all know the situation demands urgency.

Our domestic economy has faltered. In a marked change of tone, the government is now predicting the worst and seeking to attribute blame, wholesale, to the Eurozone crisis. But our economy was faltering long before the crisis became such an issue, with stagnant growth for over 12 months.

The situation is likely to become more difficult going forward but this has been compounded by the government’s too far too fast approach to deficit reduction.

And we have seen dither and delay at an international level in resolving that crisis. Contrast the G20 of over a week ago with the example set at the April 2009 gathering in London. Then we saw concrete action thanks in part to the efforts of British government. Today one feels a huge sense of frustration th at this is not happening at the moment.

Now I could spend my time talking to you about the government’s failure to get our economy moving again here and the failure of the international community to resolve the ongoing problems on the continent.

That is what you would expect but that is not what I’m here to talk about today.

We have put forward a 5 point plan to get demand and growth back into our economy – including tax breaks for small businesses taking on extra workers, a temporary VAT cut, and a tax on bank bonuses to fund 100,000 jobs for young people. This is a plan that we say should be implemented immediately.

But the challenge is more than restoring the economy to growth in the next year – as vital as that is. We also need to confront head-on some of the longer-term issues exposed by the global financial crisis if we are to take full advantage of the opportunities of tomorrow – that is what I want to focus on.

During Labour’ s time in office we saw real growth in the economy leading to real improvements in living standards for people at home.

1.1 million businesses were created under the Labour Government and, on leaving office, the World Bank ranked the UK fourth in the world, ahead of the US and first amongst European countries, for 'ease of doing business'.

We became and we still are a party of enterprise. We are proud to play our part in helping British business compete across the world. But the financial crisis exposed some long-term structural issues in our economy that cannot be ignored.

Growth was too concentrated in too few sectors, and in too few regions of the economy.

Despite a large finance sector, levels of investment in British business have been low compared with many of our competitors.

And many people have come to feel that, in the good times the economy did not really work for them, while in the bad times they were being made to carry much of the! risk.

The truth is that not enough of the reward from rising productivity found its way into the wage packets of average earners.

Low earners did see improvement through the minimum wage and other measures Labour introduced. High earners saw their wages soar to such an extent that City professionals surveyed for a St Paul’s Institute report published last week say they think they are paid too much. But middle earners actually saw their wages stagnate from 2003.

So although we achieved a huge amount in office, lifting millions out of poverty, times have changed and new challenges present themselves. The question is: how we respond to this?

Perhaps the biggest challenge is the new world we live in.

It is a far more globalised and competitive abroad than it was when we were returned to office in 1997. If you look at the economies that are growing today and the businesses that are flourishing, you cannot help but see that it is the developing economies that are on the rise.

By 2050 the combined GDP of the seven largest developing economies is expected to be 50% higher than those of the current G7, with China forecast to overtake the US as the world's largest economy by 2025 or even earlier.

Some watch the rise of these economies, China in particular, and see them as a threat to the established order. They are worried that the success of the new can only mean the failure of the old.

On the contrary, rising incomes in developing countries around the world offer whole! new markets for British goods and services and we must be ready to exploit those opportunities that emerge.

“At a very basic level, the competitiveness of a company and the health of the communities around it are closely intertwined. A business needs a successful community, not only to create demand for its products but also to provide! critical pu blic assets and a supportive environment. A community needs successful businesses to provide jobs and wealth creation opportunities for its citizens.”

I share this view.

The work of people like Bob, Dominic, Mark and Michael illustrates the absurdity of claiming that ours is an anti business agenda – it is business’ agenda. How does this all translate?

Consider the day to day in a business. Happy, healthy, employees who arrive at work every day and are made to feel like they have a stake in the business, rather than being treated like cogs in a wheel, make for more productive employees. This in turn reduces absenteeism and lost work days. It is good for business. As management guru Charles Handy says, “a good business is a community with a purpose”.

A dedication to environmental sustainability can work in the same way. It is a moral claim. Resources on our planet are finite and scarce. But it is also good business. It can provide the spur and the focus for radical innovation in goods and services, to serve growing global as well as domestic markets. Viewed this way, the transition to a post carbon economy becomes an opportunity to be embraced, not a burden to be resisted.

Let’s think about suppliers and customers too. Squeezing your supply chain might increase profits in the short term. But in the long term, investing in it is likely to improve product quality, while creating social and economic value down the length of the chain.

Around Britain, forward thinking, dynamic and creative firms are already pursuing business models that embody these ambitions.

They know their people matter. They engage them.

They know that their business cannot stand aside from their community – local and global; that they have responsibilities to others and to future generations.

The best of British businesses know the value of building for the long term, of investing. They know the value of nurturing t heir supply chains.

They don’t rest on their laurels. They innovate, finding inventive ways to solve problems old and new and innovation is key to exploiting new markets.

They know the value of building long term relationships with their customers.

They understand the importance of consistency between what they say and what they do – all the way through their supply chains.

And they understand that doing right by their customers, their staff and their communities is not an avoidable cost but at the very core of their strategy and a source of competitive advantage.

Businesses pursue these kinds of long term, inclusive and socially responsible strategies because it is good for them. And it is good for the rest of us too.

The more businesses that pursue these kinds of strategies, the closer we will get to our vision of the good society. A Britain in which business prospers will be a Britain in which we all flourish together.

These long-term, productive business models, cultures and practices are at the core of Labour’s vision for the New Economy we need.

But they are also at the core of Labour’s vision for our society. If markets are generating greater wealth and distributing it efficiently, fewer people will have to rely on the state.

If companies are developing the skills of their employees, the skills acquired are more likely to be appropriate to the needs of the business.

I! f businesses are building sustainability into their business models of their own choice, they are more likely to do so in a way that adds more value than regulatory intervention.

So as we look to ! the future, we should do so with confidence in our ability to succeed.

The scale of our task is a big one but so is our ambition. A transformed economy, producing better and fairer outcomes for all of our people, paying our way in the world and working to ensure this new era of globalisation delivers wealth and prosperity for all. A stronger, richer, more dynamic society as a result.

It is a prize worth striving for.

Thank you.