Cameron’s ‘moral capitalism’ speech in full

Read David Cameron's speech on 'moral capitalism' in full on

"These are difficult times.

We have to deal with the legacy of the deficit and debt.

The Eurozone is in deep and continuing trouble.

Yesterday, unemployment rose again.

And across Europe, economies have stalled.

Here in Britain, it’s clear that this is an active government with its sleeves rolled up, doing everything possible to get the economy moving.

The biggest work programme since the 1930s, helping 3 million people.

A massive drive on apprenticeships.

Major initiatives on regional growth, infrastructure and enterprise.

But today many people are questioning not just how and when we will recover, but the whole way our economy works.

So while the economic challenge starts with dealing with our debts and achieving growth – it doesn’t end there.

We must aim higher than just coping with the storms affecting the international economy.

Because I believe that out of this current adversity we can build a better economy, one that is truly fair and worthwhile.

And my argument today is this.

We won’t build a better economy by turning our back on the free market…

…we’ll do it by making sure that the market is fair as well as free.

While of course there is a role for government, for regulation and intervention…

…the real solution is more enterprise, competition and innovation.


In this debate about the kind of economy we want to see, my position is clear.

I believe that open markets and free enterprise are the best imaginable force for improving human wealth and happiness.

They are the engine of progress, generating the enterprise and innovation that lifts people out of poverty and gives people opportunity.

And I would go further: where they work properly, open markets and free enterprise can actually promote morality.

Why? Because they create a direct link between contribution and reward; between effort and outcome.

The fundamental basis of the market is the idea of something for something – an idea we need to encourage, not condemn.

So we should use this crisis of capitalism to improve markets, not undermine them.

Conservatives in particular are well-placed to do this.

Because we get the free market we know its failings as well as its strengths.

No true Conservative has a naive belief that all politics has to do is step back and let capitalism rip.

We know there is every difference in the world between a market that works and one that does not.

Markets can fail.

Uncontrolled globalisation can slide into monopolisation, sweeping aside the small, the personal and the local.

But we are the party that understands how to make capitalism work; the party that has constantly defended our open economy against the economics of socialism.

So where others see problems with markets as a chance to weaken them…

…I see problems with markets as an opportunity to improve them.

This reflects two principles that have always been at the heart of what I believe, and which have been at the centre of Conservative thinking for centuries.

The first is a vision of social responsibility, which recognises that people are not just atomised individuals, and that companies have obligations too.

And the second is a genuinely popular capitalism, which allows everyone to share in the success of the market.


The idea of social responsibility is not a new departure for my party.

It was Burke who insisted on public accountability for the East India Company, and William Pitt who brought it under the control of government.

Later, the same spirit of responsibility helped drive the campaign against the slave traders.

Under Peel it led to the repeal of the Corn Laws which had forced up the price of food.

Under Disraeli, it led to the Factory Acts, which began to set working conditions.

Of course it’s true that the great campaigns for reform drew strength from other movements too.

But social responsibility – watching over business, correcting market failure, recognising obligations…

…that’s been the Conservative mission from the start.

And a large part of my leadership has been about renewing our commitment to that long-standing tradition.

Corporate social responsibility and environmental responsibility have been constant themes in the arguments I’ve made and the policies we’ve developed.

Soon after I was elected leader I said that we should not just stand up for business…

….but also stand up to big business when it was in the national interest.

Three years ago I argued that the previous government’s turbo-capitalism turned a blind eye to corporate excess…

…while we believed in responsible capitalism and would make it happen.


But the second principle is just as important.

As well as social responsibility we need to open up markets and get more people engaged in a genuinely popular capitalism.

Conservatives always believed in an ownership society.

A consistent Conservative theme has been the ambition of building a nation of shareholders, savers and home-owners.

Macmillan championed this through home ownership, giving people an asset of their own.

Margaret Thatcher did the same with privatisation and share ownership.

And three years ago in Davos I called for a new popular capitalism.

One that recognised what’s gone wrong with capitalism, and which freed people to make something of themselves…

…to get a good job. To own a home. To start a business.

Today this mission of improving markets, and ensuring they are fair as well as free…

…informed by the principles of social responsibility and genuinely popular capitalism…

…has three things at its heart.
First, we need be clear about the very specific mistakes of the last decade.

Second, we need to put the right rules and institutions in place to correct them.

Third – and I think this matters far more than anything else – we need to open up opportunity and enterprise so that everyone has the capacity to participate and benefit.

We need to boost competition.

Back enterprise.

Encourage the adventurous spirits who challenge the status quo.

That’s how we’ll build a fairer and more worthwhile economy.


So, first: what went wrong?

The last government claimed to have got rid of boom and bust.

What it really did was allow a debt-fuelled boom to get out of control.

The result was a series of lethal imbalances in our economy…

….between north and south…

….between financial services and manufacturing…

….between the people who got huge rewards at the top, or welfare at the bottom…

…while everyone else seemed to be left out.

The truth is that the last government made a Faustian pact with the City.

It encouraged a debt-crazed economy…

…because it needed to pay for spiralling welfare costs and a top-down, interventionist state.

It tolerated market failures…

…because at heart it didn’t really accept that markets could ever be made to work.

It seemed frightened of challenging vested interests…

…believing the interests of big business were always the same as those of the economy.

All this left us with a level of public spending that we couldn’t afford and a model of economic growth that doesn’t work.

I understand why this has made many people today disenchanted with markets – even angry.

Because far from abolishing boom and bust, the previous government gave us the biggest boom and the biggest bust, leaving everyone with a share of the debt.

But when things went well only a few seemed to get a share of the profit.

Too many people found they couldn’t count on their savings growing.

They couldn’t afford to buy a home.

They worried about how they would pay their bills in old age.

And the City, which should have been a powerhouse of competition and creativity…

…became instead a byword for a sort of financial wizardry that left the taxpayer with all the risk, and a fortunate few with all of the rewards.

So instead of popular capitalism we ended up with unpopular capitalism.


So the next question is: what needs to change?

My answer is that we need to change the way the free market works – not stop the free market from working.

We need to reconnect the principles of risk, hard work, and success with reward.

When people take risks, with their own ideas, energy and money…

…when they succeed in a competitive market where anyone can come and knock them off their perch at any time…

…we should celebrate entrepreneurs who get rich in that way.

We should support business leaders who earn great rewards for building great businesses…

…for doing great things for their company, for our economy and for society.

There should be a proper, functioning market for talent at the top of business.

And that will inevitably mean some people will earn great rewards.

But that is a world away from what we’ve seen in recent years – where the bonus culture – particularly in the City – has got out of control.

Where the link between risk, hard work, success and reward has been broken.

This is not the politics of envy.

As the Governor of the Bank of England reminded us this week, excessive bonuses reduce lending to small businesses.

Large rewards for failure when companies are suffering means even less is left over for customers and shareholders.

So next week the business secretary will set out our detailed proposals on executive pay, including any necessary legislation to follow.

Yes, there’s a need for new rules.

But we should be clear about what will do most to bring about responsibility.

We need to make the market work and we will do that by empowering shareholders and using the power of transparency.

That’s why I welcome this week’s decision by Fidelity Worldwide Investment to add their voice to calls for the better policing of boardroom pay.

It’s responsible action to make markets work and it is the thread that runs through this government.


Regulation is part of it, but the last government got regulation completely the wrong way round.

Small companies were strangled in red tape while the banks were allowed to let rip.

We're turning the tables on this.

We’re acting to make banks work for the people and firms who rely on them.

This means implementing the Vickers report, to separate investment banking from retail banking.

We will ensure banks are properly capitalised as losses should be borne by investors, not taxpayers.
We’re overhauling financial services regulation, abolishing the failed tripartite regime.

We’re fundamentally reviewing the Private Finance Initiative to strike a better balance between risk and reward to the private sector.

And it’s also why we’re busting open the cosy collusion between big business and big government that locks small businesses out of public sector contracts – a market worth £150 billion a year.

None of this means more regulation.

It means less but better regulation.

We need strong frameworks that people can understand, not endless but ineffective box-ticking red tape.

That’s what lies behind the new anti-tax abuse rule that the Chancellor is examining, which will make the tax code simpler, not more complex.

And at the end of all this – be in no doubt – this government will have reduced regulation, not increased it.


But the third part of our mission to improve markets and make them fair as well as free is about enterprise and opportunity.

Capitalism will never be genuinely popular unless there are genuine opportunities for everyone to participate and benefit.

Of course this means a greater emphasis on equality of opportunity.

You can never create a fair economy if there are people who are automatically excluded from it through poor education…

…or encouraged to think that the only way to live their lives is to depend on state handouts.

People need the capacity to succeed.

That’s why this government has made an education revolution its priority…

…with academies, free schools, rigour in exams and a complete intolerance of failure.

We’re slanting the funding system in favour of the poorest, with a pupil premium that means disadvantaged pupils get more.

In an age when we’re having to cut public spending, we are investing more in early years childcare.

And we are intervening comprehensively and early in families that are failing to help children who might not otherwise get the right start in life.

But popular capitalism also means believing in an insurgent economy, where we support the new, the innovative and the bold.

Where we give a chance to thousands upon thousands in our country who aren’t in business yet – but want to be.

Whose ideas and energies, whose enterprise and ambition, need that first, crucial springboard.

Intelligence; ingenuity; energy; guts…Britain’s fizzing with business potential.

We need to end the fear that says this opportunity is only for a few.

I admire more than almost anything the bravery of those who turn their back on the security of a regular wage to follow their dreams and start a company.

If you take a risk, quit your job, create the next Google or Facebook and wind up a billionaire, then more power to your elbow.

And if you took a punt, invested your money in that hugely risky start-up, and made a fortune, then fair play to you.

And let’s also recognise those people who take risks, who don’t succeed first time but persevere.

I'm not just open to that type of success – I actively want to see it happen.

That's why we’re improving Entrepreneur Relief, so that founders of companies get to keep a bigger slice of their gains.

It’s why we launched the Entrepreneur Visa, so the brightest and best would-be entrepreneurs from around the world can start their business right here in the UK.

It’s why we've implemented some of the most generous tax incentives for early stage investment of any developed economy.

And next week I’ll be launching a new campaign to start up Britain, helping people take that brave step into business for themselves.

It’s a basic truth that if people have a stake in business, they will support its growth and share in its success.

But the reality is that even as our country has grown richer, participation has shrunk.

Yes, we’re boosting shareholding by giving tax relief to people who invest in new small businesses.

For this Olympic year of 2012 we’re going to cut capital gains tax for people who’re prepared to have a go and invest in a startup.

But we can't stop there.

To build a fairer economy, we need more shareholders, more home-owners, and more entrepreneurs.

That’s why we’re reinvigorating the right to buy and are transforming the failing housing market.

And as the deputy prime minister said on Monday we need to help encourage different models of capitalism…

…ones where employees have a much more direct stake in the success of their company.

It’s an issue I have long cared about.

Back in 2007, I established the Conservative Co-operative movement – which now has over 40 Conservative MPs as members.

In government we are providing new rights for public sector workers to create mutuals and own a stake in their success…

…with employee-led mutuals now delivering almost a billion pounds worth of health services.

Because we know that breaking monopolies, encouraging choice, opening up new forms of enterprise is not just right for business…

…but the best way of improving public services too.

There are over 12 million co-op members in the UK.

That’s more people than there are shareholders in the economy…

…and a vital branch of popular capitalism.

But right now there are too many barriers in the way…

…17 separate and outdated pieces of legislation add cost and complexity.

So today I can announce they will all be brought together and simplified in a new Co-Operatives Bill that will be put before parliament.



I want these difficult economic times to achieve more than just paying down the deficit and encouraging growth.

I want them to lead to a socially responsible and genuinely popular capitalism.

One in which the power of the market and the obligations of responsibility come together.

One in which we improve the market by making it fair as well as free, and in which many more people get a stake in the economy and share in the rewards of success.

That’s the vision of a better, more worthwhile economy that we’re building.

An economy where people who work hard get rewards which are fair in the true Conservative meaning of the word.

An economy where people feel in control of their destiny…

…because they’ve started their own business, or are shareholders in the company they work for, or are part of a co-operative.

An economy where everyone has the chance to build up assets and pass something on to the next generation.

That is how we will markets work for all of us…

…to spread wealth, freedom and opportunity.”