David Cameron unveils Tory economic policy in Birmingham

Mar 13 2009 by Jonathan Walker

David Cameron was today promising to place manufacturing back at the heart of the British economy, as he announced a radical rethink of Conservative economic policy in a keynote speech to Birmingham Chamber of Commerce.

In his first speech since returning to work after the death of his son Ivan, the Conservative leader will insist that Britain must end forever its reliance on housing and financial services to create jobs and prosperity.

Mr Cameron will admit his party got it wrong by signing up to the “cosy consensus” which assumed the economic boom would last forever.

And he will warn the “battered economy” he expects to inherit if he becomes Prime Minister - even once the recession has ended - means his party must reconsider its plans for taxation and spending.

The speech this evening, to the Chamber’s Annual Presidents’ Dinner at the International Convention Centre, is the first of a series the Tory leader is to make on the subject of the economy.

He will set out “emergency measures” the Conservatives have proposed to give immediate help to industry, including a government-backed loan guarantee scheme giving firms access to credit.

Criticising government “inaction”, he will say: “Here in the West Midlands you’re still waiting for the real help for the car industry that you were promised weeks ago. Today, not a single one of these schemes is properly active.”

But his party also had to face the question of what to do with the economy once the recession ended, he will say.

“By the time this recession is over, our national debt will stand at over a trillion pounds. One million more people may have been added to the welfare register. And the drivers of our recent economic growth – the financial services and housing sector – will be shadows of their former selves.”

Over the next few weeks he will make a series of speeches setting out Tory plans for tax and spending, and how government could continue to improve the standard of living when money was tight, he will say.

“If I’m honest, I have to admit that we – the Conservative Party – didn’t see this as early as we could have.”

He will add: “Do I believe we did enough to warn about the rising levels of corporate debt, banking debt and borrowing from abroad? No.

“And there are other areas of economic policy where I look back now and think we would have done it differently if we had the time again. For example, while we warned that it was wrong and complacent to claim that boom and bust had been abolished - we based our plans on the hope that economic growth would continue.

“All parties signed up to this cosy economic consensus . . . it is only by being honest about the past that we can get things right for the future.”

Britain faces four major economic challenges, he will say. Levels of debt are too high, the economy is dependent on too few industries, the nation faces a massive welfare burden because of the number of people out of work, and banks are not properly regulated while small businesses are forced to cope with too much regulation.

“We’ve been over dependent for our growth on finance, housing and government spending – and we just don’t have the regional economies, the skilled workforce or the different industries and markets to fall back on and drive us through this recession.

“That too has to change, and that’s why our plans for fixing our broken economy will include new proposals for creating a more balanced economy - focusing in particular on a renaissance in British manufacturing.”

Britain ignored the fact the five million people were dependent on out-of-work benefits during an economic boom when the country could afford to pay them, he will say.

“The continuing existence of the welfare culture is down to one other important thing: the reluctance of all political parties to stick their neck out and confront it.”

He will tell business leaders: “The new jobs, the new products, the new ideas that will lift us up will be born in the factories and offices in places like the West Midlands – not in the corridors of Whitehall. It will be hard, it will be difficult – but we can not put this off any longer.”

* Read the draft of David Cameron's speech at the ICC here >