Leta Kipande yako!
Archbishop desmond Tutu with Raila Odinga -Kenya
Home Secretary Jacqui Smith’s speech to the first International Conference on Radicalisation and Political Violence
Our Shared Values – A Shared Responsibility
17 January 2007
I am delighted to be here to speak to you today, and to mark the launch of the International Centre for the Study of Radicalisation and Political Violence.
There are few areas of domestic or international public policy where the case for exploration and enquiry is more pressing, where the need for understanding and debate is more urgent.
I applaud you on this important initiative, and wish you every success.
Today I want to give you my perspective on these pressing and urgent issues:
• The causes and the effects of violent extremism;
• How it comes to take hold in people’s lives;
• The damage it can do to individuals, communities, and wider society; and
• How that damage can be prevented and communities supported in rooting out its influence.
The counter terrorist strategy for which I am responsible – known as CONTEST – has four main components:
• Pursuing terrorists and disrupting the immediate threats we face;
• Protecting our infrastructure and our borders;
• Preparing for any incident which may occur; and
• Preventing radicalisation in the cause of violent extremism.
I have no doubt that it is the last of these – stopping people becoming or supporting terrorists – that is the major long-term challenge we face.
The relentless process of persuasion and propaganda, of assertion and insinuation, that can lead ultimately to engagement or support for violent extremism – this poses particular questions and requires a rounded, comprehensive response.
Last year, we established the Office of Security and Counter Terrorism (OSCT) in the Home Office to co-ordinate the development and delivery of CONTEST. An early priority has been to focus on the need to review and enhance our PREVENT work.
Central government departments, enforcement agencies, local authorities, institutions and community groups have all been involved in this process. And the wealth of expertise they bring to it is injecting new energy into our efforts, and helping us to build new thinking on old.
These efforts will be the main focus of my remarks today. But before turning to them, I think it is important to first give you a sense of the threat we face.
The threat
Last June, in my first few days as Home Secretary, the attempted attacks in London and Glasgow showed clearly the intent of those who want to mount indiscriminate attacks on public places.
As we have seen all too clearly, attacks can happen without warning, and with the aim of causing multiple fatalities.
Our current threat level is ‘severe’, which means that we believe an attack is highly likely.
Jonathan Evans, the Director General of the Security Service, recently estimated that there are some 2000 people in the UK who pose a threat to our security. In 2006, the number was roughly 1600.
The increase is partly because our coverage of the extremist networks is now more thorough. But we also have to accept that more people are showing sympathy with the cause of violent extremism.
Secretary Chertoff’s comments this week on the rise of what he calls “homegrown terrorism” in Europe are a timely reminder that this radicalisation, wherever it occurs, is an issue of international concern.
Last year, 42 people were convicted for terrorist offences, relating to 16 different operations. Half of these people pleaded guilty.
These figures show that the threat is real and serious. Among those convicted last year were the 5 young men sentenced to between 35 and 40 years each as a result of Operation Crevice.
Their plan was to detonate a device in London in 2004. But we should remember that they were not only prepared to make a conventional explosive device but also talked about obtaining a radiological device – a dirty bomb.
And material recovered after Operation Rhyme, the al Qaeda conspiracy to attack London, again in 2004, also included instructions on how to make a dirty bomb and projections of its destructive effects.At the moment there are 5 major terrorism trials in court here. These include the trials of 6 individuals charged in relation to the alleged plot to kidnap and kill a British soldier, and the trial of five individuals charged following an operation against an alleged terrorist facilitation network in this country.
Since becoming Home Secretary, I have made it my business to understand the basis for our threat assessments. In countering terrorism – just as much as in tackling crime and in strengthening our borders – I do not take my responsibilities lightly.
The gravity and the extent of this criminal terrorist activity are now all too clear to me.
And it is equally clear to me that to tackle it we all need to keep clear heads.
The threat is real. The threat is live. But we must keep it firmly in perspective.
It comes from a very small minority of people – and the great majority of us, who share common values and principles, find the murder of innocent people abhorrent.
This is vital when we come to consider how best to respond to the threat we face.
Terrorism is a crime that does not discriminate. The ‘small minority’ threatens the safety and security of all communities in Britain, irrespective of politics, faith, or ethnic background.
And we are not unique in this – the same is true elsewhere. Indeed, despite its rhetoric to the contrary, al Qaeda itself pursues a global strategy of killing Muslims.
Terrorism can affect us all, wherever and whoever we are.
And let me be clear – such terrorist outrages are crimes, first and foremost. First and foremost, terrorists are criminals.
As so many Muslims in the UK and across the world have pointed out, there is nothing Islamic about the wish to terrorise, nothing Islamic about plotting murder, pain and grief. Indeed, if anything, these actions are ‘anti-Islamic’.
Our response to the threat
My duty as Home Secretary is to protect the security of our citizens and the freedoms they enjoy.
The purpose of terrorism is to use indiscriminate killing to dictate the way we think and act, both as individuals and as governments.
But it is a weakness of terrorism as a tactic that the way we respond determines the impact that it will have.
Whether terrorists ultimately succeed or not is up to us, not up to them.
We should not forget that we operate from a position of strength – for these values are shared by the overwhelming majority of people living in Britain.
In Britain our response to preventing terrorism should therefore preserve both our security and the values on which our society depends.
And in this country we will uphold our common values by pursuing terrorists as criminals through our criminal justice system. They will get the justice that they deny to others.
To support the work of criminal investigations and the due process of our judicial system, we need to ensure that the police and security agencies have the powers they need to deal with the threat we face.
Countering terrorism and violent extremism is one of the most important and urgent priorities for the police service.
That’s why we are providing record levels of funding for counter terrorism policing.
And to ensure we have the powers, as well as the resources, that we need to mount an effective response to the threat we face, we will introduce the Counter Terrorism Bill shortly.
From the first, my approach to this Bill has emphasised the importance of consulting and listening to the voices of all who have an interest in our proposals.
There is consensus on a number of the measures we want to bring forward:
• The gathering and sharing of information about terrorist suspects;
• The greater use of post-charge questioning of suspects;
• Tougher sentencing for offences with a terrorist connection; and
• The seizure and forfeiture of terrorist cash, property and other assets.
We have also amended our proposals for pre-charge detention to reflect the views we have received. And in bringing forward these proposals, we have made clear that we are doing so on a precautionary basis, with strict limits imposed that mean they could only be used for a temporary period in exceptional circumstances.
But an effective response to terrorism can never solely depend on the state and law enforcement.
It also depends on us – on the active commitment of individuals and communities to certain rights and responsibilities, to shared values which apply irrespective of religion or culture.
These rights include the right to life, and to liberty. The right to freedom of speech and expression, and to freedom of religion. The right to live the lives we wish, subject only to our law.
The rights we claim for ourselves need to be matched by the responsibilities we owe others – to our fellow citizens, to a common good. Together, these rights and responsibilities are the foundation for citizenship.
As the Prime Minister said in his speech on liberty in October, in developing our work against terrorism we must “bring people together, mark out the common good, and energise the will and resources of all.”
The way we respond to terrorism must reinforce our shared values – because it is on these values that our security ultimately rests.
Because our work to reduce the threat here depends on individuals and communities, we will seek the widest possible consent for, and understanding of, our strategy.
Success requires consensus as much as executive or law enforcement powers – and that in turn requires openness and consultation.
We want to hear views and engage in debate. We published last year our strategy for countering terrorism and are continuing to evolve it in the light of experience. The Prime Minister intends to present the National Security Strategy to Parliament shortly.
What does this mean in practice?
I have talked about the threat we face and about principles which must inform and guide our response. I now want to focus in particular on counter radicalisation.
Study of experiences in this country and elsewhere has told us a lot about why people are drawn into the world of violent extremism, either as actors or supporters.
Our best estimate is that in this country, as in others, violent extremism is caused by a combination of interlocking reasons:
• By an ideology, by which I mean both a misinterpretation of religion and a view of contemporary politics and history;
• By ideologues and propagandists for this cause, very often taking advantage of the open institutions in this country;
• By vulnerability in young people, of a kind that I recognise from other contexts;
• By communities which are sometimes poorly equipped to challenge violent extremism; and
• By grievances, some genuine and some perceived, and some of course directed very specifically against government.
Our strategy to deal with radicalisation to violent extremism must therefore focus on each of these factors.
We need to challenge the ideology of violent extremism, that misreading of Islam and view of history and contemporary politics which justifies terrorism. The ‘we’ in that sentence means not only civic society in Britain, but states and communities overseas.
Government can facilitate, but it should be cautious about the degree of expertise it can bring to bear on matters of religion and about the extent to which it should seek to lead or to guide. And we need to be very clear about parameters.
I do not wish to discourage dissent or seek political conformity. I will not dictate how people should practise their religion or express their lawful opinions.
But I will never accept any argument which seeks to legitimise and sanction mass murder.
We have made progress:
• We have backed leading Muslim scholars and opinion formers here to talk about extremist ideology at roadshows across the country. Some sixty thousand people have attended to date, and an associated website gets fifty thousand hits each month.
• We want to see more Islamic studies here, perhaps a further centre of excellence.
• We are supporting a programme of overseas visits by British Muslim opinion formers to Muslim majority countries, and establishing links with prominent institutes overseas to better understand the teaching they can provide.
• We are encouraging much more interaction between opinion formers here and in Muslim majority countries to correct misunderstandings about Islam in the UK.
But we must take action not only against the ideology, but also against those who promote it.
We have legislated to enable us to do so – and we are now systematically disrupting the small group of key propagandists for terrorism in this country.
The use of intelligence to identify and go after the individuals concerned will become an ever more important priority for policing and the security services.
We also need to sensitise those working in the institutions – including in prisons and educational establishments – where propagandists are and have been active.
With the Ministry of Justice and the Prisons Service we have set up an important programme to understand and address radicalisation in our prisons system.
I know that this is a problem in many countries, and we have learned much from experiences elsewhere. I want to highlight the very valuable contribution made to this programme here by the Prisons Chaplaincy, imams and others, who have vital role to play in challenging anti-Islamic views and behaviours. In tandem, there have also been initiatives to raise awareness and understanding among Prisons Service staff.
Education has a key positive role to play in countering violent extremism – not only through the teaching of particular subjects like citizenship and religion, but also through the shared values embodied by the method of teaching.
My colleagues John Denham and Bill Rammell have started a debate on how we maintain academic freedom whilst ensuring that extremists can never stifle debate or impose their views. They will shortly be providing guidance to Higher and Further Education establishments to help promote shared values, increase community cohesion and prevent violent extremism.
As a Government, we have no wish to constrain the space for enquiry. But we want active debate and challenge, not a monologue imposed by ill-disguised force, and we must be ready to take action against propagandists who incite violence.
Schools can also make a crucial contribution to building resilience and supporting young people who may be exposed to extremist influences.
Countering violent extremism features in The Children’s Plan recently issued by the Department for Children, Schools and Families. We are engaging directly with head teachers to talk about what further support they need, and to ensure that schools are involved in local partnership work, including with the police.
As you have been discussing at the conference, the internet is a key tool for the propagandists for violent extremism.
Let me be clear. The internet is not a no-go area for Government.
We are already working closely with the communications industry to take action against paedophiles, and together we have improved the way that instances of possible abuse can be reported by internet users.
If we are ready and willing to take action to stop the grooming of vulnerable young on social networking sites, then I believe we should also take action against those who groom vulnerable people for the purposes of violent extremism.
In the next few weeks, I will be talking to industry, and critically those in the community, about how best to do this – and how best to identify material that is drawing vulnerable young people into violent extremism. Where there is illegal material on the net, I want it removed.
Our strategy also needs to find ways of directly supporting vulnerable people – by intervening with individuals when families, communities and networks are concerned about their behaviour.
We want to know what advice to provide to a parent concerned about the behaviour of a son or daughter, drifting into a network which sanctions violent extremism – and we want to know how best to provide it.
In this context, we need to think about the most effective response – more about rehabilitation, where that will work, and less about the criminal justice system.
Support to vulnerable individuals is best provided by communities. I commend the lead that a number of mosques have provided, not only in developing material which refutes a misreading of Islam but also in providing a space in which that material can be put to best use.
There are things government can do to help:
• We are supporting work with young offenders vulnerable to radicalisation;
• We can help create linkages between those working on rehabilitation programmes overseas and those wishing to do so here; and
• We can support the police and others as they work with ‘at risk’ individuals.
Building resilient communities is the next key part of any strategy to counter radicalisation.
The people who really understand the challenge of confronting violent extremism in our towns and cities are the people who live and work there.
Muslim communities have been more at risk from the propagandists of violent extremism than anyone else. So there is a particular and compelling role for Muslim organisations, institutions and civic society to challenge what I have described today as anti-Islamic activity.
Of course, these organisations have every right to expect respect and recognition from others for what they have already achieved, and I pay tribute to the work being done in our communities, by our communities, for our communities – often without a fanfare of publicity but with quiet determination, and great conviction.
There is a very large range of activity underway already. Hazel Blears and her department have funded the development of more than 200 wide-ranging and ambitious projects.
Over the next three years, we will be working with local authorities and local communities to bring about a step change in this work.
Many projects are focused on women and on young people, with others designed to support citizenship education and volunteering in the Muslim community. There are also a number of community-led programmes for faith leaders and for faith organisations, for imams and for mosque schools.
Policing has a key role to play in supporting resilient communities. But I want to emphasise that policing is vital to all aspects of the counter radicalisation strategy I have described today – challenging the language of violent extremism; disrupting propagandists for terrorism; better protecting vulnerable institutions; and supporting individuals vulnerable to recruitment. Counter terrorist policing is not just about the sharp end – the disruption of those who seek to attack us – crucial though that is.
It must also be about stopping people becoming or supporting terrorists. We cannot, after all, simply arrest our way out of this problem.Developing a Prevent policing plan is one of the most important and urgent initiatives now underway, led by the Association of Chief Police Officers.
The plan will build on other initiatives successfully developed by the police in recent years – neighbourhood policing, support programmes for drugs offenders, outreach to improve community cohesion, local multi agency partnerships to deal with a range of criminal activity.
The Prevent policing plan will make use of these experiences and reflect this expertise. But it will deliver something that is recognisably new.I want to end my remarks on our strategy by talking about how we address grievances which some people hold in this country and which may encourage them to sympathise with the propagandists of violence.
These grievances may be about our foreign policy, or what is perceived to be our foreign policy.
They may derive from the experience or the perception of socio-economic disadvantage.
Or they may be based on perceptions or misperceptions of police and law enforcement activity.
No grievance can justify terrorism. But where grievances are legitimately expressed, we are of course prepared to debate them.
Terrorism must not drown dialogue. And where grievances are not only legitimately expressed but well founded, we must be prepared to respond.
That a cause has been misappropriated by violent extremism does not make it a wrong one.
Rather, putting a grievance beyond the reach of a democratic solution, beyond the understanding of state and society, is a goal of those who wish to harm us. We should do them no favours.
Concluding remarks
As I have explored today, the framework for action we are developing is designed to offer comprehensive engagement with the threat Britain faces from violent extremism.
We have built a wide range of partners to deliver the framework, some of whom are new to the issue. The challenge is considerable, and cannot be met by a narrowly defined or narrowly delivered response.
We are working at home and overseas, at national and local levels. We are talking to local authorities and to regional government.
We are considering carefully how the policing of counter terrorism needs to develop to take account of counter radicalisation, and the extra resources that may be required for this purpose.
And we are listening to you, academics and experts from around the world.
I finish where I began. It is certainly a key role of government to protect people’s security. And it is also certain that government cannot do so on its own.
That is the basis of our strategy – a strategy that is perhaps unequalled in the world today for its breadth of partnership and scale of ambition.
To succeed against terrorism and violent extremism in this country, we will depend not on force, but on force of argument. Not on authoritarianism, but on the authority that derives from shared values, shared rights, and shared responsibilities.
Thank you.
Our Shared Values – A Shared Responsibility
17 January 2007
I am delighted to be here to speak to you today, and to mark the launch of the International Centre for the Study of Radicalisation and Political Violence.
There are few areas of domestic or international public policy where the case for exploration and enquiry is more pressing, where the need for understanding and debate is more urgent.
I applaud you on this important initiative, and wish you every success.
Today I want to give you my perspective on these pressing and urgent issues:
• The causes and the effects of violent extremism;
• How it comes to take hold in people’s lives;
• The damage it can do to individuals, communities, and wider society; and
• How that damage can be prevented and communities supported in rooting out its influence.
The counter terrorist strategy for which I am responsible – known as CONTEST – has four main components:
• Pursuing terrorists and disrupting the immediate threats we face;
• Protecting our infrastructure and our borders;
• Preparing for any incident which may occur; and
• Preventing radicalisation in the cause of violent extremism.
I have no doubt that it is the last of these – stopping people becoming or supporting terrorists – that is the major long-term challenge we face.
The relentless process of persuasion and propaganda, of assertion and insinuation, that can lead ultimately to engagement or support for violent extremism – this poses particular questions and requires a rounded, comprehensive response.
Last year, we established the Office of Security and Counter Terrorism (OSCT) in the Home Office to co-ordinate the development and delivery of CONTEST. An early priority has been to focus on the need to review and enhance our PREVENT work.
Central government departments, enforcement agencies, local authorities, institutions and community groups have all been involved in this process. And the wealth of expertise they bring to it is injecting new energy into our efforts, and helping us to build new thinking on old.
These efforts will be the main focus of my remarks today. But before turning to them, I think it is important to first give you a sense of the threat we face.
The threat
Last June, in my first few days as Home Secretary, the attempted attacks in London and Glasgow showed clearly the intent of those who want to mount indiscriminate attacks on public places.
As we have seen all too clearly, attacks can happen without warning, and with the aim of causing multiple fatalities.
Our current threat level is ‘severe’, which means that we believe an attack is highly likely.
Jonathan Evans, the Director General of the Security Service, recently estimated that there are some 2000 people in the UK who pose a threat to our security. In 2006, the number was roughly 1600.
The increase is partly because our coverage of the extremist networks is now more thorough. But we also have to accept that more people are showing sympathy with the cause of violent extremism.
Secretary Chertoff’s comments this week on the rise of what he calls “homegrown terrorism” in Europe are a timely reminder that this radicalisation, wherever it occurs, is an issue of international concern.
Last year, 42 people were convicted for terrorist offences, relating to 16 different operations. Half of these people pleaded guilty.
These figures show that the threat is real and serious. Among those convicted last year were the 5 young men sentenced to between 35 and 40 years each as a result of Operation Crevice.
Their plan was to detonate a device in London in 2004. But we should remember that they were not only prepared to make a conventional explosive device but also talked about obtaining a radiological device – a dirty bomb.
And material recovered after Operation Rhyme, the al Qaeda conspiracy to attack London, again in 2004, also included instructions on how to make a dirty bomb and projections of its destructive effects.At the moment there are 5 major terrorism trials in court here. These include the trials of 6 individuals charged in relation to the alleged plot to kidnap and kill a British soldier, and the trial of five individuals charged following an operation against an alleged terrorist facilitation network in this country.
Since becoming Home Secretary, I have made it my business to understand the basis for our threat assessments. In countering terrorism – just as much as in tackling crime and in strengthening our borders – I do not take my responsibilities lightly.
The gravity and the extent of this criminal terrorist activity are now all too clear to me.
And it is equally clear to me that to tackle it we all need to keep clear heads.
The threat is real. The threat is live. But we must keep it firmly in perspective.
It comes from a very small minority of people – and the great majority of us, who share common values and principles, find the murder of innocent people abhorrent.
This is vital when we come to consider how best to respond to the threat we face.
Terrorism is a crime that does not discriminate. The ‘small minority’ threatens the safety and security of all communities in Britain, irrespective of politics, faith, or ethnic background.
And we are not unique in this – the same is true elsewhere. Indeed, despite its rhetoric to the contrary, al Qaeda itself pursues a global strategy of killing Muslims.
Terrorism can affect us all, wherever and whoever we are.
And let me be clear – such terrorist outrages are crimes, first and foremost. First and foremost, terrorists are criminals.
As so many Muslims in the UK and across the world have pointed out, there is nothing Islamic about the wish to terrorise, nothing Islamic about plotting murder, pain and grief. Indeed, if anything, these actions are ‘anti-Islamic’.
Our response to the threat
My duty as Home Secretary is to protect the security of our citizens and the freedoms they enjoy.
The purpose of terrorism is to use indiscriminate killing to dictate the way we think and act, both as individuals and as governments.
But it is a weakness of terrorism as a tactic that the way we respond determines the impact that it will have.
Whether terrorists ultimately succeed or not is up to us, not up to them.
We should not forget that we operate from a position of strength – for these values are shared by the overwhelming majority of people living in Britain.
In Britain our response to preventing terrorism should therefore preserve both our security and the values on which our society depends.
And in this country we will uphold our common values by pursuing terrorists as criminals through our criminal justice system. They will get the justice that they deny to others.
To support the work of criminal investigations and the due process of our judicial system, we need to ensure that the police and security agencies have the powers they need to deal with the threat we face.
Countering terrorism and violent extremism is one of the most important and urgent priorities for the police service.
That’s why we are providing record levels of funding for counter terrorism policing.
And to ensure we have the powers, as well as the resources, that we need to mount an effective response to the threat we face, we will introduce the Counter Terrorism Bill shortly.
From the first, my approach to this Bill has emphasised the importance of consulting and listening to the voices of all who have an interest in our proposals.
There is consensus on a number of the measures we want to bring forward:
• The gathering and sharing of information about terrorist suspects;
• The greater use of post-charge questioning of suspects;
• Tougher sentencing for offences with a terrorist connection; and
• The seizure and forfeiture of terrorist cash, property and other assets.
We have also amended our proposals for pre-charge detention to reflect the views we have received. And in bringing forward these proposals, we have made clear that we are doing so on a precautionary basis, with strict limits imposed that mean they could only be used for a temporary period in exceptional circumstances.
But an effective response to terrorism can never solely depend on the state and law enforcement.
It also depends on us – on the active commitment of individuals and communities to certain rights and responsibilities, to shared values which apply irrespective of religion or culture.
These rights include the right to life, and to liberty. The right to freedom of speech and expression, and to freedom of religion. The right to live the lives we wish, subject only to our law.
The rights we claim for ourselves need to be matched by the responsibilities we owe others – to our fellow citizens, to a common good. Together, these rights and responsibilities are the foundation for citizenship.
As the Prime Minister said in his speech on liberty in October, in developing our work against terrorism we must “bring people together, mark out the common good, and energise the will and resources of all.”
The way we respond to terrorism must reinforce our shared values – because it is on these values that our security ultimately rests.
Because our work to reduce the threat here depends on individuals and communities, we will seek the widest possible consent for, and understanding of, our strategy.
Success requires consensus as much as executive or law enforcement powers – and that in turn requires openness and consultation.
We want to hear views and engage in debate. We published last year our strategy for countering terrorism and are continuing to evolve it in the light of experience. The Prime Minister intends to present the National Security Strategy to Parliament shortly.
What does this mean in practice?
I have talked about the threat we face and about principles which must inform and guide our response. I now want to focus in particular on counter radicalisation.
Study of experiences in this country and elsewhere has told us a lot about why people are drawn into the world of violent extremism, either as actors or supporters.
Our best estimate is that in this country, as in others, violent extremism is caused by a combination of interlocking reasons:
• By an ideology, by which I mean both a misinterpretation of religion and a view of contemporary politics and history;
• By ideologues and propagandists for this cause, very often taking advantage of the open institutions in this country;
• By vulnerability in young people, of a kind that I recognise from other contexts;
• By communities which are sometimes poorly equipped to challenge violent extremism; and
• By grievances, some genuine and some perceived, and some of course directed very specifically against government.
Our strategy to deal with radicalisation to violent extremism must therefore focus on each of these factors.
We need to challenge the ideology of violent extremism, that misreading of Islam and view of history and contemporary politics which justifies terrorism. The ‘we’ in that sentence means not only civic society in Britain, but states and communities overseas.
Government can facilitate, but it should be cautious about the degree of expertise it can bring to bear on matters of religion and about the extent to which it should seek to lead or to guide. And we need to be very clear about parameters.
I do not wish to discourage dissent or seek political conformity. I will not dictate how people should practise their religion or express their lawful opinions.
But I will never accept any argument which seeks to legitimise and sanction mass murder.
We have made progress:
• We have backed leading Muslim scholars and opinion formers here to talk about extremist ideology at roadshows across the country. Some sixty thousand people have attended to date, and an associated website gets fifty thousand hits each month.
• We want to see more Islamic studies here, perhaps a further centre of excellence.
• We are supporting a programme of overseas visits by British Muslim opinion formers to Muslim majority countries, and establishing links with prominent institutes overseas to better understand the teaching they can provide.
• We are encouraging much more interaction between opinion formers here and in Muslim majority countries to correct misunderstandings about Islam in the UK.
But we must take action not only against the ideology, but also against those who promote it.
We have legislated to enable us to do so – and we are now systematically disrupting the small group of key propagandists for terrorism in this country.
The use of intelligence to identify and go after the individuals concerned will become an ever more important priority for policing and the security services.
We also need to sensitise those working in the institutions – including in prisons and educational establishments – where propagandists are and have been active.
With the Ministry of Justice and the Prisons Service we have set up an important programme to understand and address radicalisation in our prisons system.
I know that this is a problem in many countries, and we have learned much from experiences elsewhere. I want to highlight the very valuable contribution made to this programme here by the Prisons Chaplaincy, imams and others, who have vital role to play in challenging anti-Islamic views and behaviours. In tandem, there have also been initiatives to raise awareness and understanding among Prisons Service staff.
Education has a key positive role to play in countering violent extremism – not only through the teaching of particular subjects like citizenship and religion, but also through the shared values embodied by the method of teaching.
My colleagues John Denham and Bill Rammell have started a debate on how we maintain academic freedom whilst ensuring that extremists can never stifle debate or impose their views. They will shortly be providing guidance to Higher and Further Education establishments to help promote shared values, increase community cohesion and prevent violent extremism.
As a Government, we have no wish to constrain the space for enquiry. But we want active debate and challenge, not a monologue imposed by ill-disguised force, and we must be ready to take action against propagandists who incite violence.
Schools can also make a crucial contribution to building resilience and supporting young people who may be exposed to extremist influences.
Countering violent extremism features in The Children’s Plan recently issued by the Department for Children, Schools and Families. We are engaging directly with head teachers to talk about what further support they need, and to ensure that schools are involved in local partnership work, including with the police.
As you have been discussing at the conference, the internet is a key tool for the propagandists for violent extremism.
Let me be clear. The internet is not a no-go area for Government.
We are already working closely with the communications industry to take action against paedophiles, and together we have improved the way that instances of possible abuse can be reported by internet users.
If we are ready and willing to take action to stop the grooming of vulnerable young on social networking sites, then I believe we should also take action against those who groom vulnerable people for the purposes of violent extremism.
In the next few weeks, I will be talking to industry, and critically those in the community, about how best to do this – and how best to identify material that is drawing vulnerable young people into violent extremism. Where there is illegal material on the net, I want it removed.
Our strategy also needs to find ways of directly supporting vulnerable people – by intervening with individuals when families, communities and networks are concerned about their behaviour.
We want to know what advice to provide to a parent concerned about the behaviour of a son or daughter, drifting into a network which sanctions violent extremism – and we want to know how best to provide it.
In this context, we need to think about the most effective response – more about rehabilitation, where that will work, and less about the criminal justice system.
Support to vulnerable individuals is best provided by communities. I commend the lead that a number of mosques have provided, not only in developing material which refutes a misreading of Islam but also in providing a space in which that material can be put to best use.
There are things government can do to help:
• We are supporting work with young offenders vulnerable to radicalisation;
• We can help create linkages between those working on rehabilitation programmes overseas and those wishing to do so here; and
• We can support the police and others as they work with ‘at risk’ individuals.
Building resilient communities is the next key part of any strategy to counter radicalisation.
The people who really understand the challenge of confronting violent extremism in our towns and cities are the people who live and work there.
Muslim communities have been more at risk from the propagandists of violent extremism than anyone else. So there is a particular and compelling role for Muslim organisations, institutions and civic society to challenge what I have described today as anti-Islamic activity.
Of course, these organisations have every right to expect respect and recognition from others for what they have already achieved, and I pay tribute to the work being done in our communities, by our communities, for our communities – often without a fanfare of publicity but with quiet determination, and great conviction.
There is a very large range of activity underway already. Hazel Blears and her department have funded the development of more than 200 wide-ranging and ambitious projects.
Over the next three years, we will be working with local authorities and local communities to bring about a step change in this work.
Many projects are focused on women and on young people, with others designed to support citizenship education and volunteering in the Muslim community. There are also a number of community-led programmes for faith leaders and for faith organisations, for imams and for mosque schools.
Policing has a key role to play in supporting resilient communities. But I want to emphasise that policing is vital to all aspects of the counter radicalisation strategy I have described today – challenging the language of violent extremism; disrupting propagandists for terrorism; better protecting vulnerable institutions; and supporting individuals vulnerable to recruitment. Counter terrorist policing is not just about the sharp end – the disruption of those who seek to attack us – crucial though that is.
It must also be about stopping people becoming or supporting terrorists. We cannot, after all, simply arrest our way out of this problem.Developing a Prevent policing plan is one of the most important and urgent initiatives now underway, led by the Association of Chief Police Officers.
The plan will build on other initiatives successfully developed by the police in recent years – neighbourhood policing, support programmes for drugs offenders, outreach to improve community cohesion, local multi agency partnerships to deal with a range of criminal activity.
The Prevent policing plan will make use of these experiences and reflect this expertise. But it will deliver something that is recognisably new.I want to end my remarks on our strategy by talking about how we address grievances which some people hold in this country and which may encourage them to sympathise with the propagandists of violence.
These grievances may be about our foreign policy, or what is perceived to be our foreign policy.
They may derive from the experience or the perception of socio-economic disadvantage.
Or they may be based on perceptions or misperceptions of police and law enforcement activity.
No grievance can justify terrorism. But where grievances are legitimately expressed, we are of course prepared to debate them.
Terrorism must not drown dialogue. And where grievances are not only legitimately expressed but well founded, we must be prepared to respond.
That a cause has been misappropriated by violent extremism does not make it a wrong one.
Rather, putting a grievance beyond the reach of a democratic solution, beyond the understanding of state and society, is a goal of those who wish to harm us. We should do them no favours.
Concluding remarks
As I have explored today, the framework for action we are developing is designed to offer comprehensive engagement with the threat Britain faces from violent extremism.
We have built a wide range of partners to deliver the framework, some of whom are new to the issue. The challenge is considerable, and cannot be met by a narrowly defined or narrowly delivered response.
We are working at home and overseas, at national and local levels. We are talking to local authorities and to regional government.
We are considering carefully how the policing of counter terrorism needs to develop to take account of counter radicalisation, and the extra resources that may be required for this purpose.
And we are listening to you, academics and experts from around the world.
I finish where I began. It is certainly a key role of government to protect people’s security. And it is also certain that government cannot do so on its own.
That is the basis of our strategy – a strategy that is perhaps unequalled in the world today for its breadth of partnership and scale of ambition.
To succeed against terrorism and violent extremism in this country, we will depend not on force, but on force of argument. Not on authoritarianism, but on the authority that derives from shared values, shared rights, and shared responsibilities.
Thank you.
Timetable announced for border protection and immigration reform
Labour’s Immigration Minister, Liam Byrne, has set out a challenging timetable to secure the largest shake-up to Britain’s border security and immigration system for 40 years.
After the successful rollout of global fingerprint checks for visa applicants – three months ahead of schedule and millions under budget – the Border and Immigration Agency will now set about a ten-point plan to secure Britain’s borders.
The milestones set out by Liam Byrne are: within 15 days to check fingerprints before a visa is issued anywhere in the world; within 60 days to introduce on the spot fines for employers who don't make the right right-to-work checks; within 80 days to begin the introduction of a new points system for managing migration; and within 100 days to introduce a single border force and police-like powers for frontline staff.
The BIA will also aim to confirm the number of foreign national prisoners deported in 2008 will exceed 2007 within 180 days; within 200 days to activate powers to automatically deport foreign national prisoners; within 300 days to expand detention capacity; within 330 days to begin issuing compulsory ID cards for those foreign nationals who want to stay and by Christmas to begin counting foreign nationals in and out of the country and to introduce compulsory watch-list checks for high risk journeys before they land.
Finally, within 360 days to make and enforce 60 per cent of asylum decisions within six months, with alternatives to detention for children.
Liam Byrne said: "The public wants stronger borders. They want us to shut down the causes of illegal immigration and hold newcomers to account, deporting rule breakers where necessary. They also want a compassionate system, which makes and enforces decisions fast when we have obligations to honour - and lets those we need contribute to Britain as long as they speak English, pay tax and obey the law.
"My goal therefore in 2008 is as ambitious as it is urgent. There are four themes to our work: protection, prevention, accountability and compassion. By Christmas the system will look and feel different. Every month the public will be able to see us not talking about change but delivering on our ten point plan for change. The public is right to demand a new system. We have listened. And we will act."
The Immigration Minister also confirmed that the BIA had exceeded the Prime Minister’s target of removing or deporting more than 4,000 foreign national prisoners by the end of 2007.
Labour’s Immigration Minister, Liam Byrne, has set out a challenging timetable to secure the largest shake-up to Britain’s border security and immigration system for 40 years.
After the successful rollout of global fingerprint checks for visa applicants – three months ahead of schedule and millions under budget – the Border and Immigration Agency will now set about a ten-point plan to secure Britain’s borders.
The milestones set out by Liam Byrne are: within 15 days to check fingerprints before a visa is issued anywhere in the world; within 60 days to introduce on the spot fines for employers who don't make the right right-to-work checks; within 80 days to begin the introduction of a new points system for managing migration; and within 100 days to introduce a single border force and police-like powers for frontline staff.
The BIA will also aim to confirm the number of foreign national prisoners deported in 2008 will exceed 2007 within 180 days; within 200 days to activate powers to automatically deport foreign national prisoners; within 300 days to expand detention capacity; within 330 days to begin issuing compulsory ID cards for those foreign nationals who want to stay and by Christmas to begin counting foreign nationals in and out of the country and to introduce compulsory watch-list checks for high risk journeys before they land.
Finally, within 360 days to make and enforce 60 per cent of asylum decisions within six months, with alternatives to detention for children.
Liam Byrne said: "The public wants stronger borders. They want us to shut down the causes of illegal immigration and hold newcomers to account, deporting rule breakers where necessary. They also want a compassionate system, which makes and enforces decisions fast when we have obligations to honour - and lets those we need contribute to Britain as long as they speak English, pay tax and obey the law.
"My goal therefore in 2008 is as ambitious as it is urgent. There are four themes to our work: protection, prevention, accountability and compassion. By Christmas the system will look and feel different. Every month the public will be able to see us not talking about change but delivering on our ten point plan for change. The public is right to demand a new system. We have listened. And we will act."
The Immigration Minister also confirmed that the BIA had exceeded the Prime Minister’s target of removing or deporting more than 4,000 foreign national prisoners by the end of 2007.
George Osborne: Brown has failed to prepare Britain for tough times
In a speech to the London School of Economics, the Shadow Chancellor, George Osborne said:"It is a pleasure to be here at this event organised by the London School of Economics and the British Chambers of Commerce.I'd like to thank Howard Davies, the Director of the LSE, and David Frost, the Chairman of the BCC, for inviting me here to speak to you today. The British economy faces its most testing time for a generation. My argument today is a simple one. Britain's economy is not prepared for the difficult times that lie ahead. The past fifteen years of global growth provided the perfect opportunity to prepare our economy for the twenty first century. Two billion people - a third of the world's population - have joined the global economy in countries like China and India. The result has been a huge expansion in global supply, and so strong downward pressure across developed economies on prices, inflation and interest rates.Around the world, countries like Ireland and Australia shrewdly took advantage of these huge opportunities. They reformed their economies, made themselves more competitive, and strengthened their public finances. Both of these countries, for example, now have a "future fund" of assets built to provide security against future shocks and liabilities. Their public finances are well placed. Their competitiveness has risen. Their institutions are stronger.Our competitors used the fat years to prepare for the lean years. Britain did not.Failure to prepareIndeed I would argue that we are the least prepared major economy in the developed world to cope with the current financial turbulence. Our financial reputation has been badly damaged by the only run on a retail bank in the world.Our double deficits - external and fiscal - are worse than any other European economy. Taken together, they are worse than the United States. And our economy is increasingly inflexible, with falling competitiveness thanks to higher taxes, more regulation and failing public services. The consequence is that respected economic forecasters are predicting that this year we will experience the sharpest economic slowdown of all the G7 countries.As Alan Greenspan, who now advises our Prime Minister, says, the UK economy is "more exposed" than the United States to financial instability.The OECD states that the difficulties are "going to be larger in the UK than elsewhere".And the World Economic Forum highlights the UK as particularly "vulnerable".The IFS have pointed out we are particularly vulnerable to a downturn in the financial sector.Morgan Stanley say that the UK is more exposed than most. Goldman Sachs, the Treasury's advisers, say "the UK is slowing more than the rest of Europe"The view of international experts is clear. Britain is not prepared if rainy days lie ahead. And the blame lies squarely and fairly with Gordon Brown. His eleven budgets have left us with the worst public finances in Europe.The system of financial oversight he personally insisted on left Britain as the only country facing a run on the bank.His taxes and regulations have left the British economy more inflexible and less competitive.Gordon Brown likes to quote the Bible. But he obviously doesn't know about the story in Genesis of the Pharaoh who was warned to use the seven fat years to prepare for the seven lean years - and did.Well our Prime Minister was also warned in the fat years to prepare for the lean years - but he set nothing aside. Now most say the lean years are here, the cupboard is bare and Britain is vulnerable. We've got used over the last decade to Gordon Brown boasting about his reputation for economic competence. But his actions betray him. It is his economic incompetence and fiscal incontinence that have left Britain more exposed than any other developed economy to the current crisis. Of course, the Prime Minister wrings his hands and says that this crisis didn't start here. We've got used to him taking all the credit when times are good and passing off all the blame when things turn bad.His mantra, repeated in every interview, is that Britain's troubles are all down to problems in the US sub-prime markets.But he should know that external economic shocks - so-called exogenous shocks - are inevitable. From the oil shock in 1973, to the bursting of the dot-com bubble, they have always happened and always will. The challenge for a government is to make sure the British economy is well prepared to withstand these inevitable shocks. That's what putting economic stability first means.Let's be clear: the trigger may have been pulled by American sub-prime lenders - but the gun was loaded at home.The Credit CrunchWhat do current events teach us about how we need to prepare?The credit crunch began as a liquidity problem in the world's intensely interconnected international money markets.The crunch came as US mortgage banks found that rising interest rates meant many vulnerable borrowers could not afford to service their credit - and so defaulted.In the past, this may have caused a problem in the US banking sector, as in the mid-1980s, when a similar crisis hit Savings and Loans.But not today. The hugely sophisticated and international financial markets packaged up millions of mortgages, and sold the debt on. The innovation was hailed as an efficient way of managing risk.The problem was that when the loans went bad, no-one knew who was ultimately responsible for the debts. So far, of the estimated $300 billion losses, only $100 billion have been publicly identified. Banks still don't know the extent of other banks bad debts. It is this uncertainty that is at the heart of the crisis.No longer able to trust one another's solvency, highly geared banks stopped lending to each other.What looked like lack of liquidity has become a lack of credit, resulting from a lack of trust. As Paul Krugman said: "pervasive loss of trust" was "like sand thrown in the gears of the financial system". The result is that the credit crunch has posed three clear challenges to all advanced economies, including Britain's.The first challenge has been the immediate institutional one. Have the different institutions that oversee financial services in different countries been able to cope with the lack of liquidity and lack of credit?The answer is 'yes' - except in Britain. Only in Britain has there been a run on a bank.The second challenge is the medium-term fiscal one. Are governments in the developed world in a sufficiently strong fiscal position to withstand a slowdown and the pressure that puts on government revenues? The answer is, in most cases, yes. Most countries have used recent economic growth to build up surpluses or at least reduce deficits. But not Britain - we have the largest budget deficit in Europe.The third challenge is the long-term economic one. Are the developed economies of the world sufficiently flexible to recover quickly if there is a serious down-turn?The answer is that many countries have used recent years to free up the supply side, reduce corporate taxes and make their economies more flexible and more competitive. Britain has instead become less flexible and less competitive. And only the British Government is contemplating a major tax increase on business and enterprise as its response to a potential slow-down - which is economic madness. So faced with these three challenges - institutional, fiscal and economic - the British government has failed.Let me set out now what their response should have been - and what our response will be when a Conservative Government is elected.In the short term, our institutional arrangements need reform. It goes without saying that the Northern Rock crisis needs resolving now - indeed should have been brought to a resolution back in September. But we also need to improve dramatically the supervision of liquidity and make the Bank of England stronger and more independent by, among other things, giving it the power to rescue future Northern Rocks.In the medium term we need to sort out our public finances. And we must reform the failed fiscal rules so that never again do we borrow in a boom and leave our economy so exposed to a downturn.And in the long term Britain needs a new supply side revolution, that brings greater flexibility and more competitive tax rates to our economy, because flexible economies are more stable economies. Let me take each in turn.Weak institutional set-upIn the short term, the Northern Rock debacle has exposed the flaws in the institutional arrangements introduced by Gordon Brown to govern financial crises.As the Director General of the CBI put it: "this was the first big test of the so-called tripartite arrangement … designed to be the bedrock on which to build stability across our financial system. For whatever reason, this tripartite system has failed to deliver the goods."Visiting China with David Cameron before Christmas, and meeting leading financial institutions there, I was repeatedly told that while they once had seen the British regulatory regime as a goal to aim for, after the past six months they now see it as a set of lessons that they must learn.No wonder when banks like Goldman Sachs tell their clients that: "the "Northern Rock" factor has badly dented the UK's reputation for being the world's pre-eminent financial centre"The key problem was that when things went wrong, no-one was clear who was in charge. The FSA was supposed to be in charge of the liquidity of individual institutions while the Bank was in charge of the liquidity of the system.Indeed the Chancellor himself implicitly admits that his predecessor's regime failed. That's why he announced a series of changes to the press last week. He said that he would set up a new "COBRA" committee so everyone knew who was in charge. COBRA. It sounds impressive. It conjures up images of a West Wing style war room.Well it's not. Not many people know, but COBRA stands for Cabinet Office Briefing Room A. It's just a room. I've been in it many times. It's a bit bigger than Cabinet Office Briefing Room B.The Chancellor could have called a committee meeting with the Bank and the FSA at any time - in the Cabinet Office or anywhere else. He could call one today.It does not solve the problem of a lack of leadership.It is clear that much more far reaching reform is needed. So let me today set out some of the institutional reforms that we need to introduce to give Britain a twenty first century financial infrastructure.We clearly need to reform's deposit insurance. Four months ago I wrote to the Chancellor offering the co-operation of the Opposition in doing this - although I have yet to have a reply. Following the run on Northern Rock, the first £35,000 of savings are protected. I think it is sensible to raise that so that we protect at least the first £50,000 of savings - that would cover 95% of all deposits and is equivalent to the $100,000 that is protected in the United States.Alistair Darling needs to make clear what level of deposit insurance he supports - is it the £100,000 he talked about in his interview to the Times newspaper in September?We also need to reform the way the Bank and the FSA supervise the liquidity of individual institutions. There was a clear failure to do this with Northern Rock. And we need to create a new power for the authorities to take control of a bank on the brink of crisis. Intervention could be triggered by breaches of either solvency or liquidity rules. And it would be the logical consequence when the Bank of England chooses to act as lender of last resort, so that taxpayers' interests are safeguarded. Crucially, they must have the freedom to act without pressure from shareholders, to safeguard the interests of creditors, including the taxpayer. This bank rescue power should set out, clearly and in advance, how all parties - shareholders, savers, and other creditors - will be treated.It would be a form of administration with the goal of a private sector solution - a work-out not a run-off. And the power must allow the authorities to free up the deposits of retail customers, as part of a reform of deposit insurance. I proposed this bank rescue power in an article in the Financial Times before Christmas. I am glad that last week in an interview with the same paper the Chancellor agreed with me.But we disagree about who should exercise this power. The Chancellor says it should sit with the Financial Services Authority. I personally believe it is part of the role of a strong and independent Bank of England. There are a number of reasons why. For a start a rescue implies that the principal regulator - the FSA - has probably failed in its prudential supervision. And at a practical level, the Bank is close to the money markets through its day to day provision of liquidity. The FSA has no such daily interaction with the markets. What's more, monetary policy and banking are inextricably linked. That is obvious at moment when you consider that the monetary conditions facing businesses have tightened, because of the credit problems in the banking sector, even though monetary policy has officially loosened. After all, it is banks that create money. M0, the money printed in banknotes by, or held in account at, the Bank of England, is just three per cent of broad money stock. The health of the banking sector has a direct impact on monetary conditions.You cannot separate monetary policy and banking. You cannot keep the Bank of England out of the banking system.The Chancellor's decision to sideline the Bank of England in favour of the FSA fits in with a recent pattern. Whether it is the Treasury's private briefings against Threadneedle Street or the Prime Minister very public dithering over the reappointment of Mervyn King, the Government is undermining the strong and independent Bank of England which the country needs. At a time of great uncertainty in financial markets, this is one bit of uncertainty we could all do with out.So the short term challenge the Government can address is the need to reform our financial oversight institutions, increase deposit insurance and give new powers that reinforce the independence of the Bank of England instead of undermining it. Public FinancesIn the medium term, we must restore the health of the public finances.For in a downturn, tax revenues usually fall and the rate of government spending goes up as welfare costs rise. These so-called automatic stabilisers help to smooth demand in the economy. But the process works in reverse, so revenues automatically rise when the economy is growing above trend.Economic stability demands that you save in the good times so that government can afford to help recovery in the bad times. And after fifteen years of global growth, our public finances should be in a healthy state. Most other countries finances are.But instead both the OECD and the European Commission estimate that we have the largest structural budget deficit in Europe, a deficit that is more the twice the size of the EU average.In boom years, when it would have been prudent to save, this Prime Minister borrowed.In fact over the last five years, he has borrowed over £100 billion more than he originally planned. That's more than we spent on the entire NHS last year.And despite the Government's recent promises of tighter spending controls, despite the months of uncertainty over the economic outlook, borrowing still continues to rise.In March 2006 Gordon Brown said he would borrow £30 billion this financial year. Over the last twenty months that estimate has risen steadily. First it was increased to £34 billion and then £38 billion and now the Institute of Fiscal Studies predicts that borrowing could be £42 billion. And for the coming year the OECD is forecasting that borrowing could reach almost £50 billion.The truth is that, thanks to Gordon Brown's economic incompetence, Britain has run out of money.This is the real reason why, for example, the government is seeking to put some breaks on public sector pay after years of huge increases. Of course, pay restraint is necessary.However, the Prime Minister said in his press conference at the beginning of this week "the single purpose of this [restraint] is keeping inflation under control." Prime Minister, that is either wilfully misleading or woefully ignorant.It harks back to the failed logic of the pay policies of the 1970s. Of course controlling inflation is crucial for maintaining economic stability. And I note that inflation is higher now than when Gordon Brown entered the Treasury. But the contribution of the pay rounds of the 20% of the workforce who are in the public sector is tiny compared to energy and food prices, or the rising costs of imports from China, or the impact of a falling pound.Yesterday Capital Economic argued that the inflationary risk "is fairly limited. They conclude: "the truth is that [the Government] simply does not have the money to give away."So let's try and get some economic literacy into the debate. The reason why Gordon Brown is giving public servants pay rises below the cost of living is because he hasn't got any money spare despite fifteen years of growth.So with little room for manoeuvre, with no money put aside for a rainy day, what is the solution?Well as the old adage goes: the time to fix the roof is when the sun's shining.Savage spending cuts now to deal with the budget deficit would not make economic sense.It's too late to make sure that the public finances are properly prepared for this coming downturn - and Gordon Brown must face the consequences for that failure. In the medium term, we can all now see the benefits of our policy of sharing the proceeds of growth so that government spending will grow more slowly than the economy over an economic cycle.By spending within our means - after a decade of doing the opposite - the public finances will in time be returned to health as government revenues grow more quickly than government spending.We must also ensure that the economic incompetence of a Chancellor never again leaves the British economy in such a vulnerable position. Never again should we be able to borrow in the boom.Of course, the situation we find ourselves in is exactly the fiscal rules trumpeted by Gordon Brown when he was doing my job were meant to prevent. They have clearly failed.We have already seen that when the golden rule started to bite, the then Chancellor was able to move both the start and end dates of the economic cycle in order to buy more room for manoeuvre. It was like making the defendant the judge and jury in their own trial. As a result the fiscal rules have failed to ensure prudent fiscal management.Gordon Brown said last weekend that serious academics support his use of the golden rule. In fact, the exact opposite is true. No serious economic commentator now uses them as an indicator of the health of the public finances.That is why I have pledged that we will hand the dating of the economic cycle and the verification of fiscal rules to an independent body - so that credibility is restored.Chancellors will no longer be judge and jury of the very rules that are meant to constrain them. It is a key part, along with and independent Bank and independent statistics, of the triple lock on economic stability that David Cameron and I set out more than two years ago.For by restoring trust in the fiscal framework we will ensure that never again will a Chancellor be able to borrow in a boom and leave our economy so exposed to a downturn. Supply sideNot only must we prepare the economy with immediate reform of our banking institutions and restore the health of the public finances over the medium term, but we also need to make the long term changes that will make our economy stronger, more flexible and more competitive.A competitive economy is far better prepared to weather a storm than an inflexible and uncompetitive one.Alan Greenspan puts it: "if we cannot forecast these bubbles or these expansions or even a standard old-fashioned recession, which we can't, it is important that we have a flexible system so that it absorbs the adjustment."Over the last decade the evidence of our increasing inflexibility has been overwhelming.Gordon Brown's employment legislation; his £56 billion of additional regulations; his failure to provide the skills and supply the infrastructure we need have each in turn made Britain's economy less flexible. That's before the effects of Alistair Darling's proposed tax rise on entrepreneurs.And the result?Our productivity growth- what Gordon Brown rightly called the "fundamental yardstick" of economic performance - has fallen while in the US it has almost doubled.Take home pay is down, real living standards have fallen, the tax burden is up, and business investment is down. We have fallen down every league table of competitivenessWhile a benign global economy shielded Britain from the malign influence of the Brown Treasury, like rocks under a falling tide, the problems are now emerging all too clearly.In the 1980s, Margaret Thatcher's programme of deregulation and business tax reductions freed Britain to compete. She liberated the supply side and let demand follow.We have been living off the benefits of that revolution. But a supply side revolution is not just a one-off that happened twenty years ago. To compete in the new global economy, we need constant reform to attract business from abroad and help domestic companies to grow.Recent visits to Eastern Europe, Ireland, India and China have reinforced my belief that we need a second supply side revolution to once again catch up, build the environment for enterprise, and become the best place to do business in the world.We have put forward a radical programme of school and welfare reform, because improving skills and ending dependency are crucial economic tasks in the modern world. The report of our Economic Policy group last year set out proposals for far-reaching deregulation.The independent Tax Reform Commission I established showed how we can simplify our business taxes, and we are working with PWC and Grant Thornton on how we achieve that.These are the long term reforms to our economy that we will make and I will want to be judged on. My ambition is nothing less than to make Britain the most competitive major economy in the world so that the benefits of globalisation are felt by every citizen, and we see living standards in our country rise not fall.That, in the end, is the best defence against adversity and instability.ConclusionTwo years ago David Cameron and I put economic stability right at the core of conservative economic policy, above all else. There were some who attacked us for it. I believe that recent events have totally vindicated our decision to put stability first.But stability means more than reciting a mantra. It means a financial oversight regime that works. It means a strong and independent Bank of England. It means not borrowing in a boom. It means long term reforms to make our economy competitive. It means using the fat years to prepare for the lean years.Gordon Brown has failed to prepare. That is economic incompetence. And now we must face the consequences
In a speech to the London School of Economics, the Shadow Chancellor, George Osborne said:"It is a pleasure to be here at this event organised by the London School of Economics and the British Chambers of Commerce.I'd like to thank Howard Davies, the Director of the LSE, and David Frost, the Chairman of the BCC, for inviting me here to speak to you today. The British economy faces its most testing time for a generation. My argument today is a simple one. Britain's economy is not prepared for the difficult times that lie ahead. The past fifteen years of global growth provided the perfect opportunity to prepare our economy for the twenty first century. Two billion people - a third of the world's population - have joined the global economy in countries like China and India. The result has been a huge expansion in global supply, and so strong downward pressure across developed economies on prices, inflation and interest rates.Around the world, countries like Ireland and Australia shrewdly took advantage of these huge opportunities. They reformed their economies, made themselves more competitive, and strengthened their public finances. Both of these countries, for example, now have a "future fund" of assets built to provide security against future shocks and liabilities. Their public finances are well placed. Their competitiveness has risen. Their institutions are stronger.Our competitors used the fat years to prepare for the lean years. Britain did not.Failure to prepareIndeed I would argue that we are the least prepared major economy in the developed world to cope with the current financial turbulence. Our financial reputation has been badly damaged by the only run on a retail bank in the world.Our double deficits - external and fiscal - are worse than any other European economy. Taken together, they are worse than the United States. And our economy is increasingly inflexible, with falling competitiveness thanks to higher taxes, more regulation and failing public services. The consequence is that respected economic forecasters are predicting that this year we will experience the sharpest economic slowdown of all the G7 countries.As Alan Greenspan, who now advises our Prime Minister, says, the UK economy is "more exposed" than the United States to financial instability.The OECD states that the difficulties are "going to be larger in the UK than elsewhere".And the World Economic Forum highlights the UK as particularly "vulnerable".The IFS have pointed out we are particularly vulnerable to a downturn in the financial sector.Morgan Stanley say that the UK is more exposed than most. Goldman Sachs, the Treasury's advisers, say "the UK is slowing more than the rest of Europe"The view of international experts is clear. Britain is not prepared if rainy days lie ahead. And the blame lies squarely and fairly with Gordon Brown. His eleven budgets have left us with the worst public finances in Europe.The system of financial oversight he personally insisted on left Britain as the only country facing a run on the bank.His taxes and regulations have left the British economy more inflexible and less competitive.Gordon Brown likes to quote the Bible. But he obviously doesn't know about the story in Genesis of the Pharaoh who was warned to use the seven fat years to prepare for the seven lean years - and did.Well our Prime Minister was also warned in the fat years to prepare for the lean years - but he set nothing aside. Now most say the lean years are here, the cupboard is bare and Britain is vulnerable. We've got used over the last decade to Gordon Brown boasting about his reputation for economic competence. But his actions betray him. It is his economic incompetence and fiscal incontinence that have left Britain more exposed than any other developed economy to the current crisis. Of course, the Prime Minister wrings his hands and says that this crisis didn't start here. We've got used to him taking all the credit when times are good and passing off all the blame when things turn bad.His mantra, repeated in every interview, is that Britain's troubles are all down to problems in the US sub-prime markets.But he should know that external economic shocks - so-called exogenous shocks - are inevitable. From the oil shock in 1973, to the bursting of the dot-com bubble, they have always happened and always will. The challenge for a government is to make sure the British economy is well prepared to withstand these inevitable shocks. That's what putting economic stability first means.Let's be clear: the trigger may have been pulled by American sub-prime lenders - but the gun was loaded at home.The Credit CrunchWhat do current events teach us about how we need to prepare?The credit crunch began as a liquidity problem in the world's intensely interconnected international money markets.The crunch came as US mortgage banks found that rising interest rates meant many vulnerable borrowers could not afford to service their credit - and so defaulted.In the past, this may have caused a problem in the US banking sector, as in the mid-1980s, when a similar crisis hit Savings and Loans.But not today. The hugely sophisticated and international financial markets packaged up millions of mortgages, and sold the debt on. The innovation was hailed as an efficient way of managing risk.The problem was that when the loans went bad, no-one knew who was ultimately responsible for the debts. So far, of the estimated $300 billion losses, only $100 billion have been publicly identified. Banks still don't know the extent of other banks bad debts. It is this uncertainty that is at the heart of the crisis.No longer able to trust one another's solvency, highly geared banks stopped lending to each other.What looked like lack of liquidity has become a lack of credit, resulting from a lack of trust. As Paul Krugman said: "pervasive loss of trust" was "like sand thrown in the gears of the financial system". The result is that the credit crunch has posed three clear challenges to all advanced economies, including Britain's.The first challenge has been the immediate institutional one. Have the different institutions that oversee financial services in different countries been able to cope with the lack of liquidity and lack of credit?The answer is 'yes' - except in Britain. Only in Britain has there been a run on a bank.The second challenge is the medium-term fiscal one. Are governments in the developed world in a sufficiently strong fiscal position to withstand a slowdown and the pressure that puts on government revenues? The answer is, in most cases, yes. Most countries have used recent economic growth to build up surpluses or at least reduce deficits. But not Britain - we have the largest budget deficit in Europe.The third challenge is the long-term economic one. Are the developed economies of the world sufficiently flexible to recover quickly if there is a serious down-turn?The answer is that many countries have used recent years to free up the supply side, reduce corporate taxes and make their economies more flexible and more competitive. Britain has instead become less flexible and less competitive. And only the British Government is contemplating a major tax increase on business and enterprise as its response to a potential slow-down - which is economic madness. So faced with these three challenges - institutional, fiscal and economic - the British government has failed.Let me set out now what their response should have been - and what our response will be when a Conservative Government is elected.In the short term, our institutional arrangements need reform. It goes without saying that the Northern Rock crisis needs resolving now - indeed should have been brought to a resolution back in September. But we also need to improve dramatically the supervision of liquidity and make the Bank of England stronger and more independent by, among other things, giving it the power to rescue future Northern Rocks.In the medium term we need to sort out our public finances. And we must reform the failed fiscal rules so that never again do we borrow in a boom and leave our economy so exposed to a downturn.And in the long term Britain needs a new supply side revolution, that brings greater flexibility and more competitive tax rates to our economy, because flexible economies are more stable economies. Let me take each in turn.Weak institutional set-upIn the short term, the Northern Rock debacle has exposed the flaws in the institutional arrangements introduced by Gordon Brown to govern financial crises.As the Director General of the CBI put it: "this was the first big test of the so-called tripartite arrangement … designed to be the bedrock on which to build stability across our financial system. For whatever reason, this tripartite system has failed to deliver the goods."Visiting China with David Cameron before Christmas, and meeting leading financial institutions there, I was repeatedly told that while they once had seen the British regulatory regime as a goal to aim for, after the past six months they now see it as a set of lessons that they must learn.No wonder when banks like Goldman Sachs tell their clients that: "the "Northern Rock" factor has badly dented the UK's reputation for being the world's pre-eminent financial centre"The key problem was that when things went wrong, no-one was clear who was in charge. The FSA was supposed to be in charge of the liquidity of individual institutions while the Bank was in charge of the liquidity of the system.Indeed the Chancellor himself implicitly admits that his predecessor's regime failed. That's why he announced a series of changes to the press last week. He said that he would set up a new "COBRA" committee so everyone knew who was in charge. COBRA. It sounds impressive. It conjures up images of a West Wing style war room.Well it's not. Not many people know, but COBRA stands for Cabinet Office Briefing Room A. It's just a room. I've been in it many times. It's a bit bigger than Cabinet Office Briefing Room B.The Chancellor could have called a committee meeting with the Bank and the FSA at any time - in the Cabinet Office or anywhere else. He could call one today.It does not solve the problem of a lack of leadership.It is clear that much more far reaching reform is needed. So let me today set out some of the institutional reforms that we need to introduce to give Britain a twenty first century financial infrastructure.We clearly need to reform's deposit insurance. Four months ago I wrote to the Chancellor offering the co-operation of the Opposition in doing this - although I have yet to have a reply. Following the run on Northern Rock, the first £35,000 of savings are protected. I think it is sensible to raise that so that we protect at least the first £50,000 of savings - that would cover 95% of all deposits and is equivalent to the $100,000 that is protected in the United States.Alistair Darling needs to make clear what level of deposit insurance he supports - is it the £100,000 he talked about in his interview to the Times newspaper in September?We also need to reform the way the Bank and the FSA supervise the liquidity of individual institutions. There was a clear failure to do this with Northern Rock. And we need to create a new power for the authorities to take control of a bank on the brink of crisis. Intervention could be triggered by breaches of either solvency or liquidity rules. And it would be the logical consequence when the Bank of England chooses to act as lender of last resort, so that taxpayers' interests are safeguarded. Crucially, they must have the freedom to act without pressure from shareholders, to safeguard the interests of creditors, including the taxpayer. This bank rescue power should set out, clearly and in advance, how all parties - shareholders, savers, and other creditors - will be treated.It would be a form of administration with the goal of a private sector solution - a work-out not a run-off. And the power must allow the authorities to free up the deposits of retail customers, as part of a reform of deposit insurance. I proposed this bank rescue power in an article in the Financial Times before Christmas. I am glad that last week in an interview with the same paper the Chancellor agreed with me.But we disagree about who should exercise this power. The Chancellor says it should sit with the Financial Services Authority. I personally believe it is part of the role of a strong and independent Bank of England. There are a number of reasons why. For a start a rescue implies that the principal regulator - the FSA - has probably failed in its prudential supervision. And at a practical level, the Bank is close to the money markets through its day to day provision of liquidity. The FSA has no such daily interaction with the markets. What's more, monetary policy and banking are inextricably linked. That is obvious at moment when you consider that the monetary conditions facing businesses have tightened, because of the credit problems in the banking sector, even though monetary policy has officially loosened. After all, it is banks that create money. M0, the money printed in banknotes by, or held in account at, the Bank of England, is just three per cent of broad money stock. The health of the banking sector has a direct impact on monetary conditions.You cannot separate monetary policy and banking. You cannot keep the Bank of England out of the banking system.The Chancellor's decision to sideline the Bank of England in favour of the FSA fits in with a recent pattern. Whether it is the Treasury's private briefings against Threadneedle Street or the Prime Minister very public dithering over the reappointment of Mervyn King, the Government is undermining the strong and independent Bank of England which the country needs. At a time of great uncertainty in financial markets, this is one bit of uncertainty we could all do with out.So the short term challenge the Government can address is the need to reform our financial oversight institutions, increase deposit insurance and give new powers that reinforce the independence of the Bank of England instead of undermining it. Public FinancesIn the medium term, we must restore the health of the public finances.For in a downturn, tax revenues usually fall and the rate of government spending goes up as welfare costs rise. These so-called automatic stabilisers help to smooth demand in the economy. But the process works in reverse, so revenues automatically rise when the economy is growing above trend.Economic stability demands that you save in the good times so that government can afford to help recovery in the bad times. And after fifteen years of global growth, our public finances should be in a healthy state. Most other countries finances are.But instead both the OECD and the European Commission estimate that we have the largest structural budget deficit in Europe, a deficit that is more the twice the size of the EU average.In boom years, when it would have been prudent to save, this Prime Minister borrowed.In fact over the last five years, he has borrowed over £100 billion more than he originally planned. That's more than we spent on the entire NHS last year.And despite the Government's recent promises of tighter spending controls, despite the months of uncertainty over the economic outlook, borrowing still continues to rise.In March 2006 Gordon Brown said he would borrow £30 billion this financial year. Over the last twenty months that estimate has risen steadily. First it was increased to £34 billion and then £38 billion and now the Institute of Fiscal Studies predicts that borrowing could be £42 billion. And for the coming year the OECD is forecasting that borrowing could reach almost £50 billion.The truth is that, thanks to Gordon Brown's economic incompetence, Britain has run out of money.This is the real reason why, for example, the government is seeking to put some breaks on public sector pay after years of huge increases. Of course, pay restraint is necessary.However, the Prime Minister said in his press conference at the beginning of this week "the single purpose of this [restraint] is keeping inflation under control." Prime Minister, that is either wilfully misleading or woefully ignorant.It harks back to the failed logic of the pay policies of the 1970s. Of course controlling inflation is crucial for maintaining economic stability. And I note that inflation is higher now than when Gordon Brown entered the Treasury. But the contribution of the pay rounds of the 20% of the workforce who are in the public sector is tiny compared to energy and food prices, or the rising costs of imports from China, or the impact of a falling pound.Yesterday Capital Economic argued that the inflationary risk "is fairly limited. They conclude: "the truth is that [the Government] simply does not have the money to give away."So let's try and get some economic literacy into the debate. The reason why Gordon Brown is giving public servants pay rises below the cost of living is because he hasn't got any money spare despite fifteen years of growth.So with little room for manoeuvre, with no money put aside for a rainy day, what is the solution?Well as the old adage goes: the time to fix the roof is when the sun's shining.Savage spending cuts now to deal with the budget deficit would not make economic sense.It's too late to make sure that the public finances are properly prepared for this coming downturn - and Gordon Brown must face the consequences for that failure. In the medium term, we can all now see the benefits of our policy of sharing the proceeds of growth so that government spending will grow more slowly than the economy over an economic cycle.By spending within our means - after a decade of doing the opposite - the public finances will in time be returned to health as government revenues grow more quickly than government spending.We must also ensure that the economic incompetence of a Chancellor never again leaves the British economy in such a vulnerable position. Never again should we be able to borrow in the boom.Of course, the situation we find ourselves in is exactly the fiscal rules trumpeted by Gordon Brown when he was doing my job were meant to prevent. They have clearly failed.We have already seen that when the golden rule started to bite, the then Chancellor was able to move both the start and end dates of the economic cycle in order to buy more room for manoeuvre. It was like making the defendant the judge and jury in their own trial. As a result the fiscal rules have failed to ensure prudent fiscal management.Gordon Brown said last weekend that serious academics support his use of the golden rule. In fact, the exact opposite is true. No serious economic commentator now uses them as an indicator of the health of the public finances.That is why I have pledged that we will hand the dating of the economic cycle and the verification of fiscal rules to an independent body - so that credibility is restored.Chancellors will no longer be judge and jury of the very rules that are meant to constrain them. It is a key part, along with and independent Bank and independent statistics, of the triple lock on economic stability that David Cameron and I set out more than two years ago.For by restoring trust in the fiscal framework we will ensure that never again will a Chancellor be able to borrow in a boom and leave our economy so exposed to a downturn. Supply sideNot only must we prepare the economy with immediate reform of our banking institutions and restore the health of the public finances over the medium term, but we also need to make the long term changes that will make our economy stronger, more flexible and more competitive.A competitive economy is far better prepared to weather a storm than an inflexible and uncompetitive one.Alan Greenspan puts it: "if we cannot forecast these bubbles or these expansions or even a standard old-fashioned recession, which we can't, it is important that we have a flexible system so that it absorbs the adjustment."Over the last decade the evidence of our increasing inflexibility has been overwhelming.Gordon Brown's employment legislation; his £56 billion of additional regulations; his failure to provide the skills and supply the infrastructure we need have each in turn made Britain's economy less flexible. That's before the effects of Alistair Darling's proposed tax rise on entrepreneurs.And the result?Our productivity growth- what Gordon Brown rightly called the "fundamental yardstick" of economic performance - has fallen while in the US it has almost doubled.Take home pay is down, real living standards have fallen, the tax burden is up, and business investment is down. We have fallen down every league table of competitivenessWhile a benign global economy shielded Britain from the malign influence of the Brown Treasury, like rocks under a falling tide, the problems are now emerging all too clearly.In the 1980s, Margaret Thatcher's programme of deregulation and business tax reductions freed Britain to compete. She liberated the supply side and let demand follow.We have been living off the benefits of that revolution. But a supply side revolution is not just a one-off that happened twenty years ago. To compete in the new global economy, we need constant reform to attract business from abroad and help domestic companies to grow.Recent visits to Eastern Europe, Ireland, India and China have reinforced my belief that we need a second supply side revolution to once again catch up, build the environment for enterprise, and become the best place to do business in the world.We have put forward a radical programme of school and welfare reform, because improving skills and ending dependency are crucial economic tasks in the modern world. The report of our Economic Policy group last year set out proposals for far-reaching deregulation.The independent Tax Reform Commission I established showed how we can simplify our business taxes, and we are working with PWC and Grant Thornton on how we achieve that.These are the long term reforms to our economy that we will make and I will want to be judged on. My ambition is nothing less than to make Britain the most competitive major economy in the world so that the benefits of globalisation are felt by every citizen, and we see living standards in our country rise not fall.That, in the end, is the best defence against adversity and instability.ConclusionTwo years ago David Cameron and I put economic stability right at the core of conservative economic policy, above all else. There were some who attacked us for it. I believe that recent events have totally vindicated our decision to put stability first.But stability means more than reciting a mantra. It means a financial oversight regime that works. It means a strong and independent Bank of England. It means not borrowing in a boom. It means long term reforms to make our economy competitive. It means using the fat years to prepare for the lean years.Gordon Brown has failed to prepare. That is economic incompetence. And now we must face the consequences
