The CBI at Harrogate: Smith wins new friends

The Opposition leader, John Smith, yesterday set out to woo the business community by pledging that a future Labour government would put the revival of manufacturing industry at the top of its agenda.

Mr Smith's 'business plan for Britain', laid out in a speech to the Confederation of British Industry at Harrogate, would commit Labour to increasing industrial investment, nurturing the small business sector, modernising the transport system and expanding training and education programmes.

But Mr Smith, the first Labour leader to address a CBI conference, was also candid in saying that Labour would improve employment rights and implement the social chapter of the Maastricht treaty - the issue many businessmen see as its Achilles' heel.

The Labour leader's speech was laced with soothing words on tax, support for interest rate cuts, enthusiasm for Europe and moral indignation at the waste of 3 million unemployed. And it went down well.

Mr Smith was greeted with warm, sustained applause before and after his address and, as delegates spilled out of the conference hall, the overwhelming consensus was that he had acquitted himself well.

Asked later whether the CBI could do business with a Labour government Sir Michael Angus, president, said: 'There was a lot in John Smith's speech with which we would agree and I enjoyed his support for manufacturing industry.

'But I very much doubt if our members were convinced by what he said about the social chapter. That is an area where our members beg to disagree.'

Over the next 12 months Robin Cook, shadow trade and industry secretary, will consult business leaders in all regions on Labour's business plan, with the aim of presenting a new industrial policy document to the party conference next autumn.

Emphasising that the central importance of manufacturing industry - a phrase used a dozen times in his speech - was one of his longest-held beliefs, Mr Smith pledged to tilt the tax system in favour of investment.

Small businesses, the principal creators of jobs and developers of new products, would be offered real encouragement, with Labour advocating, for instance, a statutory right to charge interest on overdue debts.

Mr Smith also sought to dispel fears that Labour would be a party of punitive taxation. Looking ahead to this month's Budget, he said: 'This is not a time for raising taxes on people who are already struggling to keep their heads above water. Any further tax hikes at this time will only smother consumer spending and stifle the little confidence there is.'

Labour also backed an immediate cut in interest rates and opposed government plans to make companies shoulder the full cost of employee sick pay - a proposal Mr Smith described as 'irresponsible and potentially disastrous for many small and medium-sized businesses'.

But he did not seek to duck the thorny area of Labour's social agenda.

'I know the CBI has reservations about these issues and has opposed the social chapter of the Maastricht treaty,' he said. 'But I really do ask you to consider the desirability of having a common floor of employment rights throughout the European Community.

'If a level playing field is desired in so many other areas, why is it inappropriate for social and employment rights?'

If Britain was to create a self- confident, adapatable, skilled workforce there had to be a framework of employment rights that recognised individual dignity, provided security and treated people fairly.

Mr Smith suggested Britain could not pick and choose what it did and did not like if it was to have 'a real and substantial influence' in Europe.

He shared the view of Howard Davies, the CBI's director- general, that the Government was 'far too negative in its approach and that such a posture can seriously damage our interests'.

(Photograph omitted)