“Talk about kicking an economy when it’s down. On top of the euro crisis and a double-dip recession, the Bank of England is now saying inflation may not fall fast enough to permit more quantitative easing. Actually we think the inflation outlook is probably better than the MPC thinks, with the impact of the euro crisis, declining real incomes and weak money supply growth suggesting inflationary pressures may recede later this year and into 2013. After many years of underestimating inflationary pressure let’s hope the MPC is now making the opposite mistake by overestimating it”.

“These figures raise half a cheer for the economy. Both headline unemployment measures are down, which is obviously good news, but there’s bad news in the average earnings figures. Average earnings growth including bonuses has collapsed from 1.3 per cent to just 0.1 per cent.

“Excluding bonuses, average earnings growth stands at 2 per cent, which is way behind inflation. This means the real squeeze in household incomes continues to act as a dragging anchor on consumption and high street spending.”

“Heathrow is already at full capacity, so this trial is essential to explore new ways to reduce delays and improve the airport’s resilience. Having good links for global air travel is essential not just to London but to the whole UK, so the trial’s extension is good news. The more we can do to ensure the world’s business-people and investors come here, the better – operational freedoms are a simple way to boost Heathrow’s performance without laying a single yard of tarmac.”

“It is welcome news that an agreement has been reached and the strike has been averted. Our members were very worried that their hard work would be undermined by a dispute that they had nothing to do with. Just the threat of a strike caused a lot of disruption, but at least businesses across the country can get back to focusing on what they do best – driving the economy forward and creating jobs.”

There were successful projects funded through the RGF, with some creating jobs for as little as £4,000. The IoD recognises that job creation is not the only category on which the fund should be judged, but some of the schemes involved are excessively expensive.

Alexander Ehmann, Head of Enterprise Policy at the Institute of Directors, said:

“It is disappointing that the Regional Growth Fund does not seem to be as efficient in spending taxpayers’ money as it should be. Some of the projects that have been invested in are clearly very expensive in terms of the cost per job created. However, other schemes the RGF supports are proving very efficient, so the potential is there. The Fund’s administrators must learn from this experience, and shift money from underperforming schemes to those which are delivering the best results.”

Read the IoD’s consultation response from September 2010 here.

“The Government is right to place deficit reduction and economic stability at the forefront of their programme. However, we need to see them pursued enthusiastically in practice, not just in principle. To restore business confidence, which is the real key to growth, there must be drastic measures to cut costly regulation and continue to tackle the deficit. Tweaking the edges of the system will not be enough – it’s not the number of Bills that matters, it’s what is in them that really counts.”

On Parental Leave:

“Allowing parental leave to be shared is a sensible proposal that we welcome – it makes sense as an arrangement to give families more flexibility in how they use their allowance. The Government should be careful not to use this as an opportunity to increase levels of leave, though. Sharing the allowance is fine, but putting heavier burdens on business in these tough times would not be a sensible move.”

On binding shareholder votes on executive pay:

“We welcome the Government’s plans to give shareholders a binding vote in the setting of executive pay. Executive remuneration at the largest UK companies has risen at an unsustainable rate as it has decoupled from performance. It is right that shareholders are given the tools with which to exercise robust oversight.”

On closing the Audit Commission:

“It is sensible to remove this quango, given that its performance has been far from exemplary. Public money must be managed properly and spending should be scrutinised carefully, but the Audit Commission simply didn’t do the job. There remain other quangos that should follow it onto the scrapheap.”

On the Energy Bill:

“We all know that electricity market reform is urgent and essential. The devil will be in the detail – affordability must be a priority, and the Government should resist the temptation to introduce new, heavy subsidies for renewables. It is vital that a new nuclear programme goes ahead in the UK, and there must be strategy to overcome recent setbacks. British business needs affordable energy to get the job done as efficiently as possible.”

On pension reform:

“The pension system is outdated and unsuited to the realities of modern demographics. The Bills in the Queen’s speech may go some way towards improving the situation, but the urgent need for a whole new architecture for retirement savings cannot be ignored. At best these will be steps in the right direction – dramatic action will be required in the near future”.

“This latest survey and the recent money supply figures reinforce the IoD’s view that the economy is softening. The continued euro-crisis and a technical recession in the UK are dampening consumer and business confidence just when it needs rocket fuel.”

“The current problems at Heathrow are bad enough without strikes adding to the chaos. British business needs our borders to be running smoothly so that potential investors and tourists from around the world can come here. Our border controls are an international embarrassment, putting British jobs and economic growth at risk – and this strike will make that worse.”

Putting forward the IoD’s case, Simon Walker, Director General of the Institute of Directors, said:

“Out of control remuneration at some FTSE companies is damaging the reputation of British business as a whole. Giving shareholders a binding vote will help to rein in the excesses, and restore faith among investors and the wider public. It is key that any new rules are properly designed – the proposal to raise the threshold for such votes beyond a simple majority, for example, is flawed. A binding majority vote is straightforward and fair. Giving shareholders greater powers will help to put them back in control of the companies they own.”

Key points in the IoD’s response:

• The IoD is concerned about the level of executive pay at some of the largest UK listed companies. Such remuneration levels are detrimental to the reputation and legitimacy of the UK business community. The IoD supports Government proposals to give shareholders a greater say on executive pay policy.

• A binding shareholder vote on executive pay policy and exit payments in excess of one year’s salary would provide shareholders with more power to influence the design of remuneration within companies from an early stage. It would encourage shareholders to better hold companies to account and promote a stronger link between pay and long-term performance.

• However, the IoD disagrees with Government proposals to increase the approval threshold of the binding vote beyond a simple majority. A remuneration policy which has the support of an outright majority of shareholders should be approved.

• Current proposals could permit certain poorly governed companies to ignore the implications of a failed shareholder vote for a significant period of time. After a failed vote, a company should not be allowed to simply maintain existing executive remuneration arrangements. There should be a clear requirement for companies to submit revised proposals to a further shareholder vote within a reasonable period of time (e.g. 90 days).

The Department for Business, Innovation and Skills consultation closes 27 April 2012; the consultation document can be found here: http://www.bis.gov.uk/assets/biscore/business-law/docs/e/12-639-executive-pay-shareholder-voting-rights-consultation

Good morning, ladies and gentlemen – fellow directors – and welcome to the 2012 Institute of Directors Annual Convention.

It’s a privilege to speak to you today as your Director General  in my first Convention speech, and I’m delighted so many of our members have been able to take the time to be here. I’d also like to take this opportunity at the beginning of the conference to thank our sponsors –  this event is an important one in the IoD’s calendar and we appreciate their help in making it such a success.

The IoD is proud to be made up of 40,000 people who keep the economy going: creating jobs, serving customers, achieving remarkable things. The hall this morning is a striking illustration of the variety of business in this country, and the variety of business leaders that the IoD represents.

We welcome today many of our Chartered Directors, who have achieved the very top degree of qualification in good governance, board experience and effective business leadership. Last year we awarded the one thousandth Chartered Director accolade -  a testament to the success of the scheme.

At the same time, we are joined by business people at the start of their careers. MBA students, drawn from theUK’s leading business schools and, for the first time in IoD history, members of the first cohort of the new IoD Student Membership.

They are here because we need to open our doors to tomorrow’s directors – the leaders and entrepreneurs who will be the heart and the head of the economy in years to come.

Our pilot scheme launched IoD student membership on two campuses, and from September we will extend that to all British Universities. As ever, the IoD will represent the future of business – and, as a result, the future of Britain.

As I’ve spoken – and listened – in IoD branches across the country, some of the most moving stories I’ve heard have been from members who early in their careers gained much from the support and wisdom of more experienced colleagues. The Institute is here for all those who share our belief in enterprise, and I know you will support that tradition. 

What the IoD has achieved is a great foundation – but not yet a finished work. 

It’s worth considering for a moment what our aims are. We believe in good business. That means three things: well-run companies; successful companies; and, importantly, a positive environment in which companies can flourish.

The free market in which we all work demands, rightly, that we must adapt and innovate in order to survive and grow. That is as true of the IoD as it is of any company. The hard work to deliver that adaptation and innovation has already begun.

Some it has produced results that you can already see – like the young members here today. 

Some of it is about to bear fruit, like the Youth Enterprise Loans the Chancellor announced in the Budget – a project which the IoD helped get off the ground. That scheme will mean promising entrepreneurs get the crucial combination of funding and business mentoring to turn their ambitions into reality. 

But there is much more that we need to do. British business needs renewal. 

There will always be extreme ideological opponents of the free market. They are for the most part on the margins of political thinking, and of policy-making. But we need to take seriously the fact that much of reasonable middleBritainhas also become concerned about how capitalism operates. 

The system has had a shock. Andrew Haldane of the Bank of England has calculated that the “net present value” of the cumulative loss in global output from the financial crisis is anything from 60 to 200 trillion dollars. 

That is at least twice the size of the European and American economies put together. 

The consequences of that loss of output, and the fiscal steps necessary to rein in government spending in an age of austerity, grow more obvious by the day. One doesn’t need to be a protestor on the steps ofSt Paul’s to know that business has real problems. If those who are committed to the free market don’t try to fix those problems, the enemies of private enterprise will do it for us. 

Don’t get me wrong. The global financial crisis is not the fault of the businesses represented in this hall today. The companies you run are rightly seen as the backbone of the British economy – and its best hope for recovery. 

The average IoD member earns between 80 and 90,000 pounds a year: far from being feather-bedded fat-cats, they are risk-takers working long hours who have often mortgaged their homes to get and keep their businesses going. 

The genius of capitalism lies in competition. When competition is abandoned, we should speak up. 

If major book publishers are fixing the prices of electronic books, then the American Department of Justice is right to take them to court.

If a historic British business like Cable and Wireless Worldwide is brought to its knees as a result of what the Economist called “poor and greedy management, and an addiction to deal-making that only made investment bankers rich”, we should say so.

If some banks pay three times more in bonuses to top executives than they do in total dividends to shareholders, then I think there are questions to be asked.

In fairness, questions are being asked and there are encouraging signs that shareholders are taking an activist  approach to their ownership responsibilities.

Citigroup’s rejection of its chief executive’s pay award and Barclays’ remuneration concessions are two examples. HSBC is even aiming to distribute an equal share of profit to investors, to pay, and to investment.

Capitalism is renewing and reforming itself as it should: through shareholder power, not government intervention. 

The IoD must continue to show leadership and independence on the issue of corporate governance – we are no one’s mouthpiece. 

There are many stereotypes about business and business people, and the new work I want the IoD to do will also have the beneficial affect of shattering those stereotypes utterly. 

From working with young entrepreneurs, to accessing new sectors and applying our knowledge to new ways of doing business, I want anyone who looks at the work the IoD does not only to get a new understanding of us as an organisation – but a new understanding of what it means to be a business leader in modern day Britain. A lot of people, be they politicians, commentators or members of the public, are in for a surprise.

We need to strengthen the IoD by building on our existing work. That is not simply an end in itself, though. We need to do it because it will help us to fulfil our mission to champion good business.

 Our work in advising and educating business leaders in good corporate governance and effective leadership is already delivering benefits inBritainand around the world. That must continue, and grow even further. 

 Our work in explaining the benefits of business not just to those who own companies but to those who work for them, those who make use of them and ultimately to all those who feel the benefits of the wealth and taxes generated by enterprise, will be stepped up. 

 And our work in campaigning for Government to ensure business has the freedom to flourish as well as the infrastructure to succeed will be more vocal, more pressing and – ultimately – even more effective.

We have had some successes. The IoD played a part in George Osborne’s decision to reduce the 50p rate of tax to 45p, though by no means did he go far enough. Similarly, the accelerated pace of cuts to Corporation Tax was similarly influenced by our work, but still needs to go much further.

 Thanks to changes that we pressed for which came into effect a couple of weeks ago, employers now have a bit less to fear in terms of unfair dismissal claims, and are therefore free to employ more people.

But there is still so much more to do. 

Whenever I visit an IoD branch or speak at business events around the country, I meet people who feel thatWestminsterandWhitehalldo not understand or appreciate business. 

It is our job to set that right. We will be going out there on your behalf to make the case for less onerous regulation, to explain why taxes should be lower; we will be warning of the consequences of poorly thought-out intervention; and we will be urging Government to deliver the vital infrastructure which you need to meet the right people, obtain the right staff and serve your customers. In short, we will be fighting hard to create a Britainwhere all of you can get on with what you do best: getting the job done.

 These are tough times, but they are also exciting times. The IoD has a crucial mission to help business leaders navigate today’s difficulties and make the most of its opportunities. With your hard work and your expertise, British business achieves great things every day. With your support, the IoD will enable the potential of British business to be even greater. Thank you.