David Cameron's moral capitalism speech emphasises free markets and the Tories' popular capitalist roots

By Matthew Barrett
Follow Matthew on Twitter.

David Cameron's much-previewed speech on "moral capitalism" is not particularly heavy on grand policy statements. Any policies on boardroom/executive pay have already been announced - earlier this month, Cameron told the Andrew Marr Show that shareholders should get a binding vote on executive pay scales, and that boardrooms should be more transparent. This is comparable to Ed Miliband's position, which the BBC summarised a few days before Cameron's Marr appearance:

"Labour's measures to tackle high executive pay include increasing transparency by simplifying remuneration packages. Companies should also publish a pay ratio between the highest paid executive and the company median average - and the government could publish a league table highlighting the biggest pay gaps. Accountability could be promoted by putting an obligation on investors and pension fund managers to disclose how they vote on remuneration packages."

Nick Clegg's main principles on executive pay were transparency and making big pay-offs more difficult, as well as appointing external figures to boardrooms of big firms.

Not only had Cameron already set out his executive pay intentions before today's speech, but Vince Cable will be delivering his proposals on executive pay on Tuesday, so the Prime Minister wouldn't have wanted to steal the Business Secretary's thunder on one of his main political interests. 

He did make one legislative announcement, on co-operatives:

"Back in 2007, I established the Conservative Co-operative movement - which now has over 40 Conservative MPs as members. In government we are providing new rights for public sector workers to create mutuals and own a stake in their success with employee-led mutuals now delivering almost a billion pounds worth of health services. ... There are over 12 million co-op members in the UK. That’s more people than there are shareholders in the economy and a vital branch of popular capitalism. But right now there are too many barriers in the way 17 separate and outdated pieces of legislation add cost and complexity. So today I can announce they will all be brought together and simplified in a new Co-Operatives Bill that will be put before parliament."

Overall, Mr Cameron's speech sounded more like an attempt to assert ownership of "responsible capitalism" territory for Conservatives. Instead of a policy speech, it could be seen as a philosophical exercise - and in this sense, it contained some agreeable historical notes. A couple of extracts:

• "The idea of social responsibility is not a new departure for my party. It was Burke who insisted on public accountability for the East India Company, and William Pitt who brought it under the control of government. Later, the same spirit of responsibility helped drive the campaign against the slave traders. Under Peel it led to the repeal of the Corn Laws which had forced up the price of food. Under Disraeli, it led to the Factory Acts, which began to set working conditions."

• "A consistent Conservative theme has been the ambition of building a nation of shareholders, savers and home-owners. Macmillan championed this through home ownership, giving people an asset of their own. Margaret Thatcher did the same with privatisation and share ownership."

The main substance of the speech was a strong defence of the free market:

• "I believe that open markets and free enterprise are the best imaginable force for improving human wealth and happiness. They are the engine of progress, generating the enterprise and innovation that lifts people out of poverty and gives people opportunity. And I would go further: where they work properly, open markets and free enterprise can actually promote morality. Why?  Because they create a direct link between contribution and reward; between effort and outcome."

• "My answer is that we need to change the way the free market works - not stop the free market from working. We need to reconnect the principles of risk, hard work, and success with reward. When people take risks, with their own ideas, energy and money when they succeed in a competitive market where anyone can come and knock them off their perch at any time we should celebrate entrepreneurs who get rich in that way."

The questions that followed the speech were perhaps more likely to earn headlines that the speech itself. Mr Cameron was asked "Should Sir Fred Goodwin be stripped of his knighthood?" Cameron said the forfeiture committee - which can remove honours - will consider the case, a sign Cameron is somewhat sympathetic to the idea. Mr Cameron also announced his disagreement with RBS boss, Stephen Hester's reported seven-figure bonus, saying: "I can tell you something: if there is a bonus, it will be a lot less than it was last year"