Manuel Valls sets out his government’s policy

General policy – Speech by M. Manuel Valls, Prime Minister, to the National Assembly

Paris, 8 April 2014

Too much suffering and not enough hope: that’s the situation France is in. (…)

So I’ll tell French people the truth. I owe it to them. The truth about our country’s urgent situation. The truth about the solutions that must be provided to it.

France is at a moment in its history when we must concentrate on what’s essential. And what’s essential is to restore confidence to the French in their future. Saying what’s essential in order to restore, yes, what’s essential: French people’s confidence – that will be my aim. (…)

Growth/business/taxation/job creation

Without stronger growth, we’ll do nothing. And growth isn’t decreed. It is stimulated, pragmatically and proactively.

No growth equals no confidence, and no confidence equals no growth. I won’t beat about the bush: we need our companies, all our companies, our SMEs, our start-ups, our self-employed traders, our voluntary organizations and cooperatives.

Being entrepreneurial, creating, taking risks, recruiting: it’s this positive approach I want to encourage, because it does our country good. (…)

Supporting businesses means supporting employment, investment and exports. So yes, we’ll act to encourage businesses, support research and innovation, improve the operation of the labour market, reduce costs, simplify procedures and foster social dialogue at all levels – stringently, because companies have responsibilities to their management, their employees, their workers. It’s they – those executives, employees and workers – who create the wealth of those companies, who create the wealth of our economy, who create the wealth of our country.

The idea of the responsibility and solidarity pact is simple: everyone must commit themselves to employment. It’s an innovative initiative in a country like ours. Our country must learn to dare to make these positive, creative compromises. Differences of interest exist. They’ve always existed. It’s not about wiping them out but about overcoming them, in the general interest. That’s modernity! We must now flesh out this pact. (…)

First of all, there’s the cost of labour. It must fall. That’s one of the levers of competitiveness: it’s not the only one, but it carries a lot of weight. The government of Jean-Marc Ayrault began the drive with the creation of the competitiveness and employment tax credit, which is due to reach €12 billion this year and €20 billion next year. We’ll take reductions in the cost of work to €30 billion by 2016.

How?

I refuse to pit the effort for the least qualified jobs – which we need – against the effort for the qualified jobs which make us competitive, particularly in industry. The one addresses the urgent need to create jobs and the other the necessity of exporting. So we’ll do both.

At the level of the minimum wage, employer contributions to URSSAF [Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales – network of private organizations which collect social security contributions] will be ended on 1 January 2015. Zero taxes for employers on employees who are paid the minimum wage. That’s change! That’s a real revolution! The scale of existing reductions between the minimum wage and 1.6 times the minimum wage will consequently be modified. We’ll devote €4.5 billion to this.

For salaries up to three and a half times the minimum wage, i.e. – let’s never forget this – more than 90% of employees, family allowance contributions will be reduced by 1.8 points on 1 January 2016. That is an additional reduction of nearly €4.5 billion. It will in no way penalize the financing of family policy, to which other predictable receipts will be allocated. Self-employed workers and traders, who represent a job creation reservoir, will benefit from a more than three-point reduction in their family allowance contributions from 2015 onwards – i.e. €1 billion.

That’s the state’s effort. It’s equal to the challenge: €30 billion in reductions in the cost of labour, i.e. the equivalent of family allowance contributions. As the President announced on 14 January.

To increase investment, the government will also act through taxation. Firstly by reducing production taxes like the Contribution Sociale de Solidarité des Sociétés [tax on companies to fund social security], paid by 300,000 companies. It will be completely eliminated in three years. This represents some €6 billion in additional margins, €1 billion of it in 2015.

Regarding taxation on company profits, the surtax established under the previous government term will be eliminated in 2016, as expected. The normal rate of this tax will also be reduced to 28% in 2020, with an initial intermediate stage in 2017. Finally, to simplify our tax system, several dozen small, complex and low-yield taxes will be eliminated.

Ladies and gentlemen deputies, the state has shouldered its responsibilities. It’s up to employers to honour their commitments. They were specified in the agreement reached between the employers and unions on 5 March. This agreement sets two major goals: job creation, particularly for young people and older people; and the quality of employment, the training of employees, apprenticeship and the improvement and recognition of qualifications.

On the basis of these goals, negotiations must begin in the coming weeks, in each professional sector. The Great Social Conference to be held in the summer will enable us to assess together the dynamic created in this way.

The pact – as I’ve said and the President said previously – is also a solidarity pact. It must improve the spending power of the lowest-paid employees. The best way is to act on salary contributions so as to increase net salaries, the ones people receive at the end of the month. From 1 January 2015 onwards, they’ll be reduced for people on the minimum wage, so as to bring an additional €500 a year in net salary. That’s nearly half of a 13th month for employees on the minimum wage. This gain will gradually decrease between the minimum wage and 1.3 times the minimum wage.

Moreover, the government will propose reducing the taxation on low-income households, particularly – we heard it throughout the local election campaign – those who have entered the income tax bracket in recent years at the very time when their situation hasn’t improved. All these measures in support of low-income households will amount to €5 billion by 2017.

Energy transition/green economy

Ladies and gentlemen deputies, growth is also the green economy.

The energy transition will be one of our priorities. It’s a tremendous economic opportunity. (…)

But there’s also the environmental necessity. The climate is probably where the need for regulation is becoming most pressing. At the end of 2015, France will be hosting the great climate conference in Paris. It’s a major planetary challenge which we’ll address by creating a genuine “low-carbon strategy” which the government will present to Parliament. The aim is to reduce our fossil fuel consumption by 30% between now and 2030 and our greenhouse gas emissions by 40% in the same period. The President’s commitment to increase nuclear power’s share of electricity production to 50% by 2025 will be honoured. It will be included in the law on the energy transition, which will be submitted to the Council of Ministers before the summer. This law, which will be discussed in detail with Parliament, will be the founding text of our new energy policy for France and for the future.

Ladies and gentlemen deputies, our recovery also requires us to be financially independent. The public debt is our collective responsibility. (…)

Successive governments have chosen to put our accounts back on a sound footing by prioritizing repeated increases in contributions. Let’s look at the situation as it is: it’s been especially the case since 2010. The previous majority played its role in this – €30 billion as much as the current one. Those increases haven’t spared the middle classes. We must put an end, ladies and gentlemen deputies, to fiscal creativity that creates genuine anxiety among our fellow citizens. (…)

Ladies and gentlemen deputies, I propose to you a change of pace, to avoid any recourse to taxation and to finance our economy’s recovery.

We’ll make €50 billion in savings in three years, from 2015 to 2017. The effort must be shared by everyone, and it will be. The state and its agencies will make the greatest effort, namely €19 billion; €10 billion will come from health insurance and an additional €10 billion from the local authorities. The rest will come from increased fairness, greater consistency and improved transparency in our benefits system. But I don’t want to undermine growth, ladies and gentlemen deputies, because our deficits wouldn’t be reduced and nor would unemployment. Of course, our public accounts must be put right, but without undermining our social model, our health system, our hospitals or our public services, because the French people wouldn’t accept it! I’m in favour of honouring our commitments and of genuine budgetary discipline, not of austerity or challenging our system!

We’re going to explain this necessary balance again to our European partners. The economic recovery is there, but it’s fragile. We must keep it going like a nascent flame and support it. The efforts we make in terms of the reduction of our deficits, structural reforms, businesses’ competitiveness and the cost of labour mustn’t be swept away by too strong a euro. The euro today is 10% more expensive than it was in the summer of 2012, which obviously puts a strain on our exports. The European Central Bank is conducting a less expansionist monetary policy than its American, British and Japanese counterparts, and in the Euro Area the economic recovery is at its least vigorous. I want very directly to tackle this subject, which will also be central to the campaign for the next European elections. It’s actually for the European Union to provide concrete responses to the people’s urgent expectations. What’s essential is to put it back onto the path of growth through major investment policies and employment policies, focusing particularly on young people. Otherwise all efforts to reduce the deficits will be in vain. I don’t want the magnificent adventure that has united our continent to lose its significance and ultimately its rationale, and I’m sure you don’t want that either, ladies and gentlemen deputies!

I’m deeply committed to the solidity of the Franco-German tandem. I remain convinced that France can’t do without Europe, but I’m equally convinced that Europe can’t and never will do without France’s voice!

Regional reform

Our financial independence, ladies and gentlemen deputies, also means structural reforms, as we all know. France is ready for such reforms, particularly that of the “millefeuille territorial” (1). I propose four major changes that should overcome partisan rifts. The first concerns our regions and is inspired by the report by Senators Yves Krattinger and Jean-Pierre Raffarin. Our regions must have critical mass. They will thus have all the levers and all the powers to support the growth of companies and encourage local initiatives. I propose to reduce the number of regions in mainland France.

As for the method, it’s a matter of trusting the intelligence of those elected. Regions will thus be able to merge through mutual decisions. In the absence of proposals, the government will propose by legal means, after the departmental and regional elections in March 2015, a new map of the regions, which will be prepared for 1 January 2017. The second objective is intercommunality. A new intercommunal map based on the “community areas” (1) will come into force on 1 January 2018. My third objective concerns the clarification of powers. I propose getting rid of the general powers clause.

In this way, regional and departmental powers will be specific and exclusive. Finally, my last objective consists in getting the debate under way on the future of the departmental councils. I know such a debate will take time, but I propose getting rid of them by 2021.

I appreciate the magnitude of such a change. Among other things, we’ll need to respond to the feeling of abandonment and the need to protect many departments and rural areas. This change will give rise to an in-depth debate in the country bringing together elected representatives and citizens. (…)

As regards the state, which is central to nation-building, it’s essential it is present all over the country. The country’s network of prefectures and sub-prefectures can’t be called into question, but it will be necessary to adapt it gradually to the country’s new territorial set-up, which I’ve just presented, in order to guarantee every citizen’s equal access to public services, which are at the heart of our Republican pact. I also pay tribute to all civil servants, who are the face of our country’s public service.

Health/education/housing

Ladies and gentlemen deputies, getting France back on its feet means doing so fairly. France will be strong if it is fair. (…) The government I lead will support the least well-off French people without losing its focus. The President has set the course. We’ve got to move towards what’s essential: health, of course – I’ll come back to this – and schools and housing, which I’m going to say a few words about. We’ve got to invest in the Republic’s schools and particularly in their teachers, whom we must pay tribute to and cherish, because they pass on our country’s knowledge and values!

Investing in schools and their pupils means reinvesting the Republic with its number one mission. Every child, whatever his or her social background, must benefit from the same opportunities. (…)

The second priority I’ll talk about is housing. We must start building again where there are needs. To generate more housing, more cheaply and faster, we have to simplify things. Fifty measures to simplify existing rules and standards will be decided without compromising on quality or effectiveness. The orders will be published before the summer. The mission to provide housing for everyone is one we must carry out together: the state, regional authorities of the Right and Left alike, businesses and social and private landlords. (…)

France/confidence/influence/pride

Ladies and gentlemen deputies, I’ve described how things are. It’s affecting French people’s morale. What’s lacking in their eyes is confidence in themselves. Confidence is the key to everything. I want to inspire it through you, but I’ve also come to seek it from you. I say to the French people that they must look at themselves with clear-sightedness, but also with pride. Our country has greatness. This isn’t built on nostalgia, but on the ambition which has driven us generation after generation.

France has so many strengths! Our public services, our infrastructure, our big and small companies, and the beauty of our countryside and our villages in addition to our farming and our rural life, which are both our heritage and our modernity. Let’s also mention our vast maritime area and the crucial role overseas France plays on five continents when it comes to our presence in the world, just like the one played by our compatriots based abroad. Our country has a fantastic culture. There are over 200 million French-speaking people in 75 countries on every continent. France is the world’s fifth greatest power.

Its message is heard, its voice respected. Its flag speaks directly to oppressed peoples. Our country has genius when it comes to innovating and creating. I’m thinking of our film and music industries – capable of conquering the world –, and our doctors, researchers, scientists and Nobel Prize winners. (…)

France is indeed beautiful! It’s also a country of freedom, as this majority demonstrated by opening marriage up to same-sex couples. Yet I’d like things to be calm, in accordance with the desire expressed by the President.

This too is what the Left is about! The Left is true to itself and to its values when it speaks to everyone and brings people together. (…)

Let’s take pride in being French! (…)

The notorious “French arrogance” often ascribed to us by our neighbours is in fact the immense generosity of a country wanting to transcend itself. France has the same greatness it had when I viewed it as a child: the greatness of Valmy, that of 1848, the greatness of Jaurès, Clemenceau, General de Gaulle and the Maquis. It’s why I wanted to become French, and it’s why being Prime Minister of the French government is a huge honour for me. I think to myself, there are few countries in the world which allow citizens who are born abroad and learn the Republic’s values to rise to the highest office of the state, and it’s why I deeply love this country and am proud to speak to its elected representatives. That is France, and it’s these values which must bring us all together!

This is what we are and what we must remain. Let’s not diminish France, let’s not diminish its dreams. And I ask you, as people whose hearts beat for France, to give me your votes of confidence, so that together we can give this confidence back to the French people!./.


(1) millefeuille territorial – the many layers of regional and local administration.

(2) bassins de vie – in France, these are defined as the smallest areas within which inhabitants have access to the most basic amenities.

Published on 08/05/2014

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