It would be an honour and a pleasure to speak to this distinguished audience at any time, and it is doubly so in this Tercentenary Year. You will be relieved to hear that I have no intention of speaking to you about matters of business. This would be about a useful as David Beckham making a guest appearance as a brain-surgeon.

I shall try not to speak for too long, mindful of the advice given to young whales – that it is when they are spouting that they are most likely to be harpooned. But I should like to say a couple of things, first about the Tercentenary itself, and then about some of the recent press speculation on Gibraltar's future, and the British Government's supposedly sinister plans for it.

Peter Caruana has spoken – often and well – of what Gibraltarians are celebrating – 300 years that have formed you as a people. I will not compete with him, particularly in the presence of the Tercentenary Co-ordinator. I would rather speak briefly of what I personally want to celebrate this year.

Of course the appeal of Gibraltar to anybody with a sense of history is enormous. Its brooding presence on the threshold of the Mediterranean has caught the imagination of poets from Homer to Browning, and generation after generation of British people everywhere. It is deeply embedded in the history and the identity of the Royal Navy, the Royal Marines, the Royal Engineers, and many British regiments, some of which I hope to see help us to celebrate this year. The thing which has made it remarkable - and the main reason why it is a British and not a French or a Spanish Governor that is enjoying your hospitality this evening - is the ingenious and invincible human spirit that has inspired its defence and shaped its identity over those 300 years.

Two hundred years ago, it was engineers and artisans who dug tunnels and invented guns to shoot downwards that kept the Union Jack flying over The Rock. Now it takes a rather different kind of ingenuity to guarantee Gibraltar's survival and prosperity in a tough and competitive world. Gibraltar is both diverse and united, stubborn and adaptable, cosmopolitan and self-reliant. In the last 30 years it has shown that however fast the world around it changes, and whatever new obstacles are placed in its way, Gibraltar can change and survive. Nobody exemplifies all of these qualities better than you, the Members of the Gibraltar Federation of Small Businesses. For the battlefields of the future are the markets of the world and that is where Gibraltar must win its victories. You are – all of you – among the real heirs of General Eliott.

Edmund Burke once remarked that: "Nothing in progress can stand on its original plan. One might as well think of rocking a grown man in the cradle of an infant". Gibraltar is in every sense a mature society, and it is right and proper that any such society should aspire to more control over its own affairs. And it is those kinds of aspirations which are reflected in the constitutional proposals which the Chief Minister forwarded to the British Government on behalf of the whole House of Assembly last year. I do not yet know how the British Government will respond. But I do know that the British Government is entirely free of neo-imperialist fantasies, and I see no desire in London to hold on to responsibilities which can be carried out as well or better by Gibraltarians here. They want – we all want - a modern relationship. But for Gibraltar - as for all our Overseas Territories where London bears responsibilities - London will want to retain the powers necessary to discharge them. And for as long as Gibraltar's sovereignty is disputed and access to the full benefits of EU membership is under challenge, there are some responsibilities which I do not believe that you would want Britain to relinquish. I doubt that there will be much disagreement between the governments of Britain and Gibraltar about the overall direction in which Gibraltar's constitutional arrangements should travel. But there will have to be a serious discussion about how far and how fast progress can be made in that direction in the immediate future. It goes without saying that this is a dialogue for two – Britain and Gibraltar.

This brings me to the eternally vexed question of dialogue with Spain. I read suggestions in the press that the Chief Minister's statements to the effect that joint sovereignty does not represent a basis for early progress in dialogue with Spain, and the British Prime Minister's statements that dialogue on the search for a better future for Gibraltar should continue are evidence of some fundamental disagreement between the two. As I see it they are nothing of the kind. Both governments are, in principle, ready to talk. And both are agreed that no lasting settlement can be achieved on any basis unacceptable to the people of Gibraltar. As the pace of the Spanish election campaign increases in the weeks ahead, you can expect to read many more exciting and misleading headlines. Treat them with a healthy dose of scepticism.

The press has been equally busy speculating about a huge gulf which is said to exist between me and the Chief Minister. You can safely ignore that too. I work very closely with the Chief Minister. I very much enjoy doing so. And I intend to go on working very closely with him for as long as I am in Gibraltar, as I am convinced that that is how the two of us can best serve Gibraltar's interests. We shall not always agree – we should not be doing our respective jobs if we did. But I know that he will be as committed as I am to resolving any differences in a way that safeguards the great partnership whose tercentenary we celebrate this year. I see no reason for Britain and Gibraltar to follow the example of the couple who were reported in an American newspaper to be planning divorce after 65 years of marriage. When asked why they were separating after so long they replied: "We thought we should wait until the children had died".

I look forward tremendously to doing what I can to promote the success of the celebrations which you are co-ordinating with your usual energy and style. I am hoping to make a small addition to them by inviting – so far as I know, for the first time ever – all the living ex-Governors of Gibraltar to pay a joint visit to The Rock this Summer. I hope that Gibraltarians will enjoy showing them some of the things that you have achieved in the years since they left the Convent. I do not yet know whether Sir Hugo White will be able to be among their number, but I know that all of you will share my delight at hearing of the remarkable recovery that he is now making after his appalling accident last year.

Finally, may I thank you and your members for your splendid hospitality, and wish you every success in the year ahead as you work to make sure that Gibraltar's next 300 years are as successful as her last.

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