Good afternoon everyone.

It may sound odd for someone like me, whose degree is in Law and who went on to become a barrister, to say this, but I strongly believe that university education has to be about far more than simply preparing people for a given job.

It must be about preparing people for life and for work, which forms such a big part of most people’s adult lives. That means, among other things, giving them the tools they’ll need not just to make the most of the job they’ll get at 21 or 22, but tools that they can carry with them and develop as they get older and gain more experience. Tools which, in our modern world in which a job for life is a thing of the past, should serve them well in a whole variety of settings and help them to get on in each.

Of course, the recession has underlined more strongly than ever that universities are economically essential in a whole range of ways. And perhaps the most important way in which they matter to most employers is by producing the steady stream of skilled people they send into the workforce.

It’s equally obvious that employability skills should matter to graduates as well as employers. What graduates have learnt at university is often a large part of what they have to offer prospective employers when looking for that first job.

The CBI/UUK report Future Fit asked employers what universities should prioritise in relation to their students. More than three-quarters of them said the top priority should be to “improve their employability skills”.

And I want to make clear straight away that I fully recognise the importance of that function.

Nevertheless, it’s common to talk about “employability skills” with only a vague sense of what we mean. It’s too easy to interpret the phrase as an argument for a narrowing of the range of learning and experience that universities should offer down to the purely vocational.
But I would argue that it’s precisely the opposite.

For example, I know that some people think that the whole case for public funding of higher education is based on its ability to supply business with – in that patronising, too widely-used and altogether too depressing phrase – “oven-ready graduates”.

For my part, I think a good case could be made for revoking the charter of any university that saw itself as being just a production-line for clones in business suits.

In fact, I don’t think most young people these days – if my generation was Generation X, then I suppose they’re Generation Y – would stand for that. They’ve grown up to view expressing their individuality as a normal part of life, for example, through Facebook and Twitter, Flickr and Bebo. And, perhaps more than any other generation since the 1960s, they’ve grown up with a healthy distrust of the establishment that has got the world into crises of ecology, finance, politics and much else besides.

And in any case, even if it were possible, seeking to produce identikit employees does no one any favours.

Certainly not students, who risk finding themselves pigeonholed from the word go. And, in the long run, it doesn’t benefit businesses either. It may be tempting for bosses to demand of universities, as I know many do, graduates to slot straight into whichever jobs they have vacant and whichever corporate culture happens to prevail. And that may indeed help to make a business profitable today.

But what that approach won’t do is keep it profitable tomorrow. For example, it won’t encourage creative thinking and new ideas. It will stifle innovation and challenge. And it will fail to build the sense of entrepreneurship and ambition that could lead the current crop of recruits to go on to establish new businesses and create new jobs on their own account.

That’s why the more forward-looking graduate recruiters look not for job-ready skills, but for potential that can be developed through coaching and other forms of in-company training.

For their part, I think more and more universities are coming to realise the sheer breadth of the skills-set that their students may need to carry into the world of work if they are to achieve their full potential. To take just one example, the other week I had the great pleasure of visiting Aston University’s new Careers and Employability Centre, and was greatly encouraged by the variety of growth experiences that are being offered to students there. That already includes placements in industry for almost all.

I admit that I used to be sceptical when business leaders moaned about new graduates lacking soft skills. It seemed to me that it was asking a lot for a degree in biomechanics also to be a qualification in social interaction or individual initiative. But I’m a convert these days.

I’m not just talking about the need for generic, transferrable skills to be learned alongside subject- or job-specific ones – important though that is, but about the active rather than passive attitudes that universities should foster in their students. Like refusal to just accept that the way things have always been done is necessarily the best way to do them now. Like eagerness to question received wisdom rather than just take everything on trust. Like openness to a wide range of different points of view and a forensic approach to assessing them. Like an ability to see the wood as well as the trees.

Of course, the relevance of what students learn at university to their future lives and careers isn’t only of interest to their employers. Since the introduction of variable fees in 2005 especially, students have gradually become much less passive consumers of what their universities dish out. When I go around the country talking to them, I get the firm impression that they’re much more concerned than ever before about what the return on the education they’re helping to pay for will be.

That’s one reason why we have asked all higher education institutions to produce a statement on how they promote employability and how they plan to make access to information about employability outcomes to prospective students.

But there are still some difficult issues to address.

As a result of the extra money that this Government has put in since 1997, there are more people in higher education today than ever before. And not only that, there is a wider and more representative range people at university, too. More students from lower-income families and State schools. More from black and ethnic minority backgrounds. And more who are holding down a job while studying.

We make no apology for that. But as a result, graduates are not as rare as they were only a few years ago. It’s true that the number of high-skill jobs in our economy is growing, but at the same time, it’s becoming less true that a degree is necessarily a passport to a good job on its own.
The range of skills and attributes that make graduates sought-after by employers is wide and complex, as our Higher Ambitions strategy recognised last year.

And that isn’t just the result of the effects of the recession on the graduate job market.

I don’t want to minimise how tough times have been for some graduates. Although unemployment among young people is now thankfully falling and although the Association of Graduate Recruiters’ worst fears about the effect of the recession on graduate vacancies were not realised, we know that, towards the end of last year, graduate unemployment reached its highest level since 1996.

But if we look at a country like China, with its booming economy and the rapidly-growing graduate workforce that its two and a half thousand universities are producing, we still find a country in which one in five graduates is unemployed.

The lesson I take from that is that graduates who aspire to fulfil the promise of a better life that university is supposed to hold out need all the help they can get to make themselves more employable.

I expect that everyone here today knows that the Government’s response to the particular problems graduates have faced during the recession was to offer support that helps build employability skills and boost their CVs.

The creation of the Graduate Talent Pool and of no fewer than 24,000 graduate internships have been an important part of that. Plenty of people sneered at the idea when I first mentioned it a year ago, but it’s turned out to be one of the achievements in my current post of which I’m most proud.

The scheme that we have launched with Raleigh International to provide placements overseas, is equally exciting in terms of what it can do for graduates’ prospects, although on a much smaller scale.

The latest figures from the Association of Graduate Recruiters and elsewhere suggest things now beginning to look up in graduate labour market and those graduates that have taken advantage of opportunities to gain work experience will be well placed to compete.
But we must look to the future as well. Because the need to enrich graduate employability, and the benefits of doing so successfully for individuals, for employers and for our economy generally are not going to go away.

That’s why we are aiming to increase links that universities and graduates have with the sectors and the types of businesses with greatest potential for growth. We recently announced 8,500 internships with small businesses – in partnership with the Federation of Small Businesses – and in priority sectors where we know there will be strong demand in the future for people with graduate-level skills, like digital, low carbon, advanced manufacturing.

All young people deserve a chance to make the best of their individual talents and aptitudes, the more so if they’ve worked hard to gain a degree and contributed towards its cost themselves through tuition fees. To do that, they will need the sorts of skills that programmes like those I’ve just described can help foster. It used to be claimed, with some justification, that it was precisely those sorts of skills and the confidence to use them that a public school education and the Oxbridge tutorial system helped to develop in young people.

But in the 21st century that’s just not enough. And that’s why the Government, with its partners in the university and business sectors, is working to deliver on its commitment to offer a brighter, fairer future to our young people than previous generations could ever have expected. A future in which many more of them will have not only have the specialist knowledge that employers value, but also the skills necessary to make best use of that knowledge, for themselves, for their employers and ultimately for all of us.

I want to conclude with one final thought. I’ve argued today in favour of offering a truly liberal higher education backed up with other measures as a preparation for success in working life. But offering students new experiences and broader perspectives as well as new skills isn’t just necessary for a healthy business environment.

We desperately need the openness and engagement that these things encourage to maintain a healthy democracy, too, and to counteract the growing sense of democratic deficit that we see around us.

Because, if life as well as at work, the antidote to alienation and disinterest is willingness to get involved and to work for real change.

Thank you.

Speech by: Lord Mandelson
Event: Trade and Industry Dinner
Venue: Guildhall, London

One year on

My Lord Mayor, My Lords, Ministers, Aldermen, Mr Recorder, Sheriffs, Ladies and Gentlemen. The benefit of giving this speech two years running is that it gives me a very clear yardstick to work from. A year ago we were deeply in recession, the dust barely settled from Lehmans and the immediate consequences of its failure.

Now we have returned to growth. The banks are stabilized. Nobody is hanging out the bunting for a modest 0.3%, and the road ahead is certain to be bumpy. But the reality is that the worst predictions about where the credit crisis would leave us have not been realized. Not because it was wrong to anticipate the worst. But because massive, indeed unprecedented, government intervention pulled a spiraling private economy back from the brink.

A year ago I stood here and said that I believed that the Britain that emerges from the credit crunch would be a different country. For one thing – although this is not what I had in mind – we are a country now unavoidably in significant debt. How we respond to that fact has been the source of some debate, and some rather poor argument, and I want to address that tonight.

But more fundamentally, what I argued a year ago was that we needed to recognise that the crisis, like all crises, reveals both what is strong and what is weak in our foundations. And we should not waste the crisis by failing to tackle the weaknesses.

Our strengths are our flexible labour market, keeping unemployment much lower than projected. Constructive labour relations have allowed many firms to reach deals on pay and hours that protect jobs. I applaud those who have made sacrifices. They are the true heroes of the recession. The rate of business failure has been half that of the recession of the mid-nineties. Half as many homes have been repossessed in this recession. But we have also been brought face to face with some new realities.

Starting in the 1980s we allowed the diversity of the British economy – or lack of it – to approach the limits of what was prudent. Sometimes there was an economic fatalism about manufacturing decline and falling British goods exports, rather than seeing them as something that policy and private enterprise should address. Our economy, and certainly our corporate tax base, became too dependent on the City. We were also carrying a huge hidden insurance liability for a sector that was taking badly understood and inadequately policed risks.

And I think we are now also asking some very far-reaching questions about the values and outlook that we need to embed in our businesses and economy if we are going to prosper in the long term. We will need a smarter and more affordable state, but we also need a private sector firmly focused on long-term productive investment, enterprise and corporate stewardship. The debate that is happening within business on business models, especially the reliance on debt over equity, needs to be part of a wider reassertion of the values of the long term, of organic growth and value creation over the temptations of excessive leverage and the fast buck.

One of the big problems behind the credit crunch was a sort of financial abstraction. People and companies bought and sold financial assets with little regard to the real assets they represented. At the centre of financial markets is the tension between the need for long term investment in a real asset, and the desire for short term gain from a financial asset. Should the prerogatives of the latter trump those of the former? What kind of economy will we end up with if they do? We have to address these questions.

Public Debt

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The fact is we entered the global crisis with the second lowest debt of any nation in the G7. And the global crisis has left government balance sheets across the world in a worse state, as they have absorbed the economic shock and sustained economic activity. Britain is hardly alone in seeing its public finances ravaged by the financial crisis. According to the IMF, in 2010 public debt as a proportion of GDP is forecast to be higher in Japan and Germany than in the UK. [Political Content Removed]

Which is why it is also wrong to assert that the fiscal stimulus and need to borrow must necessarily push up interest rates. While that must always be at the back of our minds, in reality, the shock to economic demand is so deep that the economy needs both continued fiscal and monetary stimulus. [Political Content Removed]

This is not an attempt to dodge the need for sometimes painful public spending cuts: they will come when, but only when, the return to growth is secure. The IMF, the OECD, the IFS: they have all sounded a warning about undermining the recovery.

Growth

But the Government’s analysis is not just about locking in recovery. A credible commitment to reduce the deficit and pay down debt also requires a credible plan to achieve medium term economic growth. Any would-be administration that fails to present a credible growth plan alongside its deficit reduction plan has a big hole at the centre of its programme. Growth depends on continued active government support for business, including new public-private forms of growth and venture capital for high tech and growing SMEs. Especially when banks are risk averse and focused on – indeed being urged to – repair their balance sheets.

Government needs to lend its energy to the stimulation of new innovation and enterprise from our world class research base and universities. We need to ensure that in a period of reduced funding our universities give increased priority to science, technology, engineering and mathematics, and to commercialization of research, and that our skills system provides advanced apprenticeships and technician training to serve the new industries of the future We need to mobilise private and public investment behind the Britain’s infrastructure needs and to boost our national supply chain – in digital, in energy, in transport and in low carbon transition.

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Since we published the New Industry New Jobs policy framework last year, the Government has earmarked almost a billion pounds for targeted investments in Britain’s basic capabilities in new technologies like composites, plastic electronics and industrial biotech – the kinds of game changing seed investment that markets too often see as unviable or too risky in the short-term.

We have the biggest demonstrator programme of its kind in the world for ultra low carbon vehicles in Britain – publicly funded. We have announced both support for charging infrastructure and for consumer subsidies for the first generation of mass market vehicles next year. The result: Toyota and Nissan have both announced their intention to base new low carbon operations here.

Britain comprehensively missed the boat in onshore wind power generation two decades ago. But we have partnered the wind and wave energy sector in making sure that our natural comparative advantages in offshore energy are exploited this time around. The result: FCC, ClipperWind, Mitsubishi, – all have chosen to invest in renewable energy in the UK. Domestic companies such as David Brown and Skykon are taking advantage of these opportunities as well. No other country in the world makes turbines of the size of those now being developed in the UK on a commercial scale.

These are just two sectoral examples of the way that a more proactive approach to building our industrial strengths can and will pay off if government has the confidence to act at near-to-market stages of development and help to identify and pull away the barriers to commercial viability.

The great slur on British manufacturing has always been that it can’t cut it in a world dominated by China and Germany. This is utter nonsense. Britain is the world’s sixth largest manufacturer and our manufacturing output has remained stable in both value and volume over the last decade despite the fiercest imaginable competition. It remains absolutely central to our export strength. But if we want to maintain those strengths we have to pioneer advanced technologies and keep investing in the science, research and skills that underwrite them.

Companies

We also need entrepreneurs and companies capable of commercializing and transforming these capabilities. And that is a process that requires commitment and innovation. It requires strong and competitive companies. Our basic answer to this challenge in Britain for the last three decades has been to focus on subjecting companies to the discipline of the market and removing the market barriers that prevented them responding.

Industrial relations were reformed. The deepening of the European Single Market and the development of global capital markets created intense discipline for management. Government took a neutral view on foreign ownership and welcomed foreign investment into Britain. These developments have been almost entirely beneficial. They are probably the single most important reason why we still have a motor manufacturing industry, for example.

The massive expansion of capital markets, and widespread public share ownership through pension and saving plans have changed the game significantly. And ironically the costs of this change are closely tied to its advantages. We can entrust our share ownership to intermediaries, which is a good thing, because most of us don’t have the time or expertise to make investment decisions. And we spread our share ownership across hugely diversified, often international, portfolios, which hedges us in most circumstances against market risk.

But the result of intermediation and diversity has been to turn most shareholders into absentee or transient owners of companies. The decisions about what to own and when are made by fund managers whose incentives may require them to deliver returns on short timeframes, even if they manage pensions for people whose key interest lies in the long term.

For companies, the pressure to deliver short-term share price gains too often has to come before any wider considerations. In fact if CEO remuneration is tied to share price movements, simply raising the share price can become a corporate strategy in itself. Market analysts may be as likely to be involved in a sophisticated game of predicting the next press release and share price movement as they are in assessing the long-term strength or weaknesses of firms.

This risks rewarding clever readers of the market more than industrial innovation, quality management, or entrepreneurial skill. On the face of it, it does not seem a model good at building companies with the patient but engaged ownership required for low carbon innovation or infrastructure investment or manufacturing on the back of new technologies in Britain.

In recent years the UK Government has carried out a number of significant reforms to encourage the right kind of long-termism among company directors, not least the directors’ duties in the 2006 Companies Act. We need an equivalent long-termism among company owners, especially institutional shareholders. These company owners need to combine short term activism on company strategy, with long term commitment to the development of the companies they own.

Christopher Hogg’s review of corporate governance and David Walker’s review of banking boards have started to pose the right questions. The UK’s Stewardship Code must emerge stronger from the current consultation. It should make it clear that subscribing fund managers and ultimate owners have a duty of engagement and that long term stewardship must be at the centre of the fund manager’s mandate, and that indeed, this has to be demonstrated in reporting. I think there is a case for making fund managers publish the terms under which they are paid and the goals they are working to.

Takeovers

In this context, I think we need a fresh look at mergers and acquisitions. In some ways the current system is good at defining director and shareholder duties where the ownership is relatively stable. It is less clear how those duties should be interpreted in the fast-moving circumstances of a takeover.

Nobody believes that poorly performing management should be protected. But the open secret of the last two decades is that mergers too often fail to create any long term value at all, except perhaps for the advisors and those who arbitrage the share price of a company in play. A lot of M&A advisors must be sleeping badly in that knowledge. Or maybe not.

And it seems to me that given that a takeover can have huge implications for workforces and communities as well as investors, this is an area where good governance, and active and responsible shareholding, are absolutely critical. I do believe that there is a strong case for throwing some extra grit in the system. This is true for us in particular because the UK has a very open market for corporate control, arguably the most open in the world. And it is in our interest to make sure that this openness is producing sound outcomes.

In the case of Cadbury and Kraft it is hard to ignore the fact that the fate of a company with a long history and many tens of thousands of employees was decided by people who had not owned the company a few weeks earlier, and probably had no intention of owning it a few weeks later.

Company Directors engaged in takeovers clearly have a legal duty to shareholders. For the Directors of the target this is often interpreted as meaning a duty to accept any price that exceeds their own assessment of the future valuation of the company. However, the Companies Act sets out the duties of directors to consider the best outcome for a company in the long term, considering the interests of all the stakeholders – employees, suppliers, and its brands and capabilities. Getting a higher price in a takeover may not be a perfect proxy for that. It seems to me that we need to have a debate about how these various duties should be understood in the fast-moving circumstances of a takeover, when some of the company’s newest shareholders may not have a long term commitment to the company. Obviously we need Directors equipped to be stewards rather than just auctioneers. If this requires re-stating the 2006 Companies Act, then I am willing to do that.

I believe that one of the key ways to strengthen consideration of these wider issues in takeovers is to strengthen the ability of all shareholders on both sides to scrutinize the planning, financing and intentions behind deals. For that reason I welcome last week’s decision of the Takeover Panel to consult on the provisions of the Takeover Code, following Roger Carr’s sensible suggestions reflecting his Cadbury/Kraft experience. I believe that there is a case for:

• Raising the voting threshold for securing a change of ownership to two thirds;
• Lowering the requirement for disclosure of share ownership during a bid from 1% to 0.5% so companies can see who is building up stakes on their register
• Giving bidders less time to “put up or shut up” so that the phoney takeover war ends more quickly and properly evidenced bids must be tabled.
• Requiring bidders to set out publicly how they intend to finance their bids not just on day one, but over the long term, and their plans for the acquired company, including details of how they intend to make cost savings; and;
• Requiring greater transparency on advisors’ fees and incentives.

I also think there is a case for requiring all companies making significant bids in this country to put their plans to their own shareholders for scrutiny. Kraft after all had to bend over backwards to avoid asking Warren Buffet for his binding opinion, although I think we all got his message. None of these measures would necessarily have prevented Cadbury changing hands – that is not the point. They would have enabled the owners of both companies more actively to scrutinize the transaction, and better weigh the long term prospects for the merged company.

Some people have gone further and suggested that we need a new form of public interest test to guard British companies against foreign acquisition. I am happy to have an open debate about this, but I think we need to be very cautious. Britain benefits from inward investment and an open market for corporate control internationally. A political test for policing foreign ownership runs the risk of becoming protectionist, and protectionism is not in our interests.

We already have certain EU and UK rules that protect the public interest in a change of corporate control. A public interest test already applies to questions of competition, public security, media pluralism and – in the UK – financial stability. These rules have evolved over time – most recently to absorb the concept of financial stability. They are not immutable, and as I said I am open to debate. But we must not get drawn into a narrow debate about foreign ownership, which is not the issue. More important is the need for reform to promote corporate stewardship and long term engagement and ownership amongst shareholders, boards and their directors.

Conclusion: renewing the standing of the City

Let me say in conclusion that it strikes me that one of the biggest risks following the banking crisis is the development of an unhealthy attitude towards business and open markets in general – Richard Lambert pointed this out a few weeks ago. People who are losing their own jobs find it jarring when many in the City are reported as having had a good year. And that the biggest individual beneficiaries of the bailout seem to be bankers themselves.

But to jump from this to the conclusion that the whole market economy has failed us is a dead end, politically and practically. Our future depends on us harnessing markets and private enterprise for the good of all. Britain’s economic recovery will not be driven by consumer debt or public spending. It can only be driven by private enterprise and investment, backed by active and strategic government.

And Britain remains a very good place to do business. The World Bank ranks us 1st in Europe and 5th in the world. I realize that the changes made to personal taxation at the top end are not popular with business. But in the circumstances they are fair and justified for now. Our corporate tax rate and capital gains rates, especially for entrepreneurs, are competitive and need to remain that competitive.

As we recover there is an understandable temptation to respond to a clear regulatory failure in the banking sector with excessive new regulation. Of course we need to make our banks safer, and the Government made early proposals for reform. However, I do think that we need to guard against any unintended consequences from the new capital, liquidity and leverage requirements which are being proposed from different directions. As the Prime Minister has stressed, these need to be fully internationally coordinated.

New rules need to be implemented in a way, and on a timeframe, that does not create uncertainty now and which does not put at risk the ability of the banking system to fund the credit needs of the global economy as we recover.

At the moment, the current low demand for credit is masking the issues concerning credit supply. But as the recovery strengthens, we must avoid banks shrinking their balance sheets to meet regulatory requirements at the expense of lending to the viable businesses that we need to drive the recovery. But alongside this we need to recognize the need for renewed belief in the City’s role at the heart of our economic life.

We need to rebuild confidence in the City and Britain’s corporate leadership – and I know the City accepts and advocates this. I realize talking about trust probably sounds rich coming from a politician. Let’s just say: I feel your pain. The City is an immense asset to the UK and a key comparative advantage of our economy. It will be critical to financing the recovery and critical to financing our future growth.

Alongside regulating to strengthen the stability of the finance sector we also need to have a debate about culture. It is about the City leading the debate on a new ethic of stewardship and long-term commitment as the way to economic strength. There will no doubt be plenty of people who regard such comments as unduly idealistic or even naive. I’m enough of an optimist to believe they are not and that the changes we need are eminently achievable. I’m also, my Lord Mayor, enough of an optimist to say I’ll be back next year to see if I’m right!

Thank you for the introduction.

I’m delighted to be here and to welcome you all to the Department for Business, Innovation and Skills, and to the UK inaugural event of Europe’s e-skills week. I welcome this initiative to highlight the growing need for skilled ICT users and professionals – I think the European Union is absolutely right to prioritise this as a key area for the European economy. And I welcome the work of Intellect as the UK’s lead partner spearheading this campaign.

This is right at the heart of the UK’s future economic success, key to the Going for Growth strategy Peter Mandelson set out in January. And, of course, its vital for the responsibility I have: to deliver the aims of the Digital Britain white paper we published last June – a major element in our new strategy to build growth as we recover from the worst downturn in the world economy for 70 years.

It is today a near universal requirement for work to have at least a basic level of IT skills. As we come out of recession, growth in the UK economy will primarily be in high value goods and services whose provision demands digital skills and increasingly sophisticated competencies. Technology products have become essentials. When I became the Minister responsible for broadband for the first time in 2002, it was very hard to believe that we would – as we did within seven years, in 2009 – have 70% of UK households with internet access. The speed of change has been extraordinary and impressive – reflecting great credit on many of the organisations represented at this event.

HMG support for ICT

ICT is an exceptionally vibrant area for innovation, with new forms and new ways of working being developed all the time. It is an important sector of the UK economy in its own right. But it is also an enabler, providing other sectors with their competitive edge, enabling all the other parts of the UK economy to do well. That is a key part of the rationale for our strong support for the development of ICT, set out in the Digital Britain report.

We want our information sector equipped to compete and win in the new global economy, securing the UK’s position as a world leading digital knowledge economy. We know that the economy will look very different over the next decade.

The UK has great strengths in IT: R&D; business solutions capability; technology innovation; internet exploitation; mobile communications; and learning technologies. The UK is already home to Europe’s largest ICT industry, employing more than one million people and contributing 8% of UK GDP.

But we are not complacent – If we are to be successful we know we have to work hard to ensure the UK has the best environment it can for creating and growing businesses.

And that means ensuring the supply of world-class talent.

Digital Skills

Providing high quality professionals who can build and maintain digital Britain means equipping the workforce with both high-level, hard, digital skills and with other business skills – like being able to spot the commercial potential in an innovation.

The IT professional workforce in the UK has more than doubled since the early 1990s to now well over one million. In the short-term technology companies are facing the pressures common to the whole economy, but, looking just a little further ahead, strong growth is forecast to continue. The IT workforce is predicted to grow at four times this rate.

Higher Ambitions, launched last year, sets out the direction for higher education over the next decade. It seeks to encourage Higher Education Institutions, employers, Sector Skills Councils and sectoral experts to collaborate to focus customer demand and accelerate the response from universities to meet that demand. A Chief Executive from one of our leading IT companies was telling me last week how hard his company finds it to influence university course content. We need higher education to be more responsive.

The Foundation Degree (FD) is a prime example of HE-employer collaboration on HE qualifications, with the courses being designed with employers to meet specific workplace needs. Sector Skills Councils and professional bodies are also involved. Foundation Degrees have been growing quickly. Many are being delivered through joint arrangements between higher and further education. There are 255 IT Foundation degree courses running.
The ICT Foundation degree framework, launched recently, was developed to meet changing needs in the ICT sector. It sets out a fuller understanding of the sector; learner requirements for up-skilling and preferred delivery methodology. The framework will enable Apprentices to progress their workplace learning. And one of the key strengths of the foundation degree is in providing a pathway into higher education to able people who chose an apprenticeship to further their education, rather than A-levels.

The ITMB (Information Technology Management for Business) Degree Framework has also been developed by a consortium of universities and e-skills UK in partnership with leading employers. Rather than focus purely on technical skills, the framework recognises the importance of business, project management, and personal skills as well.

It provides graduates with specific skills employers see as essential, and the tools to excel in and lead the industry in the future. The first tranche of ITMB graduates is just now starting to enter the workforce.

The UK Higher Education sector produces world-class graduates in the disciplines which underpin a digital Britain. But we need more of them. There are problems getting graduates with the desired mix of skills. Student demand for computing courses has fluctuated. There was a steep rise in demand and provision through the 1990s, followed by an equally steep fall in the first half of the present decade.

Since 2006 numbers have levelled off. Entrants to Computer science courses were up 7% last year – welcome news, reflecting serious effort by those involved. And there is encouraging data from other science and maths courses too.

But we need to continue promoting the sector as an area with good opportunities for those with the right aptitudes.

The impressive economic performance which is our aim requires world class capability in the ‘hard’ subjects that underpin technological innovation. Future growth of the digital sectors depends in no small measure on having the right people with the right skills.

So we are supporting not just new entrants into the industry, and also putting in place the processes to raise the skill levels of the current workforce.

We are investing in development of a National Skills Academy for IT, which will be launched later this year. It will provide services for employers and IT professionals – people working of course in the IT and telecoms industry, but also those working in sectors where IT is essential for business success. And these days that’s most of them!

The National Skills Academy is being crucially influenced by employers in the sector, including BT, IBM, Logica and Microsoft, as well as British Airways, Sainsbury’s, Vodafone and Whitbread. Our aim is that it will ensure that business gets exactly the skills that they need. We see the Academy playing a vital role in the more responsive Higher Education system we are aiming for.

We also announced in Skills for Growth a pilot of a Joint Investment Programme (worth £50 million) from autumn 2010. The programme will involve a small number of Sector Skills Councils and Industry Training Boards in sectors key to economic recovery such as the digital sectors, at skilled technician and associate professional levels. This will match employer investment with government funding.

We are also committed to using our role as a very large procurer of IT services to address skills issues in the IT sector. We currently spend £14 billion a year on IT contracts. In December we announced that IT companies wanting to work with the Government will need to make sure their employees have access to the right training and skills. Suppliers doing business with the public sector will need to commit to using the Skills Framework for the Information Age or one of its equivalents, so that both Government and suppliers are speaking the same language about skills and can therefore ensure that projects deliver maximum value for money.

There’s one other point to make. I’ve mentioned the UK’s strength in learning technologies. So much so, that the Prime Minister recently asked David Puttnam to look into the export opportunities for educational technology. His initial report will be ready for the summer.

Our higher and further education systems increasingly use online learning, appreciating its impact, flexibility and access. Businesses too understand this. 40% of employers have increased their e-learning in the last two – economically difficult – years, when there is a temptation to cut training back. But look at the results. Sky saved £700K and doubled its staff retention. And Xerox saved over £5m by setting up 300 virtual classrooms. We need to see more of that kind of success.

At the start, I said how important this subject is. 21 million people in the UK use IT in their daily work. We are all, citizens and businesses, dependent on technology. Do please take the opportunity today to get involved in the discussion.

Now, I think I’m presenting an award which Margaret Sambell of e-Skills UK and Craig Martin of DediPower Hosting will tell us about …

Award Presentation

It is always a pleasure to recognise and see business ideas rewarded. I understand the competition for this award was exceptionally tough and that the judging panel had a difficult time choosing its finalists. Nonetheless, the winning entry stood out for its commercial and real world application.

So I am delighted now to present the 2010 DediPower Digital Entrepreneur of the Year award, in recognition of impressive work on innovative applications for mobile devices to Stuart Varral of Fluid Pixels.

Speech by: Lord Mandelson
Venue: Sciences-Po, Paris

As always it’s a pleasure to be in Paris, and of course it’s an honour to speak here at Sciences-Po. During my four years as EU Trade Commissioner I came here to Paris often, but I have to say that a trip to Paris often meant I had irritated someone important. So it’s rather nice to be here and not feel like I’m in trouble somehow!

And I have to say that those four years only reinforced my respect for France’s commitment to a strong and resilient EU. The French Presidency in 2008 was a high point for Europe’s projection in the world. This augurs well for 2011 when France chairs the G8 and the G20.

In every respect, I wanted, and want, the same strength and resilience for Europe. And in that sense the arguments about globalization, or trade liberalization were, and are, eminently worth having.

I am often caricatured as a bit of an Anglo Saxon liberal in France. As a typical free market, free trade Brit. And I am a liberal at heart, with all the necessary caveats. But ironically, really ideological liberals in Britain and America regard me as dangerously French. So you can’t believe everything you read…

Today I want to make three arguments, and I will try to be a bit provocative about this so as to keep things interesting.

The first is that we are in economic trouble in Europe. Europe’s long term economic strength is more vulnerable now after the banking crisis and the recession than it has been at any point for a generation. This threatens not just our prosperity and our solidarity, but weakens our ability to project Europe’s influence more widely in the world.

The second is that the EU is key to responding to this, but that we need to rethink some of the basic ways in which we use EU policy as a way of driving European economic growth. We are in the process of updating the Lisbon Agenda for another decade. Professor Mario Monti is working on recommendations to the Commission.

This is a moment to challenge some parts of the status quo. In particular, we need to refocus EU policy and EU budgets more on innovation, low carbon and high technology research and development. We need to focus on the commercialization of science and technology because this a route to more jobs and growth.

My third argument is that a genuinely transformative agenda for the European economy has to be owned by the European Member States themselves.

This week the European Commission will set out its “Europe 2020” proposals for economic reforms. It is important that the Commission is doing this and we should support it. But the challenge of difficult reform cannot simply belong in Brussels. We cannot subcontract it.

Prosperity at risk

Over the last twelve months a huge chunk of the growth and employment generated by the European economy over the last decade has simply been wiped away.

The banking crisis and the collapse in public revenues following the recession have undone twenty years of public financial consolidation in Europe. Not least in Britain – and I am quick to acknowledge that.

So we face this huge challenge of reconstruction, renewal, rebalancing. We need to upgrade Europe’s economic model. The broader pressures on us as an economy and a society have not changed. In fact they have been compounded by the challenges of economic recovery.

Like Japan, we are ageing while most of our major economic competitors remain demographically skewed towards relative youth.

After the relative luxury of playing catch-up with America over the last decades of the 20th century, now the emerging economies, especially, but not only in Asia, are playing catch-up with us. Indeed, in many respects they are already breathing down our necks.

Pressure on many traditional sectors means that European businesses and entrepreneurs will need to create millions – probably tens of millions – of new jobs over the next decade. And we will have to do this while progressively raising the cost of carbon to reach our climate change targets and operating in public spending constraints.

In this light it is alarming that the 1.5% growth rates projected by the European Commission for the EU after 2010 describe an economy limping into the future.

And there is no escaping the fact that this is a collective European problem. The largest ‘external’ market by far for every European Member State is the rest of the EU. So there will be no sustained national recoveries without a European recovery.

Sharing a single market, a single banking system and, in part, a single currency is a source of great potential strength for Europe. But it is also a declaration of inter-dependence that we have to make work.

The credit crunch has provided a necessary wake up call with respect to the inter-dependence of our financial markets. That is why we took the de Larosiere route to toughened and harmonized financial market regulation in Europe and globally. A route which needs to remain as now agreed, and on which the UK is as determined as anyone.

The debate over the response to Greece’s budget deficit and the need to rebalance demand across the EU is an extreme reminder that the divergences between us in our national competitiveness and fiscal management can turn out to be everybody’s problem. The credibility of big projects like the euro depend on our willingness to defend them when the going gets tough.

So the bottom line is that Europe has a growth deficit which is putting our future at risk. We are rightly proud of our social models, and I believe that they are an important part of our response to a world of very rapid economic change. But they are not cheap. The only way to ensure that they remain affordable is to put the European economy on a stronger path to growth.

The policy response

So how do we do that? Well, we start by recognizing what we have got right over the last two decades. We have got right our commitment to open competition and better regulation as the basic dynamic for improving productivity.

We have got our response right in the Lisbon Agenda’s basic commitment to labour and product market reform and flexibility. One of the big goals for the new Commission needs to be the deepening of the Single Market in services, which remains unrealized.

There have been plenty of people who have argued that the banking crisis has put these things in question, but they are wrong. The answer to Europe’s problems is not to reverse the openness of the single market or to cut it off from competition or trade or to make it harder for people to move from job to job.

But we do need a stronger strategic approach at the European level. Not the dirigisme of the 70s and 80s that tried to direct industry or counter the basic logic of comparative advantage or commercial viability, but a much better sense of how we are going to focus on and drive a deepening of our longterm economic and industrial strengths.

We need a more strategic approach that invests heavily in the things from which viability and comparative advantage emerge. Infrastructure, skills, innovation, our science and research base and the effectiveness of our capital markets. This is the best way to make the most of the opportunities offered by globalisation.

Europe has spent a decade focusing on freeing up the supply side of its economy. Now we also need to think how we equip the supply side better for global competition through a combination of sharper business models and government covering more of what markets are failing to provide.

As one example, EU markets currently fall far behind the US in making available venture capital for small firms. The EU venture capital market is about a quarter of the size of that in the US. If we were to give the European Investment Fund the freedom to draw in an additional €3billion from private capital markets to invest in venture and growth capital funds we could close that gap. The benefits for small firms with high potential would be substantial.

The UK also supports adapting EU State Aid rules to raise the cap on the maximum size of publicly-backed risk capital investments to €5million per company per year.

We would also like to see the creation of an EU-wide Small Business Research Initiative similar to that used in the UK. This is a programme that provides public contracts to SMEs to enable them to research and develop new solutions to public procurement challenges – setting them the problem and commissioning an innovative solution that saves money for taxpayers. We would like to see a similar programme established at the European level.

There are a range of basic targets that EU states should commit to meeting. The Commission has set a target of 5 million high quality apprenticeships in the EU by the end of this year. All homes and businesses in the EU should have access to broadband at 2Mbit per second at least by the end of 2013 and at least 50Mbit by 2017 – creating the digital infrastructure that the modern European economy will depend on. Patent Offices in Europe should create a fast track patent for low carbon innovations.

These goals are simple, but they are concrete and real, and relatively easy to achieve with the necessary coordination and political will. They represent measureable improvements in the way the EU supports the young, the innovative, the entrepreneurial.

They are part of a new ‘EU Compact for Jobs and Growth’ that Britain has proposed for adoption by EU leaders, and which we hope will be widely taken up in the European Commission’s new research and innovation plan, which Britain strongly supports.

But I would argue that we need to go further than this and rethink the whole orientation of the EU budget. The way the EU spends money is too strategically passive. Only 5% of its budgets are spent on low carbon. There is not enough focus, for example, on EU digital communications and low carbon transport infrastructure. Only a quarter of structural funds support research and development.

Measured against the challenges we face, this suggests we need to think afresh about our priorities. In this respect, I very strongly welcome the fact that the new Commission has created portfolios for innovation and the digital economy.

Leadership

And that brings us to the question of European political leadership. Politically the EU is an unusual animal. We are deeply interdependent, but we are also sovereign states.

Part of our solution to this has been to create strong and effective institutions in Brussels to protect and advocate the European collective interest. The European Commission may be unloved by some – institutions are not loveable things – but it has been the glue that has held the expanding European Union together and this must remain the case.

But the Commission’s leadership is, of course, only as good as its members. It is only indirectly accountable to Europeans. While being string in its advocacy, it cannot wholly implement reforms. That is why its authority must always be exercised with the tacit approval of the European Council. Being EU Trade Commissioner left me in no doubt about that.

But the Commission’s great strength lies in its ability to take the long view, and sometimes the politically difficult view, and the wise rather than the populist view. European governments can have short memories and short attention spans, and the institutions are there to hold them to the promises they make.

So although I have always argued, and I argue strongly now, that we do need greater political leadership from Europe’s states, this cannot come at the expense of strong institutions.

What we need is both. We need a strong Commission to drive the agenda. But the Commission needs to be anchored in the strongest possible consensus from Member States in favour of ambitious change. Both sides need to remember their part of the bargain.

Europe’s greatest achievements have been driven by strong Commissions acting with the clear backing of visionary political leadership from the Council. The creation of the Single Market, the creation of the euro and the enlargement of 2004 all combined disciplined Commission leadership with clear political patronage from Member States.

This is the kind of dynamic that we want to create with the EU Compact for Jobs and Growth. It would act as a political agreement between the European Member States, the new President of the Council and the Commission.

It would establish annual economic summits of EU leaders that would set the direction of travel for EU and national economic policies, identifying the key barriers to faster growth and more jobs. They would bring together and assess EU reporting on public finances, economic reform and financial markets.

European governments would establish national targets in key agreed indicators like employment rates, productivity and capital investment. These targets would not be imposed top down as they have been in the past, but built bottom up.

And although Member States would have different starting points and aspirations, they must be challenged to be ambitious. They would be monitored by the Commission and held accountable for progress. This would be done openly and publicly, so that progress could be compared across Europe.

Conclusion: instruments and intentions

It might seem an obvious point, but my time in Brussels convinced me that this goes to the heart of how the EU succeeds and fails. Almost everything about Europe depends on national political ownership of the idea that Europe and its agenda matters.

We should not make the mistake of confusing instruments with intentions. The Stability and Growth pact, the European Financial Stability Board, the Lisbon Agenda, even the Lisbon Treaty itself: these are all hugely valuable instruments. But they have to be embedded in and advanced by, political leadership and the will to make them work.

The challenges of economic reform in Europe are not resolvable by simply passing more powers – or passing the buck – to the centre. That is just not politically possible, nor necessarily desirable, given national obligations to national taxpayers. It also ignores the need for national political ownership of difficult change.

But the corollary of this has to be an attitude of mind in governments that recognizes the critical European dimension of our national economic and political lives. This is true whether we are talking about changes to financial markets, tackling climate change or the defining of a more coherent European foreign policy.

And Europe certainly needs a more coherent voice in the high politics of foreign affairs and global governance. This is what the Lisbon Treaty aimed to deliver. The EU needs to build a deeper strategic relationship with states like China, India and Russia. Periodic summits and occasional visits do not add up to a substantial relationship.

But it also needs the less glamorous kind of political leadership that owns the hard day to day grappling with national economic reform targets and delivers them on time.

Many European national politicians still regard European policy as a distraction rather than a core part of their democratic mandate. When the time comes to spend political capital, the temptation, inevitably and understandably, is to spend it at home. But I do not believe that Europe can genuinely set a transformative agenda for its future until this starts to change. As future French leaders, this is part of your challenge.

So to sum up: we as Europeans face a growth deficit that threatens our prosperity, our solidarity and our capacity to project our influence outside of Europe. This is the moment to question some of the basic ways we think about the EU’s strategic role in driving growth and innovation. This debate has started in Brussels. But this agenda, however much it is shaped and driven by the Commission, needs to be owned by national capitals. It needs to be driven by national politicians. It is, after all, our names that are at the bottom of the Lisbon Treaty.

I believe that despite the sometimes exaggerated rhetoric, France and Britain are much closer on these issues than the caricatures suggest. Over the next few months we should be at the forefront of defining this agenda. Britain and France both believe that Europe matters. Right now, in the face of a very uncertain future, Europe matters more than ever.

Speech by: Lord Drayson

Venue: Nairne annual lecture – St Catherine’s College, Oxford

CHECK AGAINST DELIVERY

Good evening.

Let me first thank St Catherine’s for inviting me to give this lecture. I’m honoured to do so, and – as ever – it’s great to be back in Oxford. Many of the best things in my life have their origins here.

It was here that I met my wife, Elspeth, and four of our five children were born in Oxford, in the John Radcliffe.

It was here that I helped to build the university spinout PowderJect and made my fortune.

And it was here that I first encountered Professor Brian Bellhouse – Magdalen Don, medical engineer and serial entrepreneur. Brian is the scientist whose research lies behind PowderJect. He’s also my father-in-law.

And it’s through Brian – and I hope this isn’t too complicated – that I know St Catherine’s own Roger Ainsworth. It was Roger’s work on Doppler Global Velocimetry that helped Brian and his team to characterise the supersonic helium flows in the PowderJect device.

Some beautiful images of those gas flows that Roger produced actually featured on the cover of the PowderJect prospectus when we went public in 1997.

As some of you know will know, the PowderJect device led to the development of a whole new area of genetic vaccines and grew to be the world’s sixth largest vaccine company, employing over 1,000 people and valued at £550 million at the time of its sale in 2003.

What you may not know is that it delivered a 40-fold return to its original venture capital investors and £21 million to the University of Oxford – helping to fund the new engineering buildings on South Parks Road.

Now, I haven’t offered this potted history for vanity’s sake – though I’m proud of what the PowderJect team achieved and I’m proud of my place in this Oxford genealogy.

I’ve done so in service of a broader argument I want to make about the strengths and weaknesses of UK science.

This evening, I intend to be more emphatic than I have been previously about the path this country must pursue on science. And I’ll insist – not for the first time – that certain questions which continue to preoccupy some UK scientists are a distraction from what ultimately matters to all of us.

But back to the story for a moment. All of the commercial value I just mentioned can be traced back to a meeting I had with Brian and Elspeth in 1993.

Yet, Brian’s own achievements rely on previous generations of Oxford scientists, who worked for several decades on supersonic gas dynamics and on fluid flow.

An early group, for example, worked alongside Rolls Royce during the Second World War to urgently address a cause of Spitfire crashes – during high-speed dives, where the aerodynamic flow over the plane’s control surfaces was disrupted as they approached the so-called sound barrier.

That line of enquiry was later taken on by Douglas Holder and Donald Schultz here at Oxford – key figures in breaking the sound barrier.

Donald’s entrepreneurial instincts – unusual in Sixties academia – certainly influenced his research student, a young Brian Bellhouse, who borrowed insights from aeronautics when he investigated the mechanics of blood flow. Breakthroughs in renal dialysis, artificial heart valves and a host of other medical devices all followed.

To me, this is a perfect illustration of scientific serendipity and of the way in which research proceeds: questions about why planes go into fatal tailspins increased understanding of basic physics, led to major advances in aeronautics and eventually spawned medical applications that were entirely unanticipated by the original research teams.

More to the point, there’s a golden thread running through the story – whereby, over time, science creates wealth and jobs and capital for reinvestment in research.

But, in truth, we’re still weaving science narratives in this country without that thread.

The UK’s achievements in pure science are legion – in chemistry, in medicine, in astronomy, to just name three.

We’ve always had the brainpower and attracted the best overseas talent, even when these scientists didn’t have the investment to match.

Since 1997, however, Government funding for research has doubled. Total funding for universities in England has risen by 25 per cent in real terms.

And universities themselves are now much better at generating their own income. Total UK university income in 2007-2008 was around £23 billion.

This spending has brought about a genuine transformation in the research base.

In the 1980s, when I was doing my PhD, I was frankly embarrassed to show visitors around some of the labs where I was working.

Today, it’s very different. Our research infrastructure is excellent. We lead the G8 on scientific productivity. Only the US outstrips us on citations.

This performance owes a good deal to my ministerial predecessor, David Sainsbury, and to the new breed of university vice-chancellors.

But where we are now is not where we have to be in order to meet the challenges of the future.

I say to you tonight that UK science doesn’t need fixing. It needs continued investment and a stable framework so that scientists are able to get on with what they do best: excellent research.

The problem remains that our capacity to create wealth from science needs to improve – to deliver the strong economic growth and jobs.

I recognise that commercialisation of university research is responsible for a significant part of the increase in income across the HE sector. I know from my time on Oxford’s tech transfer and VC fund boards – and from my involvement in setting up the
UK Innovation Investment Fund to support promising UK tech companies – that the quality and number of university spinouts is much improved.

Never better, in fact. In 2007-08 university spinouts employed at least 14,000 people and had a combined turnover of more than £1.1 billion.

The Technology Strategy Board, meanwhile, has grown membership in its 15 Knowledge Transfer Networks to over 43,000 business members and 14,000 non-business members.

But wealth creation from UK science needs to improve further still.

We have to spin much more golden thread because the key question this country faces right now is how we rebalance and grow our economy. This is our top priority.

My single-word answer to growth is “science”. We are number one or two globally in more disciplines than I have time to list. This is our ready resource.

I’ve been arguing this for as long as I’ve been science minister, but – truth be told – I still need to make the case, and particularly to the science community.

When I started talking about “impact” last year – about the UK figuring out where our competitive advantage lies and where we can achieve the most growth – perhaps I failed to be sufficiently explicit about my rationale.

Now, things are clearly looking up. We’re coming out of recession. We’ve taken important steps to make key sectors – like healthcare and automotive – more attractive to investors and to make them work more effectively with the science base to achieve growth. The UKIIF is already the largest equity finance fund in Europe.

But the Government has readily acknowledged that the recovery remains fragile. We have to take the right steps now to achieve robust and sustainable growth.

So, as a nation – and in terms of how we use UK science – we are at a crossroads.

This is a critical point in the economic cycle. It is also a general election year.

Science isn’t peripheral to the decision facing the country. It is central: to growth, to prosperity and well-being.

In this context, we can’t – and I refuse to – back away from impact, from translation, from driving home the necessity of UK science delivering profits to the UK.

High-tech, high-growth companies represent a small minority of businesses, but their economic impact is entirely disproportionate to their number. Research from 2009 by the National Endowment for Science, Technology and the Arts – and covering a three-year period – found that six per cent of companies were responsible for around half of all net employment growth in the private sector.

Sometimes I sense a squeamishness about making money from science, and it mystifies me – not least because I don’t sense the same misgivings about bidding for and spending taxpayers’ money on research.

Science that is profitable also delivers clear benefits to mankind – treating disease, boosting food yields, making water safe to drink, improving communications, inventing new forms of entertainment.

So, let’s concentrate on science-based business.

Let science-based companies deliver tangible products and services in low-carbon, in advanced manufacturing, in digital, in bio-engineering.

Now perhaps my own experience has somehow given me a certain perspective on all of this. But science has been the source of my own social mobility.

My parents are passionate believers in education, and I was lucky to get a good one – especially in science. It was the making of me, and – through helping to break new ground in the fields of robotics, immunology and drug delivery as a science entrepreneur over 20 years – I did make a lot of money.

I want other families to benefit from the same mobility as mine – and my priority is to see that occur through science.

So what needs to happen? First, we need to get away from some of the old clichés.

I mentioned distractions in my opening remarks. Let me address those now.

We have to rise above the simplistic notion – repeatedly advanced by a small but vocal minority – that pure and applied science are in conflict; the notion that they come from the same pot of money, so that any increase in applied research requires a cut to pure.

This simply isn’t the case – and yet I constantly receive messages to the contrary.

Take this tweet that came yesterday: “Gov investment in science commendable, prioritising economic impact over blue-skies research disastrous.”

For the umpteenth time, let me say again: this is not what we’re trying to do.

We need to stop portraying pure and applied as mutually exclusive or different in moral terms – where pure science is somehow a more noble or disinterested pursuit than applied.

And we must urgently focus attention on building our capacity to translate science into wealth and jobs – while maintaining our investment in science. Both pure and applied.

We need to drop another old cliché too.

I remind you that it was UK scientists who invented ultrasound. It was UK scientists who sequenced DNA. It was UK scientists who made the breakthrough on plastic electronics. It was UK scientists who got there first on monoclonal antibodies. In each case, commercialisation happened elsewhere.

So I rejoice every time the UK produces another Nobel laureate in the sciences. We do it time and again, despite our size as a country. We are number two in the world for Nobel Prize winners.

Last month, I met Venki Ramakrishnan, one of our latest winners, whose work on ribosomes has laid the foundations for synthetic biology and for treating infectious diseases currently resistant to antibiotics.

Venki’s company, though, is in California.

I know we can win as a focused knowledge economy. But we have to be more determined – more self-interested.

We have to project a positive vision: a country built on science with the talent, the drive and the focus to fulfil its potential.

So much for the message we put out about UK science. What must we do for reality to match my ambition?

Let me explore this first by way of analogy.

A few years ago, in my first spell as a defence minister, I had the privilege to fly in the back of a Typhoon: the RAF’s latest fast-combat jet, built in Lancashire, and powered by Rolls Royce engines, built in Bristol.

We were on a training mission doing fast interception over the North Sea. At the time, I had only about 14 hours’ worth of flying under my belt – but, at 40,000 feet, the pilot offered to give me full control of the plane at the end of the training mission: to, in his words, “See what she can do.”

So, of course – and as invited – I gave it full throttle – full reheat – and pulled back hard on the stick.

The punch in my back was not only the most incredible sensation physically, but the most visceral encounter I could ever have with the science of supersonic flow that preoccupied me here in Oxford.

I won’t pretend I had time to think of Holder and Schultz at supersonic speed, but they were behind it all.

Well, in 2010, we’ve got UK science to full throttle. It’s taken more than a decade. And in that same time period, we’ve made it so much easier to get an innovative business up and running.

The question is how to light the after-burners.

I offer you five principles.

First – and I continue to insist on this – we have to be ruthless about establishing where we have competitive advantage and what are the sectors with the clear growth opportunities. This is where we have to invest: in space, digital, life sciences.

Second, we must accept that there are some sectors where we’re first-class scientifically and we can identify strong growth prospects – but we have no industry. Fuel cells is an example.

Where the task involves building an industry from scratch, I think we need to look to overseas models – in particular Germany’s Fraunhofer Society. The Fraunhofer institutes include small businesses which lack the critical mass to carry out their own R&D. There is a clear role for universities like Oxford to gestate businesses for longer – even without an industry partner.

The Government has invited the entrepreneur Hermann Hauser to review UK technology centres and recommend how they should be developed in future. We have some institutions already which do this incredibly well – like the Laboratory of Molecular Biology – but we need to build a broader capability.

Third, we require a fiscal regime that does a couple of things. One is to incentivise long-term investment in areas where technological development involves great technology risk but also offers the potential for high returns – areas such as carbon capture and storage. The patent box, announced in the pre-budget report, is a step in the right direction here. From 2013, it will provide a reduced corporation tax rate on income from patents, encouraging dynamic companies to locate IP and to manufacture in this country.

The other is to encourage serial entrepreneurs to remain in the UK, reinvest their profits and spin more thread. A third of high-growth firms in this country were founded by serial entrepreneurs. In the US, it’s almost one half.

Fourth, we’ve got to fix the equity gap once and for all, which – despite the boost provided by the UKIIF – is preventing really promising businesses from fulfilling their potential. There has to be greater investment and longer-term investment.

Fifth and finally, we’ve got more work to do on the STEM pipeline. More graduates are now coming through in maths, engineering and the hard sciences. We’ve got to keep them from wandering off into other areas. And we need even more of them.

Yesterday, I was highlighting the potential of our space industry. Growing already at 5 per cent a year, it has the potential to create 100,000 new, highly-paid jobs in 20 years if the UK raises its global market share in space to 10 per cent.

But I want to bring all this back to Oxford to give a sense of what this means in practice.

It allows me to draw on another story that’s personal – one that’s fundamentally about science and impact, talent and wealth creation, about playing to our strengths.

My proudest achievement concerns the role I played in Oxford getting a dedicated children’s hospital.

I led the five-year fundraising campaign for a new building at the Radcliffe, but it took huge effort – locally, centrally – to make it happen.

Anyone who has visited knows what a fantastic place it is – and that the children who go there are getting treatment as good as anywhere in the world.

But here’s the crux. It’s no longer enough for the John Radcliffe Children’s Hospital to offer outstanding treatment and make kids better. Like the rest of the NHS, It has to be an engine for economic growth – through its relationships with Oxford University researchers and others, with this city’s biotech cluster and counterparts elsewhere.

The new treatments which will save lives on John Radcliffe’s wards have to make money for this country.

The researchers and the entrepreneurs who bring innovative drugs and medical devices to market need to be fully plugged in to the NHS: an NHS which will improve on patient care and on cost if it adopts technologies that diagnose faster and treat more effectively.

For me, this is what it’s all about. I’m optimistic and I’m energised by the opportunities for business, for job creation, for strengthening our universities, for science, for making people’s lives healthier and more fulfilling.

Everyone accepts that belt-tightening is unavoidable. It’s the price of our taking decisive action to save the banks and support the UK through the recession.

Nevertheless, the ring-fenced budget for science and research will continue to rise next year.

We recognise that the best antidote to debt is growth. Everything I’ve said this evening has been about making the case for science as the engine for jobs, for sustainable economic recovery.

And that brings me back to PowderJect, whose alumni have gone on to found more than 20 other technology businesses.

Circassia is developing a new class of T-cell vaccines designed to treat allergies and combat organ transplant rejection.

Zeneus Pharma specialises in oncology and critical care.

PowderMed and Glide Pharma are pursuing further applications for needle-free drug delivery.

Together, these firms have so far been responsible for many new, high-quality jobs, and today have a combined market capitalisation of over £800 million.

So – to my great delight – Oxford’s golden thread continues to unspool. It connects Brian Bellhouse and his predecessors to the people based in the spinouts born of PowderJect.

May they now go forth and multiply – and on a biblical scale!

Thanks for listening. I now welcome your questions and comments.

It is a great honour to be asked to give a lecture in memory of Ron Dearing. Lord Dearing was an outstanding public servant, respected across the political spectrum, who played a role in British public life for more than forty years.

His obituary in The Times observed that: “One minister after another turned to him to help to extricate them from some crisis or to study the need for longer-term reforms”. That makes him sound a bit like Sir Humphrey Appleby’s benevolent twin.

But of course what defined Lord Dearing was the fact that he was everything that the privileged and rather complacent Sir Humphrey was not. He was the product of ladders of opportunity created by our post war government and society. He left school at 16 to start work as a clerk. He ended his career a visiting fellow at the London Business School.

My last conversation with him was coming out of the Chamber in the Lords and I asked if I could bend his ear to discuss wider education and skills policy. I am the worse off for that conversation not ever having been able to take place before his untimely death.

One of Ron Dearing’s great contributions to British public life was his report on Higher Education, It has been associated ever since with the recommendation to adopt variable fees. But it was a much wider vision of the role and future of higher education.

Without really intending to do so, our Higher Ambitions strategy, which I published last November, marked the halfway point of Ron Dearing’s long vision of UK higher education. What I want to do today is to say something about Lord Dearing’s original vision, and how I believe we have stayed true to that in setting the course for the next decade.

I think it is necessary and unavoidable to ask how we can hold that course at a time of fiscal constraint, and some reduction in total public funding for higher education.

I have been criticised for talking up the critical role of higher education in our society and in our economy, while looking for savings across higher education, research and science spending over the next three years. I think that criticism requires a proper response. That’s what I’m going to offer you today.

From The Learning Society to Higher Ambitions

If you go back and read the 1997 Dearing report now, you are struck how deeply it has permeated the way we think about higher education in Britain. It had a clear message for everyone who has a stake in a strong higher education system.

For politicians, it said as diplomatically as possible that the UK had a crisis in public patronage of higher learning. Capital budgets had been slashed. Investment per student had fallen by 35% prior to our arrival in office. The UK was literally hemorrhaging academic talent.

For universities Lord Dearing had a clear message that the institutions needed to focus on distinctive missions, diversified sources of income, a new recognition of the value of teaching, a constant focus on the quality of the service to the student.

And, of course, for students and their parents there was clear notice that the user can and should be expected to pay some measure of the cost of higher education, because the benefits accrued both to society and to the individual in their improved prospects. This cost had to be set in a way that did not act as a check on university access for poorer students, but it was a legitimate part of a properly funded university system.

The decision to follow Lord Dearing’s recommendation with the introduction in 2004 of capped variable fees in England was, as you all recall, heavily criticized – even denounced by some at the time. But in fact it has provided an alternative source of income for universities – without the damaging consequences for participation that were predicted by some at the time. Young people from areas that traditionally have some of the lowest participation rates are now 30 per cent more likely to go to university than even five years ago. Real progress, if not nearly enough.

Lord Dearing was very clear that our higher education system was central to what made our society intellectually curious and critical, what made it socially just and humane. It is the place where we define and redefine our sense of ourselves and the forces that shape us.

These are all convictions that I share personally very strongly. We have to hold very tightly to a belief in the importance of higher education as a civilising force, as the ultimate and necessary bastion of knowledge and learning for their own sake.

Lord Dearing also stressed that they are where we develop the basic capabilities that underwrite our economic strength. Although he did not use the word globalization, he described a globalised economy and he knew that higher education had to be central to our response to that challenge.

This is the key reason why we made the decision to bring skills and higher education into a new department devoted to policy on Business, Innovation, Skills and Science. A decision that has been widely welcomed, and which I believe puts our university policy where it belongs, absolutely at the heart of our growth strategy in this country.

Universities are where we learn to challenge and innovate, where we develop the raw knowledge that is ultimately refined into skills and into innovation. New industry and new jobs start in the research lab and the classroom. I have often been criticized for sounding rather ‘instrumentalist’ when I talk about this economic role for higher education. But I don’t regard universities as factories for workers, but nor do I apologise for insisting on the link between higher education and a job.

And it is precisely because of those close links between higher education and quality employment, and between higher learning and our critical outlook and cultural inheritance that the question of wider access to university is so important to the whole question of social mobility in Britain, which is something on which Lord Dearing insisted rightly very strongly indeed.

A decade of transformation

Looking back we can see now that the Dearing report marked an important turning point in the recent history of higher education in England. This Government has always made reversing the neglect of higher education the centre piece of its ambitions.

Since 1997 when we can to office, total funding for higher education in England has risen by 25% in real terms. Public support for research has doubled since that time. Universities have benefited from an unprecedented commitment – both political and financial – to their transformation and strength.

On the back of that strong public investment, universities have been able to leverage a steep rise in non-state funding. They have widened their sources of income by exporting their teaching brands, opening their doors to fee-paying international students. Higher education is now a major export industry for the UK and a key comparative advantage for us – some £5.3billion in exports in 2008. Nottingham does this very well. The Open University has become a global pioneer internationally of distance education.

We strongly support institutions in branching out in this way, and I want to assure you that the new migration requirements set out by Alan Johnson yesterday will in no way jeopardize the ability of genuine students to study here as both undergraduates and postgraduates.

Universities have also been commercializing more of the knowledge they generate and building more collaborative relationships with business and industry in order to finance research as well as teaching. Over the last decade annual university earnings from collaboration with business have risen to £2.8bn.

The result of this growing diversity in university finance is that public funding for universities accounts for just half of the total income of UK universities, just half comes from the taxpayer. The £23 billion in public and private income that universities received in 2008 is now transformed into an economic footprint in our society worth almost £60 billion in jobs, exports, innovation and added value.

The right expansion

This represents a real transformation in the place of higher education in our society and economy. Around 60% of British 16 and 17 years olds now see themselves as likely to go on to university. It is hard to overstate the revolution that this represents in social attitudes so crucial in young people’s aspirations and ambitions.

But the benchmark here will of course be our success in meeting those raised expectations. We have successfully raised participation levels from every level of British society, including the most disadvantaged. But not enough, especially for our best institutions, which is why I have asked Martin Harris to report back on how we can do better in access for young people from a range of backgrounds to all our universities, and I mean all.

We have created new routes into higher education, and new ways to get a degree while working or at work. These opportunities need to and must expand, even in more constrained environment.

And this remains the fundamental challenge of higher education policy. How do we continue to expand higher education participation in a way that respects the finite resources of the state? And which reflects the fact that three quarters of the workforce of 2020 that is already out of formal education and already in the job market.
How are we going to catch up with the continuing opportunities for higher learning for those people?

The demographics of an ageing population also mean that even with an influx of international students, the student market is going to get progressively older. Students too from a wider set of backgrounds and with a different relationship to work and employment.

These people need flexible and good value choices that can include or fit around work. The three-year, campus-based, straight-after-school honours degree serves us well. It certainly served me well and is popular with students and parents. But it is not where we should focus future growth. Because the profile of students is changing, the range of options must also adapt.

That is why we have invested so heavily in building up Foundation Degrees to their current level of around 100,000. It is why we have asked HEFCE to support models for employer co-funding of courses, which have doubled this year to 10,000 and are projected to double again next year .

That is why, along side traditional three year full time degrees, I want to see more part time study, I want to see two year Foundation Degrees and three years Honours courses delivered intensively over two years expand as part of the mix. Not creating a single blueprint in which everyone is made to conform. We’ve got to create a mix to take higher education forward.

When their objectives and outcomes are clearly defined, and when they are taught well and properly resourced, there is no sense at all in which these alternatives should be seen as inferior to three year equivalents.

And they can be, in many respects, better for students, especially for students without financial resources behind them. Because they enable them to earn and learn. They reduces the amount they have to borrow to get a qualification.

And because these flexible kinds of education and training are vital for those who miss out on higher education straight after school the push for two year degrees and wider part time or work-based study should be at the core of the wider participation agenda. Those who argue against it risk painting themselves as defending an institutional inflexibility that doesn’t serve students, and doesn’t get the most out of public investment that we make in higher education.

That is why we have asked HEFCE to advise on how we best use the public funding system to offer the right incentives to those universities and colleges that are willing to set the pace on these kinds of alternatives.

And it’s important that this growing diversity of quality provision doesn’t stop with universities. One of the most important changes that we have driven in the higher skills system over the last decade is in making sure that university is only one of a range of options for advanced and higher learning. Especially if you want vocational training with a strong emphasis on technology or business skills.

Hence our ambition to ensure that 75% of Britons have a higher or advanced qualification by the time they reach the age of 30, recognising clearly that university is only one way – albeit a very important and desirable way – to achieve this benchmark.

This is why we have expanded the advanced apprenticeship system by more than 35,000 places to start the work of creating a modern class of technicians in Britain. All these apprenticeships will earn UCAS points so that they act as a ladder into university.

This point about the huge expansion of alternatives to university is important, because this year, like every year, there will be greater demand than supply for university places. But this year, like every year, many students will not achieve a university place. Although the scope of university education has massively widened, getting into university always has been and always should be a competitive process.

I acknowledge that this autumn there are likely to be more disappointed people who do not achieve the university place they aspired to. I don’t in any way seek to minimize that.

But no student who does not get into university should feel that they have exhausted their options or wasted their efforts. Our best further education colleges and apprenticeships can provide a preparation for the world of work that compares in its excellence and market value to the best of our universities.

The right response to that very real disappointment, as tempting as it might seem, cannot be to guarantee every applicant a full time university place. It makes no sense either in terms of the cost to the public purse, or the provision of quality teaching, which remains critical to the credibility of higher education.

A large scale, untargeted further expansion of full time three-year degrees without any real attention to what these additional students are studying, or how well it equips them for life at work, also makes no sense at a time when we need to be focussing more closely on strategic skills and alternatives to full time study.

That’s why we specified Science, Technology, Engineering and Maths and other economically essential disciplines for the additional 10000 places we provided last year. That’s why we have provided clear financial incentives to provide vocational or work based Foundation Degrees in place of traditional three-year campus based equivalents. That’s why the key challenge is not expansion, but the right kind of expansion. That’s what we’ve got to focus on in our debate, realistically, for all of those with an interest in HE.

Constraints

Now, I realize that to trumpet the diversity and achievements of British higher education at this point is going to invite the response: why, then are you cutting its funding?

The simple answer to that is that we are acting out of necessity. Public funding cuts are the regrettable cost to the UK of saving the banking sector and getting the country through the recession.

Universities are not bearing the brunt, they are not being singled out for financial constraint. The lead times for higher education funding cycles means that we have wanted set out at this early stage, ahead of other areas, where we expect savings to be made. Intelligent, long-term planning requires us to do this.

Much of the rest of the public sector will receive similar constraints in the course of this year or soon after. The appearance that universities are in the frontline of public spending cuts is an illusion created by that need to plan ahead.

I have always said that higher education would have to bear its share of public spending cuts, but not more. What I can say very clearly is that I believe that our higher learning system is fundamental to our capacity to grow and prosper as a nation, not least as we recover from recession and balance the public finances. We have built up this extraordinary asset in our universities and we are not going to see it undermined. Not while we are in office. We are committed to continuing to expand participation in a sustainable way. Next year the budget for science and research will actually continue to rise.

And in that respect it is important to be clear. Precisely because of the widening base of income that British universities have achieved over the last decade, a small reduction in public investment impacts less than it might have, although I recognise that reductions will impact in different ways at different institutions.

But the proposed £915 million in reductions across higher education, research and science spending over the next three years represents savings of less than 5%. In the coming year- 2010-11- this is just £315m out of a total university income of around £23billion – clearly structured to minimise the impact on teaching and research. I do think it’s necessary to see these figures in that perspective. It is a modest sum compared to university income as a whole. This is across the sector as a whole, not just university teaching and over three years.

Now, I don’t want to dress up funding mutton as policy lamb. But I do want to argue that it can focus minds in two ways.

The first is on the need to seek out alternative sources of funding. The best university systems in the world are defined by a wide range of public and private funding and British universities need the same diversity.

I recognise that sources of additional business income are not limitless and can be irregular, especially during a downturn. But even a small expansion in this work would go a long way in closing the gap created by a period of fiscal constraint.

The second is that the push to save costs can and should actually push the system in the direction of the modes of study I have just been advocating during the course of my remarks to you this morning. Part time degrees, shorter and more intensive courses all offer the potential to lower student support costs, use resources more intensively and improve productivity.

Finally, I do not believe that the net effect of public funding constraint has to be a fall in quality, even if it requires a refocusing of resources. Universities are free to find the savings the government requires where they wish, and they can, if they choose, focus funding in their strongest areas of teaching and research.

This is a process that needs to happen anyway and it must inevitably mean institutions removing resources from areas where they are weaker to concentrate them where they are achieving teaching and research excellence. The reality is that we cannot afford a system in which every institution tries to do everything. That is not a sustainable model.

And of course basic operating efficiency can absorb some of this reduction. In this respect, the years ahead for Higher Education will be no different from any other part of the public (or private) sector

The fees review

It would be odd to speak about the financial resources available to universities without mentioning student fees. I don’t intend to pre-empt or prejudge the outcome of the review currently being conducted by Lord Browne and his team. The fees debate is as much about how we guarantee access to higher education as it is about the necessary level of resources universities might want or need.

But I would say simply that we need to see this review as part of a wider debate of how we guarantee excellence in British higher learning in the future. Accepting as I think we must, that state funding can only be part of the final mix. A critical part – but only part – which is why we need to look to individuals and other resources for funding. Whether the balance comes from industrial collaboration, learning exports, donations or fees, the stronger this non-state component of funding is, the stronger the sector will be in the long-term.

Conclusion

Ron Dearing’s core conviction, which I share, was that higher learning is the foundation of a civilised society, a expression of the value of knowledge, for every sake, including its own sake. He also saw it as vital for equipping British people for their economic future as well as for their social mobility.

I do not want to minimise or ignore the impact of reduced state funding for universities and colleges. That has not been my intention today.

But I have argued that the system Lord Dearing helped map out for us, and which we have transformed over the last decade, need not be weakened or undermined by a period of constraint in public budgets so long as we recognise two things.

The first is that a greater focus on alternative income and a greater focus on institutional strengths and a greater focus on alternative modes of study can all cushion the impact of a small reduction in the total level of public support.

The second is that this direction of travel is right and necessary in itself. It is the route to a higher learning system that is constantly testing its relevance against taxpayer value, the expectations of students, the demands of research and teaching excellence and the needs of our economy and society. It will build on state support, but reach beyond state support.

It is important to be absolutely clear that our best institutions are already doing this. I know I have had plenty of conversations with Vice Chancellors across the country. What I am saying and Government is saying is what Vice Chancellors are already doing in their institutions. Some were doing it even before Ron Dearing set his pen to paper in 1997. It is those institutions that have defined the pace and potential of reform, not Government.

I welcome debate about the future of higher education and I expect cuts in university funding to be greeted with varying degrees of dismay – some of it vocal and critical. And some of it downright hyperbolic.

But does a less-than-5% reduction in public support for universities reverse a decade of rapidly rising investment in universities, or leave our best institutions on their knees? Does it seriously damage the extraordinary potential in this extraordinary sector? I don’t believe by any stretch of the imagination that it does.

Is it an opportunity to reinforce some clear-eyed thinking that is already happening about the future of British universities and colleges?

I passionately believe it has to be. I passionately believe universities cannot stand still. Universities must adapt to new times, to new sorts of courses, to new ways of delivering and teaching. This is where I will continue to lead the debate and policy. Thank you very much.

Speech by: Lord Drayson
Venue: QEII Centre, London

CHECK AGAINST DELIVERY

Good morning.

Throughout the downturn, space has been an ongoing source of good news.

We secured a first European Space Agency facility that’s already up and running at Harwell.

We saw Tim Peake selected for ESA’s Astronaut Corps – a home-grown role model for the most rarefied of careers and the best advertisement, bar none, for doing your physics homework.

And a couple of months ago, I was delighted to announce the creation of an executive space agency to support a sector that’s one of the UK’s hidden gems.

For some time, I’ve been making the case for space as follows.

We are world leaders on the science side – judged by both research output and our participation in international missions.

We are world leaders on satellites – satellites designed and manufactured here – like Hylas, which will deliver broadband across Europe to people unable to use surface links.

We are world leaders on software design and systems integration – expertise now being put to further use at the ESA centre in Harwell.

All told, space is worth £5.6 billion a year to the UK economy and supports 68,000 highly-skilled jobs.

The industry has enjoyed real-terms annual growth of nine per cent since the turn of the century.

And the killer fact: space has bucked the recession. Demand for the technologies and services that we produce and provide remains undiminished. The Government’s commitments to ESA have guaranteed work for UK companies for at least five years. One forecast is for the global sector to grow by an average of five per cent annually until 2030.

So, as we build on the early signs of recovery – as we concentrate on the industries which can drive economic growth and create jobs – space is a strong candidate.

It can boast the track record I’ve just outlined. It has solid links already in place between industry and the research base. It’s backed by a robust supply chain.

And the jobs and the contracts are coming to the UK.

Surrey Satellites is part of the international consortium that – last December – won the first production phase for 14 Galileo satellites, worth £500 million in total. About half of that comes to the UK.

A month earlier, SES in France ordered four new satellites – also worth £500 million – from Astrium. The UK will build half of these by value.

And it’s worth noting that Astrium – which assembles half of its telecoms satellites in Stevenage and Portsmouth – increased its UK workforce by around 10 per cent in both 2008 and 2009.

Which brings me to the opportunities that Andy Green has just presented, and the challenge of scaling up this industry.

First, a word of thanks. This is an excellent report that Andy and the team have drafted. I also want to thank my ministerial colleague Ian Pearson for kick-starting the whole IGT process.

But what matters is that the report outlines a really promising future for UK space.

A sector that creates 100,000 well-paid jobs over the 20 years.

A sector that could be worth £40 billion by 2030.

A sector that takes a 10-per-cent share of the global market.

Now, I’m not going to respond to the IGT’s recommendations today. That’s something that Government has committed to do later this month.

Yet, I will give serious consideration to every one of the recommendations – to talk them through with industry leaders and ministerial colleagues, and explore what’s feasible.

One way to ensure that happens is to adopt the IGT’s final recommendation for a new Space Leadership Council: a group that facilitates discussion – initially about the actions in this report – at the highest levels between Government and industry. So I’ve decided to accept that recommendation right now.

And in the meantime, be in no doubt that the Government appreciates the growing role for space systems, services & applications in existing as well as emerging markets.

That means commercial possibilities in telecoms and transport, internet and entertainment, in defence and security. It means new prospects for tourism and healthcare.

And let’s not forget the equally significant contribution space has to make when it comes to forecasting the weather, monitoring climate change and responding to natural disasters.

Inmarsat, for example, was one of the first companies to support the relief efforts in Haiti by providing satellite communications.

So we’re serious about making sure that the UK plays its part in tackling issues of global concern as well as positioning the country to exploit the opportunities that lie ahead in areas like digital and low-carbon.
I want to see space as a leading sector of UK industry and a mainstay of our economy – built on science, employing talent, manufacturing cutting-edge technologies.

The UK is firmly in the space race – a race to the top of the global space industry over the next 20 years.

Thank you.

Introduction

You know, the last time I was in China I was told that the construction boom in Shanghai is so intense that its street maps have to be redone every six months or so.

I’m not sure if it’s true but it’s a useful image for China itself. Because China is of course redrawing everyone’s economic and political map.

A few months ago I gave a speech at the Party school in Beijing in which I said that the next generation of Chinese leaders would have to be the most internationalist in its history.

Premier Wen gave an important speech in Prague last year about what he called the “larger trend” in global politics – multilateralism.

And I think that is right and inescapable, and that China will be central to it.

There has been a lot said and written about the climate change summit in Copenhagen and what it suggested about the way in which this change is playing out.

There is a very strong impression in the US and EU that this summit marked the emergence of a new and assertive China in international politics.

In the last few weeks we have seen China challenge EU shoe tariffs at the WTO. Tensions between the US and China over Taiwan, Google and Tibet are arguably running higher than they have been for a long time.

What Copenhagen certainly reinforced is that the question of the match- or mismatch- of our expectations of China and China’s own assessment of its role and responsibilities is a vital one.

Europe and the US want and expect an engaged partner – a “deputy global sheriff” as one Financial Times columnist put it the other day.

But for reasons I understand, China is often suspicious of that expectation and insistent on its own terms for any such role.

My question this evening is how realistic assumptions currently are on both sides.

Shared goals

Europeans put a lot of time into trying to divine what China is thinking. Many Europeans assume that the deeper instincts and outlook of China are essentially like those of Europeans, under a layer of ‘Chineseness’.

Partly this is rooted very deep in a European tradition of the universality of human rights and aspirations. We are frustrated or even offended to have our interest labelled arrogance.

Broadly speaking I think we should take this approach in international politics. Not the assumption that everyone shares European values of course, but the presumption that we all want the same basic things.

Stable, growing societies. Hopeful societies. Political self-determination and civic freedom. A safe and secure world.

These things should be a constant reference point, even in more hardnosed debates about our economic or political interests or priorities.

But I do think that Europeans need to be much more aware of the way that they are perceived in China.

Especially by a younger generation of Chinese, whose whole adult experience is defined by two decades of Chinese growth and who resent any suggestion that China should or could be dictated to on economic management or anything else.

When it comes to questions of economic credibility, the catastrophic mismanagement that crippled the Western banking system has only deepened the scepticism of the superiority of the Western model in China. And we do well to be honest in recognising and understanding that.

Not least because it is difficult to assert the wider value of economic liberalization in China or anywhere else if we appear unable or unwilling to confront the mistakes in managing or regulating it ourselves.

It is important that the basic aim of open markets and economic integration remains a shared goal. And this cannot happen if it is pushed or perceived as a ‘Western’ negotiating position.

A problem of perception

When I look back over the last five years of working with Chinese leaders as a senior EU official, I am struck by the distance between how we often see China and how China sees itself.

China has reshaped our markets, and increasingly the markets of the rest of the developing world.

In just the last five years it has overtaken, first the US, and then Germany, to be the world’s largest exporter.

It will soon overtake Japan to become the world’s second largest national economy. It has the world’s largest forex reserves. It has become the world’s biggest emitter of carbon.

What Europeans too often don’t see is that behind this growth is Chinese caution and inhibition born of a governance challenge on a massive scale.

In my experience, European leaders tend to be much more confident of China’s inexorable rise than their Chinese counterparts.

Not because China’s leaders don’t have a profound belief in China – they do. But because they know the scale of the challenge that faces them only too well.

They know that the export-led Chinese growth model is not sustainable in the long term.

They know that weak domestic demand and state-led bank lending, flush now with a huge stimulus, need to give way to something more diverse and durable.

They know that a quarter of a billion people will move into China’s cities in the next 20 years – the equivalent of the entire population of the United States.

The environmental impact of change on a scale that most Europeans can barely imagine has to be managed.

Europeans see 10% annual growth, barely slowed by global recession, as a juggernaut, a tectonic shift in the global economic order.

In my experience Chinese leaders see it as the minimum required to create the jobs to meet the expectations of an urbanizing and industrialising society with a growing and impatient taste for prosperity.

They see it as the only way to ensure a stable transition from a largely agricultural society to an entirely modern one in the space of two or three generations – generations that are getting older very fast.

We see China as increasingly rich. China sees itself as still, in many respects, worryingly poor.

Deputy sheriff?

These issues of perception are critically important and easy to overlook.

They are surely what lies behind the great tension over accepting global targets for carbon emissions.

And the antagonism created by overt criticism of China’s growth model – however justified.

Europe and the US want China to be “deputy sheriff”.

China is understandably preoccupied with its own development and stability and still suspicious that the rules it is being asked to enforce were not written with its interests in mind.

And there is something in that – we should be honest about it. The machinery of global governance is still rather ‘Atlantic’ in its orientation, for understandable, if no longer defensible, historical reasons.

That’s why it is necessary to reform the IMF and the World Bank and the other international institutions to reflect China’s growing influence, along with that of the other emerging economies.

That’s why it is necessary to ensure that the climate change process and international trade rules do not have the appearance of the developed world setting out the rules for everyone else, once they have secured their spot at the top of the economic pile.

I think that both at Copenhagen and in the WTO this principle has actually been well accepted.

And I do think there is a tension in China’s position that needs to be resolved. Some of my Chinese friends have said since Copenhagen: “Europe cannot expect to dictate to China or lead in its name”.

But at the same time there is a strong sense that China is not yet ready or willing to lead in its own name.

And the reality is that effective multilateralism will be impossible without Chinese engagement. And it will become harder and harder for Western politicians to maintain an open and constructive line with China if that line is not seen to be reciprocated.

There will be no global climate change settlement without China. No Asian or global security architecture. No sustainable governance of global trade or finance without China.

For all the frictions that go with managing this system, in the long run China needs these things to work and to function and deliver results as much as anyone else. That’s the reality.

Conclusion

I don’t see how we in Europe can deny the fact that China is going to grow on its own terms. You cannot really dictate anything much to a country of 1.3 billion people.

But the dilemma for Europe (and America) is this: we cannot dictate China’s development or the solutions to its problems. It’s not our business to do so and we wouldn’t know how to if we wanted to. But we do not have the luxury of ignoring them either.

On Europe’s part I think we are still not investing enough in understanding China on China’s terms and presenting it as a coherent European partner.

China has been one of the few global players seriously to invest in a political partnership with the EU as a whole, through the European Commission and Council.

But increasingly I hear from Chinese colleagues that they focus on individual member states because the EU relationship delivers form without enough substance.

Now, I’m obviously delighted that Britain and China have a strong bilateral relationship.

But I don’t delude myself that twenty years from now that partnership will rank alongside China’s partnership with the US, or India, or Japan.

The place at this top table will be taken by a European partner or probably not at all.

I believe this is one of the key foreign policy challenges for the new EU Presidency and the new European Commission. It needs serious and sustained engagement at the highest level amongst EU member states: more than just a sequence of flying visits to Beijing.

We need to develop a clearer and consistent channel for communicating with China, especially on trade and climate change issues.

But of course we also need a China that is there to negotiate and engage.

Europe and the US need to recognize that China will not simply accept a model of global governance or multilateralism that it played no part in designing, or which it feels does not reflect the imperative of its growth and stability.

But Chinese disengagement from the evolving landscape of global governance and multilateralism is obviously not a viable option for anyone, including China.

China is too big, the challenges too great and the global village too small for China not to accept a leadership role.

We may have to show some patience, and nerves for the occasional friction. But one way or another, we all need China to succeed and we all need China to pick up a sheriff’s badge.

Introduction

Welcome and thank you for coming here today. I appreciate you making the time to be with us this afternoon.

In a few minutes we will give you the chance to put your questions to a panel including: me, Michael Gibbons – Chairman of the new Regulatory Policy Committee – and John Dodds, BRE’s Director of Regulatory Reform. John then will introduce a workshop session.

But before that I think it would be useful to set out where Government is coming from on these issues.
Regulation is an important lever for Government. It is thanks to regulation that we have improved air quality, fewer workplace accidents, more trade across the European Union and a better quality of life in general. But regulation is never cost-free and there are often other ways we can achieve our policy aspirations that are both less burdensome for business and cheaper for Government to deliver.

Today I will argue that the huge challenges of returning the economy to sustained growth, and tackling the deficit, mean we need to become even more disciplined about the way we regulate.

I believe we should always start from the premise that alternatives to regulation are equal, if not better, ways of achieving the important outcomes we want. Regulation, in effect, should be seen as a last resort.
In an ideal world, regulation should keep a low profile. I used to run a small business myself and my attitude to regulation was that it was fine – as long as I could get on with things without too much difficulty. But the global recession and the collapse within the banking sector has turned the spotlight on regulation as never before. It has given us a sharp reminder of just how important it is to have the right regulatory framework.

And that is going to be even more important as we prepare for economic growth.

The right regulation

Some tend to see this debate in black and white. It is all about whether we have too much or too little regulation. The trillion dollar question might well have been could we have stopped the global recession with more regulation? But for me, the debate should be about both quality and quantity.

Getting regulation right is a high-wire act. No intervention is ever risk free and there may be unintended consequences. Your actions might benefit the collective good, or they could stifle growth and limit individual freedom.

To illustrate the point let us look at Government’s efforts to reduce heart disease. The leading cause of premature death in the UK. It has a devastating effect on sufferers and their families and places a significant burden on the resources of the NHS. It is influenced by factors which include poor diet, high blood pressure, obesity and high cholesterol.

Now you might say here there was an immediate need for Government intervention. But we knew that immediate regulation could damage business – by imposing substantial costs on the food industry – and still fail to achieve our objectives.

So we found a middle way. We did that by establishing a programme of voluntary targets which encouraged retailers, manufacturers and caterers to reduce the level of salt, saturated fat and added sugar in their products and therefore reduce national consumption levels.

At the same time, we used extensive consumer awareness campaigns to give individuals the information they needed to reduce their own risk. So really this approach was about encouraging more personal responsibility – empowering the industry and the customer to regulate themselves.

Government action to ensure right regulation

Now, in the current difficult economic conditions, with firms struggling to make ends meet, the need for us to get the balance right and minimise the burden to business is even more pressing.

That is why we have given business more certainty in planning for the future and published, for the first time, a detailed timetable of all the Government’s new planned regulations.

That is why over the past five years we have reduced the paperwork burden to business by one quarter – that’s over £3 billion a year and around £8million a day, every day!

And that is why we have delayed the introduction of nearly 30 new laws, postponing nearly £3.5 billion in costs to business until after April 2011.

Looking ahead, our new target to simplify regulation – cutting costs for business by a further £6.5 billion a year by 2015 – includes the full costs of compliance not just the forms and paperwork. No other country in the world has instigated such an ambitious programme.

And, to keep ahead of the game, we have set up the new external Regulatory Policy Committee (RPC), chaired by Michael. With cross-Government support, I expect the RPC to make a real difference – providing a constructive independent challenge to Government – in helping minimise the cost of regulation, maximising benefits for business and the economy.

So we have done a huge amount to minimise the burden of regulation. And our efforts should be seen in the wider European context too.

The EU has also been keen to get rid of unnecessary red tape which is why it introduced a target to reduce administration by 25 per cent by 2012. And it has also brought in the Small Business Act for Europe, with three key better regulation components. The UK has played a leading role here in helping the EU’s better regulation agenda. To drive this agenda at EU level, I am working closely with my German counterpart. And in the next month I will be publishing joint proposals for EU better regulation priorities with my Dutch and Danish colleagues.

Better regulation

So there is a great deal being done to make sure that we have the right regulation. But, as I indicated earlier on, if we are to make sure this country succeeds in the future, we have to go much further. We need to be clearer about when and why we intervene. And, when we do, we need better regulation.

How can we be clearer collectively, as Government, and with you, business, on the principles that underpin our approach to regulation?

1. Clarity of purpose

Firstly, we need a greater clarity of purpose. We have to know exactly when Government will intervene, and why. In short, we should only resort to regulation to correct a social inequality, or address a market failure. Let me illustrate the point with a couple of examples.

More than a decade ago it was still possible for UK companies to run up huge profits based on exploiting a poorly paid, poorly treated workforce. We changed that through intervention. The National Minimum Wage – which celebrated its 10th anniversary last year – showed how regulation could create a fairer workplace. And it benefited business too by ensuring that competition is based on the quality of goods and services rather than low rates of pay.

So that is how regulation can address social inequality. But it is also sometimes necessary to address a market failure. Why? Because for the economy to function effectively, and allow businesses to thrive in a genuinely competitive environment, markets need some rules.

For example, Government has a vitally important job in setting the regulatory framework to protect consumers from over-pricing by monopolies. The Enterprise Act 2002 took the politics out of competition decisions, with expert, independent competition bodies such as the OFT and other sectoral regulators taking decisions on mergers and markets.

And we know that we have to reduce our carbon footprint by 2050. Now, one of the ways we are going to achieve that challenging target is by changing the way we build our homes to make them more energy efficient. But the problem is that, with the potentially large up-front costs of doing this, the market may not, on its own, provide the solution. So we are using building regulations to drive change.

2. Understanding our impact

The second part of this principled approach to regulation is about having a greater understanding of the impact of intervention.

The recently published Growth Strategy showed how a more active industrial policy will get the UK economy back to a normal and sustained rate of growth.

When Government regulates business, it will always have an impact on growth. Entrepreneurs and businesses react to the signals that Government sends when choosing how to invest and innovate. If we decide to intervene, we must do so in a way that minimises barriers to growth and maximises the opportunities.

We are already taking action. We will shortly be publishing research looking at the effect of regulation on small businesses who wish to become more resource and energy efficient.

And we know that there can be delays to investment and costs created by consents for planning development. So the Penfold Review has issued a call for evidence and I hope many of you will feed in views. The deadline is next Wednesday. It will report in the Spring, looking for ways to stimulate growth.

3. Greater customer focus

The third principle that I think is intrinsic to better regulation is about having even greater customer focus.

UK businesses spend around £10bn per year – that’s about one per cent of GDP – completing administrative tasks related to regulation. Businesses have to keep up with the flow of new laws, updating their processes and guidance, and sometimes taking professional advice on the implications. The “policy costs” of the requirements of the regulations alone are estimated to be several times higher.

Much of this regulation is vital to a modern economy. But the only way we can guarantee whether we are intervening in the right way, and the only way we can know when it is right not to intervene, is by putting ourselves in the shoes of businesses, employees, consumers and families. And that means continually asking ourselves whether what is proposed – either here in the UK or in the EU – is proportionate, accountable, consistent, transparent and targeted.

One of the ways we are doing this is through a committee that is based at the heart of Government. Chaired by the Chancellor, the Better Regulation sub-committee of the National Economic Council scrutinises planned and proposed regulation that impacts on business. The views of business are vital – and that is why we are committed to effective consultation so that business views are at the heart of decision making.

We are also encouraging businesses to have their say, in other ways. We have issued a call for evidence and will feed the results directly into our new simplification programme. Today’s workshop session is another opportunity to gather your views.

Conclusion – alternatives to regulation

So if we regulate only when absolutely necessary and adhere to these three principles – clarity of purpose, greater understanding of our impact on the market, and greater customer focus – we will go a long way towards ensuring we have better regulation. But, in a sense, better regulation goes beyond these principles. It is about seeking out alternatives rather than opting for a new law as a first resort.

Why do I think alternatives to regulation are so important?

They frequently impose less cost and often work better. We need to avoid the trap of assuming that regulation is a fool-proof way of achieving what we want. Alternatives also reduce the need for Government machinery to enforce regulations, as well as avoid the inevitable public spending that entails.

Alternatives are key to the next phase of the evolution of the better regulation agenda. I want to see a new determination, a new energy, in Government, business and society to think more creatively about alternatives to regulation that can help improve people’s lives and support prosperity and growth.

Those alternatives might be about more intelligent, smarter provision of information to consumers, enabling them to take more responsibility for their choices and actions and avoiding the need for regulation. They could be about market-based solutions such as emissions trading to deal with the impact of climate change. Or they could relate to codes of practice, such as the Press Complaints Commission, so that industries are empowered to regulate themselves. From the EU there are good examples too. Last year the Commission announced that 10 mobile phone producers have signed a voluntary agreement to use standardized chargers for mobile phones – reducing thousands of tons of waste each year, while avoiding costly new legislation.

To drive the search for innovative alternatives to regulation forward I have set the Better Regulation Executive the challenge of coming up with options for fresh approaches that will help develop this hugely important part of the agenda. I look forward to seeing the results.

But, of course, this search for better regulation keeps coming back to you. As we look for ever smarter ways of tackling and simplifying existing legislation, we will need to work ever more closely together to get it right.

Your views are vital if we are to build an environment that is better for business, better for the customer, and best of all for our economy.
I look forward to hearing them this afternoon.

Good morning everyone.

Ever since Roman times, one of the things that has distinguished the inhabitants of these islands is the links they have forged with the most distant reaches of the known world. The millions of international students who have studied here help to ensure that this tradition continues today, and that we continue to be bound by ties of friendship and good will to people in all parts of the globe.

Today, there are over a quarter of a million international students in our universities. They’re not here for some sort of working holiday for which study is the nominal justification. Many are the most intelligent and hard-working young people their countries have to offer. And their undergraduate and postgraduate studies are often at the high end of academic difficulty, especially in the scientific and technological subjects in which our universities excel. These are not people who have come to Britain to flip burgers.

International students aren’t here for a free ride from the British taxpayer either. They or their sponsors judge that the education they receive is worth the high fees they’re charged, and their presence here contributes more than £5 billion a year to our economy.

They’re here because they’re hungry for the sort of education that will lay the foundations of success in adult life. They’re here to fulfil the promise that education holds out to all young people of all nations.

And we should all be proud to be doing our bit to help them in that.

Only a couple of weeks ago, the Prime Minister publicly underlined the importance of welcoming international students to this country and announced new measures to help build the UK’s global higher education brand and encourage still greater numbers of international students to choose Britain.

We cannot, must not, use the need to protect our borders as a pretext for Little England attitudes. There is no contradiction for any of us between being proud to be British and proud to be citizens of the world. And just as the tensions within our own society shout the need for us all to become more open to our neighbours, whatever their individual heritage, so the common global challenges that we must all face in the 21st century demand that we become more open to the rest of humankind.

So let me take this opportunity to reinforce that all students who come here legitimately to benefit from our education systems and your expertise are welcome. But let’s also be clear we are determined to stamp out visa abuse.

I want to make clear today that our wish to expand the international dimension of higher education isn’t an act born of the complacent belief that British is best – although our universities do indeed have much that’s valuable to offer. It’s born of a recognition that the students who come to this country bring much more than their money with them.

For example, they bring their knowledge and talents. Especially at postgraduate level, many improve the research going on in our universities and increase the returns that it generates for our economy.

And they also bring themselves. Their experiences of different education systems and cultures. That makes British universities richer and more diverse places. I hope that it also makes them more tolerant places.

Now some of you may wonder whether there is much more we can do to increase the number of learners from overseas who come here. And indeed, the numbers of international students coming here continue to grow.

But other countries are not standing still and our own position will be challenged increasingly. The competitive demands that British higher education faces today are the same as those faced by any other global business.

Australia, for example, is becoming an increasingly prominent economic and political power in Asia, and that is being reflected in its universities’ increased attractiveness to students from elsewhere in the region.

Those countries and others including those on our doorstep are as aware as we are that the global knowledge economy that has been talked about for so long has arrived at last. That has serious implications for how universities do business, but also for the extent to which students perceive study abroad as an investment in their own future employability.

I know that some people in our higher education sector have been quick to grasp this fact and to pioneer a whole range of activities designed to bring the world to them and themselves to the world more effectively. And I applaud their foresight. They will be well placed to reap the benefits of diversification.

Growing numbers of our universities are forming partnerships with institutions in other countries, opening up new possibilities for teaching, learning and research and new opportunities for staff and students alike. Sometimes those links involve physical mobility and sometimes, thanks to the use of distance learning technologies, they’re virtual. But both are valuable.

Some universities have already opened outposts abroad in cooperation with the governments of the countries concerned.

And crucially, many are listening more carefully than ever before to the needs and aspirations of their own international students. The students themselves, to judge by the ones I’ve met on campuses around the country, are becoming more assertive and willing to give a voice to those needs and aspirations. That’s part of a general and, in my view, healthy trend in English higher education that’s become increasingly apparent since the introduction of variable fees for home students.

We know from the National Student Survey and the international Student Barometer that international students are broadly satisfied with their experiences in the UK. But, there are some aspects where they think we can do better particularly in relation to careers and employment support. I am sure that HEIs here today are tackling this and through PMI2, government is working with the sector on this very important area.

International students and international cooperation are becoming more, not less important to the health of British higher education. I believe that’s a process that will continue in the years to come, and that it’s a process which it’s in all our interests to encourage.

Over the next decade, we must ensure that the efforts of our universities to engage with international students is less competitive and more collaborative. We also need to make sure that British students understand what they can gain from a period of study overseas, not only in terms of boosting their employment prospects, but also widening their cultural understanding.

Finally, I would like to see greater focus in the UK on the use of technology in the pedagogy of teaching. We have the opportunity to be the best in the world at this – and such world-leading status in teaching can only encourage even more international students to come and study here.

Thank you.

All governments have to respond to circumstances. The present Government, like any other, has had to change tack a few times over the past 13 years – notably in order to protect British people as far as possible from the effects of the global recession.

But along with what has had to change, there are many important things that haven’t. For example, one of the salient features of this Government’s approach to skills ever since we first came to power in 1997 has been our consistent commitment to apprenticeships.

And it shouldn’t be a surprise either that the current Prime Minister has a huge personal commitment to apprenticeships – after all, when he presented his first budget back in 1997, he had a special new budget box made by apprentices from his constituency. It was a hugely symbolic gesture, so we shouldn’t be that surprised that there are now nearly 4 times as many apprentices – 230,000 to 60,000.

So, as we draw towards the end of another successful Apprenticeships Week, I think it’s timely to take an overview of what contribution apprenticeships are making to our national economic recovery and to the Government’s longer-term skills objectives.

And my basic contention is that apprenticeships work.

The basic apprenticeship model has delivered skills effectively in this country for nearly 1,000 years. And it continues to do so today.

The principle is really straightforward. What better way can there be to learn the skills needed for a job than by actually doing the job and by learning from people who have those skills already? Combine that concept with underpinning transferable skills, technical skills, robust quality-assurance and accreditation arrangements and you have an approach to work-based learning that can really deliver for individuals and employers alike.

Obvious. But back in the 1980s and early 1990s it seemed as if apprenticeships might die out in this country – along with British manufacturing itself. When we came to power, there were barely 65,000 new apprentices a year. However, since, then, over 2,000,000 mainly young people have followed this route to a better chance in life and now nearly a quarter of a million start an apprenticeship every year.

I should add that we have also delivered record numbers of successful completions; record completion rates; and record number of Advanced Apprenticeships at level 3. Overall more than 70% are now completing their apprenticeships, compared with less than half that percentage back then. And of course we have set up the National Apprenticeships Service as a field force to promote and help create more apprenticeship opportunities.

The advantages of the apprenticeship model for employers are clear. And our economic problems of the past couple of years have shown that more clearly than ever. Those employers who heeded the call of the CBI, the trade unions and Government to keep training have reaped the benefits. Our expanded apprenticeships programme and the money we have invested have played a pivotal role in enabling them to do so.

You don’t have to take my word for it. Research has shown that more than 60 per cent of businesses in England have benefitted from employing apprentices during the recession. Half report that their apprentices have helped increase productivity and reduce recruitment costs.

Altogether, four out of five employers think apprenticeships offer value for money.

Britain is now emerging out of recession. Surveys show that employers are getting more confident and that over half are looking to take on new members of staff.

Apprentices will make their contribution to filling those vacancies – and to ensuring that they’re filled by people with the right skills to do the job.

Even during the recession, the Government carried on working to remedy Britain’s long-standing weakness in intermediate skills. The demands that renewed growth will bring are set to give renewed urgency to that task.

Our plans for this were set out only recently in Skills for Growth, which I know many of you will have read. Among other things, this set out our ambitious vision to increase dramatically the number of Advanced Apprenticeships, creating up to 35,000 new places for 19-30 year-olds over the next two years to support creating a modern technician class.

Because the level of skills needed in the workforce for Britain to remain economically competitive in the coming years is rising, Skills for Growth also underlines the need to build stronger routes from apprenticeships into higher education. Our proposals here include the development of an apprenticeship scholarship programme.

We have other ambitious plans for apprenticeships, too.

For example, the Apprenticeships, Skills, Children and Learning Act puts the apprenticeship programme on a statutory basis and will ensure that an apprenticeship place is available for all suitably qualified young people by 2013. We will focus on ensuring that apprenticeships are a mainstream option for 16-18 year-olds, alongside other education and training routes. Within the next decade, we anticipate that one in five of all young people will be taking an apprenticeship.

And my colleague at the Department for Business Innovation and Skills, Pat McFadden, announced last September that the Government would aim to support 20,000 apprenticeship places over the next 3 years through public-sector procurement, as part of our wider aim to increase apprenticeship numbers.

We are making real progress in opening up apprenticeship opportunities through this route including on the Olympics park development, Building Schools and Colleges for the Future, and the Homes and Communities Agency’s £5 billion a year house-building budget.

We’re committed to doing all this because we believe the apprenticeship programme is an effective route into work that gives people the skills that business values.

But for this to work, we need business to champion the apprenticeship programme, work with sector skills councils to develop new advanced and higher apprenticeship frameworks and offer more advanced and higher apprenticeship places.

This was underlined only last week, in the open letter that the UK Commission for Employment and Skills sent to employers. This made clear that, I quote, “employers are best placed to create opportunities for opening young minds to the world of employment, maybe even leading to sustainable jobs as the economy recovers”.

Indeed, while it is important that people are supported to gain new skills, it is equally important that these skills are used by employers if they are to drive productivity. And this is something that only business can do.

The best businesses already see investing the skills of their workforce as one of the most powerful things they can do to drive their business forward. So the contribution of training organisations and business to this work is crucial.

As the theme of today’s conference makes clear, apprenticeships drive business. But businesses also drive apprenticeships. And as the demand for skills grows it’s incumbent on all of us here to play our part in ensuring that apprenticeships continue to make their full contribution towards meeting that demand.

Thank you.

Speech by: Pat McFadden MP
Event: Deloitte Academy, London

Visit the BIS Ageing Population pages

I rise somewhat unsteadily to stand before you.

Last night in our house was the picture of modern family life. It was about nine o’clock and my partner was sitting on one side of the bed with her laptop doing her homework. And I am sitting on the other side with George’s book open and I am saying to her:

“How do you spell ageing?”

She is from Canada so we had quite a discussion about the spelling of this.

It always makes the news, anything about this. Just looking at his morning’s media, we have got a major report on research into Alzheimer running on the radio and one of the front pages today has a headline about a pill that allows you to live to be 100.

If there is a benefit from my day in bed yesterday, it’s that I had a chance during the course of the evening to really think about this a little about it.

This notion about older people somehow being banished from society is really wrong. I have always enjoyed the company of older people. I come from a big Irish family and when I think of my relatives, some died young and some lived well into their 90s.

My oldest uncle Den died age 96 just over a year a go. I used to really enjoy going to see him. Just him, me and a bottle of Irish whisky

Just hearing him talk about farm prices, about how work had changed, about how technology had changed. When you speak to someone who was born in 1912, the pace of change over a century that they have seen is just amazing to hear. If they are a good drinker and talker as my uncle Den was.

Flicking through George’s book last night, there are a number of obvious issues for any discussion like this that I just want to touch on.

The first one, and the one that my Department is probably most interested in, is the world of work, business and jobs.

The second one is products and services and I’ll come back to that.

And the third includes some of the things, that Mike touched on and that is the issue of costs and public policy.

But there is an overarching thing, which is worth thinking about during the course of today. And that is whether an ageing society is good or bad. It seems to me that a lot of the discussion is that somehow this is a bad thing.

It is a really difficult thing. Yet all of us want to live longer. And surely it is a good thing that not only we are all living longer, but that we are also healthier for longer too. Anyone in any doubt about that, just go around any graveyard and look at the life stories that are there: either about children who died young or about adults who died long before their time.

The Department’s interest in this was really focused on the New Industry, New Jobs document that we published. And that was really an attempt to look to our economic future, try to see what areas of national capability we would need and then think about some policy choices that would help us succeed in those.

And those policy choices really fall into two camps. One is a greater industrial activism to try to create the capability to succeed in those areas. And the other is skills policy to equip people to do the jobs.

And I see these two things come together in a very real way in my own constituency. One of the areas that New Industry New Jobs talked a lot about was the move to a low carbon economy and the need to manufacture a whole series of new products from electric vehicles, to wind turbines, to new nuclear power stations and to have the supply chains necessary to do this.

Looking at my own constituency, it is still, after everything that has happened, very much a manufacturing area. But there is a great sense there that the manufacturing glory days were often in the past. And I think if we get this right we can actually create a new era of manufacturing in the UK that makes the most of the shift to low carbon.

And what that would mean would be using the engineering and manufacturing know-how, in places like the Black Country, which have often felt left out of the long boom, that we saw coming to an end in 2007 and 2008.

And this actually has the capacity to make parts of the country, that did feel left out of that boom, really included in the next wave of our economic future. That will mean using skills that perhaps we haven’t paid enough attention to during that long boom.

So, the first area is about work and about how we make the best use of an older workforce. Part of that of course is around policies about employment, flexible working, part-time working, retirement and so on.

We have this issue in government, which we discuss a lot, around the default retirement age and I was talking to George about it before I began. What this is really is a right to request for older workers to work beyond the default retirement age of 65.

Business says that most requests are accepted, but not all are, and some people say you shouldn’t have a default retirement age at all. Business tends to want the option of saying no, but says it says yes to most requests.

We have said we’ll have a review of the default retirement age this year. We haven’t made up our minds on this and in the review we understand there are issues for both employees and for employers to take into account.

But whatever the public policy, I do think that there is a tremendous wealth of experience in an older workforce that we have got to make use of. When I think about the jobs of future and the greater health that people are enjoying into old age, it simply makes sense for any society that is ageing to use the skills and talents of older people.

That, of course, will mean, in a fast changing world, giving older people the chance to re-train and re-skill. Because if our working lives are going to be longer, focusing training on the years between five and maybe around about 21 and 22 when we finish university or maybe even 18 if we come straight out of school doesn’t seem to make sense when you could then have a working life of many decades beyond that.

So the first big issue, for any meeting like this, is the area of work and the labour market.

The second area is consumption. And this is one where, I think, sometimes perhaps, marketing has a difficulty. Because when we think about consumption of products and services for older people, the expectations have changed and it’s not easy.

No one really likes to think of themselves as being in the era of those small ads at the back of the newspaper for stair lifts and that thing you need to get into the shower with… and the big slipper that you put both feet in to stay warm at night.

Because expectations of retirement and your ability to do things have completely changed. And there is a lot of money there: 80% of national wealth, 40% of annual consumer spending is accounted for by people over the age of 50. Older consumers spend more on housing, on fuel and power, but less on transport. They invest in recreation and culture and are more likely to think about ways to make the most of savings.

So when we think about consumption of products like insurance, banking, savings and obviously tax policy, which I am going to come on to, all of these things have to be rethought if the lifelong trajectory of consumption and saving patterns is much longer than it used to be. So there is a whole area around what people buy, how they save and how they spend.

But it has to be re-booted and re-tuned in line with expectations. One of the things I do as any constituency MP does, is going to lots of places including traditional old folks homes as well as the more modern independent places. And they are very,very different and that’s because expectations of retirement have completely changed, about what we’d want if we’d find ourselves in circumstances where we needed extra care. We would want more independence than has been traditionally enjoyed in those places and the best retirement complexes now are completely different from what we used to think of some decades ago.

That longer life span also means that things are done at different times. For example, there are lots of older dads around and I am one myself. I am 44 and I have got a nine months old baby at home. You wouldn’t have seen so much of that probably in the past, but it does changes your self-perception. That’s why I think marketing for older people is difficult to get right, because as people stay healthier for longer, they are probably not going to want to put themselves in the traditional box of older people in terms of what they buy and the products they expect to be marketed to them.

So there is a big challenge but also a big opportunity for companies to get it right.
A lot of businesses such as Marks & Spencer, Microsoft, Barclays have joined the Age OK programme to ensure products and services in the UK economy meet the needs of an ageing population.

Some car makers, for example, have an eye on this in terms of different models. I was reading in Barbara Beck’s piece in The Economist last night about Volkswagen who have made a model called the Golf Plus which is slightly bigger, slightly roomier, with an eye on the older driver.

So that’s the second area.

The third area I think is around public policy and there is a whole number of questions here.

It is absolutely true that older people have a greater propensity to vote and all politicians of all parties will be conscious of that. What we haven’t seen so far though is a sort of a generational self-interest, if you like, in that voting. You haven’t seen that in the way that you might expect, but I think for all governments we have to think about the trajectory of tax, just as the private sector and financial services have to think about savings products and so on.

And there is the issue of social care as we do grow older. There has been a significant debate around this and how you pay for it. People don’t like the idea of having to sell their house to pay for social care in the last year or two years of their lives or perhaps longer.

So I think you will see both main parties debating this strongly in the coming months and that it will be an issue in the election. We have got to get to a better place than in recent years in terms of the State’s contract with the public about how this is paid for. It isn’t easy because the costs are high but I do think this will be a big issue in the future on which we haven’t got to the right place entirely.

So, those are really the questions that I wanted to put before you today.

The question of work and the labour market.
The question of products and services.
The question of public policy.

As I said, this is all under the backdrop of whether an ageing society is a good thing or a bad thing. I do believe that it’s got to be a good thing that we’re living longer and that we’re healthier.

So those really are my questions:

How do we retain the capabilities of the older generations?

What opportunities are there for business in meeting the demand for goods and services?

How does government get this right in terms of responding to these changes?
If we succeed in facing up to these questions, then I think we’ll get ourselves in a better policy place and we’ll also meet the demands and the desires from an older population.

I want to just say good luck for this meeting today. Thankfully I’ll be able to stay and hear George’s contribution. Having had my day off yesterday means that I have got a double busy day back at the office so I’m afraid I won’t be able to stay for the whole meeting.

Thank you very much.

Hello everyone. It’s a great pleasure to be here.

I must congratulate whoever came up with the James Bond themed title for our conference today.

So before coming here today I thought I’d better have a briefing from M – for Mandelson, obviously – and he asked me to convey his thanks to you all for the works SSCs are doing and to wish you well with the conference.

So let me start by reminding us all of the extent to which we’ve undergone economic change over the past 20 or 30 years.

I come from South Wales, and there are few places that illustrate better just how brutally industrial decline can happen and just how much effort and investment it then takes to create economic regeneration.

If we travelled back in Dr Who’s Tardis we’d see that – My father was a steelworker and my mother’s brothers and father coalminers and to many people, steel and coal once seemed virtually to define my part of the world. But the decline of those industries was swift and its economic and social consequences all too visible. By contrast, their replacement by silicon, service industries and the television and film industries in which we now lead the UK, has been more gradual and less obvious.

As the MP for where BBC Wales is headquartered, I visited the factory which was converted to the set for filming Dr Who. In a sense it had gone from being a site where car components were manufactured to one where fantasies are manufactured

Similar transformations have taken place all over this country, not least here in the West Midlands. But change hasn’t stopped. Indeed, the pace of change is growing, and will accelerate further as the world starts to emerge from recession into recovery.

Businesses will respond to the pressures of global competition by moving into new sectors, striving to increase productivity and to introduce new goods and services.

But for them to do that successfully, and to reap maximum benefit for themselves and for the country as a whole, they’ll need a workforce skilled as never before. And, as our increasingly international business environment has already shown, if they can’t find it in Britain, they’ll look elsewhere.

The issue for Government is how to manage the transition from the old to the new in ways that ensure Britain’s competitiveness but which avoid the sort of trauma to communities that we experienced in the 1980s and 1990s.

That’s going to take a lot more than simply waiting for change to happen, or trying to shore up areas of traditional skills strength. To safeguard existing jobs and create new ones, we’ll need to develop new skills, and especially transferable skills that can serve people well in more than one sector.

The Government’s approach to these challenges is described in two documents. The first, New Industry, New Jobs, was published a year ago and set out our view of the future economy and identified some key sectors for future growth.

The second, Skills for Growth, appeared late last year and discussed how the skills system can support the industries that will have major workforce and skills requirements in the years ahead.

They include, for example, the environmental and low carbon industries. Here, my Department is already working with the Department for Energy and Climate Change to develop a Low Carbon Skills Strategy This will identify particular skills challenges and opportunities across the full range of emerging technologies and markets – ranging from carbon capture and storage, through renewable energy generation, to ultra low carbon vehicles.

We have also launched an Advanced Manufacturing Strategy and strategies for emerging sectors of Plastic Electronics and Composites. I am pleased by how Sector Skills Councils, employers and providers are working to meet the skills needs of these emerging sectors.

Of particular relevance in this apprenticeship week, Skills for Growth sets out our plans to continue to expand apprenticeships:

I think all of us here know that apprenticeships have been one of this Government’s great success stories. When we came to power, there were fewer than 70,000 apprentices. But since 1997, over two million people have started an apprenticeship and we are currently investing over £1 billion a year in this tried and trusted form of training.

Currently, there are over 130,000 employers out there offering apprenticeships across 80 industry sectors.

Now we aim to build further on that. For example, advanced apprenticeship places are almost doubled, with an additional £140 million package to create 35,000 places and creating the apprenticeship scholarship fund.

We also want to provide more opportunities for younger and older people to gain skills at higher education level through learning in the workplace. Our ambition is for three-quarters of people to participate in higher education or complete an advanced apprenticeship or equivalent level technical course by the age of 30.

I don’t pretend that the task of identifying areas of future skills need and then acting to meet it is going to be easy. It will require in particular even closer collaboration between employers and skills providers.

From that perspective, it’s not surprising that Skills for Growth sets particular challenges for Sector Skills Councils (SSCs).

For example, it argues that SSCs need to achieve a better fit with the likely sector boundaries of the future. But it also makes clear that there is a very important role for SSCs in the new skills landscape, notably when it comes to putting employers in the lead in spelling out the skills needs of their sectors.

The Evaluating Economic Impact SSC report launched here today highlights the valuable contribution that SSCs are already making to increasing skill levels in their sectors. And we want to build on their good work in developing our new skills landscape.

In many ways, the implications for the skills system of the need to deliver the highly-skilled workforce we need for the future economy are very familiar. Responsiveness to employers and learners alike will continue to be key.

I recognise here the important work you are already doing to ensure that vocational qualifications really provide what employers need for business success.

So we also need employers and SSCs to keep working together within and across sectors to identify and deliver skills for emerging sectors. The work that SSCs have been doing to inform the forthcoming first national audit of strategic skills will make a key contribution here.

And at a regional level, I have made it clear to RDAs that I expect them to work closely with SSCs in developing regional skills strategies.

None of that is going to be straightforward, especially in the tighter fiscal environment within which all publicly-funded bodies are going to have to operate in the months and years ahead. And employers, too, who remain by far the major funders of adult skills this country, will also have to balance the competitiveness advantages of a highly-skilled workforce against the many other demands on their budgets.

But with all the difficulties comes a substantial reward. Economic dynamism and the prosperity it brings. New industries, new jobs and a new chance to show the rest of the world that the far-sightedness of British businesses and the talent of British workers remain second to none.

Thank you.

Introduction

The last eighteen months have been exceptionally tough for many businesses and the people they employ. Effects are still being felt on the factory floor, in businesses and households up and down the country.

I know what you’re expecting me to say here. You’re expecting me to talk about what the government has done to get us through the recession.

But the real heroes of this recession are businesses and their workers. They are the workers who accepted shorter hours or lower pay to keep jobs alive. They are the businesses that offered this flexibility.

The government has done everything possible to back you in doing that. The £27billion in lending guarantees from the banks and the up to £1.8billion in extra lending capacity for small firms through the two stages of the Enterprise Finance Guarantee.

The VAT cut. The scrappage scheme. The tax deferrals, help lines, the £3billion in extra support for the job centre system to help people get training and get back into work. Many of these things involved close consultation with the FSB and huge thanks for that.

On that point, I want to respond quickly to a criticism that has been levelled at the government over the last couple of days about prompt payment of invoices by government. This is critical for small firm cashflow and that’s why we committed to having central government pay its bills within ten days.

In December, central government paid £21billion worth of bills in less than ten days. 19 out of 20 invoices are now paid within ten days. Although local authorities are not covered by the prompt payment code, most have taken on similar commitments and English authorities are paying invoices in 18 days on average. So I don’t want to minimise the need to keep the pressure up, but public authorities have done a good job in turning invoices around as fast as possible.

So I don’t for one second want to downplay just how tough it has been for small businesses. But the fact that the insolvency rate for firms in this recession has been half of the recession of the early nineties tells us more businesses are able to tough it out. The number of new business owners in the UK has actually risen over the last year.

And because those businesses have survived, and because people have had so much extra help getting back into work, unemployment is more than a million lower than it was in ‘85 or ‘92. And because people are working, repossessions are also running at half the rate of the recession of the 90s.

Frank about the future…and the recent past

But the future remains very uncertain. We’re looking back at the last decade and asking how the global economy stumbled, and the British economy with it.

And I think this means being frank with ourselves about what it is going to take to rebuild Britain’s growth on strong foundations. How we balance the budget without tearing into the fabric of public services, or undermining confidence or demand.

So when I say frank, I’m not talking about silly, hair-raising comparisons between the UK and Greece. Or seeing who can talk the toughest talk about slashing public expenditure from day one of a new government.

Because these things are more complicated than that.

Private demand is growing but is still very weak. The money government spends helps balance that fall. It keeps businesses in contracts and people in jobs. Cut it before private demand is strong or revived enough and you risk a double dip recession.

But we all know that the public balance sheet needs to be repaired. Of course preserving Britain’s credit rating matters. That’s why we have made the commitment in law to halving the deficit by 2014. The biggest recalibration of the public finances in a generation. And we will back this with a new drive for public sector reform and rising public sector productivity, which has fallen too far behind the private sector.

It also means targeted tax rises, which will never be popular and will never make the government friends in business. I get that. But we are committed to ensuring that the UK remains a competitive place to start and run a business. Britain’s corporate tax rate remains very competitive. As does our capital gains tax, especially for entrepreneurs.

Given this, it is surprising that the Opposition have proposed cutting investment allowances for small businesses at precisely the time when we need businesses to be investing.

But we do need to be frank that while growth is growth no one is hanging out the bunting for 0.1%.

We need to be frank about the fact that the dependence on financial services hurt us and is holding us back. About the fact that heavy consumer debt will act as a drag on recovery. Our focus was on inflation, not asset bubbles, or the debt that funded them.

And frank about the fact we need to build a new economic model for this country.

There is no question that future growth in the British economy cannot be based on excessive consumer debt or the growth of the public sector.

It cannot be built on reflating the financial services industry as fast as possible, without the right structural reform. And while I don’t agree with every part of President Obama’s plan of last week, it has the real merit of being clear that the status quo ante is not an option. The real economy will not be held hostage to the financial economy again.

Future growth has to be driven by private enterprise and private investment. And we are committed to raising business investment and backing British exporters to the hilt.

We need, and now have, two plans. A plan for deficit reduction and a plan for growth. Both are equally important and depend on one another for success. The plan for growth is what I have been setting out over the last year.

It’s about investing in the capabilities we need to create the jobs of the future and the skills and science and infrastructure we need to do them in every part of Britain. Our huge new investments in Digital infrastructure and High Speed rail will help open Britain’s regional economies even further to the world and ensure that they share even more in the fruits of future growth.

Our clear commitment to renewable and nuclear energy, our tough carbon targets and our big investments in low carbon technologies will help ensure that the UK builds real new strengths in low carbon and is a world leader in this growing sector.

Government needs to set the strategic direction and put in place the right framework of policy and necessary public investment. But equally, at the centre of our growth plan have to be enterprise and small businesses. They will create most of the new jobs. They will in many cases challenge incumbents with new green technologies. They will be the adaptable, imaginative companies that lead the way on the low carbon transition. They will always be our biggest national reserve of entrepreneurship and self-reliance.

Supporting small businesses

So they need a clear shot at the goal. The red tape burden is so important for just this reason.

We’re proud of the fact that the UK ranks 5th in the world and top in Europe in the World Bank’s Ease of Doing Business survey – which is by far the most systematic and objective survey of such competitiveness. And incidentally, we’ve committed to moving up to 4th place next year.

But there are other big issues. The banking system needs to win back small business trust. We need more competition in the market for business banking. Which is why we have launched the consultation on the expansion of banking services at the Post Office, and asked how its services might be expanded to best meet the needs of small businesses.

With the restructuring of RBS, Lloyds and Northern Rock assets representing about 10% of the UK banking market will be sold to small or new players in the market. That’s very important because competition matters. Let’s get the banks out there chasing for business again and competing to get yours.

We’ve also created two important new vehicles for channelling venture and growth capital in the Growth Fund for established growing companies and the Innovation Investment Fund for high tech firms, including startups. The aim is to invest well over a billion pounds over the next twelve to fifteen years, almost all of it in SMEs.

Small firms are also absolutely central to a healthy apprenticeship and training system. so we are delighted to be working with the FSB to place up to 10,000 graduates, who would otherwise be unemployed, as interns in small and microbusinesses. I know that it has required the shifting of a few bureaucratic boulders…

These are just some of the tens of thousands of opportunities we are opening up to help provide new opportunities for young people and to tackle youth unemployment. Including the guarantee that everyone in this country under 25 will receive training or a job after six months of unemployment. Never, never again in this country should we lose a generation to a prolonged period of worklessness. That was a mistake of previous recessions and not one we’ve repeated.

Rebuilding confidence

This is a moment for a sense of renewal and confidence in our country. That’s why talking the country down for political gain seems to me such a dangerous line of argument. In reality, we are coming out of recession with our growth potential intact.

Most of the choices Britain has made over the last ten years were the right ones. Some of them were not. In some cases we are being driven to change by the reality of globalisation. In some cases we are now asking if the market-driven prerogatives of the short term are always right for a long term world. These debates are too important not to have.

These arguments are central to Britain’s future growth. Business is central to all of them, and small business is central to business as a whole.

It is a debate in which I hope the voice of small businesses will be heard loud and clear- that’s the challenge, I am sure you will not shrink from it!

David, I am delighted to be with you – thank you for inviting me to join you at the inauguration of this celebration. And celebration is the right word – there is a great deal to celebrate in this industry’s contribution to our economy and to our society over the past twenty five years.

25 years of services – but the invention isn’t much older than that. I met a while ago in the US, Marty Cooper who invented the cellular mobile phone and made the first call on one, while working for David’s former company – and that was only in 1973. It has been astonishingly fast progress, with an enormous economic impact.

David talked to us as well about a dream, and I want us to celebrate today as well the social impact. I remember, as many of us will, the debates we used to have about how to extend the benefits of having a phone to people who couldn’t afford one. In the 1990s, many of the asylum seekers and others on very low incomes coming to my surgeries in my constituency in the East End of London were’nt able to give me a phone number. And I remember how that suddenly changed – with extraordinary speed – when pre pay mobile services were introduced a decade ago. Today almost everybody has a phone number. Cellular mobile has powerfully boosted social inclusion.

And its very striking that the commercial packages to provide broadband internet to low income families under the Government programme launched last week, have mobile as their broadband solution.

Looking outside the UK, the impact has been even more extraordinary. In India, in China, in Africa. And in Africa we see, in particular, examples not just of remarkable economic development, as places which have never had a telephone service in the past have leapfrogged to modern cellular communications, but of inspiring social development as well, as the new technology has been harnessed with imaginative corporate responsibility. And some UK players have played a very important part.

Being here in this marvellous hall is a reminder of the complementary relationship between aviation and telecommunications. Both industries can trace their origins back to the time of the French revolution, with the first balloon flights and the first telegraph systems. When, two hundred years later, in 1985, the first mobile phones appeared on the streets of Britain, it began a new chapter in an old story.

Technology develops at a remarkable speed. Government played its part in helping secure worldwide agreement on GSM, now an extraordinary global success story, and later in making sure new spectrum was available for 3G.

It was initially luxury items for a few. But it didn’t take long before the market delivered affordable, indispensible devices for all. And the competitive market in the UK, and our investment-friendly climate, have helped put British consumers at the forefront in Europe.

I am now in my third stint as the Minister looking after Government’s interest in this sector. My contribution has been a modest one by comparison with those in the museum today, but I was on the receiving end in March 2003 of the first official 3G video call, made by then Secretary of State Patricia Hewitt. And it has been a remarkable story, over the past 25 years, of innovation and enterprise, of overcoming hurdles and defeating scepticism, of understanding needs and then smartly figuring out how to best meet them.

Today, my brief is to take forward the strategy set out in the Digital Britain White Paper, published last June. The digital sector is a huge success in itself, with outstanding opportunities for future growth which we need to harness as we emerge into economic recovery. But it is also the vital enabler for economic and social activity, right across every sector. As fiscal consolidation will be imperative over the next decade, and as we look for new sources of growth and for more efficient ways to deliver services, this sector will be providing many of the answers.

Three components in the Digital Britain strategy:

First, it recognised that it is people who use technology, and ‘people becoming digital’ is vital for social mobility and inclusion. Last week’s announcement that mentioned the home access programme will provide 270,000 low income families with a free laptop and broadband, giving parents the ability – for example – to monitor online their child’s progress at school.

Our champion for digital inclusion is Martha Lane Fox, who is doing outstanding work encouraging people to get online – particularly those ten million UK citizens who have never used the Internet in their lives. We hope that, in the next five years, the vast majority of large transactional services will be handled online, often via mobile. And the result will be better value for businesses and consumers – and for taxpayers.

Second, Digital Britain recognised the need for a strong supporting structure for developing content, whether public service content or copyrighted material. The creative industries have been damaged by large scale on-line copyright infringements, though not on the whole by the mobile service. The obligations in the Digital Economy Bill currently before Parliament aim to establish a process through which people are informed about copyright, understand the damaging effect of illegal actions and change their behaviour so they can get the content they want legitimately.

We want content creators to be confident they can continue to earn a livelihood. Companies nurturing creative talent will be able to be confident of a return on their investment, so they can develop new talent to entertain and inform us all.

Third, Digital Britain was about investment in networks. We have to build on the story of liberalisation, competition and independent regulation, with a new phase of infrastructure and service development.

We want a good basic level of broadband to be available to every home, and then go further by investing an extra £1 billion in next generation broadband by 2017. Its even more important in the current economic climate, as having fast, modern broadband will help to create and expand thousands of companies and mean thousands of new jobs. It is crucial infrastructure for Britain’s development in the future.

For mobile services to contribute their full potential, they need more spectrum. Our major challenge is getting spectrum into use in a way that delivers for consumers. Each extra year without next generation mobile services is a year too long.

So our Wireless Radio Spectrum Modernisation Programme was designed to work out how to liberalise 2G GSM spectrum, and provide more spectrum through releasing 2.6 GHz and the Digital Dividend 800 MHz spectrum, which we want to bring into line with other European countries.

The Independent Spectrum Broker’s conclusion, broadly shared across industry was that a lot of progress could only be achieved through a comprehensive approach. By looking at all the spectrum bands involved; at the level of spectrum holdings by operators across those bands; and at which bands spectrum was held or not held.

We are working now to implement the recommendations. We issued a consultation in October on use of the Secretary of State’s powers to direct Ofcom. Once that consultation closes, on 5 February, officials will complete a full analysis of the responses. But the stakes here are very high. Decisions this year will shape the next twenty five. I hope we can together make the right judgments.

Let me close by thanking Cambridge Wireless for organising this event, it’s a great occasion; and thanking everyone in the industry for achieving the incredible success we are celebrating today.

We need a lot more success in the future too. Let’s work together to achieve it.

Thank you.

I am delighted to be here today to launch the “beta” of data.gov.uk. We promised this in Smarter Government; today we deliver it, with over 2,500 data sets.

Government Data

Government has a unique role in the data economy. We gather definitive reference information across a huge number of different areas. If you want to know:

• whether or not a company exists;
• whether it is solvent; or
• whether the products it is selling are safe for consumers

we hold that data. If you need to know

• whether the house you about to buy is built correctly;
• whether it is prone to flooding; or
• whether it is handy for the buses;

We have data on those too.

If you want to know how many fish there are in the English channel, I am reliably informed that we have data about that.

What’s more, as the Prime Minister identified in his Liberty speech back in October 2007 – “Public information does not belong to Government, it belongs to the public on whose behalf government is conducted”.

Data.gov.uk

So on 10 June last year, the Prime Minister told the House of Commons he wanted Government information to be accessible and useful to the widest possible group of people, and that he had asked Sir Tim Berners-Lee and Professor Nigel Shadbolt to help us drive the opening up of access to Government data.

In the seven months since then Tim and Nigel have achieved a lot:

• in Smarter Government we set out clear principles for the release of public data which apply to all departments;




• we have built a developer preview of data.gov.uk, and engaged over 2000 people in helping us improve it and telling us what data would be most valuable to them and in what format;




• we have drawn together over 2,500 data sets into a single, easy to find, place.




• we have agreed an open licence that allows the re-use of the government owned data to be freely re-used with no bureaucracy




• we have set out commitments to release high interest datasets over the next few months in weather, transport and public finances




• We have launched a consultation on how Ordnance Survey can open up some of its datasets, including those people using other government data have told us would be most useful to them. Do make sure you respond to that consultation if you are interested.

Tim and Nigel: that we have achieved so much so quickly is a testament to the leadership and drive that you have injected into the work across Government.

But I know you would also want me to say how delighted we are by the support and feedback from the development community, and how that has been valuable in steering and prioritising the work. That’s been a distinguishing feature of the UK approach. We decided to move very quickly to set up a developer preview of how data.gov.uk might work, so that we could engage with potential users quickly and effectively.

Today we are releasing a new version of data.gov.uk. It is now fully open to view, and its features reflect feedback from developers. But it also includes lots of membership functions so that developers can continue to engage with us and with each other as we take the Public Data work forward.

This is not the end of the process. Data.gov.uk is what the technical world calls a “beta” – it is usable now. Over the next few months:

• Government departments will release more and more datasets on to it;




• we will continue to develop the functions in response to feedback;




• we will make more and more data available in Linked Data form, as well as in raw form;




• we will encourage other parts of the public sector to apply the same principles of public data and to contribute data to data.gov.uk; Nigel has already had the first meeting of his Local Public Data Panel to drive this forward in local government; and




• we set out other public data actions in Smarter Government before Christmas.

And, more than that, we have established further release and reuse of Public Data as key to our plans for reforming Government, implementing the principles spelt out in Smarter Government in order to strengthen the role of citizens and civic society, recast the relationships between the citizen and the State, and streamline Government.

Success in Public Data is not just about what the Government can do. It requires Government and developers – both community developers and businesses – to work together to deliver value for society and growth to the economy. So we want to continue to hear from you:

• what further data is the priority to allow you to create new and innovative services;




• how we can further improve the data.gov.uk service; and




• about your applications and ideas, and how these are being used by people to get a clear view of how government is working on their behalf, how their public services are performing and could be improved, and to allow them to lead safer, more sustainable, more empowered lives.

Applications

That last point is vital. The challenge for all of us is to make this real. We need new businesses, generating profit. We need new social ventures, benefiting all of us, and particularly those experiencing disadvantage. We need to build on exciting early shoots like: the Postcode Paper , ITOworld and Mapumental to deliver real benefits that people can understand.

The Public Sector can offer a wide range of support to help in growing and developing ideas, for example through Business Link.

And I warmly welcome the announcement by 4iP that they will make two investments of up to £100k each in start-ups that use public data.

In 2008, the Power of Information Taskforce headed by Richard Allan – on the panel here today – ran a competition called Show Us A Better Way. With over 450 ideas submitted, the response was astonishing.

Now we have been thinking further about what more we could do to support this sector in the UK and provide a new showcase for British talent?

So, over the next few months, we will be looking to work closely with the innovative web sector in the UK to help showcase British talent in the use of public data.

Summary

Before you hear from Tim and Nigel on the detail of data.gov.uk, I want to leave you with:

• Transparency and Accountability – We want you to see how Government is working on your behalf.




• Improving Public Services – we want you to be able to tell us how we could do better.




• Economic and Social Value and Growth – we want you to develop new, innovative information-based businesses and communities.

We have come a long way in a short time, but there is a great deal more to do. We need your help to shape this in the period ahead. We need you developing, building and telling others what you have done.

Thank you for organising today and pulling this event together. Let’s work together to make the most of these very important opportunities.

Thank you.

Good morning everyone. It’s a great pleasure for me to be able to join you today.

Towards the end of last year, the Government published its plans for higher education, for skills, for tackling unemployment and for growth. And only this week we’ve published our response to the Milburn report on access to the professions.

Today, I want to talk you through some of the main points of these proposals that will affect you. And I want to leave plenty of time at the end to answer any questions you may have.

Skills are an essential part of the national recovery plan. The strategic goals we want to achieve through the skills system remain much as they ever were. But the new context of the need to support British business and British people out of recession and into recovery give our work to achieve them a new urgency.

Indeed, work to maximise the sector’s contribution to recovery and renewed growth is already under way.

To take just one major example, the first of the UK Commission for Employment and Skills Audits of future skills needs is due shortly.

I know that the phrase “the right skills in the right place at the right time” has become a bit of a mantra, but that doesn’t make it any the less necessary. And this analysis should be a real help in delivering it.

My Department’s Going for Growth strategy, which was published early this year, set out a long-term cross-government approach to supporting and encouraging sustainable economic growth.

Not surprisingly, the strategy covers several areas of direct relevance to this conference. For example, the need to foster knowledge creation and its application. The need to help people develop the skills and capabilities to find work or to access higher education. And the need to supply the right skills to build the businesses and industries of the future.

In that sense, it complements the key themes of our Skills for Growth strategy, published last November. This, too, emphasised the benefits of giving people greater control over their own learning by means of skills accounts and better information about courses and the bodies that deliver them.

Those same themes of simplification and individual empowerment also feature in the Department for Work and Pensions White Paper, Building Britain’s Recovery, and indeed, in the Government’s response to Alan Milburn’s report.

You may have picked up already that the measures listed in our response include the introduction of the new Specification of Apprenticeship Standards for England and an Apprenticeship Scholarship Fund from the autumn. These will help to build the new technician class we outlined in Skills for Growth.

It’s no secret that all of these things I’ve been talking about, and more, will need to be delivered in parallel with achieving the financial efficiencies that we are asking of further education, along with the rest of the public sector.

We must not ask you to do the impossible. But we believe that we can free the money necessary to achieve the sorts of objectives I’ve been talking about by reducing funding for lower-priority programmes, increasing the financial contribution made by individuals and employers and finding more efficient ways of delivering learning.

Change will come to the further education sector whichever Party is in power and it’s certain to come without large-scale extra funding attached. At the same time, the demands on you, the most important of which do not emanate from Whitehall, can only intensify.

Because although governments ask you to respond to what the country as a whole expects of its further education system, the real impetus towards greater responsiveness comes from much closer to home.

From the demand from young people for a good start in life.

From the demand from over 2.5 million unemployed people for a route into work or back into work.

From the demand from workers for the skills they need to get on.

From the demand from businesses for the skilled workers they need to thrive.

And from the demand from communities for their further education providers to provide the sort of local hub for learning and aspiration that only they can.

If you’re going to respond effectively to all of those demands, you’ll have to be open to innovative approaches where they can deliver greater efficiency or economies of scale.

You’ll also need a clear understanding of the changing environment in which you work and what support you’re going to need to deliver. In that regard, you will need to continue to work with us to ensure that Minimum Levels of Performance, the Framework for Excellence and the traffic light system offer what we all need.

Performance data will help not just funding bodies, but also learners and employers to identify outstanding colleges and training organisations which will have greater autonomy to respond to our priorities. The new Skills Funding Agency will consult on how they are identified and what flexibilities will be available to them.

More streamlined arrangements for determining regional skills needs will also help you respond to your local communities. Regional Development Agencies (RDAs) will deliver regional skills strategies that support national priorities, skills advocacy and the Business Link brokerage service.

The embryonic Skills Funding Agency is already working with RDAs and Sector Skills Councils to ensure that our investment supports their priorities. Details will be included in the Agency’s forthcoming delivery plan. The plan will also set out the next steps for taking forward the policies announced in the Skills Investment Strategy.

I do want to say a little more about the new Agency, because I know that the transition from the Learning and Skills Council to the new body has been a subject of concern for many of you. And I’m pleased to be able to reassure you that transition is going well. The new Chief Executive, Geoff Russell, and his senior team are now in place and staff are moving into their new roles.

Equally encouragingly, all colleges and training organisations know by now who their Skills Funding Agency account manager will be. The Single Account Management system will mean one contact and one contract for all publicly-funded providers. And I know that’s a simplification that you welcome in principle just as much as I do.

I hope that what I’ve said so far will help to inform your discussions during the rest of the day. As ever, the forward agenda for further education is both lengthy and challenging. But the more constructive discussions we have about how to make it all happen, the more likely it is to become reality.

And it’s in that spirit that I’ll now try to answer any questions you may have.

Thank you.

Stephen Timms said: “As Minister for Digital Britain, it’s my job to secure future success in the creative industries. Making sure we have world-class infrastructure, a sound intellectual property regime and the right skills in the workforce. Government activism is a practical necessity.”

Read the full speech on the Digital Britain website.

In theory, this is a transformative phase we are now entering for Europe. We have a new role for a President and a new High Representative. We have a big chance to redefine European influence globally in the face of major challenges like climate change.

In practice, the financial crisis that we have experienced and the ensuing recession pulls in the opposite direction, as do a lot of our national politics – these forces risk making us more politically insular. And we have to resist that because it is going to make recovery and building on that recovery a darn sight harder to achieve.

Europe’s big external agenda rests to a large extent on our internal economic strategy. In my view, protracted institutional reform has diverted some attention from economic modernisation and reform. Since 2000 and in recent years we have rather lost our way in pursuing that agenda. During the intervening years, the need for reform and economic modernisation has become so much more urgent.

It is critical to us in the UK that we do not take our eye off this ball any longer.

Britain’s economic recovery depends on Europe’s economic recovery, whether it is European demand which represents our biggest market, or the European response to the financial crisis. And growth plans in this country are inextricably linked to similar plans in Europe.

Crisis measures now giving way to regulatory responses. This is a critical phase for business, and especially for financial services. The key here is to distinguish between the need for new proportionate regulation in financial markets on one hand and the wider regulatory agenda, where the somewhat more disciplined approach of the EU to better regulation needs to be maintained, but strengthened in the life of this Commission. Because business burdens, especially on job creation, will be critical to the rate of recovery in Europe.

Some, as we have seen, in the European Parliament will interpret the banking crisis as a clarion call for more business regulation in general. We need to push back against this intelligently. We have to lead that debate and bring it to a set of reasonable conclusions.

Of course, the City is sensitive about its regulatory burden and I understand the caution being expressed. We do not need regulatory grandstanding – we need regulatory coherence, joined up between jurisdictions. We do not need multiple, cumulative layers of regulation that amount to overkill.

Our own FSA has a duty to take a step back and introduce a sense of proportion. This is not to deny there is a need for more financial oversight and the regulation of risk. There is no point in defining the industry’s competitiveness by the lightness of its regulatory burden if that lack of governance means the system blows up and needs taxpayer rescue once a decade.

There is a compelling case for moving the basic level of the design of financial markets regulation – although not its implementation or supervision – to the level of the Single Market.

We in the government think the balance struck on de Larosiere, where the EU collectively defines, and Member States implement and supervise, is the right one. This makes prudential sense – this is the level at which markets and banking operate. And in my view Michel Barnier gets this and that forward looking common sense will guide his actions.

A coherent EU position also gives us much greater weight in shaping a new global regime through the G20 process. It also makes commercial sense. Don’t see how the UK can detach itself from a single European regulatory regime. If it wants to be the main capital and financial markets centre for the single market and if we want to be the main route or centre for investment into the single market, it doesn’t make sense to detach ourselves from a single coherent European system.

However, I agree that some of the initial attempts at this were badly flawed. Parts of the Alternative Invesment Fund Managers Directive read more like a long standing grudge against the hedge fund industry than a serious attempt to address systemic risk.

Most other member states understand on principle the fact that the UK has more skin in this game than the rest of the EU put together, and we expect that to be respected. We will need to work hard with the European Parliament to get a constructive outcome.

On the wider regulatory agenda, we in Britain have got to avoid two mistakes. Don’t play into the hands of eurosceptics by equating Brussels solely with regulation. All markets are regulated. At base what we should work for is a single regulatory system in Europe, rather than 27 separate ones.

What matters is keeping the burden right, especially for small firms. Business needs to engage firmly in Brussels alongside government to shape the regulatory debate.

We have to provide leadership and engage with the EU on growth plans. We set out as a government some ideas for this last year, which I believe have coloured European Commission thinking.

In 2005 during the UK Presidency, when Britain called the Hampton Court summit there were no competing views. That agenda became the agenda for the European Commission – people do listen to us when we are thinking European, rather than bashing Europe.

Liberalisation of EU services market. 2010 marks deadline for implementation of liberalisation of key service trade. We want the Commission to focus on a clear plan to review implementation. And to focus on remaining obstacles in key areas like professional and business services like accountancy and legal services.

A genuine EU digital transition plan. We think the EU should commit to clear targets on universal broadband access across the whole EU. We need to make sure that the incentives are right to get digital infrastructure into every part of the EU.

When the EU budget is reviewed during the course of this year, we have to bring our views on the redistribution of that budget, so that more is allocated to low carbon, to research, to innovation.

New rules on growth capital – as you know the UK has created the IIF and the Growth Fund to address this problem. We should think creatively about making better use of the European Investment Fund – which is a fund of funds – to significantly reduce the venture capital gap with US at the EU level.

While we have argued very strongly that Commission should end the temporary State Aid flexibilities in 2010, we want to see revised risk capital guidelines for public financing of high tech and innovative companies. We want a little flexibility to enable smart public sector intervention.

The next five years are going to be critically important. We need business and government working side by side in Brussels, not just on a defensive regulatory agenda, but to shape a whole new positive agenda for EU governance and growth. The next five years are important also in the building of our external relations.

I hope very much that the European Commission, without any delay, is ready to recover its leadership role – now that its appointment has been safely banked – and veer a little more to the creative and adventurous side.

This is the Commission’s job:

• to stand up for the long term
• to represent what is wise rather than populist
• and to give a strong lead where, inevitably, more short-term, electorally conscious national Governments may fear to lead.

Speech by: Lord Drayson
Venue: European Cleaner Racing Conference, Birmingham NEC

CHECK AGAINST DELIVERY

Good morning, everyone.

The first couple of times I attended this event, it was as a driver and a team owner.

But I’ve been the minister for science and innovation for just over a year now – and I’m primarily wearing that crash helmet today, rather than my Drayson Racing one, because I want to talk about how UK motorsport can become an even greater national asset as we move to a low-carbon economy, and why that’s an opportunity for you.

Now, I understand the basic motivation of people involved in motorsport. We want to win. Period. Securing pole position and then standing on the top step of the podium, I know, the be all and end all.

And that’s what we’ve been doing in this country. The UK is – hands down – the world’s best in this industry and in this sport, and I’m not only thinking of Button and Brawn. 2009 saw other triumphs for the likes of Dario Franchitti and Kris Meeke.

Away from the rostrum, we have a motorsport sector which – according to the Advanced Institute of Management – involves around 4,500 firms with an annual turnover of £6 billion; employs some 38,500 people on a full- and part-time basis, including 25,000 engineers; and contributes £3.6 billion to the UK economy through exports.

The Government recognises the value of this industry – not only to the country’s bottom line, but to the UK brand. I’m delighted that the British Grand Prix is now secure. And with two British world champions both driving for McLaren, the F1 spotlight will continue to be directed on UK motorsport – on the talent of our drivers, on the quality of our science, engineering and technology.

That’s all to the good, but I’m also very aware of the challenges facing this industry – both from the perspective of the paddock and from the viewpoint of someone pre-occupied with how we go about rebalancing the UK economy after the credit crunch.

The recession has hit motorsport, just as it has damaged other sectors. The decline in income from sponsorship, especially outside of Formula One, is just one consequence of the global downturn.

And I believe that’s it has also proved damaging to the low-carbon agenda in motorsport.

My sense is that we’re at risk of losing momentum in green racing: in promoting technologies with clear potential for wider application and in convincing a sceptical public – sceptical about green cars and even the very relevance of motorsport in a world facing the challenge of climate change.

Failure to meet that challenge is really not an option for us.

Motorsport has a significant role to play in preparing for and benefiting from that transition to a low-carbon economy. In fact, it’s custom-made to do so, and I don’t believe it will detract from motorsport’s core purpose: winning races.

You need fresh sources of sponsorship, but you also need sustainable business models where sponsorship isn’t the only income stream. Going green and pursuing technology transfer opportunities isn’t the sole answer, but it’s one of them and it’s going to be more important in future.

The automotive industry, meanwhile, needs help pushing ahead with green tech, and the Government needs help in persuading people to change what they drive – because the presenters of Top Gear are having a field day making fun of green cars, and any thumbs-down from the Stig leaves a stigma that’s hard to dislodge. When a green car is rated as “sub zero” on “cool wall”, then we know we’re getting somewhere.

That’s a crude summary of where we are, and it raises the question of what we do next. I want to concentrate now on how we can work together more effectively, but first, I want to issue a challenge to the administrative – as opposed to the team – side of the sport.

Competition is what drives us on. When rules change, teams are quick to adapt technology.

I want to see governing bodies championing radically greener racing by redrafting their rulebooks. It’s the best catalyst for change and a sure means of proving that motorsport is in touch with the abiding issue of the 21st century – and staying ahead, but in step, with what’s happening in the car and other industries.

So what are the barriers? Competition itself certainly won’t suffer, because the rules – the parameters of racing – change all the time. Indeed, what better way is there to secure motorsport’s future, attracting a raft of new potential sponsors?

As I’ve already said, going green would also open up far greater opportunities for developing technology partnerships with the automotive sector – and that’s the other thrust of my speech today.

Where motor racing leads, mainstream manufacturers often follow. We can all reel off examples of motorsport technologies finding their way into aerospace and marine applications, medical and military – to say nothing of cars on our roads. But there’s more you can do to become a greater asset to this country’s industrial base.

My honest view – and this isn’t about allocating blame – is that motorsport and the mainstream car industry aren’t doing enough together – especially in terms of low carbon.

At the same time, UK motorsport and Government aren’t talking to each other enough.

Talking works.

Take the case of mainstream automotive.

Through the Innovation and Growth Team, the Government sat down with the automotive industry to figure out the major drivers of change over the next 25 years. CEOs discussed business opportunities against the backdrop of carbon legislation and energy security. Industry scientists and engineers defined the absolute limits of existing technologies, and the potential of new zero-carbon cars in 40 years.

The outcome was a roadmap for the future, and a significant new body: the Auto Council, where Government and automotive will work together to make this happen.

The process also gave birth, indirectly, to the Office for Low Emission Vehicles (or OLEV), which brings together senior Whitehall figures from business, transport, energy, local government and finance to work with automotive, power generators and infrastructure companies; with experts on pricing and systems design; with academics and creative thinkers.

Things are really moving. OLEV is coordinating over £400 million in direct government support for, amongst other things, the world’s largest EV and plug-in hybrid car demonstrator competition.

Let’s build on this, with more input from motorsport: a greater role on the technology side, a greater role in addressing people’s attitudes to low-carbon.

I’d like to see two things happen – and, to be blunt, neither involves extra money from government. The purpose is to work together and seek out market opportunities.

First, I’m aware that the Automotive Council secretariat is already in dialogue with the MIA, but we need more motorsport companies to engage directly with the Council and its working groups.

Second, we need to identify ways to boost the role of motorsport within the low carbon agenda. I know that my Cabinet colleagues, Andrew Adonis and Pat McFadden, who oversee the work of OLEV, are keen to hear from industry representatives how motorsport can support the move to high-efficiency, low-carbon transport.

I’d like to get your take on this, but I’ve seen it working in the US, where the American Le Mans Series is closely, and productively, involved with the Environmental Protection Agency and the Department of Energy.

One last thing, I’m delighted to be launching today the new CRP electric race bike, designed for exclusive use in the TTXGP race series.

As many of you know, Azhar Hussain, the man behind TTXGP, had the vision to run the world’s very first zero-emission motorsport event in the margins of the Isle of Man TT last June.

Azhar got a fair bit of stick for doing so, but he received support from UK Trade & Investment. The event was a great success, and it has grown into an international series, with races this year in Europe and North America. It demonstrates what I said earlier: when you change the rules of the competition, new technology follows close behind.

Azhar is now behind the CRP, which boasts a good deal of British technology and sets an important precedent. I challenge other firms to develop bikes like this one – which allow enthusiasts to race against constructors. It’s a fantastic development. Great PR.

And I suppose that’s what I want to stress above all. The UK is out in front on low-carbon: the first to set legally binding targets for emissions; absolutely serious about renewables; way ahead of the limited consensus in Copenhagen. Our future industries, jobs and economic growth depend on the UK being a leading developer and manufacturer of low-carbon goods and services.

OLEV is all about affecting cultural change in line with these commitments. And yet we’re struggling to bring domestic opinion along with us.

Motorsport can lend the necessary street cred to going green. You represent the best possible response to Top Gear ridicule – to move the low-carbon story away from lentils, sandals and self-sacrifice.

It can be much more exciting than that.

Thanks for listening.

I want to welcome you all on behalf of the British Government and on behalf of DCSF and BIS who have responsibility for education policy here in England. Thanks also to BECTA for putting together this great World Forum event.

We have many international visitors here today from every part of the world. That’s a testimony to the importance we all attach to the linked challenges of digital education, digital innovation and digital inclusion.

The digital challenge

The digital revolution represents a huge opportunity, and a huge challenge. The challenge is of course one of intense competition with an implacable and impersonal economic force. I am of course talking about trying to keep up with our tech-savvy teenagers…

We all have a pretty clear sense of how digital technology is changing the way we live and work. And the huge benefits that it brings in terms of flexibility, efficiency and effectiveness. There have been perhaps half a dozen genuine step-change technologies in the last century, and this is one of them.

I think it’s important, we be clear-eyed about this as governments. As digital literacy becomes one of the core competencies of modern life, it also has the potential to become a barrier to a full working life for those who do not achieve it. In that sense it is no different from basic literacy or numeracy. We have to get all our people into the digital loop.

Digital technology will be integral to most of the manufacturing and services jobs of the future. The digital economy in the UK already accounts for about 8% of GDP. So it’s a challenge for business as well as government.

There is an infrastructure issue. We need faster, more capable networks that reach into every part of our society. Some of this digital infrastructure the market is already providing, but some of it will depend on public investment.

It’s an education problem: people need the skills to interface with digital technology and really exploit its potential. This is a challenge that runs through the whole education system from primary school to higher education.

In Britain we tackled all of these things in our Digital Britain strategy last year. This set out very big plans to get broadband into pretty much every home and business in Britain within a couple of years, and to get coverage of next generation broadband to more than 90%.

It also launched the digital inclusion agenda the Prime Minister has just outlined. The Home Access scheme we are launching today is an important part of that.

Today we are also launching a pilot Online Basics service to help people in England develop their computer skills. It’s a free online service that you can access anywhere. The explicit aim in the next three years is to reach and empower one million of the fifteen million adults in Britain who don’t use the internet.

Higher and Further education

I want to finish with a few points about the role of Higher and Further Education in this wider challenge. Britain has a very strong Higher and Further education sector. Over the last decade, real terms funding for research in Britain has doubled. Now our challenge is developing that incredible resource into one equipped for a digital knowledge economy.

In my view one of the big challenges for Higher and Further Education for the next decade is pioneering new forms of learning, especially ones that fit around work, or distance.

Most – probably three quarters – of our workforce of 2020 are already out of the formal education system. They need an alternative to three-year-full-time-straight-out-of-school-campus-based degrees.

And we’ve set up an independent online learning taskforce to give strategic leadership in building on our current high quality on-line and distance higher education.

This is not just about learning how to use ICT better. It is about using ICT to make the whole process of learning more efficient. We estimate that efficiencies created by IT have saved more than £1billion in teachers’ time in England since 2005.

BECTA has published a new prospectus today for professional development for FE teachers and trainers to help them build their own digital teaching skills. We are also expanding the Technology Exemplar network which provides them with a resource for sharing best practice.

I think that this is a huge area for international collaboration. Britain has been a big pioneer in online learning and we are committed to building a national innovation system that is very plugged into international partnership and international education.

Britain has long been a very attractive place for international students to study, or learn English. We have some of the strongest learning brands in the world in our leading universities.

Their research strengths have also been central to attracting the very high levels of inward investment that the UK has drawn in over the last ten years. As the PM has just said, this is something we’re very proud of indeed and which we intend to build on.

We also strongly encourage British students to internationalise their education by studying abroad. Both in the rest of the EU, but also through the links we are increasingly building with universities in many of the countries represented here today. That is one particular export – our students, to your universities – that I’m committed to boosting.

Conclusion

The key here is seeing this digital innovation agenda as an agenda where the benefits of international collaboration are not zero-sum. The big prizes of the digital revolution are improved education, rising productivity, greater innovation.

It’s not overly starry-eyed to say that these are races that in the long run we all win. We often talk about the lump of labour fallacy that wrongly says that there are only a limited number of jobs to go round in the world.

We need to avoid the ‘lump of digital innovation’ fallacy. That’s what this conference is about. LATWF is an ideal platform to discuss how we can work together to strengthen academic and also business ties. I’m sure you’ll find the event useful and that your discussions will lead to a strengthening of the links which are mutually beneficial for all of us. I wish you a very productive couple of days.

Speech by: Lord Mandelson
Work Foundation, London

This week marks the start of a new decade in which we know the economy will come under fiercer competitive challenge than ever before, as the world tilts further east towards China and the other emerging economies.

But we do not have to resign ourselves to relative economic decline. On the contrary.

In Britain we still have one of the best environments in the world for starting and growing a new business.

We are emerging from the financial crisis and the downturn with our key industrial strengths intact, unlike our experience in previous recessions.

The competitive value of the pound is helping exports and increasing the sourcing of manufactured goods in the UK. And the Government will maintain its support for the economy through existing public spending and investment until the recovery is firmly locked in.

But that’s not the end of the story. The recovery is only the beginning of how we are going to pay our way in the global economy and create the jobs of the future.

As the Government will explain in the strategy for economic growth we are publishing tomorrow, how we create future jobs won’t be the same as in the past. We will turn new technologies into jobs, like those in digital and biotechnologies. We will commercialise the output of our hugely successful science and research base. We will turn low carbon into business and employment opportunities.

None of this is going to happen with government simply standing on the sidelines. Other governments are actively investing in their industrial strength. We have to do the same.

And it won’t happen if we take the wrong turn in sorting out the national finances in the coming months.

Two plans

So a credible Deficit Reduction Plan has to be accompanied by an equally credible Growth Plan. Deficit reduction is a three-sided triangle: spending reductions, tax increases and economic growth, and, of the three, growth is the best antidote to debt both in short term and the long term.

December’s PBR has a clear objective – to halve the deficit by 2013-14. It is bold and tough: the equivalent of something approaching an £80 billion turnaround in the public finances. This is the sharpest reduction in the budget deficit for any G7 country. This is vital for credibility, vital for attracting inward investment.

Our social priorities in health, schools and policing are protected. But, as the Prime Minister and the Chancellor have both made clear, the impact on other services cannot be painless.

Our plans do not at this stage fix rigid limits for each department, for the good reason that future uncertainties remain. But the commitment to real reductions is clear.

The politics of growth

You can see the last thirty years as a series of steps and mis-steps towards this economic goal; shaped sometimes by ideology, sometimes by pragmatism, increasingly by the realities of globalization.

The 1980s saw the timely privatization of industries that were long overdue for return to the commercial sector. Industrial relations underwent a sea change. The quality of management in our best firms improved, and with it, corporate profitability.

But, there was also soaring unemployment and social divisions. And other long-standing weaknesses in UK economic performance were becoming chronic: an indifference to manufacturing; neglect of science, engineering, technology and skills; lack of a long-termist business culture; and an education system that paid scant attention to the needs of employment.

British business still suffers from too large a tail of poor management and low productivity and the financial crisis demonstrated that the long-termist business culture needs to be more firmly established. There is a debate within business on business models, especially the reliance on debt over equity.

We need a politics of long termism over short termism.

Of a smarter, more effective and affordable state.

Of a return to the values of hard work, enterprise, corporate stewardship and mutual commitment over those of dodging responsibility, making a fast buck, and putting self before others.

Of working together as a nation to address the shared challenges of the future, not social divisiveness or outdated ideological obsessions about the State or doing away with government.

We need a dynamic economy and society, but we also need to understand that while people want opportunity, they also want security for themselves and their families in a fast changing world.

There are significant strengths for Britain which give us a base that makes the new challenges easier to address.

The UK research base has benefited from a doubling of the Government’s investment in science.

Our universities are now fully part of the way we earn our living in the world: attracting 230,000 fee-paying overseas students and generating £59billion a year for the UK economy – more than 2% of GDP.

There has been a renaissance of major UK cities – a genuine end to the psychological cycle of decline that blighted the late eighties. This has been led by public-private investment in which the Regional Development Agencies have played a major role.

Although it has not grown at the rate of the rest of the economy, the British manufacturing sector did not in fact contract in absolute terms in the decade before the recession – its output in both value and volume has remained stable despite the fiercest imaginable competition.

The resilience and reinvention has been helped by flexible labour markets which in this period became culturally embedded in the private sector.

It is this factor, together with the scale of the fight-back mounted by the government and the strength of our welfare-to-work system, that has helped keep people in jobs and limit the effects of the global recession.

But it is also clear – and I want to be honest about this – that the global economic crisis has exposed structural problems in all developed economies, including the British economy that we did not entirely foresee or deal with in the years of uninterrupted growth.

No-one fully understood the risks in the model that destroyed Lehman Bros and crashed the banking system.

And let me say this quite bluntly. For the past decade we allowed ourselves to become over-dependent on the City and financial services for growth and our tax revenues. That is why, without wishing the financial sector to be smaller, we need other industrial strengths and sources of revenue to grow faster.

And finance will have to change – the insurance bill for saving the economy from the status quo was far too steep and it can never happen again. While putting the City in an iron cage of regulation is undesirable, just relying on a bit of nudge here and there will not suffice.

The document we will be releasing tomorrow sets out the Government’s plans for growth. It sets out what we have done since I launched the New Industry New Jobs agenda last spring and described the Government’s further work programme for the coming months. It is work in progress. We are in a marathon, not a sprint. But it defines an agenda for a very challenging future, and a new approach to investing in our basic capacities for growth.

Today I want to highlight some of the key themes of that work programme and say something about where we need to go with each.

Enterprise

First and foremost we need to foster a new climate for enterprise in Britain. There is no substitute for this – no substitute for the drive and ambition that it brings. It can sometimes be a touch ruthless and raw. But it is the single most important engine of economic progress. The recovery cannot be driven by consumer debt or public spending. It will be driven by private sector investment and private enterprise.

Enterprise and reward go hand in hand. Much as it shocked many of my friends when I said I was comfortable with people making themselves “filthy rich”, in the context I was speaking I was simply stating a simple truth: that enterprise and effort should be rewarded. It sets goals to spur people and brings gains to us all. And it is often forgotten that I added the important rider “as long as people pay their fair share of taxes”.

I would also add now that pay and performance must go together. That means long term sustainable performance. In this case, there is no need for government to intervene. We are not interested in capping salaries for the genuinely successful.

Where pay and performance do not correlate, the whole notion of value breaks down. And if remuneration is actively driving systemic risk, and that risk cannot be confined to a single institution, then we have a real problem.

Of course given the tax rises on the better off imposed in the past year, tax is inevitably once again a hot topic of debate in the business community. Setting tax rates for me has always been a matter of striking the right balance, not of ideology. In a difficult fiscal environment no credible government can rule out the need to raise taxes. And we haven’t shirked from taking those tough decisions over the past year.

But there is never a case for punitive taxation. There is never a case for rates of tax that remove the incentive to self-improvement or to build a business. Britain retains one of the most favourable tax regimes in the world for entrepreneurs who start a successful business and eventually sell part of their stake.

Our 18% capital gains tax rate is among the lowest in the world and our corporation tax rate among the lowest in the G7. A competitive tax environment is something we must preserve.

As for the new top income tax rate, I believe that is justified in the quite exceptional circumstances we face.

It is right that in taking the tough decisions on tax needed to combat the deficit those with the broadest shoulders will bear the greatest burden. I believe we have got this balance right.

But as a Government we will always be vigilant that this burden does not become so great that it damages our long-term competiveness or inhibits those whose efforts will help us build sustainable growth.

At the same time we need to accept that the current structure of most public companies is better at rewarding enterprise in senior management or owners than it is at giving the bulk of the workforce an incentive to innovate or commit to the business. The evidence is that companies that share rewards with their employees, like the John Lewis Partnership, are also very good at pursuing long term growth strategies.

Innovation

Second, we need to renew our focus on what makes us successful innovators. A decade of sustained investment by this government has rescued British science from its desperate straits in the 90s and secured its position of global excellence, second only to the United States. Our challenge is to transform more of that knowledge into economic gain. To get more D out of our R and D.

In productivity terms we spent the late twentieth century trying to catch up with the US. Now Asia is racing to catch up with us. We did well in the American century. We can take little for granted in the Asian century.

Our 21st century economic growth needs to be built on innovation at the knowledge frontier, addressing new challenges such as climate change and decarbonisation and exploiting new digital and materials technologies.

For this reason, it is vitally important to preserve our research capabilities even through a period of increased constraint on investment. Our universities must focus on research that offers the greatest economic potential, prioritise excellence, develop partnerships with industry, specialise around their core strengths and not be afraid to develop distinctive missions.

For each region of the country, I am asking the Chair of the Regional Development Agency to present me with a report by mid- March, prepared in conjunction with their Vice Chancellors, on how their universities, supported by RDAs, can drive economic growth in their area.

In the PBR, to boost innovation, the Government supported the concept of a “Patent Box” that ring fences commercial revenues from patents and secures favourable tax treatment for them. This complements the incentives we have for research in the UK through the R&D tax credit.

Since I launched our policy framework New Industry New Jobs, we have earmarked almost a billion pounds in the last year for investment in British capabilities in cutting edge technologies like plastic electronics, composites, wave energy and industrial biotechnology. We will be publishing the next stage of our plans for the further development of key sectors – including construction, business services and homeland security – by the end of March.

Over recent years we have built up the basic skeleton of an industrial innovation system in the UK. We have the rapidly growing outreach of our universities into business, RDA investment in innovation centres, the setting up and expansion of the Technology Strategy Board, and the recent decisions to establish industrial centres of excellence in a range of technologies including civil nuclear engineering and industrial biotechnology in Yorkshire, and plastic electronics in County Durham.

Our challenge now is to build and consolidate that innovation landscape into something like the Fraunhofer network in Germany which actively connects industry and the German research base. With this objective in mind I have asked technology entrepreneur Hermann Hauser to undertake an urgent but systematic evaluation of the UK’s existing Innovation network to see how Britain can best emulate the outcomes of the Fraunhofer model.

Finally, innovation depends on skilled people. We have set out plans for the creation of a new British technician class, in part through a dramatic expansion of Advanced Apprenticeships. This will fill a longstanding gap in the British skills market.

These proposals have been well received but we need to focus on implementation. I have asked Lord Sainsbury to report to me by the end of March on the development of the registration system for engineers and proposals to introduce a parallel scheme for science technicians that will make this new technician status a reality.

Finance for growth

My third theme concerns the way we finance this enterprise and innovation. Enterprising and innovative companies need investment to grow, but there is strong evidence that UK financial markets have for some time not served some growing British companies well. The credit crisis has exacerbated this problem by dramatically reducing the banking system’s appetite for risk. We need to keep up pressure on banks to lend, but we also need to look for wider solutions, both at the British and the European level.

For a decade we have tentatively been experimenting with public-private solutions to the growth capital problem. It is clear that Britain needs coherent solutions at a different scale. We need a new range of public- private financial instruments to step into the historical equity gap and the breach created by the banking system’s reduced appetite for commercial risk.

That is what the Innovation Investment Fund launched last year will in part do – it has already more than doubled its initial £150 million public investment with private funds and its professional independent fund managers will make their first investments this year.

At the same time the Rowlands Review has explored the issue of growth capital for business and the feasibility of re-creating a successful fund like the old ICFC or 3i. So we are working with banks to establish a new growth capital fund which will invest in established UK SMEs who are seeking between £2 and £10 million to develop their business.

In parallel the RDAs are establishing a number of new public private financial vehicles with the help of European funding and the EIB, which will invest in businesses seeking less than £2m.

These will sit alongside existing smaller venture capital funds established over the last 10 years.

I am therefore now asking Mervyn Davies to report to me urgently on what might be done to give this network maximum coherence and reach. My aim is to create an industrial investment network with a strong regional capacity.

Infrastructure

Fourth, over the next ten years Britain will need a transformative wave of private investment in digital, energy, transport and low carbon infrastructure, totalling hundreds of billions of pounds.

We have two challenges here. First, how we get these high cost, long term investments made. The public purse isn’t going to be able to fund them, so we need to get the conditions and incentives right for private sector investors. Second, we need to make sure that these massive programmes create opportunities for British-based industry. Britain’s supply chain only too often has a habit of missing these opportunities. This time has to be different.

We are implementing plans to stimulate investment in the infrastructure for digital communications. They will extend broadband access to every home and business in Britain in just a few years and extend next generation broadband beyond where the market alone will build it to serve 90% of the population.

And are developing strategies on renewable energy, rail electrification, low carbon vehicles and the charging infrastructure for electric cars, putting in place what only Government can – clear frameworks of policy within which the private sector can take commercial decisions

We have begun a shift in the basic remit of the regulatory agencies so that they focus on the need to renew our infrastructure and adapt it to a low carbon future.

In the transition to low carbon energy and transport, emissions trading and a carbon price potentially provide strong stable investment incentives. Initial experience though has been disappointing. The need now is to look urgently at the options for ensuring we have a carbon price that is more stable and truly reflects the environmental costs.

And we need to examine how the role of pension funds to be major investors in the long term infrastructure projects of the future.

Infrastructure UK has been tasked with producing a full assessment of the scale of the challenge, and to produce creative ideas for how to meet it. Getting this right will be one of the most important ways of securing the country’s future prosperity. We all need to engage with Paul Skinner as he draws up his report in the coming months.

We need equal vigour in tackling the parallel challenge of making sure that British-based firms are ready for the opportunities this wave of investment will create.

Government bodies like the Office for Nuclear Development and the Office for Renewable Energy Deployment need to work intensively with British-based companies to anticipate and compete for the supply chain opportunities from huge shifts to alternative energy or transport infrastructure.

By the time the call for tender arrives, these firms should understand the opportunities, understand the capacities they will require, and understand the help Government can provide in helping them develop those strengths.

That’s exactly what we are doing now for example in the civil nuclear sector through the Nuclear Advanced Manufacturing Centre and our work to develop the nuclear supply chain to serve the growing nuclear industry in the UK.

Long termism vs short-termism

Finally, we need to start a debate about how we build a stronger culture of long term commitment to sustainable company growth in this country, based on a strong compact between institutional shareholders and the corporate sector.

On one hand we need a system that enables shareholders to discipline poor management. But we also need to give management some scope to plan and build without the excessive demands for quick returns that characterise too much modern public company ownership.

I don’t have any easy answers. Our reforms of company law made clear the importance of directors taking a long term view. At the same time we have empowered shareholders. We are now evaluating whether this has changed behaviour in the board room – and among investors.

Chris Hogg has played a key role in this debate with his review of corporate governance, and it is time for Britain to take a long hard look at the questions he and others have raised. I attach the highest importance to the new Investor Code and will be meeting investors and companies next week in the run up to the further consultation by the Financial Reporting Council.

Takeovers provide a very clear test here – for all involved. Companies making acquisitions should set out transparently and publicly their long term plans for the assets they propose to acquire, including company headquarters, R&D sites and main plants. Although these remain commercial decisions, firms or investors should expect to brave the court of public opinion if they are motivated only by short term profit.

Surely investment managers should be judged on their long term growth and profitability, not their short term performance – and the same goes for CEOs. How many strategic and effective managers are being hobbled with the quarterly race to please the beauty contest of the markets?

Conclusion

Only by growing our economy can decent jobs be created, living standards protected, and the winners’ circle expanded outward to those on low and middle incomes.

We have learnt the right lessons from the downturn and will sustain the recovery. But the key question is how we can achieve a step-change in the growth rate of the British economy in the decade ahead.

Speech by: Lord Mandelson
Venue: IISC – UK Lecture Series, Indian Institute of Science, Bangalore

 I’m very honoured to launch this lecture series. Over the next few months the series will cover a wide range of topics from prime numbers to the economics of climate change. The very distinguished Professor Alison Richard, Vice Chancellor of Cambridge will be first up here on January 12 to speak about how universities can help drive innovation.

Of course it’s also a huge privilege just to be at this podium in Faculty Hall, which in its illustrious history has hosted Nobel Laureates, and minds a lot sharper than mine. I’ll just have to do my best.

The aspiration and inspiration for this series is that it should give us a chance to reflect on the evolving relationship between India and Britain in the field of science and innovation.

So obviously, for the last couple of weeks I have been casting about for symbolic new projects to launch this week. And I knew I might be onto one when someone mentioned to me that the Indian space programme has charged Indian scientists with developing a curry suitable for astronauts.

Now, given that Indian cooking has transformed British tastes over the last twenty years, I’m wondering if this is an avenue for joint research? Perhaps British scientists can work with MTR to develop some sort of zero-gravity dosa? India and Britain: going where no paan has gone before.

Coming back to earth, I want to provide a sort of preface to the lectures to come by talking the general value of internationalism in innovation and science. Both between India and Britain, but also more widely. Both India and Britain are investing heavily in their national innovation systems. Today I want to argue that while the capacity to innovate is clearly central to national growth, it does not follow that innovation is something we should see solely in national terms.

Races we can all win?

If science and innovation are so central to competitiveness, why should we see them as something that should be built on international collaboration? This question goes to the heart of what ultimately makes globalization ultimately a good thing. Trade in goods and services, just like collaboration in science and innovation, has an important role in raising productivity, which benefits both sides. Rising productivity is, generally speaking, a race we can all win.

No less importantly, many of the big challenges of this century, such as food security and climate change, are ones in which we can all potentially lose – some worse than others and the world’s poor worst of all. We are in a race to develop green technology. But ultimately the race is not between  countries but between humanity and an advancing ecological crisis.

If the twentieth century sometimes seems like a calamitous  exercise in applied ideology, the next century needs to the century of applied science. How will we address poverty and eradicate treatable disease? How will we engineer the low carbon, and eventually the no-carbon, solutions on which a sustainable and equitable human future depends?

What this suggests to me is that the next generation of engineers scientists and innovators that the world produces will be among the most important in our shared history. Faced with these kinds of challenges there is a clear incentive to make the best use of our collective scientific and technological resources.

To put it more positively, the incredible process of cross-fertilization of ideas is one of the defining benefits of globalization. It has never been possible to separate trade in goods and services from the transfer of knowledge.

Innovation spills over from researcher to researcher and company to company. The art of paper-making came down the silk road with the silks and the spices. Indian mathematics made its way into Europe by way of Arab and Persian traders. A lot of the technologies of the later industrial revolutions flowed back the other way. East to west, west to east.

This institute is a good reflection of that. JN Tata had a clear conviction that India needed to develop its own indigenous industrial strengths. And like most great industrial pioneers, he was utterly pragmatic about the need to draw in expertise from outside India, including the budding steel industry of Pennsylvania and the United States. The first Director of this Institute was Morris Travers from Bristol.

Kamal Nath has set the same challenge for India’s infrastructure revolution, which he has openly said will require India to pull in the skills and investment of the best in the world. I know Kamal well enough to know that he is far too smart to see this as a sign of weakness. He’ll rightly see it as the fastest route to Indian strength.

Education, research and industrial competitiveness

There is another real innovation that this Institute represented, and represents, and it put J N Tata well ahead of his time. This was the recognition that you can’t separate industrial competitiveness from education and research and that you have to invest strategically in these strengths. 

The way in which this commitment to first class training and research has powered the development of an Indian technical and scientific class is of course one of the things that defines India’s recent economic rise for many non-Indians.

One extraordinary spillover from this commitment is the fact that for the last decade more than a quarter of America’s IT and software companies have been founded by Indian emigrants. In fact a troublemaker might say that the modern US economy is built on Chinese money and Indian brains. Although, I, of course, am not that troublemaker.

Britain’s hasn’t always got this balance right. An ideological distaste for public investment of almost any kind under Margaret Thatcher had left Britain hemorrhaging scientists and with a chronic underinvestment in higher education.

But over the last decade that situation has been reversed through massive investment. Britain now ranks first or second only to the US in almost every discipline. It has one of the strongest science bases in the world, way out of any proportion to our size. It’s paid off hugely in British international leadership in the biosciences and advanced technologies.

The challenge for Britain is of course to make sure that these elite institutions and specialist strengths are not a like a ladder with strong rungs at the top and weak rungs at the bottom. We have invested heavily in generic skills and in primary and secondary education and have dramatically opened up alternative vocational routes to higher skills like apprenticeships.

Obviously India’s experience is very much sui generis.  But India also faces a huge challenge of general and specialist education. And there are parallels for the simple reason that both Britain and India’s higher education systems emerged from the same nineteenth century model focused on turning out highly civilized civil servants. 

I know that Indian commentators like Nandan Nilekani have devoted a lot of time to thinking about how you transform this model into one equipped for a globalizing India. To an outside observer, this debate is yet another sign that India is at a critical point in its dramatic transformation. While its initial breakaway growth might have been driven by low cost and low value service provision, its future will increasingly be tied to driving up the value added in India. India is moving from the generic, to the genuinely innovative.

Implicit in this ambition, as writers like Nandan Nilekani are surely right to insist, is a huge education and innovation challenge. Britain is having a version of the same debate. Both of us are focused on making higher education more relevant, more vocational, more accessible and more of a driver of economic growth and innovation, without losing its civilising character.  

Britain and India

My hope is that Britain and India can ultimately build a deep, durable and mutually beneficial partnership in pursuing this. We certainly want to make sure that the UK is as open as possible to Indian who want to study in the UK.  Over 30000 Indian students studied in the UK last year – a rise of almost 40% on the previous year.

We are encouraging British universities to internationalise Higher Education and seek out Indian partners for student and faculty exchanges and developing joint and complimentary curricula. And this must be a two-way flow, with UK students and faculty coming here to experience modern India.

We need to continue to transform our research relationship from one in which we procure teaching or research from each other into one that is genuinely collaborative. India is a cost-effective place to do joint research and it has obvious strengths across the spectrum- from ICT, pharmaceuticals and green energy to public policy problems around poverty reduction and public health. Indian companies and researchers can only benefit from collaboration with knowledge brands like the best UK universities. There are a lot of good examples of how this can work in practice.

The UK and India jointly funded three Science Bridges last year, worth up to £6million, to strengthen our research and innovation relationship. One of these Bridges is between IIS, the University of Leeds and ICRISAT, focusing on sustainable agriculture. Another is between IIM Bangalore, Nottingham University and IIT Kanpur. This will see Nottingham students studying here, including at AstraZeneca’s Bangalore research lab.

The multi-million pound joint investment in the India-UK Advanced Technology Centre is working on applying technologies in rural education and healthcare and has brought together academic institutions with leading corporations in India and the UK, including Infosys and British Telecom.

Imperial Innovations, which is the research commercialisation arm of Imperial College, now has a venture here in Bangalore and has raised about $10 million for research spinouts. On an even larger scale, the Welcome Trust has now been working with the Indian government for a year on a £80million programme of biomedical research.

The UK is also increasingly keen to partner with India on publicly funded development research. The UK’s research budget for international development over the next few years will be bigger than that of the World Bank – around £220 million. In the past this is the kind of funding that has helped lead to the production of treated bednets to defend against malaria and to simple oral treatments against dehydration, which is still the second biggest cause of infant mortality in the world after pneumonia.

What we must not do is let practical obstacles get in the way. Of course we have different models for funding and defining our research agendas. We need to use the experience of existing collaborators and bodies like the India-UK Science and Innovation Council and the UK-India Education and Research Initiative as a kind of adaptor plug to fit UK institutions and research councils and Indian decision-makers together.

One endpoint of this process will be the growth of a base of innovative Indian firms to follow the first global generation of Indian companies that have emerged in recent years. We obviously want to make sure that Britain is the country of choice for these firms when they position themselves for the European market or establish a European research and development presence. All of the major Indian IT players now operate in the UK. I have just come from a fascinating visit to Wipro, where Azim Premji outlined Wipro’s impressive plans for developing low carbon business in the UK.

I know that there are concerns among some in India that changes to the UK’s migration system might put this at risk. But I can guarantee you that while we do have to guard the system against abuse, the route into Britain for skilled and qualified Indian workers and investors will remain open.

Conclusion

In making this case for an international view of innovation I don’t mean to sound overly idealistic or blind to the challenges. At the business end of the knowledge economy there will always be hardheaded debates about intellectual property and licensing. That’s a necessary reality and part of the mix of incentives that drive innovation.

It’s also the case that tough commercial competition will always be an integral part of what makes us innovative. It’s when we are under pressure that we challenge established ways of doing things and do them better. We don’t protect innovators by cutting them of from competition: often that just takes away a spur to innovation.

But this doesn’t negate the argument that science and innovation should be something that are driven at their core by international openness and collaboration.

Scientific discovery is something that India and the UK have always done well together.  Sir Roland Ross won the Nobel prize for medicine for research into malaria he did during his time in Bangalore. The most recent Nobel Laureate, Venkatraman Ramakrishnan, who this year won the Chemistry prize, is based in Cambridge.

Their experience is a reminder that in the expanding global single market for ideas, international collaboration in science and innovation is good for India. It’s good for the UK. And it’s good for our human future.

 In this Westminster Hall debate on the future of the steel industry in Teesside, Pat McFadden talks about the three factors that served as the backdrop for Corus’s decision to mothball its Teesside plant: fall in demand, fall in price and the collapse of the off-take agreement to buy the steel produced there. He then sets out the Government’s response – a £60 million package of support to help the people of the area.

 Read the full debate (external link)

PLEASE CHECK AGAINST DELIVERY

Good afternoon.

I have an announcement to make.

The UK is going to have an executive space agency – a single, coherent organisation to support an industry and a research base that are one of the best advertisements for the UK.

Space directly employs 20,000 people in this country.

It contributes £6.8 billion to the UK economy.

And here’s perhaps the most impressive achievement: our space sector has been recession proof.

Astrium recently won a €500 million contract to manufacture four Eurostar 3000 telecommunications satellites. Facilities in Stevenage and Portsmouth will be handling much of the build.

Surrey Satellites has signed an agreement to build Sri Lanka’s first Earth observation satellite, and has already started work on that country’s first communications satellite.

Systems Engineering and Assessment has sealed a deal to provide the remote interface units being used on the BepiColombo mission to explore Mercury.

The space industry has grown in real terms by around nine per cent per annum since 1999/2000 – more than three times faster than the economy as a whole.

Going forwards, it’s forecast to maintain average annual growth of five per cent until 2020 – and, on their own, commitments made at last year’s ESA ministerial meeting have provided work for UK space companies for at least the next five years.

In fact, space provides the strongest rebuttal to all those people who knock the UK and argue that we no longer have the right stuff when it comes to manufacturing.

Think about it. Space is the toughest environment of all, where systems and components are subjected to the ultimate workout – instruments required to function at just a tenth of a degree above absolute zero. When you send multi-million pound kit into orbit, there are no second chances.

We compete in this environment – and we win.

A fundamental reason for that is that you’d be hard placed to find another sector where industry and the research base are so wedded together.

The knowledge transfer relationships are long established here – and the basic story of UK space is outstanding science delivering strong commercial returns.

As we rebalance the economy, this is precisely the high-value, highly-skilled, technologically advanced area we must focus on: for jobs, for growth, for prosperity.

Hence the agency.

The recent public consultation on the funding and management of our civil space activities found that the current partnership structure has served a useful purpose.

Through the existing system – and in the past year alone – the Herschel and Planck satellites are gathering the most detailed information we have about the birth and evolution of our Universe.

The European Space Agency centre has opened here at Harwell, a facility that will lead Europe on integrated applications, robotic exploration and the management of climate change data.

It will soon be joined by the International Space Innovation Centre, where publicly-funded science will take place right alongside industrial R&D. Together, the ESA and ISIC centres will serve as a vital cluster to exploit our competitive advantage.

But the majority of respondents to the consultation agreed that we do need to raise our game in several areas – like strategic decision making, like leading multi-partner programmes, like extending the space technologies in other high-tech, high-growth areas.

That’s what the new agency will do – not through more money, but through better organisation.

It will put the machinery of government fully behind the sector. It will secure cross-Whitehall decisions and buy-in on space-related issues – including education and outreach – and it will prioritise UK involvement in future space projects.

We need that unified approach to grab a greater share of the global market in space systems, services and applications – and remain at the forefront of advanced manufacturing.

Other countries have similar ambitions. At the moment, I’d venture that the UK is the place to be for space scientists and entrepreneurs.

Only yesterday, for example, we announced a new tax measure to support innovation – the patent box.

Businesses built on patents – as many in this sector are – will benefit from a 10 per cent rate on corporation tax.

That’s great progress – and we need to keep going in what is an increasingly competitive global market.

In the last 12 months, we’ve seen India – which has a comprehensive programme of launchers, telecommunication and Earth observation satellites – send its first probe to the Moon; carrying – I might add – an instrument built here at Rutherford Appleton.

The Canadian Space Agency has received a stimulus package worth $100 million to boost its robotics capability.

There’s been no let up in China’s programme to launch dozens of spacecraft, build its first manned space station, and dispatch probes to both the Moon and Mars.

It’s early days for the agency. A cross-Government group will now meet to begin planning the way forward – and there will be a formal agency launch in due course, where we’ll reveal its name.

If you saw the Times yesterday, you’ll know there’s already been some speculation about that.

Today, we’re also publishing an independent review of space exploration – one that’s unique in attempting to quantify the potential economic benefits from future human or robotic activities.

Although the broader economic climate means we’re not in a position to change our current approach to investment in space exploration, the data in this report will inform the work of the space Innovation and Growth Team – and, later, the agency. It only reinforces the case for space as a major growth sector.

For now, let’s celebrate an excellent 2009 – strong on the science side, strong on the commercial side.

I’ve had two personal highlights as minister.

The first was meeting apprentices at Astrium – young people describing the thrill of working on equipment being dispatched to the far reaches of space.

The other was news of Tim Peake’s success for being selected as one of ESA’s Astronaut Corps.

I know that BNSC are working on a publicity campaign featuring Tim that will encourage young people to study science subjects in school. Space has a unique capacity to inspire and Tim has iconic potential.

Next year, we’ll see more data from Herschel and Planck. The UK-led Cryosat mission to study ice thickness at the poles. The launch of the Hylas spacecraft, developed by start-up company Avanti Communications, which will deliver broadband across Europe to people unable to use surface links. And the imminent report from the IGT setting out a 20-year strategy for the sector.

So these are exciting times. Promising times.

A joint NASA/ESA programme of Mars exploration is being finalised with the UK at its heart. Space technology is being built in this very lab to monitor illegal destruction of the rain forests. And about 200 miles above our heads, there’s now a fully functional scientific laboratory on the International Space Station, conducting medical, material and biological research.

What we’ve got to do is build on what the UK already does extremely well, and really go for growth – growth backed by the agency.

The late Werner von Braun, arguably the greatest rocket engineer of the 20th century, once made a rather elegant quip. He said: “There is just one thing I can promise you about the outer-space programme: your dollar will go further.”

Von Braun’s observation applies in any currency. So let’s get our full pound’s worth – up there and down here.

Because, if you look carefully this sector, you can glimpse Britain’s future: built on great science, employing the most highly-skilled physicists and engineers, manufacturing leading-edge technologies in demand worldwide.

It’s a great future.

Speech by: Rosie Winterton MP
Venue: New Local Government Network Conference – Invigorating Local Economies, London

Introduction

I am delighted to be here today and I’m sorry I have to leave so early. The reason is that I am going up to the North East to discuss the closure of the Corus plant. I think that illustrates very aptly why we are here today – to explore the role that local authorities can play in developing their local economies.

Later today I will be doing just that, meeting with local authorities and their partners to discuss what they can do to assist in what is a very, very difficult situation for thousands of people in the North East.

I believe that over the past 18 months or so, during the global recession, we have seen local authorities across the country rising to the challenges it has posed, and graphically illustrating the need for strong local leadership on economic issues.

So what we need to look at now, as the immediate crisis subsides and we focus our attention on laying the foundations of our future prosperity, is the hugely important role of councils – working closely with the Regional Development Agencies – in shaping our economic recovery.

Nurturing the economic recovery

The seismic shifts we have seen in the global economy are creating a wealth of opportunities, as well as challenges. And as a country, we have to be ready to grasp them.

So as a Government we have been examining what we need to do to facilitate that. The New Industry, New Jobs strategy we published earlier this year is our blueprint for a more active and interventionist approach towards industrial policy.

It’s not about picking winners – that’s not our job. But it is about identifying our existing economic strengths and developing new capabilities. So our people and our companies are equipped to compete and win in the new global economy that’s emerging as the recovery gets underway.

In recent years, British companies have secured a place at the top end of global supply chains, where our science, our engineering and design skills are best matched.

That expertise – and our investments in high-value, high-growth sectors like low-carbon; advanced manufacturing; healthcare and education; financial services; and others – puts us in a powerful position to compete globally.

But if we’re going to build on that we absolutely have to harness the power of Government at every level – targeting our interventions in the sectors and the areas of the country where they can have maximum impact. What we mustn’t have is a recovery that is powered purely by London and the South East.

This Government is passionately committed to economic opportunity for all – whoever they are, wherever they live. So we want to make sure that communities across the country are able to grasp the opportunities on offer.

That means ensuring that the skills training on offer meets the needs of local employers; providing the right transport networks so people can commute to work; putting in place an effective planning regime that allows firms to grow and develop; and guarding against a regulatory regime that stifles business innovation.

Partnerships for growth

Getting that right requires close partnership working – between councils and their local partners, the Regional Development Agencies, and central government. And to make that happen, each of us has to be clear about the role we need to play.

So tomorrow I will be publishing Partnerships for Growth: a National Framework for Regional and Local Economic Development.

This framework sets out the responsibilities of each tier of Government, and identifies the areas where central, regional, sub-regional and local partners can each make the greatest contribution to economic development.

It lays down how we can all collaborate to strengthen growth and spread prosperity – ensuring that every part of the country performs to its full potential.

It also identifies the growth sectors where targeted interventions can help Britain compete globally, and how support for these can be aligned with regional and sub-regional economic development to boost jobs and economic opportunity.

The framework will give local authorities, the Regional Development Agencies and other partners the ability to identify key priorities and combine their firepower to drive economic growth – for the benefit of their areas.

Councils have an absolutely vital role to play here, leading efforts in everything from creating the right environment for business investment, to equipping people with the skills that local employers need. The framework will establish economic development as a core activity for every authority.

It means they need to consider the economic impact of everything they do, and develop their understanding of how issues such as procurement, regulation, and the quality of local public services can boost – or hold back – growth.

But just as local and national priorities need to fit together, so local and regional priorities also need to be aligned.

The new Regional Strategies, being developed jointly by the regional Local Authority Leaders’ Boards and the RDAs, will set out the priorities for each local area and region, bringing together objectives for economic development, housing and climate change. They are a means of targeting key investments in infrastructure and sectors that will boost the economy across the region and drive national economic growth.

It’s essential not to lose that wider economic perspective. So the framework heralds a new approach for the RDAs, requiring them to work together with the Government to support national priorities, as well as to continue to promote economic growth in their regions.

RDAs are close enough to the ground to be sensitive to local circumstances, while being far enough away to take a strategic view. They can balance economic priorities; foster local and regional partnerships; and take the big decisions on the new infrastructure needed to galvanise growth.

That regional dimension is essential. Whitehall can never have the in-depth local knowledge; but town halls may miss out on economies of scale or sometimes the slightly bigger picture.

By aligning the priorities and the activities of Government at every level – nationally, regionally and locally – we can ensure that public investments have maximum impact and the fruits of economic growth are shared as widely as possible.

Now I suspect that for a lot of people here today, what is in the National Framework will reflect what you are already working towards; there won’t be any huge surprises.

But I do think it’s important to have written down, in a document that people can refer to, a description of how those different relationships work at national, regional and local level. And making very clear the point about local authorities’ crucial role in the driving the economy at the local level.

Local Economic Assessments

I also want to mention Solutions for Business and the role that councils have to play in that. What we have been trying to do – because we have been very aware that businesses have sometimes found all the different services on offer slightly confusing – is to bring them together.

We do need the help of councils in making sure businesses in their area are aware of what’s on offer, and in supporting the approach we have adopted in their own activities.

All of this is about creating the right environment for businesses. And I believe that the new Local Economic Assessments coming in from next April will give councils and their partners a very clear understanding of local economic conditions.

In view of what has happened in the North East with Corus we were discussing earlier whether, within the assessments, there should be the ability to look at what would happen if there is a big closure in an area.  These are the kinds of issues we need to tease out, and identify what it is that councils can bring to the table in such circumstances.

Councils can also use the opportunity of the assessment to draw up a Work and Skills Plan, which is a good way of taking the skills objectives set out in the regional strategies, and translating them into a coherent delivery plan for each area.

In the Government’s new skills strategy, Skills for Growth, published last month, we have laid emphasis on ensuring we have plans at the regional and local level to ensure we are able to equip people with the right skills for the jobs of the future, and with the flexible skills that employers constantly tell us they need.

I have been very struck by the way that councils have increasingly led from the front in ensuring they talk to local employers and involving them in the training that’s provided locally. If we get the Local Economic Assessment right, it will very good way of drawing local employers in even further to that process.

Multi Area Agreements have also been very important in ensuring local partners work together to identify priorities for the wider area – on issues such as skills, transport, and housing. And the Economic Prosperity Boards coming in from next year are a way of translating the economic assessments, as possibly the Work and Skills plans, into real action.

So I am absolutely committed to exploring just how ambitious we can be in this area, and how much further we can go in putting local authorities right at the centre of driving economic development.

Conclusion

But to do that successfully, of course, Whitehall, town halls and the RDAs all need to work together to translate our vision of economic opportunity for all into a blueprint for action in every region and local area.

I do recognise that this will involve big challenges for local authorities – we are asking a lot of you. So I think it’s important we have a dialogue about how we continue transforming the role of councils, equipping them to deal with the big challenges we face today and tomorrow.

I believe that by harnessing the power of councils and working in partnership we can generate prosperity for people in every part of the country. Today is a first step in defining how we take that forward – I am sure it will be very successful.

Thank you.

Statement by: Lord Young
Venue: House of Lords

My Rt. Hon. Friend the Minister of State for Higher Education and Intellectual Property (Rt. Hon. David Lammy MP) has made the following statement.

This year Government is spending more than £5 billion on student support in England, underpinning our commitment that finance should not be a barrier to higher education. The number of undergraduate entrants to higher education has increased by 19% since 1997, and the 20 most deprived constituencies have shown higher than average growth in student numbers over that period.

Students need a simple and straightforward application service when they are applying for student support. As I said to the House on 14 October, this year’s problems have had an unacceptable effect on individual students and their families. Even when they have not led to financial hardship, they have undoubtedly caused worry and frustration. It is clear that there were serious lapses in the customer service provided by the Student Loans Company (SLC).

At the beginning of September I became aware that, in this first year of operating the new service, there were delays in processing, customers were unable to speak to the Company, and some documentary evidence could not be traced. I ordered that a number of actions be undertaken to enable the Company to accelerate the processing of applications and to increase the number of calls being answered.

These issues are why, together with the recently appointed Chair of the Student Loans Company, I commissioned Professor Sir Deian Hopkin to provide external scrutiny to the review of lessons to be learned from this year’s processing problems. Professor Hopkin has now provided his Report and I am very grateful to him for carrying out his work so swiftly.

Download the report 276KB

While at the time of this statement the Student Loans Company has paid 801,000 students, it is clear that this year the service has fallen short of expectations. The Report says that: “While some aspects of the Programme have been realised and some progress made on others, there has been a conspicuous failure in key areas of its delivery which has had a far-reaching impact on applicants and stakeholders”.

The Department accepts in full all the recommendations in Professor Sir Deian Hopkin’s report and, as I would expect, the Board of the Student Loans Company has also accepted the recommendations in their entirety.

I am now clear that decisive action is required to change the service and that the key to this is strengthening the leadership of the Company and ensuring that the customer is at the heart of everything the Company does. The Chair of the Student Loans Company has confirmed that the senior management team of the Company will be strengthened and reorganised.

I expect the Chair to ensure that the Company transforms how it communicates with its customers so that they know what to expect from the service, what is expected of them, and that risk management, contingency planning and staff training are all significantly improved.

I have asked my officials to consider the best practice in other public sector organisations to enable us to better challenge and scrutinise the Company’s performance. But there must be no confusion about roles: it is for the Student Loans Company Board to hold the Executive to account and to ensure it has the capacity and capability to deliver the service.

Key to moving forward and improving the service next year is early engagement with customers and stakeholders in the Higher Education sector. I have therefore asked the Company to establish a Stakeholder Forum which will include representation from the National Union of Students, Higher Education Institutions and UCAS. This will help the Company to develop Student Finance England, including implementation of the recommendations in Professor Hopkin’s report and should mean, with stakeholders more closely involved in the company, that many of the issues experienced this year can be identified earlier and swift action be taken to avoid them in the future.

We have invested significantly in a substantial programme of improvements which are designed to transform the way the student support service works for customers. Over the next few years, the centralised service – which takes over from applications to local authorities where the level of service was variable – will allow students to apply on-line; they will no longer need to send in their passports to verify their identity; and their sponsors will not need to send paper evidence of family income.

I acknowledge that some of the improvements will take time to implement, but I have received assurance from the Chair that improvements in the way the service is managed will be made quickly. As the Report says, the highest priority at the moment is to successfully complete this year’s application cycle. There remain problems with Disabled Students’ Allowances and I have asked the Student Loans Company to engage directly with universities and assessment centres to speed up the process, and to increase staffing resource for these activities.

The Chief Executive and Chair of the Student Loans Company have publicly apologised for the difficulties customers have suffered. As the Minister responsible for higher education, I too have expressed regret for the unacceptable service parents and students have experienced.

Customers must also play their part, and take responsibility for applying for their student support in good time if we are to ensure the service has the best chance of operating efficiently.

A copy of the Report and a letter from the Chair of the Student Loans Company are being deposited in the Libraries of the House and paper copies of the Report will be placed in the Vote Office and Printed Paper Office.

Download the report 276KB

This year Government is spending more than £5 billion on student support in England, underpinning our commitment that finance should not be a barrier to higher education. The number of undergraduate entrants to higher education has increased by 19% since 1997, and the 20 most deprived constituencies have shown higher than average growth in student numbers over that period.

Students need a simple and straightforward application service when they are applying for student support. As I said to the House on 14 October, this year’s problems have had an unacceptable effect on individual students and their families. Even when they have not led to financial hardship, they have undoubtedly caused worry and frustration. It is clear that there were serious lapses in the customer service provided by the Student Loans Company (SLC).

At the beginning of September I became aware that, in this first year of operating the new service, there were delays in processing, customers were unable to speak to the Company, and some documentary evidence could not be traced. I ordered that a number of actions be undertaken to enable the Company to accelerate the processing of applications and to increase the number of calls being answered.

These issues are why, together with the recently appointed Chair of the Student Loans Company, I commissioned Professor Sir Deian Hopkin to provide external scrutiny to the review of lessons to be learned from this year’s processing problems. Professor Hopkin has now provided his Report and I am very grateful to him for carrying out his work so swiftly.

Download the report 276KB

While at the time of this statement the Student Loans Company has paid 801,000 students, it is clear that this year the service has fallen short of expectations. The Report says that: “While some aspects of the Programme have been realised and some progress made on others, there has been a conspicuous failure in key areas of its delivery which has had a far-reaching impact on applicants and stakeholders”.

The Department accepts in full all the recommendations in Professor Sir Deian Hopkin’s report and, as I would expect, the Board of the Student Loans Company has also accepted the recommendations in their entirety.

I am now clear that decisive action is required to change the service and that the key to this is strengthening the leadership of the Company and ensuring that the customer is at the heart of everything the Company does. The Chair of the Student Loans Company has confirmed that the senior management team of the Company will be strengthened and reorganised.

I expect the Chair to ensure that the Company transforms how it communicates with its customers so that they know what to expect from the service, what is expected of them, and that risk management, contingency planning and staff training are all significantly improved.

I have asked my officials to consider the best practice in other public sector organisations to enable us to better challenge and scrutinise the Company’s performance. But there must be no confusion about roles: it is for the Student Loans Company Board to hold the Executive to account and to ensure it has the capacity and capability to deliver the service.

Key to moving forward and improving the service next year is early engagement with customers and stakeholders in the Higher Education sector. I have therefore asked the Company to establish a Stakeholder Forum which will include representation from the National Union of Students, Higher Education Institutions and UCAS. This will help the Company to develop Student Finance England, including implementation of the recommendations in Professor Hopkin’s report and should mean, with stakeholders more closely involved in the company, that many of the issues experienced this year can be identified earlier and swift action be taken to avoid them in the future.

We have invested significantly in a substantial programme of improvements which are designed to transform the way the student support service works for customers. Over the next few years, the centralised service – which takes over from applications to local authorities where the level of service was variable – will allow students to apply on-line; they will no longer need to send in their passports to verify their identity; and their sponsors will not need to send paper evidence of family income.

I acknowledge that some of the improvements will take time to implement, but I have received assurance from the Chair that improvements in the way the service is managed will be made quickly. As the Report says, the highest priority at the moment is to successfully complete this year’s application cycle. There remain problems with Disabled Students’ Allowances and I have asked the Student Loans Company to engage directly with universities and assessment centres to speed up the process, and to increase staffing resource for these activities.

The Chief Executive and Chair of the Student Loans Company have publicly apologised for the difficulties customers have suffered. As the Minister responsible for higher education, I too have expressed regret for the unacceptable service parents and students have experienced.

Customers must also play their part, and take responsibility for applying for their student support in good time if we are to ensure the service has the best chance of operating efficiently.

A copy of the Report and a letter from the Chair of the Student Loans Company are being deposited in the Libraries of the House and paper copies of the Report will be placed in the Vote Office and Printed Paper Office.

Download the report 276KB

Speech by: Rosie Winterton MP
Venue: Tackling Worklessness through Local Partnerships, Bloomsbury Hotel, London

Introduction

I am very pleased to be here today. Tackling worklessness is one of this Government’s top priorities and I believe that, since 1997, we have made real progress in helping people back into work. By 2007 the UK employment rate had reached a 30-year high, and we had the second highest employment rate in the G7 countries.

But we are also very aware – as Steve [Houghton] and I both know coming from South Yorkshire – that there are areas where people face particular challenges in joining the labour market. There are historic reasons for that which stem from previous recessions where, I believe, a very different attitude was taken to helping people during those difficult times. 

Of course, there have always been particular challenges that some people face and that’s why we asked Steve to undertake a review of worklessness. To look at what we could do to dismantle the barriers that some people face and overcome what had been entrenched deprivation. Thank you Steve for the work you have done.

The global recession, which has been felt in all our communities, has meant this work has done has taken on a new urgency over the past year. Although there are some encouraging signs that the economic recovery is getting underway, it is also true that people are still losing their jobs. Because unemployment is a lagging indicator we would expect it to continue to rise for a time after growth returns.

But what we are very clear about, as a Government, is that we must work together – nationally, regionally and locally – to make sure this recession does not leave behind a lost generation of people plunged into long-term worklessness and left on the scrapheap, as happened in previous recessions. 

Government needs to intervene so we don’t get that waste of talent; and we don’t repeat the mistakes of the past. I know that local authorities share this conviction – nearly 90% of Local Area Agreements have at least one target to tackle the causes of unemployment.

So Steve’s emphasis on the central role councils and their local partners must play in providing opportunities and raising aspirations is absolutely right.

Last month we announced an extra £40 million for the Working Neighbourhoods Fund, to be shared by 61 local authorities, to help them find innovative ways of tackling worklessness. 

And that’s why the £1 billion Future Jobs Fund was the centrepiece of our response to Steve’s review – making clear that we need local partnerships on the ground to take the lead in implementing it.

Houghton review and Future Jobs Fund

His review really set out the way ahead on this agenda. And his findings have provided a framework for tackling worklessness, especially in areas where in a sense it had become the norm.

The theme of this conference – Local Partnerships – is absolutely the right one if we are going to make this work. We can see many examples of councils are working with Jobcentre Plus, with Primary Care Trusts, the Citizens Advice Bureaux and others from the third sector, to tackle the complex barriers some people face in getting back to work.

And why is it so important to have the local council at the centre of this work? Well because it’s about local challenges and local solutions. Local authorities know their areas; they know their people; they know local businesses – so what we want to give is the freedom and flexibility to make sure that national objectives make sense locally.

Local authorities have a crucial role to play as champions and stewards of their local economy. The evidence I have seen – not only in my role as Local Government minister, but also in my role as Minister for Regional Economic Co-ordination at the Department for Business, Innovation and Skills – is that
local authorities have really risen to the challenge of leading efforts to tackle the fallout from the global downturn.

I think we need to build on the experience that has been gained. So that in future, economic development is a core activity for every authority.

The Future Jobs Fund shows how it could be done – and why it should happen. It is designed to help young people and other groups who are especially vulnerable to long-term unemployment.

But it’s also important to remember that it is a challenge fund. Which means councils can use it as a starting point and ask how they can take it forward – by using other resources flexibly and imaginatively to target worklessness and create that pool of job-ready people for local employers to draw on.

The Fund itself is expected to create something like 150,000 jobs nationally. Around half of the 95,000 jobs already in the pipeline are from local authority-led partnerships. I think what we need to do now, is ask how we can build on this strong start?

Steve gave an example of what is happening in Barnsley, where they are using the Working Neighbourhood Fund to double the length of time that placements last. And we are seeing other examples from around the country of how councils are building on the fund.

Hampshire County Council, for instance, is putting in £300,000 to set up an apprenticeship programme to complement its Future Jobs Fund. An Apprenticeship Officer, part funded by the Learning and Skills Council, is being recruited to co-ordinate and create additional apprenticeships.

Social Exclusion Task Force research findings

Projects like these show how important it is that Government, at every level, does intervene to dismantle the barriers that prevent access to employment.

We cannot simply stand back and expect the market to resolve some of these structural issues by itself. It takes active Government working with local partnerships to intervene in the right way, at the right time.

There is going to be some research published by the Social Exclusion Task Force next week, which will show these interventions can limit the corrosive social effects of recession.

Because, of course, it is not just a question of people losing their jobs. The effects go much wider – affecting people’s health, their personal relationships, and where they can afford to live.

So this time around we have put in extra resources to try to limit these effects.

• we have put  £263 million into the Social Fund to support the hardest-hit households;
• £20 million into the local authority Preventing Repossession fund;
• we are rolling out the £173 million Improving Access to Psychological Therapies programme;
• and a £13 million package to support people experiencing distress as a result of the recession, which includes the new NHS Stressline.

The preliminary findings from the Task Force research show that, this time around the social costs have been less severe than in the 1990s and 1980s. There has been no evidence of an increase in homelessness, or of property crime increasing – we can’t be complacent, of course, but these initial findings are encouraging. They suggest that if you do intervene, you can make a difference – not just in terms of employment levels, but on some of the other social effects as well. 

I think we can learn a lot from this research about what happened in previous recessions, and the practical steps councils and others can take to boost local economic recovery.

New Industry, New Jobs Strategy

But we cannot just leave it to local partnerships – we do need a coherent local response, but it has to be backed up by effective national policy. That’s why there is a relentless focus from Government on economic recovery. Because we know there can be no lasting solutions to worklessness unless we have economic growth – in every part of the country.

That’s why, through the New Industry, New Jobs strategy, we are looking to build on our existing industrial strengths and invest in new capabilities. That means a focus on key sectors – such as low carbon technologies; advanced manufacturing; healthcare and education; the creative industries – that will drive economic growth. Targeting strategic investments in the regions and areas where they can have most impact, so we can boost the regional and local economies.

But the other side of the coin is making sure that people are ready and equipped to take advantage of new job opportunities. The Skills Strategy, Skills for Growth, which published last month, is vital in that respect.

Skills

The strategy outlines how Government will ensure everyone can get the right skills for the jobs of the future, and the flexible skills that employers constantly tell us they need. And we need to make sure that, as growth returns, we have the strategy in place to help people with a history of exclusion from the jobs market into work.

So in the strategy we have signalled the importance of enabling people with low skills to access training that will help them get into a job, and keep it. It outlines plans to extend outcome-based funding, to incentivise colleges and other providers to help unemployed people get work. And it has plans for skills accounts, which are an excellent way of motivating adults to take up training and get advice and guidance about what is going to be most appropriate for them. 

We also want to build in flexibility, so that the training provided locally will meet the needs of employers and match the jobs that are available in an area. I remember going to Steve’s Work and Skills board, which was very well-led and ensured the work was done hand-in-hand with local employers: that is what made it so relevant to the local economy.

Local planning, and a clear grasp of the local economy, will be essential to ensure that the two agendas reinforce and complement each other. So councils and their partners do need to really understand the constraints and the opportunities that exist within the local labour market and economy.

Local Economic Assessments

But what else can and should Government do to help set the framework? From next April, all top-tier authorities will be required to carry out a Local Economic Assessment. And part of that will be a worklessness assessment.

This will ensure a strong evidence base and a strategic approach, so authorities really understand the drivers of worklessness in their area. They can also then take the opportunity to draw up a Work and Skills Plan, which they can use to formulate a strategy in response.

Those plans can provide a framework for tackling barriers to employment locally. And they can provide a starting point for any local partnerships that want a greater devolution of employment services in their area.

Work and Skills plans can also take the objectives that Regional Development Agencies set out in their regional skills strategies and translate them into a coherent delivery plan for each area, with identified priorities for action.

Now I believe that, when we take together the economic assessment and the Work and Skills Plan, we will see the building blocks of a ‘Total Place’ approach to tackling worklessness in an area.

They will offer the opportunity to use joint planning and resource-mapping to make funding go further, enabling local partners to align budgets around key priorities. I think that this will be an exciting new approach with the potential to deliver real benefits.

We will shortly be publishing an Employment White Paper to set out our vision for the employment and skills system, including plans to ensure a responsive, integrated support service for those who are out of work and on benefits.

Conclusion

But the success of that vision depends on effective local leadership. And I believe that only councils can truly provide it. National initiatives will fail locally without that vitally important contribution.

We cannot tackle worklessness on our own, sitting in Whitehall. Councils know their areas, their residents, their businesses better than anyone, so that partnership approach is absolutely the right one.

We are looking to devolve the freedoms and flexibilities that authorities need to get on with the job. And we are putting in place the broader frameworks that will make sure these efforts bear fruit.

I think we have to be clear. Economic opportunities – particularly in the difficult times that we face at the moment – do not just happen by themselves. Anybody who suggests the market can resolve these issues without assistance from Government is, I believe, wrong.

It is right that Government intervenes at national level. It is right that we work with the RDAs and have a coherent strategy at regional level.

But none of it can happen without councils taking the lead in their local areas. I know from my many visits to authorities around the country that it is not necessarily the core business of all councils yet. I believe we need to make it so.

Thank you.

Speech by: Lord Mandelson
Venue: House of Lords

In this speech, Lord Mandelson responds in the House of Lords to the motion: That this House takes note of the Secretary of State for Business, Innovation and Skills Order 2009 (SI 2009/2748).

“In a global supply-chain economy, Britain cannot and should not ever aspire to be a country that competes by undercutting on wage costs or employment standards. We must compete by adding value, not reducing it.

“That puts a premium on what we do in knowledge, specialisation and sophisticated skills. It puts a premium on making this country one of the world’s great repositories of scientific and technical knowledge and the ability to commercialise that knowledge. It puts a premium on thinking about the interests of business – not just the businesses that already exist, but those that do not yet”

Introduction

I am delighted to be here this afternoon to be able to contribute to this significant debate. I would like to pay tribute to BMW for bringing us together and hosting the event.

I first visited Berlin in 1979. I came again in 1990 in that strange time when the wall was open, the DDR remained but the re-unification of Germany was pending.

Today I am proud to be here in the midst of the futuristic architecture – characterised by the magnificent renewed Reichstag Building.

The new Berlin is celebrating a momentous and inspiring period in its history this year and it is a privilege to be here at this time.

If there is one political lesson from Germany’s recent past it is that there are no certainties. I never believed in 1979 that I would be free to walk through the Brandenburg Gate to Unter den Linden. But the point I wish to make today is that the old certainties are gone in industry too and we stand at a defining moment in our shared history. We will need the same boldness and creativity in the challenge we face in moving our societies to a low carbon economy.

The context

When I visit British factories I am struck by how much German plant and equipment is there. But Britain manufactures too. We were the first industrial nation and we have a great tradition of innovation – for example, the train, the light bulb and the television. But manufacturing in Britain is not just in the past.

No. The UK is still the world’s sixth largest manufacturer, and we are very aware that our manufacturers, our engineers will hold the key to our future economy.

The global financial crisis has shown all of us the centrality of innovation and new manufacturing technologies to economic growth as we emerge from this recession. And ultra low carbon represents a tremendous economic opportunity.

Of course, it is all too easy to  think of the shift to a low carbon economy as if it were something that is inevitable. But when you sit down and think about it you realise we must act and innovate to change everything we’re used to. The way we power our factories, the way we run our homes, and the way we fuel our cars. It’s nothing less than a new industrial revolution. And that means our focus will have to be on revolution not evolution.

And what’s driving this huge economic shift, this need for a fundamental re-ordering of the way we do things, is the threat of climate change – something that is inevitable unless we do act. That’s why the UK is committed to a legally binding target to reduce greenhouse gas emissions by 80 per cent by 2050.

The UK is keen to help lead the way in low carbon. We have an estimated 50,000 companies employing 880,000 people in the UK in the low carbon market. But to fully realise our potential in a sector already worth around £3 trillion worldwide we realised we needed to do more to reshape our economy and prepare for this low carbon revolution.

So our new industrial policy looks at how we can have a national capability in the areas where we believe our future interests will lie – in advanced manufacturing, in nuclear energy and in low carbon.  And, since, travel accounts for around 21 per cent of the UK’s total domestic greenhouse gas emissions, the need to place our travel on a more sustainable footing is absolutely key.

But the gapbetween ambition and success is vast. Consumers will not  simply switch to low carbon alternatives unless they are convinced it is right for all their needs. So today I would like to set out three ways in which the UK Government intends to have a world class capability in low carbon travel.

Educating our consumers

Firstly, we’re making sure consumers are properly informed to allow them to make greener choices. Our ‘Act On CO2’ campaign encourages people to reduce their carbon footprint whether it’s through better journey planning, vehicle sharing, cycling or walking. We know this sort of campaign can have a real impact. In the past five years the three Sustainable Travel Towns of Darlington, Peterborough and Worcester have seen car trips fall by around 9 per cent, walking increase some 14 per cent, and cycling increase by 12 per cent.

Infrastructure

Secondly, we’re making sure that we will have the right transport infrastructure in place.  So we’re spending money on widening our roads and motorways to relieve some of the congestion that blights our journeys. And we’re now expanding the electrification of  our railways – since an electric train typically emits up to a third less carbon per passenger mile than does a diesel train.

And you can’t expect people to take the train if the train is the slowest alternative.  So we’re following Germany – and Europe’s – lead on high speed rail.  We know this has the potential to lower carbon emissions by encouraging people to change their habit of relying on road or air travel.

So, by the end of the year, we will have delivered a dedicated route plan for the first stage of a high-speed line between London and the West Midlands.

Low carbon vehicle infrastructure

But, of course, the key topic of interest for the people in this room is what we’re doing with cars. How is the UK making sure its car industry is fitted out with the capability it needs in a low carbon age?

It would be entirely wrong to play down the huge strides that the motor industry has made in the past few years. Britain, for example, has a world wide reputation for making motor vehicles – everything from mass market cars to Formula 1.

However, the UK’s reputation as a major auto manufacturer will, ultimately, depend on more than evolutionary improvements to the internal combustion engine.  It will be about harnessing the potential of the revolutionary emerging electric and hybrid technologies, and accelerating the transition to ultra-low carbon vehicles.  This is where the UK sees a strategic opportunity to bring together our research and engineering skills to make a stronger impact in the global industry.

But the shift to low carbon won’t happen quickly enough without Government help. That’s why we set up the Office for Low Emission Vehicles (OLEV) to provide Government leadership with industry and link them with the energy providers. And we are doing everything we can to ensure we have a national capability in low carbon cars. OLEV has developed a comprehensive package to encourage demand, support supply, and enable places where these vehicles can be used, based on the industry consensus behind the formation of the UK Automotive Council.

Our ‘Plugged In Places’ scheme will support lead UK cities as they switch on for electric vehicle use. The UK is perfectly placed for electric vehicles, with high city population densities and short distances between conurbations.  So we are even turning our congestion into an opportunity!

London is aiming to become the electric vehicle capital of Europe, and it is aiming to have 25,000 charge points across the city by 2015; but it is just one of the cities in this revolution.

And we’ve already made a commitment worth over £400m to accelerate the transition to ultra-low carbon vehicles, and to encourage take-up and support the technology as it comes to market. This includes customer incentives of between £2,000 and £5,000 a vehicle from 2011, when we expect these vehicles to come onto the market in volume.

Encouraging innovation

I’ve talked about how the UK Government is helping consumers make informed choices and how we’re building up the right infrastructure. The third element of our plan is all about encouraging innovation.

What powers each industrial revolution is strength in innovation, linked to industrial capacity, capital, science and government support.  The abundance of people prepared to think in completely different ways. If we’re going to create the next generation of electric cars, if we’re going to power another industrial revolution, we need to find and nurture the right talent. Not just people with know-how and expertise but people capable of approaching a problem from a totally different angle.

Now we’re good at innovation in the UK. I mentioned our historic tradition but we’ve been pioneers in a whole range of fields recently from plastic electronics to Bluetooth technology.  We have an excellent science and research base supported by significant increases in government science investment in recent years.  And we have four of the best ten universities in the world.  

But, even so, we know there can be some gaps between having those great ideas and bringing them to market. So £150 million of our UK Innovation Investment Fund is designed, again, to lever in additional funding from the private sector.

And because we know innovators need space and time to test out their ideas – two commodities in short supply especially during a global recession – we’re building national centres for excellence to help develop the prototypes we need. Last week, for example, I visited Bristol to announce the site of the National Composite Centre which will help us realise our potential in this next generation material.

Low carbon vehicle innovation

When it comes to low carbon vehicles we’re encouraging innovation in a number of ways. Recently, we ran a competition to develop and demonstrate low emission vehicles. It brought together car manufacturers, energy companies, local and regional government and world-class universities. As a result we are now testing low carbon vehicles from 16 manufacturers in eight locations across the UK – from Glasgow to Oxford, the West Midlands to the South East – making it possible to showcase new and emerging low carbon vehicle technologies in real world situations.

We want the UK to become the place to be for ultra low carbon demonstrator projects.

BMW, our hosts today, will soon be advancing the next generation of electric vehicles by testing their electric Mini prototypes on the streets of Oxford. And they will be showcasing a range of electric, hybrid and conventionally-fuelled vehicles at the forthcoming 2012 Olympics in London.

Britain has been chosen by Toyota to be the home of the first Toyota hybrid vehicle to be produced in Europe. And we’ve a site chosen by Nissan to be the European “mother” plant for battery production. 

By taking such an active approach, the UK is already helping speed up the technological development of low carbon cars. Yesterday, I was fortunate enough to test drive the Ampera  electric car and it was an important moment when I realised I did not notice the difference from the internal combustion engine.
We are also funding exciting products such as Jaguar’s limo green – which is an electric vehicle in the luxury class.

But this isn’t just about products.  We are developing our skills system so that people with the right skills and abilities can come through into these exciting new areas of research, development and manufacturing. Last month we published a Skills Strategy to identify the skills gaps in our low carbon industries.  For example, this autumn we launched new qualifications for the production of hybrid vehicles.

As a result, we’re building up a new technician class through our revived apprenticeship system. We’re also seeing how we can devise practical low carbon courses in schools, further education colleges and universities.

And we are working with Richard Noble to use the new land speed record “Bloodhound” car targeting 1,000mph to create enthusiasm in our universities and increase engineering intake, just as the space race did in America 40 years ago.

Conclusion

Today I’ve mapped out three ways that will, when it comes to low carbon, make the UK the place to invest in years to come. But we will not be successful in our approach without a fourth and final element. And that is our ability to work in partnership – locally, nationally, and most particularly at the European and the global level. International partnerships, partnerships between businesses and between Governments are essential if we’re to build up those local and international markets in low carbon. Because the challenges we face in the shift towards a low carbon economy are global in scale. They transcend national boundaries. And global problems demand global solutions.

I’ve already highlighted areas where co-operation between British and German companies is bearing fruit. I had a superb visit earlier this year to the BMW Mini Plant in Oxford where, building on an iconic British brand, British and German engineering has combined to create a world beating car. More broadly the car industry’s consensus on a low carbon road map was central to the UK Government’s own strategy for the automotive industry which we published earlier this year.

And our newly created Automotive Council will set a long-term plan for the development of the industry. Its membership includes world class engineers, suppliers, scientists and business leaders from across Europe. It is an impressive group. And I’m delighted to hear that BMW’s Jürgen Hedrich, along with Hermann Kaess of Bosch and Franz Josef Paefgen from Volkswagen, have agreed to join the distinguished cast list.

In a few weeks’ time world leaders will gather in Copenhagen.  We believe that the conference must succeed.

But, whatever the outcome, that meeting has already underlined a few basic truths that are now universally acknowledged.  Our future is in low carbon.  We’re behind it here in the UK and we want to work with you to realise our full capability. Today’s discussions will advance our co-operation and I’m sure we will reap the rewards far into the future.

In this speech, Lord Mandelson debates the Second Reading of the Digital Economy Bill. He focuses on three key areas where the Bill will enable the UK to modernise its digital infrastructure; to update its copyright regime for a world in which we use digital content in radically new ways; and, finally, to protect and strengthen public service content both nationally and locally.

 ”When we talk about the digital economy, we are talking about every business that runs a website or transfers data digitally; every firm that sells goods online or whose creative or intellectual property is represented by digital content; and every business that enables these business models to exist.”

PLEASE CHECK AGAINST DELIVERY

Thank you and good afternoon everyone.

Languages matter because words and the perspectives on the world that they represent matter. The more of those perspectives we can take in, the richer and more rounded we are likely to be as human beings.

I don’t think you need to be a professional linguist to understand that.

My work in the law and in politics has been an education not just in the power of words and ideas, but also in the diversity of viewpoints that language can express. And my life as a Londoner, living here in a city where 250 languages are spoken, has shown me that English is not the only tongue capable of giving expression to unique, valuable or beautiful insights.

So often in history, language has been a wall that separates people from each other, a barrier to mutual comprehension and a source of distrust. To break down that wall by learning another language is not just to find a new means of communication, but also to gain an alternative way of understanding the world and how it works.

Anyone who sees languages in that way cannot consider the promotion of language-learning as anything other than a priority for our education system. And I certainly want language skills to be recognised as a key contributor to our country’s success, now and in the future.

We cannot afford to ignore the fact that 75 per cent of the world’s population does not speak English. And even if we could, there is no virtue in showing an Anglo-centric face to a world that is much more complex than that.

Global ambitions, whether in commerce or in political influence, require global perspectives. And they in turn require our knowledge and use of languages other than English has to be nurtured and encouraged to grow.

Without this growth in language learning, we stand in danger of losing much that is valuable to us.

Our business competitiveness and our ability to attract inward investment will fall.

Our ability to research in collaboration with non English-speaking countries will decline.

And British people will be unable to compete for jobs in an increasingly open European labour-market.

I’ve met people who think of languages as an irrelevance, or at best as an afterthought to be tacked onto the end of a CV. Of course, they’re hopelessly wrong.

More and more businesses operate in more than one country. In those companies, staff need to spend time working abroad and speaking other languages if they are to gain promotion and get on in life. If we fail, as a country, to embrace language learning, we will set arbitrary limits on people’s aspirations and on their scope to achieve social mobility.

In that context, the recent CBI report Stronger together: Businesses and universities in turbulent times is required reading. It reminds us that the skills of language graduates are not just needed for interpreting and translation careers. They are important in global businesses and industry.

I quote: “Language skills are also important in an increasingly globalised workplace. Students should be striving to develop these skills which…are not an optional extra”.

In view of all this, it’s just as well that languages are not dying out in Britain. On the contrary. Today, you can hear more different languages spoken in this country than at any time in our history. And, as I’ve already said, there’s no better place to see that for yourself than here in London, the most linguistically diverse city on earth.

Moreover, more British children are growing up bilingual than ever before. Indeed, a recent survey of almost a million school-age children in London found that fewer than three-quarters of them speak English at home.

That’s not a cause for alarm, but for celebration.

Yet much of the rhetoric that has surrounded language-learning in this country is predominantly downbeat and defeatist.

And I don’t deny that there are some understandable reasons why languages are described by some people as being in decline.

I know that there remain concerns about the policy which permits 14 year olds to choose not to study a language at GCSE. And it’s certainly true that numbers of GCSE entrants in languages have been falling for nearly a decade.

But there are clear signs that the standards for languages at GCSE are improving now that compulsion is no longer there. We are encouraging languages in secondary schools through revitalising the curriculum for 11-14 year olds. And in 2011, it will become compulsory for primary schools to offer a language, as more than 90 per cent already do.

And the picture also looks much brighter at A level, where numbers of language entrants have been rising since 2005. And that ought to be feeding through into more demand for higher-level learning of languages.

Of course, it makes it much harder to take an optimistic view of the future of modern languages in universities when some vice-chancellors and their governing bodies decide to cut back or close departments, or to curtail the range of courses on offer.

I know, too, that some institutions have come to see their role in language studies as offering basic language modules for the generality of students rather than full degrees for specialists. And there’s a place for that sort of thing.

I welcome the work that is done by language centres up and down the country giving students studying other subjects the chance to add some French or Spanish to their skill set. But this must not be seen as any sort of substitute for fully-fledged teaching of high-level language skills, backed up by excellent research. We need to produce not just more linguists, but better linguists as well. And we need the understanding of the cultures, histories and politics and economics of the countries where they are spoken that only rigorous scholarship can give us.

These are all reasons why we’re here today. This event is about how we can move forward together in the context of the current state of modern languages and the recommendations in Michael Worton’s report.

I don’t pretend that Michael’s findings make entirely comfortable reading for any of us. But that’s all the more reason to take them seriously.

In particular, I’d like to hear what you think of the messages about languages that the Government gives out.

I know they haven’t always been welcome to many of you. Last year’s Research Assessment Exercise and its effects on language departments has been a particular bone of contention.

Detailed allocations of the quality-related block grant for research are of course a matter for HEFCE.

But I understand that the total amount of funding for each subject reflects the total volume of research in that subject submitted in the RAE. Volumes of language research grew at a smaller rate than in other research areas overall and so this is reflected in shares of funding.

People are understandably focusing on the year on year change in funding. But this year we are seeing a change to funding that reflects the relative volume changes since the 2001 RAE. Over that period the block grant has been steadily rising. In fact, for languages overall, it has risen by 4 per cent in real terms since 2002.

Last year’s RAE actually represented a very good outcome for some languages, like Arabic, Chinese and Japanese. But there’s no reason for it to have placed any department in these or other languages under threat.

I note, too, that Michael’s report argues that linguists in universities themselves could do more to ensure not just the survival but also the success of their departments. He says that they could make more of their successes and do more to convince university leaders of their value, for example, by emphasising their contribution to institutions’ international strategies.

I’d be interested to hear your views on that.

I know as well that some vice-chancellors have misinterpreted the need for the Government to invest in subjects like science, technology, engineering and maths that give the greatest economic return as a lack of commitment to other subjects. And that, of course, has created problems of its own. Over the last ten years, we’ve lost about a third of our languages capacity in higher education.

I don’t like seeing departments close and study options disappear and I don’t believe that the Government’s or HEFCE’s funding decisions have made that inevitable. But I can’t stop university authorities from taking management decisions. You know that the Government’s role in this is not an interventionist one and how protective of their autonomy universities rightly are.

I also want to hear your ideas on any actions we in Government can take to boost demand for university-level language studies. Because ultimately, only demand from prospective students can keep subjects sustainable.

Of course, we already have initiatives like our Routes into Languages programme which is encouraging pupils to learn languages and to enjoy the experience. The signs to date are that this is starting to have a real impact.

But I’m in no doubt that we could do more.

In particular, we must counteract the perception that the Government does not take language learning seriously. We do and we want to demonstrate this. That is why I welcome the recommendation in the report that there should be a forum to provide “clear, coherent messages” and to develop a communications strategy for them.

I want to take my share of the responsibility for this work, and that’s why I can announce today that my DCSF colleague Diana Johnson and I have agreed to chair the new forum jointly.

I’ve talked this afternoon both about some of the challenges that modern language studies face and about how necessary it is to find ways of overcoming them. But now I know that Michael and Chris are as anxious as I am to hear what you think and to answer any questions you’d like to ask.

Thank you.

Speech by: Lord Mandelson
Venue: House of Lords

In this speech, Lord Mandelson responds in the House of Lords to the motion: That this House takes note of the Report of the European Union Committee on Developments in EU Trade Policy

“It is important that Britain leverages the weight of Europe and that Europe leverages its collective strength in the world both to match those emerging economic powers and giants in the global economy and to engage them very seriously in a very practical way.”

I want to say something about the value and challenges of local media today, but I want to start with the bigger picture, which I think is the health of regional life in the UK generally.

Our big challenge now is, over time, to repair the country’s balance sheet, which has been hard hit by the banking rescues and the collapse in growth. To do that we have to get the growth back – and the growth has to be sustainable and diversified, and it has to be shared across the regions of the UK. I want to say something about how we make sure that our growth strategy has a strong regional dimension. And I want to say something about how we make sure that a strong regional culture of news prospers in Britain, and what we’re doing in the Digital Economy Bill to make sure that happens.

I don’t think it’s stretching it to talk about a renaissance of regional confidence in Britain. We must not have short memories about this. Fifteen years ago the talk in Manchester, or Newcastle or Birmingham or Sheffield or any of the industrial revolution cities was still too often about had been lost.

These days it is increasingly about what is being built and renewed, the new confidence, the new links to Europe or the global economy, the new jobs. I don’t want to sound starry-eyed or complacent but these places had the guts ripped out of them by economic change and I believe that this growing regional confidence is real and justified, and preserving it through the downturn has been an important priority for the government.

Flexing the regional muscle

Just to take one big example, almost all of our manufacturing muscle is a long ride from London. It looks different – these days it’s more likely to be a sleek barn on a business park than a factory and a smokestack, but it’s where it has always been. Even a huge chunk of the financial services industry isn’t actually in the City of London.

We talk about the need for a balanced economy in the UK and that means two basic things. A diversity of productive sectors and strengths. And a widely shared spread of growth across the UK. We might measure growth as a single national aggregate, but the reality of regional performance behind that number matters just as much.

That’s why we are committed to creating more regional autonomy and drivers of regional economic growth. It’s why we created the Regional Development Agencies, whose remit is to take a strategic approach to regional economic management. The RDAs have done this well – they produce over four times the regional economic growth for every pound they spend or invest. They’ve trained almost half a million people and helped create or secure more than 200,000 jobs over the last ten years. They are now having more responsibility passed to them for skills training in the regions – a vital key to future growth.

Our intention is to strengthen the RDAs further. Our new tasking framework for Regional and Local government, which we will launch in the next few weeks, sees them acting, for example, as a critical intermediary between local businesses and universities and colleges.

We want to see them collaborating a lot more with each other and with local government to bring in strategic public and private investment and build up regionally-based national strengths in key areas like low carbon and advanced manufacturing in a way that reflects local capabilities and local geography and is coherent across the country as a whole.

Challenges for regional and local media

Now, if you’re serious about strong regions, then the active commitment and engagement of local media is vital. Eight in ten British adults read a regional newspaper. This journalism is – or should be – the bedrock of local democracy and public life, the mirror of regional identity and an encourager of innovation and change.

But of course we all know that local journalism faces the same challenges that the wider media faces. Declining readership. A migration of advertising and interest online. And of course, for the last year the recession has hit revenues very hard.

Its good to see local media experimenting with new models like paying for premium web content and we’ll all be watching how that goes. But, all told, a tough business to be in.

Now, obviously, commercial reality is commercial reality. But a healthy culture of local news in particular is a public good and Government can’t just wash its hands. So I want to make two important points.

The first is that I recognise that many of you are concerned about the impact of the withdrawal of government advertising from local and regional papers. I also know that you are concerned about the competition to local and regional papers offered by Council freesheets.

Obviously Government faces a difficult balance here. Our first obligation is always to spend taxpayers’ money sagely- and revenue from government advertising can’t be a business model in itself.

Local authorities have a public service obligation to publicise the work they do at value for the taxpayer. But we have to weight the effect of this on a strong culture of local media – capable of holding local government to account!

I am looking forward to hearing the Audit Commission input on this question and we will then look at the evidence to see how government advice to Local Authorities might be strengthened.

Public service content

But to my mind the question of local public service content is the big one, and it’s my second and final point. The Digital Economy Bill will receive its second reading this week, and alongside its measures for upgrading the legal and physical infrastructure of our digital landscape for a global knowledge economy, it explicitly makes the case for support of public service content both nationally and locally.

I don’t buy into the view that says that public service content implies a lack of trust in people or that it equates to an evil called state-sponsored journalism. The question is whether we think an entirely commercial market for news or broadcasting produces the plurality and diversity and objectivity that the public demands.

A market for media will pull in the direction the majority of paying customers want it to go, and there is value in that. But broadcasting has a broader remit for a range and quality of programming and news that will never be delivered by the profit motive alone. That principle has to be defended.

You’d think the last two years would have taught us to be a little more cautious in ascribing absolute value to the judgments made by markets. Evidently not everyone thinks so.

Of course, the recent experience of the BBC does make the point that you have to be clear where the line between public service and commercial competition lies. The BBC seems to recognize that there are limits to extending itself into commercial markets, and its review of this is welcome. To say this is not to attack the basic mission of the BBC, as some of its commercial competitors are doing. It is to argue that mission creep can undermine the case for that basic mission.

There is also a strong case for alternative public content providers to compete with the BBC and keep it on its toes. The Digital Economy Bill does this with a new public remit for Channel 4, and we have high expectations of the Channel’s new leadership.

As you all know, we are also going to pilot the idea of Independently Funded News Consortia to provide alternative sources of high quality local and regional news, especially on television and online – the lines between these things now becoming increasingly fluid. Drawing on the experience of the initial pilots, a national roll out is planned for 2013. I’m glad that many in the local media world see a real potential vehicle for their expertise here.

In the first instance we are going to fund these out of the underspend from the digital switchover plan. For the future the Government has made it clear it favours maintaining the current top-up in the BBC’s funding and financing the consortia from that. However, we are not going to set anything in stone in the Digital Economy Bill.

Conclusion

So, to conclude. Preserving and reinforcing the local and the regional in public services, in politics, in policy is vital for effectiveness and accountability. Our economic strength depends on strong regional economies. So does our sense of social solidarity. A strong local media is vital to all of these.

It might sound a little paradoxical but I think one of the things that is driving us back to localism is globalization. Because while it is increasingly becoming rational to move some of our governance in, say, financial markets, or trade rules or action against climate change, to the EU or global level, the need to feel connected to our roots and sense of place means we also want local solutions and will build our political identities around what we want from, and feel about, our surrounding community.

Having grown up on the principles of Morrisonian municipal socialism and served for thirteen years as MP in Hartlepool I know exactly where this instinct comes from, and I think it’s a very good thing. I want to finish by saying again that the role you play in that is, and will always be, vitally important. Thank you.

Introduction

I am delighted to be here today for the formal signing of the Leeds City Region pilot programme.

This partnership, between the 11 councils, regional partners and central Government takes a further step in this new way of working together – to deliver our shared vision of economic prosperity for all our communities.

The project has become more relevant in the economic downturn because although the recession may have been global in its origins, but the effects have been felt locally, in communities across Yorkshire and beyond.

This pilot will play a crucial role in tackling the fallout from the downturn and making sure that Leeds City Region is ready to seize the opportunities opening up as the recovery begins.

Because to make progress on these issues – whether tackling worklessness; improving skill levels; or nurturing enterprise and innovation – we all need to work closely together.  We can achieve more together than we do alone. And the pilot provides the tools to do just that.

Delivering tangible results

A Housing and Regeneration Board, with new devolved powers, will be set up so the City region can take control of this vitally important agenda. It will collaborate with local partners to deliver low-carbon communities and will strive to make the area a centre of excellence in sustainable design and innovation.

The Urban Eco-Settlement Programme, which is at the heart of this ambition, will provide up to 28,000 environmentally friendly new homes for local people and regenerate brownfield land in Bradford, Leeds, Kirklees and York.

There will also be a new drive to help everyone use less energy. The new Domestic Energy Efficiency Programme will improve 300,000 properties and help lift 50,000 households out of fuel poverty.

The signatories will also work to establish the city region as a globally-renowned centre of innovation, building on existing initiatives such as Science City York and the Bradford Learning Quarter to attract new inward investment.

The Leeds City Region Employment and Skills Board, driven by local employers, will have a crucial role to play here. It will make sure that skills programmes meet the needs of the local economy, training people to work in key sectors such as financial services and the digital and creative industries.  And inward investors also want to know there is leadership here, both civic and business.

But a more skilled workforce doesn’t just mean higher productivity – it means better job prospects, greater prosperity and more life chances for families everywhere. So the new Board will empower learners to get the skills and confidence they need to succeed in the modern working world.

The ambitious commitments that we are all signing up to today will generate new homes and new jobs for the people of the Leeds City Region – tangible outcomes that will change lives and communities.

A new approach

We have already devolved new powers and freedoms to kick-start economic growth through Multi Area Agreements. Now we are taking this up a gear through the City Region pilots.

There are just two in the country – one in Greater Manchester and now one here – so as the Minister for Yorkshire and the Humber I am proud and delighted that one of them is in our region.  I was anxious to make sure Y&H was at the forefront in this area.

The Government believes that devolving these new freedoms will give the pilot the tools it needs to boost economic growth. It is an exciting, ambitious new approach and we want to explore its full potential.

That’s why we have a high-level ministerial committee, which I sit on, devoted to the two City Region pilots. It is a sign of the priority they are being given and the determination to have Ministers and Local Authority leaders working side by side to make sure these pilots succeed.

Core cities matter

And why do we want them to? We believe that dynamic cities, in the North and elsewhere, have a crucial role to play in leading the economic recovery and powering future growth, in their regions and beyond.

The Leeds City Region generates 5% of the UK economy [national Gross Value Added], so we understand the significant contribution it makes to regional and national output and we want to see how much further we can go.

This work is absolutely crucial. Research published earlier this month by the Northern Way looked at Leeds and Manchester and the role these economic powerhouses could play in powering economic growth right across the North.

It found that reducing the commuting time between the two cities, by 20 minutes, could generate up to £3.7 billion of economic benefits, which would have a wider impact across the Northern regions, and help narrow the historic economic gap between the North and South of England.

So the Department for Transport is exploring, with the pilot, ways of working more closely with the Highways Agency and Network Rail to deliver a commuting network that will unlock this economic potential.

This area already has strong economic foundations to build on. The wider Leeds City Region has world-class universities, which are doing cutting-edge research and forging innovative partnerships with industry to become hubs of the knowledge economy.

These institutions are a major draw for inward investors and are playing a crucial role in driving economic development. We need to harness these existing strengths and use them to power economic growth and development hroughout the wider region.

But it would be a mistake to see the Leeds City Region pilot in isolation. The single regional strategy, agreed between Yorkshire Forward, and our local authorities and other partners, is a means of targeting key investments in infrastructure and growth sectors that will boost the economy right across Yorkshire and the Humber. So it’s essential not to lose that wider economic perspective.

And, of course, this is also about setting the agenda – intervening during the downturn – looking at how to stimulate the economy and encourage investment but also ensure that the structures are in place to deliver on the ground. 

That’s why we will shortly be publishing a national framework for regional and local economic development.

This framework will identify the growth sectors the UK will compete in globally, and how these can be aligned with regional and sub-regional economic development. It will give local authorities, the Regional Development Agencies and other partners the ability to identify key priorities and combine their firepower to drive economic growth.

Conclusion

The pilots are an essential part of this picture. They are all about giving members of the partnership greater control over how money is spent to ensure that resources are being used to meet local priorities and local needs.

I believe they are an exciting new development. This pilot gives the Leeds City Region the tools it needs to prepare for economic growth as the recovery gets underway.

And this is just the beginning – I am absolutely committed to exploring just how ambitious we can be, and how much further we can go.

So I look forward to working with the members of the Leeds City Region in the months ahead, to achieve our shared vision – grasping the huge opportunities in the new global economy for the people who live and work here.

Thank you.

Speech by:

Introduction

It’s fair to say that the events of the past year have illustrated how interconnected our world is today. National boundaries have been blurred, as technology has allowed companies in distant places to do business in seconds.

So when the economic crisis hit last year, it is no surprise that some of the biggest holders of Lehman mini bonds were in Hong Kong, and some of the biggest Washington Mutual holders were in Thailand.

I’ve been in Government for 12 months now, and when I joined the banking crisis had just happened, so I said: ‘I’m a politician, not a banker’. And then the MPs’ expenses problem blew up, so then I said: ‘I’m really a banker, not a politician’.

To be in government during the past 12 months has made me a front-row witness to the most extraordinary changes in the world. But the crisis followed a century of huge global innovation – we’ve had political, economic and technological change – where each decade has led to profound transformations.

In 1909 Woolworths opened its first store; in 2009 it closed its last. Now it exists online, its stores taken over by other big brands or community initiatives like Wellworths.

Its fortunes reflect the dual nature of globalisation – first it grew into an international brand alongside the consumer society, and then it fell victim to the financial turmoil that swept the globe.

A century of innovation

So I would like spend a few moments taking stock of where we are, because looking back over the past 100 years can help us think imaginatively and creatively about the next.

The first decade of the twentieth century witnessed the rise of technological innovation. The Wright Brothers took flight in 1903; there was the first radio transmission from America to Britain; and the first model T Ford rolled off the production line in 1908.

This period saw the development of new corporations, such as GE, to exploit these inventions; and the emergence of large corporations, assembly lines and production on a large scale.

Capitalising on this, Frederick Winslow Taylor published what’s widely regarded as the first management book: ‘The Scientific Principles of Management’ in 1911.

By 1914, the UK was at the apex of what has been called Wave 1 of globalisation. By that time, the new world’s labour force had grown by a third since the 1870s, thanks to migration, while Europe’s had shrunk by an eighth. There were increasing concerns about Britain’s ability to compete with what was described then as an emerging economy – the US.

The 1920s opened with the first Council meeting of the League of Nations, an attempt at multilateral regulation of the world order that was compromised by the US refusal to participate. The decade closed with the one of the seminal events in economic history – the Wall Street Crash, which saw 13 million shares sold in panic on Thursday 24th October, 1929.

When you read about them it’s difficult to comprehend how catastrophic the effects of the ’29 crash were. In the 1930s the Great Depression slashed US output by 30%. In the four years to 1933, 20,000 businesses went bust; 250,000 people lost their homes and 20,000 people committed suicide. Protectionist measures such as the Smoot Hawley Act saw international trade tumble from $10 billion to $3 billion by 1932.

In the 1940s, the turmoil of the Second World War led to the foundation of a new global financial system and the implementation of the Bretton Woods system, with the IMF and the World Bank at its heart. The principle of Free trade was promoted through the General Agreement on Trade and Tariffs (GATT), which was a precursor to the WTO.

Post-war stability laid the foundations for what was a ‘golden age’ of economic growth. Rising productivity and high levels of employment produced a substantial increase in living standards – Global GDP rose by almost 60% between 1950 and 1960, while GDP per head grew by nearly a quarter.

In the 1960s, Gordon Moore formulated his famous ‘Moore’s Law’ – that the power of a computer chip doubles every two years, transforming business and societies. In 1968, he and his partner Robert Noyce founded Intel.

As the 1970s dawned the economic environment became more volatile, with two major spikes in the oil price and the birth of stagflation. Silicon Valley saw a generation of entrepreneurs striking out on their own and founding companies that today have become major household names – such as Microsoft and Cisco.

In 1977 the first personal computers – the Commodore PET and the Apple II – went on sale. It revolutionised our relationship with technology. A year later, Deng Xiaoping launched the Four Modernisations – agriculture, industry, technology and defence – that set China on the path towards economic reform.

The early 1980s recession gave way to the boom of the late 80s. During this period the first laptop – the Gavilan SC – was launched in 1983, and Windows 1.0 was introduced in 1985.

But the early 1990s saw another bust. That was followed by the Non-Inflationary Constant Expansion – ‘NICE’ – era, during which Britain and much of the world economy enjoyed a long period of growth, benefiting from falling import prices, sustained increases in trade levels and a massive boost to international capital flows.

In 1995, here in the UK, AIM was launched as a new vehicle for companies seeking finance. But as the decade closed, the highs seen on the FTSE all-share index proved unsustainable as the dotcom bubble burst.

Even so, since the millennium, technology has continued to spread into every aspect of our lives. Mobile phones, iPods, blackberries and computers are now part of ordinary life and we live in a world where distance and time zones are now no obstacle to doing business.

The global economy today

Multinational companies today have no boundaries; it’s not really relevant any more where they have their international headquarters.

By 2008, there were a billion PCs in use worldwide, and laptops exceeded sales of desktop computers for the first time. The Windows operating system now has around 94% of the market.

The BRIC economies – Brazil, Russia, India and China – are taking their place in the world, accounting for 22 per cent of global GDP in 2008. And by last month, over 3,000 companies had listed on AIM, raising over £4.2 billion to fund expansion, and vividly illustrating the growing diversity in ownership and finance that hedge funds and private equity have delivered.

Of course, the seismic shocks in the global economy over the past year have taken us into uncharted waters. On some measures there’s no doubt the recession may be the worst since the 1930s.

But the response of Governments, learning from history, here in Britain and around the world has been very different. We have intervened where necessary, pumping huge amounts of money into the economy to shore up demand. The temptation to retreat into protectionism has, so far, largely been resisted.

The question now, as the crisis subsides, is: where are we heading next? Of course, it’s very difficult to predict the future – unless you are a professor! After all, many of today’s household names in business were not around a century ago. It’s very difficult to sustain your position at the top, even to maintain a company, for ten years let alone a hundred.

Emerging trends

But by scanning the horizon we can begin to see the trends that will shape the strategies and actions of UK businesses in the years ahead. In the short term, the focus will be firmly on getting through the recession and being well positioned for recovery.

In the longer term, it’s clear that we will see sustainability and the global shift to a low carbon economy take centre stage. It doesn’t matter what you’re business is, you’d better get on that train. Otherwise, you won’t survive. It has the potential to be the great industrial opportunity of our age.

This in turn will power technological innovation. There is an interesting debate over whether the increasing costs of research and development – where, incidentally, Britain is a world leader – will be a brake on innovation. The more positive view, put by Will Hutton, who is an adviser to the Government, is that the increase in innovation-related activity globally will boost the discovery of new general purpose technologies.

The corollary of this research is a changing asset base. Economists are developing new and broader measures of investment to capture this, moving away from merely recording investment in tangible assets such as capital equipment. Instead they are capturing the investment in so-called ‘intangible assets’ – which Britain really does excel at – such as R&D, design, software, training and organisational capability. There is no doubt that they are increasingly important for innovation, and help businesses and countries compete globally.

Provisional data suggest intangible assets account for a growing share of UK business investment. Figures soon to be published by NESTA [the National Endowment for Science, Technology and the Arts] in its pilot innovation index put the proportion at 14% of Gross Value Added in 2007. Since 1992, investment in intangibles has exceeded investment in tangible assets.

So as international competition – and co-operation, through global value chains – grows, these investments will underpin a firm’s ability to compete in the global market place. Globalisation creates new opportunities for business as markets expand and international value chains grow. Easier market access and technological change have made it easier – even for small businesses and fledgling firms – to enter them.

If they do, there is a big prize at stake – tens of millions of new customers. If emerging economies continue to grow at the pace that they have in recent times, hundreds of millions of additional ‘middle class’ consumers will provide an expanding market for high value goods and services. The World Bank estimates that the middle classes in the developing world will roughly double between 2000 and 2030. That will mean it will grow from 7.6% of the population to 16.1%, which is around 1.2 billion people.

The global economy of the future

The Government’s foresight unit – our think tank – has been looking at the impact of these emerging trends. It thinks there are four possible futures for world trade.
There’s a best case scenario – and I’m an eternal optimist, so I’m with this one – with strong and coordinated global organisations and abundant natural resources. They call this future ‘global citizen’, which sees the world recover, the world cooperating, and sees the world returning to the prosperity of the last decade.

Even with enough natural resources there is a danger of global fragmentation, leading to their second scenario ‘fragile alliances’ with ‘country cartels’ setting their own local agendas and poor and powerless countries completely losing out.

But the reality is that we have yet to deliver large scale alternatives to fossil fuels. We haven’t got enough arable land in the world, and not nearly enough water.
In this future of scarce resources, without global cooperation we risk the nightmare scenario of deglobalisation. Water wars, starvation, pollution – and no hope of restoring the economy to growth.

But there is a fourth possible future scenario that they predict. One that’s realistic about resources, but champions strong global organisations, that balance the needs of the strong against the powerless, and that finds new ways to develop and create wealth.

They call this scenario ‘global innovation’. That’s why creating a more balanced, sustainable global economy requires unprecedented levels of global co-operation.
Conclusion

The reality of today is that we are all internationalists. We have to be. So we need to create a shared sense of our collective future – economically, politically and environmentally.

That means building on the firm foundations that have been laid this year at the G20 summits in London and Pittsburgh. The sad thing is that it took a credit crunch and a financial crisis to change the G8 to the G20. We have to recognise the increasing power of India and China. These are essential first steps in redesigning the global architecture.

Now we have to balance the needs of the developing and the developed worlds. We have to reach a deal on climate change in Copenhagen next month, to slow the rate of change and fairly distribute the cuts in emissions.

But we also need to do more on multilateral trade deals. Doha is the ultimate goal, but any progress we can make in banishing protectionism and creating open, fair, global markets has to be embraced.

The Chinese have a proverb – opportunities multiply as they are seized. And that’s where we stand today. We are on the cusp of a new global order and a new co-operation around the world, with limitless possibilities. So to those of you who will be embarking on a future in business, I say this: you have to be international if you are going to compete.

Thank you.

I was admiring the cars on display on the way in and it’s hard to disagree with Paul Everitt’s comment in the programme that they are British icons. We’ve been making motoring icons now for more than half a century.  I was born the same year the Triumph TR series was launched. One of us went on to become a classic…

But it’s interesting that we look back on those post-war decades as the heyday of British car manufacturing, when in fact we have twice as many motor manufacturers in the UK now than we did then. We make twice as many cars today as we did 25 years ago, even before the big Asian players revolutionised the market, and twice as many engines as we do complete cars. If you put the 1.65 million cars made in Britain last year nose to tail…they would look like a bank holiday on the M4!

My point is that we sometimes have a glib notion in this country that we don’t really make anything anymore, that we are no longer an industrial economy. The motor industry makes a nonsense of that idea. If we want a balanced, diversified economy then the engineering and technological strengths of the motor industry are a national asset of the most unique kind.

It has been a difficult two years for the motor industry – the toughest imaginable market conditions internationally. So I want to start today by paying a very genuine tribute to the resilience of the industry and its people.

It’s easy to think that motor manufacturing is chiefly about machines, but of course its biggest asset is its people. The workers whose skills and productivity are one of the reasons why this country is one of the best places in the world to make cars and components.  The staff who have accepted limited hours to keep plants viable through the downturn. The innovators in management who have had to build strong business models around high structural costs and ruthless price competition over the last two decades.

This industry is the cornerstone of Britain’s manufacturing economy. I know you’d expect a politician to stand up here and say that – but for the last year I’ve spent more time working for the future of the UK motor industry in one way or another than doing just about anything else. The car scrappage scheme has maybe been the most visible part of that, but through our business support schemes and worker assistance schemes and Train to Gain we have made sure that you had the help you needed.

Of course the wider government stimulus is acting like a crutch for demand as private investment has collapsed, and that helps across the economy. As the IMF stressed again yesterday, prematurely withdrawing this stimulus would put at risk the very jobs, skills and capacity that we have worked so hard to protect. So although there are some politicians who try to make a virtue of their haste to pull away support for demand, it’s clear we need an exit strategy for the stimulus, not a rush for the exits.

Now, I’m going to disappoint you here. This commitment to motor manufacturing is not because it exerts some kind of special sentimental tug on Ministerial hearts. Sorry to say it.  It’s a cold hard judgement of what this industry means to our skills base, our engineering supply chains, our niche manufacturing skills, especially in design, low carbon and ultra high tech. It’s a measure of what this business means for the UK’s industrial future.

We are very very good at making motor vehicles in this country – everything from mass market vehicles to Formula 1. I’ve made that case in Brussels, and Japan and Germany. I’ve made it to the management of GM and Magna.

But the reality is that this is an industry at the end of the current stage of its evolution. That was the basic analysis of the New Automotive Innovation and Growth Team chaired by Richard, whose excellent report has done so much to shape Government strategy over the course of this year. Today I want to take that analysis and ask what Government and industry need to be doing to make sure UK motor manufacturing is equipped to prosper through that change.

The horizon

There are two big basic problems out there for the vehicle industry: decarbonisation and over capacity. The basic evolution of car making over the last century has been based around the constant refinement of the same basic technology on which the automobile was originally based – the internal combustion engine. This has given a huge natural advantage to market incumbents.

But suddenly the market is much more open.    Low carbon technologies provide a real opening for new and innovative firms to shake up supply chains and this presents real opportunities for the UK and for the UK automotive sector.

The industry also suffers from longer-term structural overcapacity – an overhang of productive capacity that is probably 20% higher than demand. Even if we project huge levels of car ownership in the developing world, it is inevitable that some of that European capacity is going to have to be absorbed through consolidation.

Our challenge certainly isn’t to fight off that process of technological and structural change – if anything Government has an obligation to drive it faster both for environmental and economic reasons. Our job has to be to help you make sure that when the technological kaleidoscope slows again, Britain emerges as one of the best place in the world to makes these new kinds of vehicles and their components, to design and manufacture these new kinds of technologies.

It’s absolutely vital that that process is guided by commercial logic, not politics. That’s why I put up such a stiff fight against any suggestion that the future of plants in Luton and Ellesmere Port might be decided by political considerations rather than productivity. Now, how we do that at the European level is a difficult question, to put it mildly. But the long term competitiveness of the motor industry in Britain and Europe depends on restructuring.

Active help from government

So the question we face is how we turn that process of change into something from which British motor manufacturing emerges even stronger. Some of the most important answers to that question emerged from the work done by Richard and his team and the Government’s response to it. I want to say something about three of them: the new Automotive Council, low carbon vehicle policy and the wider strategic way we see the industry and its supply chain.

The creation of the Automotive Council is a great development and has the potential to bring a whole new strategic dimension to the self-management of the industry, and in particular to the way it works with Government. But of course, it will only be as effective as the people on it, and the ideas and energy they bring to it. It needs to represent every part of the industry – the full supply chain including the research base, and the specialist producers.

It needs to be proactive and influential and have a very clear forward strategy, based on a very frank assessment of the industry’s strengths and weaknesses. The better that it is able to set out the strategic challenges facing the industry, the better government and industry will be able to respond to them together.

Keeping membership of the Council to a manageable size has forced some hard decisions.  We have announced the membership this morning and I think it is a great list.  For example, Richard Parry-Jones and Gordon Murray are engineers of world status.  Trevor Mann is a product of the Nissan revolution in the north east of England.  Franz Josef Paefgen brings a bit of continental European class.  Andrea Paver of Leyland Trucks and Gwenne Henricks of Caterpillar show that this isn’t just about cars.  We have suppliers and scientists and SMEs and environmental expertise and the OEMs.  So it’s looking good.

Clearly one of the most important strands of the Council’s work will involve low carbon vehicle policy. Now, I recognise that there is no silver bullet solution to cutting automotive emissions. But the industry’s consensus around a low carbon road map has provided a very useful tool and was central to the Government’s own strategy for low carbon cars, which we published in April.

As you all know, as part of the £150 million Low Carbon Vehicles Innovation Platform, this included £25 million for the TSB’s demonstrator programme for low carbon cars, £30 million for pilot infrastructure for charging ultra low carbon vehicles and £20 million for trials of low carbon vans in public fleets. We have created a Low Carbon Economic Area for ultra low carbon vehicles in the North East that will leverage the various research and production strengths in the region into a single network of mutually-reinforcing strengths.

I think we have to accept that barring a crippling new plateau in oil prices, consumer choice alone isn’t going to get us to a tipping point in decarbonising road transport fast enough. The carbon cost needs to start showing up in the price a lot more clearly. That’s why we were the first country in the EU to tie vehicle taxation to CO2.

But we are also providing positive incentives by investing in charging infrastructure and making £230million available from 2011 for consumer subsidies for the first major generation of ultra-low carbon cars – a policy that reflects closely the timetable for technology roll-out that the industry itself set out in its roadmap.

Key Tier One suppliers around the world are starting to sit up and take notice of what is going on in the UK on low carbon cars. The trick now is to make the UK the place you just can’t ignore if you’re in the low carbon motor business.

I’d like to think that it’s a reflection of this commitment to making Britain the best place in Europe to manufacture low carbon vehicles is one of the reasons why Toyota, Nissan and Ford have all made the decision to locate key parts of their low carbon operations here.

Finally, in building the industry’s future strength we need a comprehensive view of how the sector works: from the manufacturers to the Tier Ones to their suppliers and beyond.  For the future I want a determined strategy to build strength at all levels and sustain the industry’s critical mass here in Britain. The Innovation and Growth Team report left unfinished business here.

For our part, government will make sure that good suppliers can prosper here. We will actively seek out more companies to locate here.We’re supporting the research base in a big way, especially in low carbon. We’re building a new technician class through our revived apprenticeship system. And a Supply Chain Council  – as part of  the Automotive Council – will provide us with advice on further steps.

But the big players in the industry need work with us in partnership – and I think this was clear in Richard’s report. We all agree that there has been some hollowing out of the supply chain in this country  – and we all know who has done the hollowing out!

My offer is partnership. A partnership in which manufacturers show their share of responsibility for the UK supply chain. There needs to be more collaborative, longer term partnerships with suppliers.  When a big player tells me, as one did last week, that it wants to source more here rather than put its faith in supply lines that stretch over the Alps or the Urals – I say, good, let’s ensure that that happens.

Conclusion

Right, that’s enough from me. I’ve argued today that the transition to low carbon and the challenge of rationalising European vehicle production make the next decade critical for vehicle makers in Britain.

My basic message to you today is that Government is committed to working with you to tackle that change.  This has been a tough industry to be in and it seems to me that it is only going to get tougher.

But you know what they say: if everything is coming your way – you are in the wrong lane! Thank you.

I remember a cartoon in the FT last year that showed a cigar-smoking industrialist leading his son around a factory. The factory was full of people in white coats staring at computer screens and the industrialist was saying – presumably in a strong Lancashire accent: “Son, where there’s knowledge-rich low-carbon, high-tech… there’s brass!”.

The knowledge economy has become a bit of a cliché, but it reflects a very basic truth about Britain’s future. The global economy is an extended, international supply chain along which very many jobs are located. Some add more value to a finished product or service. Some add less.

Wages in Britain are high, and to pay those wages requires the greatest possible productivity and value-added in the jobs we do here. Some of that we will add through sophisticated technology alone, but most of it we will add through knowledge. Skills are applied knowledge. If we want to pay our way in a globalised economy we can no more cut off our investment in these capabilities than we can cut off our supply of oil or electricity.

In this kind of world it’s no longer credible to have any notions about a hierarchy of elite academic higher education and under that, vocational or further education. There is a higher skills system, built on a wider school system, with a single core goal. Which is: people equipped with the character, confidence and skills for the world of modern life and work.

In setting out over the last month our frameworks for Skills and Higher Education Policy I have explicitly seen them as a single higher skills system. They need to mesh and reinforce each other. Skills need to be a ladder up into a job, or, as often, on to higher qualifications, university, or professional advancement. They need to be accessible throughout a working life, and in a way that fits around work, or integrates work.

Where we are

Now, I remember the skills system as far back as the Callaghan days. So I know as well as anyone that we have done a lot of good work on skills policy in this country over the last decade. We have made real progress in tackling the economic and social scandal of adult illiteracy and innumeracy. We have revived apprenticeships, which were allowed to wither away in the 80s and 90s.

We have eradicated much of the poor quality that blighted our further education system – or rather, you have, in a huge push for quality management and student service. Last week, during Colleges week I visited Westminster and Kingsway Colleges in London and I was hugely impressed – the distance we have come is genuinely striking.

But the fact remains that skills are still an area of relative weakness for Britain. Especially in some key strategic areas for growth and job creation such as STEM, and especially at key levels like level 4, where a lot of the sophisticated skills for fields like advanced manufacturing are clustered and at the technician level. We also need the skills for growth areas like healthcare where demand will inevitably rise with an ageing population.

So it seems to me that we have a collective challenge now. We need to take that renewed skills system forward with a clearer sense of strategic priority. That doesn’t mean scrapping our commitment to basic skills – you don’t strengthen a ladder by removing the bottom rungs. You can’t build sophisticated STEM skills in a worker who can’t count.

But we do need to fill these skill gaps higher up. So on top of that basic commitment needs to be some more focused priorities for the additional spend.

And of course we are going to have to do this in an environment of considerable fiscal constraint. So there will have to be the clearest possible benchmarks for public investment, and they will have to be reform, relevance, and quality.

Like any public service provision, the skills system needs to target public investment where it produces the maximum return on investment. It needs to empower colleges and training organisations to innovate and users to improve quality by exercising choice wherever possible. And it needs to eliminate duplication that confuses the delivery of services.

The Skills strategy

The Skills Strategy we published last week reflects this – I know that Kevin Brennan has set out some of the detail for you. The strategy targeted three key areas for development in the skills system, and marks a radical shift in some of our priorities.

First, it tackles the gap in technician-level skills in this country by expanding our apprenticeship numbers to create a modern class of technicians. We’ve also made it clear that we expect expansion to be focused in strategic skills, especially those linked to areas like low carbon, digital technology and biosciences and modern infrastructure. Resources will be prioritized in these areas.

Second, it gives real new customer power to learners by creating skills accounts backed with much greater access to information about courses and their outcomes, that will enable learners to plan and invest in their own futures. By allowing learners to shop around, and opening up the field for over other training organisations, we expect to see pressure to provide quality, relevant training rise.

To achieve these goals, we need colleges and training providers to have the space and freedom of manoeuvre to be out there doing the right things for employers and learners. I know colleges feel that you have been over-managed and over-directed in the past. Some of that was a response to patchy quality in previous years – which you have now very largely irradicated. Some of it was a consequence of putting in place major reforms – to which you responded with characteristic flexibility and determination. So we can now move on and focus on investing in the future.

We will still have national goals and targets, reflecting our economic priorities . We will still want you to be putting the needs of employers and learners first, helping people access the training to which they are entitled. We will still want high quality. But I know that you want those things too.

So in future we should be able to operate at the level of the whole programme you offer for employers, and for learners, and how well that whole programme reflects the range of national needs, rather than getting stuck in the detail. We then want rewards to flow to those who best respond to the range of national needs, with funding reduced to those who don’t. We will work with you on building fair ways of doing that.

Finally our strategy commits to dramatically reducing the number of public bodies involved in skills and training policy. We welcome the UK Commission on Employment and Skill’s recommendation to reduce the number of separate publicly funded agencies sharply and that’s what we are going to do. The result will be a clearer, more focused skills system.

Expectations

Now, clearly this is an approach that puts a new accent on vocationalism and I think that that’s right. The system has to be producing relevant, quality skills, with real market value.

Obviously our expectations of FE colleges are going to continue to be extremely high. But I think the last decade suggests that there is no shortage of good and ambitious leadership to be tapped in the sector. I want to say very clearly today that we are empowering you to innovate in the pursuit of wider national aspirations, and we will work with you to deliver our new measures and if you feel that Government is somehow standing in the way, I want to hear about it.

Our expectations of business will also rise – and here the track record is rocky, as business itself concedes. This strategy is explicitly targeted at producing the skills that business tells us they need, and in giving employers a greater role in shaping outcomes.

But business has to get a lot better at communicating those needs, both to you and to your students, clearly and quickly. Otherwise both you and the Government are left trying to make educated guesses about where the market is going.

We expect businesses to invest, and keep investing, in skills. And often the most effective way of doing this is going to be to build strong collaborative ties with colleges. And because they are the key beneficiaries of these new skilled people, we are going to expect business to bear more of the cost.

I’m delighted that Chris Banks, working with the CBI, AoC and Association of Learning Providers has agreed to carry out in independent review of the implementation of our fees policy to see how better to make this work.

Conclusion

I started by saying that skills are an urgent challenge for us in Britain. That urgency comes from an external challenge above all: this is a competitive and demanding world and people rightly expect Government to help them equip themselves for it.

There is a compelling case to make that investment in skills is not a cost to our society or economy but an investment that pays back many times over in growth. For us as a country the brass really is in knowledge-rich, high-tech, low carbon and the skills that drive it.

For that reason investment in skills is as important in the recovery as ever. We should be making that case. But that doesn’t remove the pressure to keep measuring what we do against those benchmarks of relevance, quality and reform.

The AoC will be central to that, you have the expertise and the experience. My ambition is that the new Department of Business, Innovation and Skills really delivers a dividend for you and for policy here – bringing skills right into the heart of growth policy making and seeing it as a driver of innovation, knowledge and enterprise. The SFA and the RDAs will be a key part of the machinery for making that real on the ground.

Our aim must be to put further education where it belongs, right at the heart of the knowledge economy, at the heart of our recovery and our future prosperity.

Let me start by saying how the constructive relationship Steve Elliot and the CIA have built with the Government is central to everything I have to say tonight.

Together, we’ve strengthened the UK’s position as a leading location for investment in this industry. And that partnership remains essential to our future prosperity in this century. So I welcome today’s launch of the CIA’s Manufacturing Strategy.

I also want to echo Steve’s thanks to Bob [Tyler] and Brian [Iddon] for their service over the last few years. And let me wish John [Saul], the very best of luck in his new role as CIA President.

The Building Blocks for Growth

If you go back down the supply chain of just about any manufacturing industry in Britain, and many other parts of our economy too, you’ll find a chemical producer.

We sometimes say that this is the carbon age – it is also the age of chemistry. And the omnipresence of fossil fuels in this industry is, as Steve said, a huge challenge.

What I want to do tonight is acknowledge the strength of the British chemical industry, and sketch out the key ways in which government will back you in facing this and other major challenges ahead.

The Challenges Ahead:

The last two years have obviously been difficult for this industry. Precisely because you are so fundamental to the industrial economy, the collapse in global demand for manufacturers is hurting you. That is why it is so critical that we maintain our fiscal stimulus until our recovery is fully locked in across our economy.

To withdraw that support now would threaten the stability that the Government, this industry and its trade unions have worked so hard to secure.

Because in the long view, this industry remains one of the UK’s great industrial successes. It is a global leader – generating billions for our economy every year, adding value across our manufacturing base and investing heavily in business-related R&D.

But even when global growth returns, this will remain a tough business to be in. You’ll be competing for markets with the chemical industries of the industrialising economies. You’ll remain highly dependent on a strong and consistent supply of trained technicians and scientists.

And of course, you will face the huge challenge of decarbonising industrial chemistry, which remains heavily rooted in fossil fuels. When we think about decarbonising the economy we tend to think about energy, about cars, about planes – but the chemical industry also faces a high and radical reinvention of itself.

That’s a huge demand. But it’s also a very exciting challenge and I’m encouraged by initiatives like those at Runcorn, such as the new Ineos Chlor Plant which are helping reduce the carbon footprint of this sector.

But this is also a massive global opportunity for our advanced manufacturing base. As we’ve heard tonight, your industry will be integral to the development of cost-effective low carbon solutions and services.

And Government is committed to equipping your industry and others to realise our vision for the UK to become a world leader in low-carbon. That includes ensuring secure, competitively priced energy supplies.

The challenge for Government is making sure that the conditions are in place to help this industry continue to make that transition and to prosper. It needs an active, strategic approach to industrial policy that puts public investment behind the capacities that the chemical industry builds on. I want to focus on three during my remarks: the right regulatory environment, the right skilled workforce and the right kind of policies to back industrial innovation.

The Right Regulation

This is always going to be a sector that has to live with health and safety regulation. It provides the reassurance people want and need that chemicals are safe. This industry can’t survive without that transparency and trust. We need to see that regulation as an enabler of innovation and commercial growth, not as a check on it.

But we need to regulate intelligently, not least because for every one big chemicals player, with the budget to handle heavy due diligence burdens, there are ten chemical SMEs who need to carry out the same checks on much smaller budgets. A big part of that challenge is at the EU level, where we need to make sure that big essential regulations like REACH and EU-ETS are proportionate, well-designed and enforced consistently across all Member States of the EU.

The Right Skills

In a laboratory-based industry like this, we also need to ensure the right numbers of skilled technicians and STEM graduates. This has long been recognised as a gap in the British skills market and something that we have addressed in our new strategies for adult skills and higher education.

Both policies retarget marginal funding in the UK higher skills system towards filling strategic skills gaps, especially in industries like chemicals, pharmaceuticals, bio-science and wider advanced manufacturing. And I make no apologies for targeting and fine-tuning at areas of skills and skill needs in this country. I’m not afraid of making those choices.

We will create a modern class of British technicians through 35,000 new advanced apprenticeships for 19-30 year olds, and many of these apprenticeships will be in the chemicals sector.

To get the best out of the skills system we need industries like yours to communicate strategic demand to both trainers and students as clearly and quickly as possible. The best way to do this is often going to be to establish collaborative partnerships with local universities and colleges, in the way that companies like AstraZeneca and Shell already do. We will continue to strongly encourage and support this.

Boosting Research & Innovation:

But it’s not just about leveraging the potential of universities for training. With investment in science topping £6 billion next year, the UK’s science and research base represents a knowledge bank second only to the US. It’s one of the few banks left that can never be too big.

Turning the intellectual resources of our universities into commercial applications is one of the defining challenges for industrial Britain that we face in coming decades. Since 2003, UK universities have spun off almost a thousand companies worth around three and a half billion pounds.

This is a good record, but I am convinced we have the potential for more, especially in new materials, processes, catalysis, nanotechnology and drug development, where the premium is on innovation. And I was pleased that today’s first meeting of the Industrial Biotechnology Leadership Forum was so constructive in identifying future opportunities in the UK.

There are a number of ways Government can back you. Evidence shows that R&D tax credits have certainly helped. The science budget is one of the most powerful public investments we make in this country and I will fight hard to protect it in principle and practice.

In the last year we’ve also taken a more active approach to investing in some of our key capabilities in this area through the new Strategic Investment Fund, especially where the market was failing these perfectly viable developments for whatever reason.

Now, we are funding the Industrial Biotechnology Open Access Demonstrator at the National Industrial Biotechnology Facility at Wilton, and have created a fund to help SMEs access it. And last month we became the enabling investor in the new Welcome Trust drug development incubator at Stevenage alongside GSK.

Conclusion:

For a decade our key concern in Government has been making sure that this country is a good place to invest in pharma and industrial chemistry. That won’t change. That’s not just about the tax and regulatory regime – although those things are of course vital. It’s about access to the right skilled workforce, the right IP regime, the right ecosystem of universities and innovation, including access to finance for innovation.

At this point as a country we are right to be having a serious debate about how we live within our means. But we also need to be thinking about how we invest in and drive the growth that will power recovery and put in place the conditions for our economic success. Because the fastest way – the only way – to get out of debt is to grow the economy, especially through exports. Investing in modern manufacturing in Britain is, in my view, the key investment in our future as an economy and as a country.

A strong chemical and pharmaceutical industry is an essential part of our industrial base. It’s also key to the solutions that will define environmentally sustainable industry in this century.

This next generation of British chemists will be among the most important we have ever produced. A lot of our best and brightest have chosen careers in the City over the last ten years, and from the perspective of 2009 it’s hard not to ask what the opportunity cost of that has been in the research lab and modern manufacturing.

Active outreach by the industry to students is key to changing this, and it’s something we support through Manufacturing Insight.

Actually, I think this year’s CIA’s young ambassador Greg Simmonds from GlaxoSmithKline is here tonight. Greg? No pressure, but our future rests on you. We need more like you.

And we need to be equipped to take advantage as much as possible of new technologies, materials and markets like the emerging economies.

Korea is one such market with an active chemicals sector. As EU Trade Commissioner I initiated the EU-Korea Free Trade Agreement to open up the lucrative Korean market to UK companies. That agreement will come in to force in the mid-2010 and will remove 97% of all tariffs between the EU and Korea within three years, creating a massive new trade opportunity. More UK businesses must seize that chance.

Let me end, as I started by saying again that we are committed to working with the CIA to ensure your industry is equipped for a changing world. I hope you enjoy the rest of your night.

CHECK AGAINST DELIVERY

Good morning.

This is an industry where – for me – the personal and the political are perfectly aligned.

That’s because the highlight of my 2009 – without question – was fulfilling a lifetime ambition by competing in Le Mans 24 hours. Ask me for a second, and I’d have to say it was moving up to LMP1, my team securing pole at Okayama and winning the Michelin X Challenge in the Le Mans Series Champtionship. I could give you a third, a fourth and a fifth.

My passion for motorsport grows with every race. But besides my own ambitions, I’m also convinced that this industry can – and should – have a greater impact beyond motorsport itself.

That’s in no way to dismiss what motorsport and high performance engineering already mean – for this country in particular.

Awareness of British achievement has been boosted by Brawn GP and Button in F1. I was delighted to pay a small part in enabling Ross Brawn and Nick Fry to buy the Honda team – although I never expected it to pay such immediate and spectacular dividends.

Yet what many people don’t realise is that British success in this sport is quite outstanding. Besides Jenson & Brawn GP, we’ve had several other winners in 2009: Dario Franchitti in the Indy Car Series; Kris Meeke in the Intercontinental Rally Challenge. Aston Martin Racing, using a Lola chassis, took the Le Mans Series constructors’ title.

These drivers, these teams all raise the profile of the UK – and in particular the quality of our science, engineering and technology.

According to research conducted this year by the Advanced Institute of Management, the British industry involves some 4,500 firms with an annual turnover of £6 billion that make a contribution to the UK economy through exports valued at £3.6 billion. They employ about 38,500 people on a full- and part-time basis, including 25,000 engineers.

These companies are also resourceful. This recession has caused major problems across the board, but motorsport has again shown its capacity to adapt. Another survey, conducted in December last year, found two-thirds of companies in this sector diversifying into new markets, with more than half of companies developing new products and services. Many are looking to significant opportunities overseas, in growing markets like the Middle East.

In terms of formal collaborations, we’re seeing several leading companies involved in collaborations with other industries: McLaren with BAE Systems; Williams F1 working with Airbus and Rolls Royce on next-generation computational aerodynamics.

I should add here that the pace at which new technology is developed and applied in this industry has really opened my eyes to different ways of doing things. In my capacity as a defence minister, it was the example of motorsport which persuaded me that Mastiff vehicles could be delivered to British armed forces in theatre on much shorter lead times.

The clear ability of this industry to innovate – the frequency with which its pioneering technologies and methods to improve safety have found their way not only into mainstream automotive but aerospace and marine, medical and military – brings me to my main point today.

For the foreseeable future, the most pressing demands for transferable technology all relate to the climate change agenda.

Now, given that my team, Drayson Racing, has – from the beginning – competed as a green team, I know UK firms are at the forefront of environmentally-friendly technologies: in biofuel development, energy efficiency, super-light materials, lean burn engines.

All the same, I am keen to make a case for the importance of going green to an audience with a high proportion of engineers – and to hear your views about current obstacles, opportunities and feasible timeframes.

I won’t trouble you with the science of climate change, nor the politics of the Copenhagen summit that’s fast upon us – except to say that a bold agreement with legally binding commitments is necessary, amongst other things, to send clear signals to green entrepreneurs – to give them confidence in the future market opportunities.

Instead, my starting point is this.

We’re not going to bring about a radical transformation in human behaviour – and that’s what we need – by pedalling doom. Guilt is unreliable as a motivating force. So is bullying.

We have to offer people a practical, accessible, attractive low-carbon future – one which offers solutions built on sound science and creative engineering.

Change must feel exciting and straightforward. People need persuading that their quality of life can actually improve, not decline – which is why I’ve not got much time for the hair-shirt environmentalists.

That’s where motor racing comes in, and it’s contribution can be twofold.

First, it has an exceptionally talented workforce with an unrivalled track record on innovation.

Second, if I’m right in thinking that – with climate change – it’s not the technological solutions that actually represent the greatest challenge but public attitudes, then motorsport has the considerable advantage of being extremely cool.

When racing cars demonstrate that it’s possible to achieve high performance by going green, people take notice.

When the experiencing of driving electric vehicles becomes exciting (exhilarating even) – as opposed to simply worthy – then people will change from curious observers to active consumers.

So I’m not advocating that you increase your focus on green tech out of altruism. I’m advocating that focus because it can make you rich.

The push to decarbonise will be a major driver of growth over the next decade and beyond.

The global opportunities here are enormous. We all know that car travel isn’t about to disappear. It can’t. Economic growth is fundamentally linked to individual accessibility and mobility. So is personal freedom.

From the Government’s perspective, the transition to low-carbon can’t be achieved without our input. The challenges involved are too great – the technology, the investment, the coordination, the need to win over hearts and minds.

I’m encouraged by what’s happening so far with cars. For example, we’ve agreed with the automotive industry a technological roadmap for the coming decades that incorporates business opportunities and the necessary drivers of change.

We’ve created the cross-government Office for Low Emission Vehicles, which has participants from the automotive industry, power and infrastructure companies, as well as creative thinkers and experts on pricing and systems design.

And we’re already running the world’s largest EV and plug-in hybrid demonstrator competition. I’ve test-driven some of the prototypes, and these are no poor imitations of petrol cars. Some of the sports models have bucket loads of torque and fantastic chassis dynamics.

Now, the way forward is by no means easy. But my experience of being in and around science and engineering all my life – as a researcher and entrepreneur, as a minister and most recently a race team owner – has made me a qualified optimist.

I believe we can develop the tools needed to adapt to changing ecological circumstances; that we can achieve zero carbon emissions by 2050 in most forms of UK surface transport.

It will require, however, the continuing efforts of industries like this one to push technological envelopes and thereby convince people that a world without carbon is not only achievable, but superior and cooler – in both senses of the word.

Thanks for listening.

CHECK AGAINST DELIVERY

Good afternoon, everyone.

As many of you will know, Oxford was the place where my own career as a science entrepreneur really took off. So I know first-hand how Milton Park has supported many science-based businesses over the past 20 years – and I’m delighted to join you in marking the formal opening of this new centre to incubate the smallest of companies.

The past 18 months have obviously been tough for almost any kind of business. As a veteran of previous recessions, I understand the sorts of challenges you’ve been facing: threats from the bank manager of a non-idle variety; the real prospect or actual experience of making colleagues redundant. Those aren’t memories that fade.

It’s very encouraging, therefore, that this centre opened for business last December, at pretty much the worst point in the downturn. It’s very encouraging that 32 tech start-ups and early-stage firms have set up shop here, with ambitions to grow and make money in the key sectors of the future: clean tech, life sciences, digital and creative industries.

Leading-edge facilities aside, you are increasing your chances of success through buying into the cluster effect.

Now, it’s been my constant refrain as minister for science and innovation – that, for all the headaches caused by this recession, this is the time when smart people make the decisions that ultimately yield the greatest dividends. It’s one of the main themes of a lecture I’ll be giving this evening at the Saïd Business School.

The quality of IP emerging from our universities – and not just the golden triangle of Oxbridge and London – has never been better. International investors are telling me that they’re looking to the UK to get it on breakthrough technologies – in renewables and plastic electronics, in computer games and regenerative medicine.

I’m in no way underestimating the current problems, especially the chronic lack of capital. Nevertheless, the upturn is on its way – and the Government is determined to help position innovative firms to steal a march on the global competition.

Enough context. What are we actually doing?

I’m not going to reel off a shopping list. The presentation of policy by volume convinces no-one. And besides, the purpose of visits like this isn’t for me to preach – but to find out what’s working and what isn’t from entrepreneurs.

The key point is this. The Government now has a strategy in place – “New Industry, New Jobs” – to create the conditions in which UK businesses can thrive in those industries most likely to drive economic growth and create high-value jobs. It covers the state’s function as both customer and regulator, as well as areas like skills development and support for SMEs.

Within this strategy, there are actions which can be categorised as immediate, ongoing and new.

By immediate, I’m referring, for example, to loans totalling around £520 million for some 5,250 businesses through the Enterprise Finance Guarantee – or the more than

By ongoing, I mean the support available to companies through Business Link, the Intellectual Property Office and the Regional Development Agencies.

I also mean activities which predate the downturn, but which are now getting up to speed.

Like the work of the Technology Strategy Board which, in partnership with the RDAs and the Research Councils, will invest over £1 billion to support commercial innovation in this spending period through technology-specific competitions and collaborative programmes.

Like Innovation Vouchers, which enable SMEs to buy in specialist advice from the research base. Eight out of nine RDAs, including the South East, are now issuing vouchers.

Like harnessing the full purchasing power of the public sector– it spent £220 billion in 2008/09 – to drive demand for innovative products and services. Low-carbon is the classic case, where Government can create certainty around new markets – but it’s not the only one.

Here, the Small Business Research Initiative is expanding across Whitehall and to other institutions like health authorities, so that more SMEs bid for – and win – Government contracts. Next year, all contracts worth over £20,000 will be advertised on a single web portal.

But I want to focus more on how our approach has shifted in line with the industrial strategy. Three examples, and then I want to invite questions.

The first involves supporting research in those sectors where Britain can and must prosper.

We’ve committed funding to technology testing facilities for low-carbon wind and wave power, and for plastic electronics. The most recent investment has gone to a pharmaceutical demonstrator site at Stevenage, co-funded by the Welcome Trust, the RDA and GlaxoSmithKline.

The second means changing the way that Government and industry work together on boosting the UK’s competitive advantage. There’s a much greater emphasis now – and it’s been much needed – on Government departments sharing budgets and agreeing practical solutions with the key players from commerce and academia.

The Office for Life Sciences has already made a tangible difference to the operating environment for pharmaceutical and biotechnology firms. With measures to exploit the NHS as a driver for innovation and market UK life sciences more effectively, I expect the UK to attract greater inward investment, put on more clinical trials and develop more products. The same goes for the Office for Low Emission Vehicles.

The third brings me back to the fundamental issue of financing innovation.

You know as well as I do how hard it is to raise capital at present.

The UK Innovation Investment Fund should provide hope for tech-based businesses dependent on equity finance – and we’ve been listening to investors, fund managers and CEOs to maximise its effectiveness.

The Government has provided cornerstone investment of £150 million to leverage private sector funding. Over its lifetime – 12 to 15 years – we’re hoping to have a fund worth £1 billion, the scale required to replicate what the best of US funds already do: making investments at all stages with the kind of patience that breeds success.

We’ll soon be announcing the professional fund-of-funds management who’ll be in charge of investing in a limited number of top-tier tech funds. The Government will not be involved in investment decisions. We expect first closing to take place early in the new year.

The experience of promoting the fund over the past few months has convinced me that this is an opportune moment for science-based businesses. We have the IP. We have the management. We will have the capital.

It’s now up to companies to demonstrate their “investment readiness”.

I’m clear that the best way to drive on the recovery is to get behind science entrepreneurs. It’s the people here – the people I met at the inaugural iAwards on Monday – and not the banks who must be the catalyst for jobs and wealth creation.

To that end, the Government is right behind you. As a final illustration, the Regional Development Agency have plans to invest over £1 million in businesses located at nearby Harwell. That campus is also home to the Centre for Defence Enterprise – a facility of dual interest to me given my responsibilities, which enables firms to discuss their innovations directly with the Ministry of Defence.

In total, we’re spending over £6 billion next year supporting British science and innovation.

The best of luck to each of your businesses and thanks for listening.

Introduction

It’s good to be here today. Before I came here, I had a look at the LBRO’s website. There are a couple of quotes on there about the Primary Authority scheme, which I’ll talk about in more detail later on. I mention them here because they got me thinking about regulation in general.

The first quote is from the Managing Director of Raymond Blanc’s chain of brasseries. It says: “It’s wonderful that we have one authority which can efficiently ensure all our brasseries are run to the same high standard.” And the second is from B&Q. It says: “We fully support the need for the scheme, which helps us to receive consistent information and decisions from all local authorities.”

Outside of the regulatory world, people probably think this is a bit of a dry subject. But these quotes reminded me that regulation is really about issues that matter to people. It is about making life simpler for businesses to do their job, about making sure industry has the highest standards and about ensuring customers in general and the most vulnerable in particular, are not exploited and taken advantage of. The work of the LBRO is absolutely key to making that happen. It has a vital job and is doing it well. A World Bank report recently recognised that we are the best place in Europe for ease of doing business and the fifth best in the world. And your work is key in maintaining Britain’s position as a great place to do business.

The regulation debate – not more or less but right and better

In an ideal world, regulation should keep a low profile. I used to run a small business myself and my attitude to regulation was that it was fine – as long as I could get on with things without too much difficulty. But the global recession and the collapse within the banking sector has turned the spotlight on regulation as never before. Yet I think that has given us a golden opportunity to rethink our attitude to regulation.

Now, for opinion formers, the regulation debate seems to centre on whether or not we have too much or too little. Could we have stopped the global recession with more regulation? That might very well be the multi-million dollar question. But, for me, the debate is not about more or less but right and better. That is to say, have we got the right regulation to get through these tough economic times? Have we got a regulatory system that allows us to adapt to a changing environment? And can we continue to deliver better regulation?

Regulation in a recession

We should look at how we are measuring up and make sure we only bring in regulation where it’s really needed. With many businesses struggling on our high streets, or even going to the wall, there’s been a real sense of urgency in doing what we can to limit the burden on business. And it’s worth highlighting some of the action we’ve taken.

We’ve looked at how we could cut red tape. We are on track to reduce the paperwork burden to business by one quarter by next spring – that’s £3.4 billion a year and, so far, it equates to £5million a day, every day! And we’ve delayed the introduction of nearly 30 new laws, postponing nearly £3.5 billion in costs to business until after April 2011.

We’ve looked at how we could give businesses more certainty in planning for the future. Which is why we have published, for the first time, a detailed timetable of all the Government’s new planned regulations that will come into effect between now and April 2011.

Instructive experience.

And, of course, we announced a new commitment to cut the costs of existing regulation by a further £6.5 billion. Added to the savings made in the last five years, UK business is set to benefit from close to £10bn worth of reductions in regulatory costs by the end of 2015.

So we’ve been doing all we can to get regulation right in the short term and the recent World Bank survey is proof our approach is having a positive effect.

Regulation in the upturn

But the short term is not our only concern. We also have to think about the future. In New Industry, New Jobs we set out some of the areas where we thought we would need to develop a national capability – whether it was low carbon, life sciences or advanced manufacturing. If we’re to be successful in these areas we need to do everything we can to give companies the freedom and certainty to innovate and grow. Yet the reality is that there can often be barriers that prevent companies turning potential into achievement. Having the wrong regulation is one of them.

So, in tandem with our active industrial approach to the upturn, we’ve been taking an active approach to regulation. That’s why we recently set up an independent Regulatory Policy Committee which will strengthen the way we regulate by challenging new regulations to ensure the benefits justify the costs.

And we’ve also been preparing for the EU Services Directive which comes into force at the end of the year. You’ll probably know more about the detail of this than I do, but essentially local authorities and regulators have been asked to remove unnecessary red tape faced by businesses in the service industry.

Each country in the European Economic Area will set up a Point of Single Contact, where businesses apply for licences online. In the UK, that means joining up more than 400 local authorities and other regulators through the Electronic Licence Management System website.

Regulation – a collaborative effort

I’d like to pick up on this last point. Regulation works best when it has the support of business. Collaboration in regulation – between local business, local councils as well as the LBRO and Government – will be the watchword in future. And, I’m glad to say, when it comes to working together, local authorities – many represented here today – have worked hard with businesses to make sure they have an easier time of things.

For example, Lichfield District Council was nominated in the Better Regulation category of the National Business awards for developing a way for regulators to share information across one single shared data system. This means that the local authority is in a better position to treat businesses in a proportionate and consistent manner.

Earlier this year saw Bexley, Cambridgeshire and Westminster achieve Beacon status for providing innovative working practices that reduced burdens on business. Not only does this show the importance attached to local authority regulatory services, it shows the value of getting it right.

When it comes to collaborative working, the Local Better Regulation Office has again been leading the way with its Trading Places scheme. Designed to break down barriers, the scheme offers local authority regulatory officers the chance to spend time at the premises of major companies, where they find out first-hand how council inspection and enforcement operations impact on day-to-day business. 99 local authority regulatory staff have already participated in the scheme with a further 117 due to take part in the coming months.

In this context I’d also like to mention the Primary Authority scheme. Launched in April, this is the new way for local authorities to regulate businesses that trade across council boundaries. It will mean they only have to speak to one local authority about their regulatory concerns. And it is the tool for ensuring that businesses comply with local regulation.

There are now 70 Primary Authority partnerships between businesses and local authorities covering nearly 7,000 premises across the country. Companies benefiting include B&Q, Moto, Iceland, Boots, the Trading Standard Institute, Dr Oetker, Ladbrokes and Raymond Blanc’s group of restaurants, Brasserie Blanc.

Three new partnerships

And it gives me great pleasure to announce three new partnerships today between Asda and Wakefield District Council; and TK Maxx and Watford Borough Council and Bright Star Fireworks and North Yorkshire County Council.

Conclusion

I began by looking at the importance of regulation to individuals up and down the country. What I hope I have shown today is that the importance of good regulation will continue to increase as we look to the future. And that places ever more emphasis on your capacity to work together with business to create an environment where innovation and creativity can flourish. The Primary Authority scheme is showing the way forward and, with the guiding hand of the Local Better Regulation Office, I feel certain that the UK will remain one of the best places in the world to do business for many years to come.

Speech by: Pat McFadden MP
Event: GEW Parliamentary Reception, Westminster, London

Introduction

I’m delighted to be here for global entrepreneurship week. This is a worldwide event. Eighty countries are taking part in this focused week designed to draw attention to achievements of young business people and to inspire others to follow in their footsteps. And I can’t think of many things more important than that.

Last year, during this equivalent week, a quarter of the schools in the country held some kind of event. This week, through the make your mark campaign, 72 000 young children are being sent an enterprising challenge to challenge their skills to think to work together in an enterprising way.

Britain a good place to do business

And it’s all designed to try to foster talent, to try to inspire people, either to start up on their own or maybe to think and work in an enterprising way in whatever career they choose in the future. And Britain’s enthusiastic about global entrepreneurship because Britain is a good place to do business – Europe’s number one location for inward investment from other countries.

The World Bank rates us as the number one country in Europe for ease of doing business.

And the OECD says the United Kingdom has the lowest barriers to entrepreneurship among OECD countries that is the leading economies in the world.

And we want to keep that record. It’s very important. We have 4.8 million small and medium sized businesses. They employ around half the private sector workforce and they are responsible for the lions’ share of the creativity and innovation that takes place in our economy. And the government wants to work with business to keep that going.

Backing young entrepreneurs

So we back things like the Peter Jones Enterprise Academy designed to inspire young people to start out in business. Just a couple of weeks ago I visited a Prince’s Trust event where I learned about the story of La Diosa. We are now backing the Prince’s Trust to go out and work with young people: to inspire them; to encourage them to follow in the footsteps of those who the organisation has already helped; and to help them set up their own business.

Through the Federation of Small Businesses we are now funding for thousands of new internships to give people the chance to work in a small businesses to see what’s required, to see what it takes. Access to capital is important in this credit crunch. And that’s why we’ll be working with the private sector to establish an innovation fund – public and private working together to get capital to new businesses to help them grow and to try to get the best ideas to the market. We want to keep this record going.

People want advice. Business link services help some 900,000 businesses – nine out of ten people who used it said they were satisfied with the service. So I’m here to celebrate that success tonight. That’s not for a moment to deny that we’ve been living through tough economic times but I believe in Britain’s business people and I believe in Britain’s young people.

Conclusion

So I want to talk Britain up not talk it down. To point to our strengths – our creativity, our use of the English language, our excellence in digital creative industries – computer gaming film, music, web services and so on.

We are world leaders in these sectors and what we’ve got to do is use this week to celebrate what is best about Britain. And nobody can do that better than the kind of businesses we’ve been hearing talk today.

They represent, many of them, the best that there is of our country. In the day to day political debate, of course, we can often emphasise the problems and the challenges we face but in entrepreneurship this really is the best of our country. And I’m sure that, coming through the tough economic times that we’ve seen, we will continue to see Britain as a country that’s a great place to do business.

That’s what the government wants to see and I draw strength and inspiration from the young businesses that I meet in the course of my job. So let us make sure that this week is a success. Let us make sure that it inspires others to follow in the path of the great entrepreneurs this country has produced so that we keep our place as the best place in Europe to do business.

Good afternoon everyone. I’m very glad to be able to join you today for the first time as Further Education and Skills Minister.

It’s a special pleasure for me to come here after Colleges Week last week: It’s a week when we celebrate everything that the FE sector does to transform individual lives by giving people new skills and the new hope of getting on in the world that comes with them.

I was delighted to help launch the week at Pat Bacon’s college – St Helen’s – where I saw their wonderful new facilities, and even had the chance to play the guitar to a hopefully appreciative audience.

This year especially, it was also a week when we celebrated what you are doing to train the employees whose skills keep businesses going, giving them confidence in their ability to take full advantage of the opportunities that recovery will bring.

In view of all that, it’s appropriate that your conference this year should have two BIS Ministers on its agenda rather than just one.

On Thursday, you’ll be hearing from Peter Mandelson about the Government’s new Skills for Growth Strategy published last week.

In my speech today, I want instead to focus on some of the structural issues that will influence how you do your jobs from day to day in the future. They include the role and priorities of the new Skills Funding Agency; the concept of earned autonomy and what it means. In doing that, I want to give you a flavour of the simpler, more streamlined and more efficient skills system that we must build.

And I want to leave plenty of time at the end to answer your questions and listen to your views.

I’m going to start with the Skills Funding Agency.

The main thing I want to say about that is that is how invaluable your input to development of the Agency has been. As the new body, now begins to come to life, I want that input to continue as we move forward.

With your help, we’ve designed the Skills Funding Agency to enable faster more effective response to policy – needed to support growth/help move out of recession and to be more customer-focused and streamlined than the previous systems you’ve known.

Three things in particular will help to achieve that.

As an agency of BIS, Skills Funding Agency staff will be directly accountable for their performance to Peter and to me. And, of course, we’ll be accountable to you. So you’ll know exactly where the buck stops.

Second, the Skills Funding Agency will implement a national account management system; with each college and learning provider, wherever they are, having their own account manager: one point of contact within the Skills Funding Agency with which to deal

And third, the Skills Funding Agency will have a more proportionate relationship with the colleges and providers it funds. That will be supported by a shared online system to support the contracting and payment processes which will enable much more effective working.

That brings me inevitably to the question of funding. A question which, after the media coverage we’ve all seen over the last couple of weeks, must be at the front of many of your minds. Yesterday we published the Skills Investment Strategy.

You’ve all seen Government grants for FE rise to historically high levels in recent years. But you’ve also seen demand for your services from learners and their employers grow, if anything, even faster.

Those of you who’ve read Skills for Growth know that in the coming years, the Skills Funding Agency will need to concentrate funding on the priorities that will give the best return on the taxpayer’s pound.

On the sectors and markets on which future jobs growth depends.

On Apprenticeships, perhaps the greatest FE success story of recent times. Many of you are already recruiting apprentices directly helping to meet the BIS FE/HE target of 2,500 public-sector apprenticeships, although we’re not quite there yet.

On supporting people to gain the basic skills they need to get on in life and work whilst building skills at the intermediate, technician associate professional and skilled occupation level. These are levels where we remain comparatively weak by international standards.

And on helping more people to progress to higher-level study.

I know that Peter’s going to say much more about the context for these priorities. But today, I want to stress that, whilst investment will increase next year, it is clear that we are going to have to work with an increasing tight financial environment. That means we’re going to require from you. More efficient and innovative delivery. Greater use of e-learning. And an open-minded approach to the development of shared services.

It’s by no means too early for you to start thinking and sharing ideas about that here and now.

The framework within which you’ll be addressing these challenges is one of earned autonomy. We’ll be asking you to take on more responsibility for improving your own quality and to accept greater ownership of LSIS services.

Together, we’re already taking the tough decisions needed to drive out poor provision and reward excellence.

I want the rewards in question to make it easier for good providers to get on with their jobs. For example, we’re introducing new light touch monitoring arrangements in 2010 with a further review in 2012. Quality will be maintained through annual performance assessments, underpinned by the performance measures in the Framework for Excellence’, which will be linked to future funding.

We will also introduce greater freedom for all colleges and training organisations to manage their resources more flexibly within their separate employer responsive and learner responsive budgets.

Colleges and training organisations that make an outstanding contribution to meeting national skills priorities will also be given enhanced freedoms across their total budget.

This earned autonomy, will allow you greater freedom to plan the mix and balance of your provision across the full range of levels, types of learners and subject areas so that you can shape your offer to respond to local need.

I want to turn finally to the reason why many learners come through your doors or seek out your services in the workplace. The piece of paper they get at the end of their studies which is so much more to them than just a piece of paper.

It’s evidence that, however well or badly their previous experiences of education were, they have got what it takes to learn and to progress to higher levels of skills and knowledge.

It’s hard evidence to prove to current and prospective employers throughout their working lives that they can be the proverbial person with the right skills in the right place at the right time.

Of course, in practice the qualifications system has been largely impenetrable to many learners, employers and indeed providers for years. That’s why the Qualifications and Credit Framework (QCF) such an essential innovation.

I know that many people in your sector have already grasped this. Over 500 providers are now involved in delivering QCF units and qualifications.

But we need all providers to deliver more flexibly, using unit and credit accumulation and transfer. We need the right set of levers and drivers to realise the benefits of QCF.

That’s why we’re now working to build the capacity and capability of colleges and training organisations. For example, the provider readiness programme co-ordinated by LSIS; consultancy support to senior managers.

We’re also developing QCF champions. Over 200 staff will be trained to support providers in taking advantage of the flexibility offered by the QCF and to develop new models of delivery, using new resources and online tools.

I do know that qualifications still remain a cause for concern to many of you. I acknowledge in particular your complaints about some awarding bodies’ lack of price transparency.

I want to assure you today that I’m determined to ensure that the market is efficient. This is a key task for the independent regulator, Ofqual

An economic regulation strategy has already been agreed. This focuses on better efficiency in the production of vocational qualifications, and on how awarding organisation services are procured

I know that the AoC is also working with the LSC to promote better procurement of services from awarding organisations. Ofqual, too, will be checking that there is a properly competitive market, and, if not, awarding organisation fees will be capped

I hope that we can all count on your support in this important work.

I’ve covered a lot of fairly detailed ground in a short time today, but I’m going to stop there. I want to give you a chance to ask any questions you may have. But even more, I’d like to hear your views on the areas I’ve been talking about and what more you think we should be doing to build an efficient and effective FE sector for the future.

Thank you.

Speech by: Pat McFadden MP
Event: TUC ‘Beyond Crisis’ conference, London

Introduction

I am glad to be here today discussing what is a critical issue for our economy – This conference is focused on how we reshape it to make the most of the transition from a high carbon to a low carbon economy. This is not the only question, but it is a fundamental one.

This is not a small shift, a minor tweak in direction. In fact I believe we are standing on the brink of a second industrial revolution with this change.

If that seems like an exaggerated claim; if we think about the first industrial revolution, it was powered by coal, steam, oil and gas. Those energy sources in turn powered the technologies, the inventions and indeed the consumer demands of the 20th century.

So, if we think about low carbon and the technologies that will be to the fore in this shift – nuclear, wind, wave, carbon capture and storage, clean coal, these too will have a profound impact not only on the way we generate our energy but also the cars we drive, how homes are built, how goods are produced.

And of course it will not only be a top down revolution. It will be also driven by consumer demand – witness the change in just two years in the demand for greener goods, behaviour changes with regard to recycling, the decline in use of free throwaway plastic bags in supermarkets and in other areas.

This shift in energy generation, production and consumer demand will fundamentally shape the economy of the 21st century.

And in the run up to the Copenhagen summit, I want to stress that this agenda is not just about emissions targets, distant deadlines of 2050, complex international carbon trading arrangements.

It is also about jobs, and industries and opportunities to do things in a cleaner and better way. The market for such technologies will be enormous. It is already estimated at £3 trillion. In the UK low carbon market, it is estimated that 50,000 companies employ 880,000 people and this is set to grow in the years to come as profound changes take place in the way we produce our energy, build and heat our homes and workplaces, and transport ourselves.

Government’s role in the shift to low carbon

What I want to focus on today is government’s role in this shift. How do we underpin this second industrial revolution to ensure that Britain has a strong capability in the technologies of the future? It is a shift that will affect every country. But how do we, in this country, ensure that in creativity and design, manufacturing and services, that Britain is well placed to succeed?

1. Industrial capability

The Government’s starting point is a simple one. That we have to work with the energy and drive of markets to make this happen. We have adopted a stance of industrial activism because we know that without strong signals – and in some cases funding – from government – the UK will not be best placed to succeed.

And that is one of the reasons, for example, why we established a strategic investment fund of £750 million to support industrial change and to foster capability. Around a third of that was committed to the low carbon industrial strategy published in July.

It set out support of up to £120 million for offshore wind, up to £60million for wave and tidal power and £19 million for the nuclear supply chain and other initiatives too.

We have already committed around £400m for low carbon vehicles. Some of this money is being used for some of the most advanced low carbon vehicle demonstrator projects in the world. In the streets of Oxford today you will soon be able to find electric BMW minis being tested in everyday use as a result of government supported investment.

Later this week Andrew Adonis and I will have more to say about the charging infrastructure and how we want to see electric vehicles in the UK.

And of course last week my colleague Ed Miliband announced the national planning policy statement designed to help bring out a new generation of nuclear power stations as a key part of cleaner energy production.

So part one of this strategy is about industrial capability, about trying to ensure that a decent proportion of the products, the technologies and the energy production benefit industries in the UK and their workers. And by this I don’t mean we take a nationalistic view. We know many of the companies may be based abroad or owned abroad. The issue is that they operate here, they invest here and they create employment here.

2. Skills

The second key issue I want to stress is skills – equipping the workforce for the jobs of the future. This is absolutely essential if Britain is to succeed in the 21st century. It’s a worldwide race and there is no hiding place for the countries that fall behind.

We have reasons to be confident. We have four out of the best 10 universities in the world. We have an excellent science and research base supported by significant increases in government science investment in recent years. We have expanded the numbers going in to higher education and, in doing so, increased our national capability as well as enhancing the life chances of many people who would not have enjoyed these opportunities had we not made that commitment. We have also revived apprenticeships, bringing them out of the intensive care ward they were in when we came in to power and making them once again a part of the mainstream labour market. And, of course, we have the Union Learning Fund doing excellent work to promote skills in the workplace, benefitting not only employees but also employers as well.

And yet for all these gains we know there is still a lot to do. We have come far but others are moving fast too. And believe me, you won’t find abroad the self limiting debate about a lump of quality, about the theory that more means worse and that there is a limited amount of excellence to go around and so we shouldn’t send as many people to university. No, you will not find that today. That would seem a very strange notion indeed to some of our industrial competitors around the world. Instead other countries are trying to maximise their participation in Higher Education, trying to drive up their skills and knowledge base because they know that is the right option for the future.

In the last two weeks, we have published our Higher Education Framework, launched our student finance review and published our skills strategy.

And these documents seek to continue our emphasis on expanding opportunity for people from all backgrounds and trying to strengthen the relationship between skills, education, and what employers and the economy need to succeed.

In skills we are placing a greater emphasis on boosting the technician level of worker with an announcement last week of up to 35,000 more advanced level three apprenticeships, an area where Britain has traditionally been weak.

We are empowering learners through skills accounts matched by accredited learning institutions and high quality advice from UKCES about the value and employability of particular courses.

And we want to simplify the skills landscape – everybody knows this is necessary – removing some of the confusion in what can be an overly complex field.

So, industrial capability and individual capability are two sides of the same coin. And for Britain to succeed in the 21st century we need so ensure we enhance both.

3. Capital

The third area I want to talk to you about today is capital and in particular access to capital for innovative, growing businesses. The credit crunch and its aftermath have exposed weaknesses in how businesses access capital to grow and invest, and how the best ideas get developed to reach market.

So we have launched an innovation investment fund with £150m including funding from my Department, DECC and DoH.

It’s designed to lever in up to £1 billion in total from private investors to support the best in UK innovation. It should mean that as, products change ever faster, we are well placed to have more successful and dynamic start ups and our existing companies will have the capital they need to go on and fulfil their global potential.

The Fund will invest in the key strategic sectors that will help rebalance the UK economy including clean technologies, life sciences, digital and advanced manufacturing. And we will be making an announcement before Christmas on exactly how that would be managed and run.

The Rowlands review has also been looking at access to capital and how medium sized businesses, who can’t issue corporate bonds in the markets, get access to growth capital. This will report at the Pre budget report, in a few weeks time and we will incorporate its findings into how we design support for small businesses which will underpin growth and job creation in the future.

4. A just transition

And finally, I want to talk about the spirit in which this change comes about. I have seen in my own constituency, Wolverhampton South East, how industrial change can affect a community, how the loss of several large employers can have a damaging effect that can last for years, indeed decades.

And as we shift from a high carbon to a low carbon economy I believe it is important that we consider the social and opportunity side of this shift, that we have a fair distribution of the costs and benefits, that we talk through the employment implications and new employment opportunities and that we bring together a group of people committed to the success of this who point out new opportunities to government to make the most of these changes in areas we have so far not spotted.

That’s why I am pleased to announce that the Government will proceed with the establishment of a Forum for a Just Transition. And I want to thank the TUC for their input into this idea and the form will include representatives from unions, industry, high energy user groups and consumers. It will have its first meeting in a few weeks’ time on 10 December and will be jointly chaired by me and Ed Miliband. Its purpose will be to make sure we make the most of the opportunities I am talking about, presented by this shift and that change is carried through in a fair way.

Conclusion

And, after the severe worldwide economic contraction we have seen around the world it would be natural for a loss of confidence to take hold, but that would be a mistake. The economy would change anyway in terms of the balance between real engineering and financial engineering but the environmental imperative, climate change, gives this a greater urgency. My message today is that the potential in terms of new jobs, new industries and new services is enormous. And it is not only about the new. It’s also about doing what we traditionally done in a better and cleaner way.

This government is determined to play our role in both making sure that Britain can succeed in these changes and that our workforce is equipped for the jobs they will bring. I don’t want to be too political but today I do have to say that this is not an agenda we have heard much on from our opponents. They seem to have little to say about our industrial future but if they are silent, we are certainly not. We are determined to make sure Britain succeeds in the shift to a low carbon future and that this transition is carried through in a just manner that makes our economy stronger and enhances opportunity and quality of life for people.

One final point – this isn’t an agenda that can just in one sit that can just sit in one government department. If we want to make the most of low carbon industrial opportunities, if we want to transform our transport, if we want to respond to consumers properly, we have to work together across government. That’s why many of these initiatives between us and the Department for Transport, between us and the Department for Energy and Climate Change exist across Government to embody our industrial activism of recent times. That’s what we have been doing and that’s precisely what we’ll keep on doing in order to make the most of the shift we have been talking about today.

Ends.

My Lords, I would like to make a statement on our policies for skills and their role in our future economic growth.

An active government approach to equipping this country for globalisation means making sure we have the skills that underwrite the industries and jobs of the future. That means skills for the high tech, low carbon, more high-value added sectors that drive the growth that underwrites everything else we want to achieve as a society. These skills are becoming more sophisticated and even more vital.

My Lords, I also start from the position that skills in our society must always be an individual’s ladder up. That’s why the skills system also needs to mesh with our university system. We need schools and colleges to make a strong vocational offer, which leads to a clear vocational route from apprenticeship to technician to Foundation degree and beyond.

Equipping unemployed people with the skills they need to get jobs in key sectors will be essential to a strong recovery. And let us remember that, by equipping more of the domestic population with the right skills to compete for jobs, we help employers become less reliant on migrant labour.

Addressing these skills challenges has been the focus of our Skills Strategy in recent years, and remains the foundation on which our new policies build.

We recognise that skills have historically been an area of British competitive weakness. Since 1997 we have made real progress in tackling the economic and social scandal of adult illiteracy and innumeracy. We will not abandon our promise of basic skills for all.

We have eradicated much of the poor quality that blighted our further education system. We have transformed work place training through Train to Gain which has trained over one million employees and helped them get on in work.

We have revived apprenticeships, which were allowed to wither away in the 80s and 90s. The Apprenticeship, Skills Children and Learning Bill which received its Third Reading in this House yesterday will ensure this progress is sustained.

This Skills Strategy builds on the progress made. It reflects some important decisions and marks a radical shift in the balance of our skills priorities. It reflects the world we find ourselves in: a world where higher level skills have never been more important to our growth, and where the skills challenge has to be tackled within more constrained resources.

So we have made some difficult choices. The crisis help we targeted to help counter the effects of the recession will progressively be refocused on the skills we need for a sustained recovery.

We have taken three key decisions:

• We will change the focus of our skills system so that a new premium is put on higher skills, especially the technician skills that are the foundation of high tech, low carbon industry.
• We will empower learners through more choice and better information to drive up the quality of the system through skills accounts.
• We will dramatically reduce the number of publicly supported bodies delivering skills policy, working with the UK Commission for Employment and Skills to reduce them by over thirty.

These choices will target public investment on the most relevant skills for the future, at the highest possible levels of quality and marketability.

The first of these decisions reflects the need for a new focus on the skills we need in the laboratory, the high-tech factory floor and the computer facility. We will create a new, modern class of technicians, something that has long been identified as a gap in our labour market.

To build this technician class, we will further expand the apprenticeship system, by creating thirty-five thousand new advanced places for those aged nineteen to thirty over the next two years. The aim of creating this technician class will also be aided by the new generation of University Technical Colleges whose creation we are supporting.

To turn these apprenticeships into potential ladders to university, from 2011, all apprenticeship frameworks at levels three and four will be required to have UCAS tariff points just like A-levels, so that holders can apply for, and make their way into university. We will also commit to Alan Milburn’s Panel on Fair Access to the Professions’ recommendation that we create an Apprenticeship Scholarship Fund that will provide one-off bursaries of up to one thousand pounds for one thousand apprentices entering higher education every year.

We will take a more strategic approach to the skills we fund. That means prioritising strategic skills in key industries like advanced manufacturing, low carbon, digital technologies and biosciences and in important growth sectors such as healthcare. Our decisions in the next bidding round of the National Skills Academies programme will reflect these core national priorities.

The second of our decisions is to increase the power of learners to drive up quality in the skills training sector by giving them more choice over where and when they train and better information on how to exercise that choice.

To give effect to that greater choice, we will set up new Skills Accounts which will enable students to shop around for training, backed by good information on how well different courses and colleges can meet their needs.

Critically, we are going to more than treble the number of public and private institutions where accounts can be used to over one thousand five hundred – not only creating new options for learners but creating a big incentive for providers to design courses that attract students.

The FE sector has made significant strides in improving the quality of its provision over the last decade. Many of our colleges are performing at world-class levels and overall success rates have increased by over 40% in the last 10 years. We will build on this by providing progressively greater autonomy to colleges that demonstrate teaching excellence – but also by cutting funding to low priority and poorly provided courses. We will invest in the courses that employers judge are in line with their needs and requirements.

Finally, we have decided to simplify the organizational clutter of public bodies delivering skills policy. We welcome the recommendation of the UK Commission for Employment and Skills to reduce the number of separate publicly funded agencies by over 30 and will work with them and others to make this happen. Our new model will make the Regional Development Agencies responsible for leading the regional skills strategy in each area, working in partnership with local authorities and others.

Conclusion

My Lords, this skills strategy shares its fundamental challenge with our recent Higher Education Framework. They must equip our people to prosper in a globalised knowledge economy. They must contribute to our return to sustained and sustainable growth.

The goal of this strategy is a skills system defined not simply by targets based on achieved qualifications, but by ‘real world’ outcomes. Relevant, quality skills, with real market value.

It will be driven by the realities of a changing global economy – by demand from the British businesses and individuals who have to prosper in that economy. The clearer that demand is, the better the system will work.

Our expectations of business will rise. We will strengthen the role of employer-led Sector Skills Councils and business-led Regional Development Agencies in shaping an excellent supply of courses and training, designed in direct response to local and national employer needs.

But we will also expect businesses to make a greater contribution to the funding of skills training for their workforce. We need a culture in which all employers take the view that the skills of their staff are one of the best investments they can make.

Our ambition is that, thanks in large part to the innovations in this strategy, three-quarters of people should participate in higher education or complete an advanced apprenticeship or equivalent technician-level course by the age of 30.

This strategy empowers the further education system above all to compete to meet the needs of businesses and learners. That will put further education where it belongs, right at the heart of the knowledge economy, at the heart of our recovery and our future prosperity.

PLEASE CHECK AGAINST DELIVERY

Good afternoon.

The UK is now the place to be for pharmaceutical or biotech companies.

That’s a bold claim. It needs some qualifying. But it’s one that I stand by.

With the sole exception of the United States, this country offers the best operating environment for the life sciences – and, in several respects, we outpace the US.

Consider the evidence.

The UK is the top performer among the G8 leading economies per unit of R&D spend. Our scientists produce 16 research papers per $1 million of research funding, compared to 9.2 papers in the US and 3.6 in Japan.

Two of our universities, Oxford and Cambridge, are ranked in the top three globally for
life sciences and biomedicine.

Our regulatory bodies and IP laws allow innovators to thrive. The UK medical technology sector, for example, has rapidly become the largest in Europe – with around 2,000 companies employing almost 50,000 people. At the same time, the UK medical biotech sector leads Europe on drugs in clinical development.

The result? Our bioscience and healthcare sectors generate over £23 billion a year in revenues.

All this without coming anywhere close to leveraging the full potential of the NHS as a driver of innovation. No other country has equivalent patient databases with which to conduct clinical trials and investigations, nor the capacity to test and then roll out cutting-edge medicines and technologies. The opportunities for collaboration between the NHS and industry are something we must exploit.

Now, I recognise – of course – the significant problems currently affecting life sciences.

The pharmaceutical sector is teetering on the edge of a patent “cliff” – valued at a $140 billion loss in sales – as several blockbuster drugs lose their licences in the coming years. It’s having to explore new business models to replenish the pipeline.

For medical biotechnology companies, the ongoing shortage of capital is putting the brakes on their ability to grow.

I’m not ignoring the warning signs – the UK’s declining global share of patient enrolment in clinical trials; the skills shortages undermining SMEs.

Nevertheless, I remain optimistic for two reasons.

First, because my personal knowledge of this industry – based on 20 years as a science entrepreneur – makes me confident that the UK has the ideas and the talent to lead on next-generation technologies.

And second, because the industry – with critical input from Government – has taken decisive steps this year to gear up for the future.

Thanks to the creation of the Office for Life Sciences and through the UK Innovation Investment Fund, we’re doing the right things to help this industry grow.

OLS – I believe – epitomises a smarter approach to supporting enterprise, with Whitehall departments, industry heads, academics and NHS leaders working together and agreeing the way forward.

Elvis Presley put it best – and most graciously: “A little less conversation, a little more action, please.”

In that spirit, the Life Sciences Blueprint – published in July – set out a package of measures to improve the UK operating environment in the face of intensifying global competition.

On the NHS, we announced the Innovation Pass, a three-year initiative that will mean patients get faster access to new medicines. A pilot will begin next year with a £25 million budget. The NHS chief executive, meanwhile, is currently leading work on reviewing incentives – including Payment by Results – to accelerate uptake of medical technologies.

To capitalise on our leading position in regenerative medicine, the Technology Strategy Board has established a new programme worth £21.5 million – with new competitions to commercialise R&D in areas such as therapeutics.

And for the first time, the UK has a single marketing strategy for life sciences, which is increasing its activities. We’re now promoting the industry with one voice.

On the most critical issue of all – finance – the UK Innovation Investment Fund represents a major bit of progress.

It’s something we’ve needed for years: a fund of the scale achieved by the biggest US vehicles which can provide patient backing to tech-based firms at all stages of development.

With £150 million of cornerstone investment from the Government, the UKIIF will be a 12- to 15-year fund of funds, seeking private sector investment on an equal basis to raise up to £1 billion over its lifetime.

We’re close to appointing a professional manager, whose job will be to invest in a limited number of top-tier technology funds and deliver top-quartile returns.

We are also exploring the possibility of co-investment – including with large pharmaceutical companies – to maximise the fund’s impact.

In the course of promoting the UKIIF and UK life sciences internationally, I’ve received some useful feedback on UK life sciences. US and Japanese companies have been positive about the sector and the work of the Office for Life Sciences, one – in particular – praising the Office’s ability to make things happen at “Formula One pace.”

That feedback is being matched by significant commitments to the UK at a time of global restructuring.

This year, we’ve seen Eisai locate their research, production and European HQ in Hatfield, and UCB Biologics open a new laboratory in Slough.

A consortium – including GlaxoSmithKline, the Wellcome Trust and my department – is investing £37 million in a drug development bio-incubator in Stevenage, which will be home to around 25 companies at the start and grow from there.

More recently, Pfizer has announced the UK as the only place outside the US where it will run a major research facility – at Sandwich.

So there are good reasons to feel confident – and we’re not going to lose any momentum.

The work of OLS continues. We’ll shortly release further details about some major Blueprint actions: the Innovation Pass consultation, the NHS Life Sciences Delivery Board, and the UK Life Sciences Super Cluster.

We’ve also been working with the Treasury on how the UK tax regime can incentivise innovative activity. We’ll say more in next month’s Pre-Budget Report.

With all of these developments, success will be judged solely in terms of change on the ground: faster clinical trials, more inward investment, new products to market, SMEs ultimately going global.

That’s all I want to say. I’m keen to hear your comments and answer some of your questions.

The only point I’d add is one I made at the launch of the OLS blueprint. Public-private partnership is the best way forward for life sciences. I therefore expect Government action to be reciprocated by industry committing to the UK; by researchers forging stronger links with industry to generate commercial value; by the NHS adopting innovative medicines and technologies.

We’re on the right path. We can’t afford any let-up.

Thanks for listening.

Access audio, video and images of this speech.

Speech by: Lord Mandelson
Venue: Brussels

Obviously at the start of new Commission there’s always a crowded market for advice. So I offer this analysis advisedly. But I do feel that perhaps more than any time in its previous history the EU faces a ‘what kind of Europe do we want?’ moment.

That choice is of course hundreds of individual choices about economic and foreign policy. But they boil down to a future picture for Europe’s weight in the world anchored in two things: the growth and strength of its single market; and second, the coherence with which it projects its policies externally.

We are approaching a decisive break with the economic past – a totally re-ordered global economy. And the idea that this doesn’t require serious new thinking in Europe is just not credible.

We will either step into a meaningful economic and political role in a multipolar world; or we will have merely walk on role, forced to follow other’s lead. In other words will we drive the agenda, or become a subsidiary of a process driven and shaped elsewhere, but above all by the G2, meaning the US and China?

Europe needs an effective role, based on growing economic strength. So we have to equip ourselves with policies and structures for this changed world. It is, therefore, time for Europe to face some facts.

The fact of new emerging powers and economic forces in the world and the implications for our absolute capacity to shape global outcomes in a way that reflects European interests and values. In this world, Europe is the essential force multiplier for every one of its member states.

The fact that one of Europe’s key deficits is leadership. Lisbon is very valuable and certainly gives us a new institutional toolkit. But it is personalities and policies that will make the difference. The point I will keep coming back to today is that we have a problem of leadership in Europe and political willingness to drive change. This does not boil down to a single individual and his ideas, however relevant. It is about an entire attitude of mind.

It has become a truism to say that the only way that even the largest European member states will address the biggest challenges they face, including, of course, climate change and energy security, is through collective action. The same applies to our relationships with Russia, China and the US. It is a truism, because it is self-evidently true.

But we also face a daunting internal economic agenda, which cannot be separated from these problems of external influence projection. We are a community of values – democracy, multilateralism, pluralism, openness, sustainability, equity – and the promotion of these values abroad should always be one of the EU’s core goals. But we are also a market and an economy, and whether we like it or not, our external political influence will inevitably be tied to our economic strength.

That strength matters for its own sake – it determines the number of quality jobs and personal security and sustainable growth that ultimately underwrite everything else we want to achieve as a European society. European people, it seems to me, will judge Europe above all on its ability to deliver a low carbon, high growth, high employment, banking-crisis-free future.

These are the critical problems for the way we invest in and shape the future of the single market. But on the whole they are simply not resolvable by passing more powers to the centre. That is just not politically possible, nor necessarily desirable, given national obligations to national taxpayers.

This basic balance between the need for stability and strength for the European whole, and the need for greater accountability in the national parts, is what we have aimed for in financial markets reform and banking supervision.

This is a problem we are going to face repeatedly, and a balance we are going to have to strike again and again. We need to encourage investment in low carbon growth and high technology, and we need to do this in a way that optimizes resources across the single market – but who should, or could, decide where public money is invested?

We have industries, like the car sector, that have excess capacity, that almost all analysts recognise need to be rationalized on a European scale, but no politically agreed way of even discussing this collectively.

So the policies that address these and other problems will need a new European leadership and a whole new magnitude of political cooperation. We will have to choose the Europe we want. The right choice in my view will be the difficult choice, because it will involve painful change. An agent of change

Whether we like it or not, this recession and its preceding financial crisis will be an agent of change in Europe. It will test more than ever what is viable economically and what is not.

But Europe also faces two big waves of even more disruptive change. The transition to low carbon, which will make many current business models untenable. And the continued push to raise productivity and move Europe’s economy right to the top of global value chains in response to globalization, which will mean replacing a lot of low skilled employment with higher skilled employment. On the way we will have to create millions, probably tens of millions, of new jobs.

All of which means we will have to be deeply innovative, in every sense. The problem is that although the EU itself is an incredible historical innovation, the EU as a group of institutions does not drive with innovation in the way we need. The EU is a tapdancer with 27 feet. Our challenge is getting that strange animal to dance. Where we have it right

First we need to recognise where Europe has essentially got it right, at least in the direction of travel. Where we have got it right is in the fundamental openness of the single market, which has held up pretty well through the banking crisis and the downturn. The existence of the euro has increased the overall stability of the system and removed the risk of competitive devaluations.

We have got it right in our commitment to open competition as the basic dynamic for improving productivity. Our commitment to labour and product market reform, our commitment to better regulation. There have been plenty of people who have argued that the banking crisis has put these things in question, but they are wrong.

And as you’d expect from a former Trade Commissioner, I think that our open trade policy is central to that – and I hope that both Doha and our FTA agenda will remain high up the agenda of the next Commission.

We haven’t delivered as well as we might have on those commitments over the last decade, but they must remain central to our conception of European prosperity.

And they need to be pushed forward. In particular I think that the next big step for the single market is making a reality of open trade in services, especially professional services, and I think the next Commission’s work should be targeted in this area. I also think we are long overdue for a Community patent, and I think, in particular, we need a fast track patent for green technologies.

These are the kinds of ideas I hope Mario Monti focuses on in his work in helping President Barroso define his 2020 agenda. That agenda should be radical. Spending money better

But this Commission also needs to recognise that we need to challenge some important parts of the European status quo. I’m thinking in particular of some of our attitudes to what government can do to equip the EU economy for growth and innovation, and how European rules and policies could reflect that. This statement is often interpreted in Europe as a signal for a return to dirigisme. It isn’t and shouldn’t be.

What we need is an entirely different kind of activist government that, rather than trying to direct industry or counter the basic logic of comparative advantage or commercial viability as we too often have in the past, invests heavily in the things from which that viability and comparative advantage emerges: education, adult skills, a flexible labour market, infrastructure, our science and research base and the effectiveness of our capital markets.

The challenge for the EU is to make these investments in its future in a way that is coherent and self-reinforcing across the single market – even though 99% of those investments will be made by Member States.

But we also need to think more strategically about the way the EU itself spends money – think more like a government investing intelligently in Europe’s capacity and less like a grant office. Our first big problem in my view is that we simply do not put innovation at the heart of the EU budget. I have heard so many people say that the EU budget is “only” 1% of EU GDP, as if this was an excuse for spending it badly.

That one percent, targeted well, could make a huge difference. It is unacceptable that we only spend 5% on low-carbon initiatives when this is an area where network and infrastructure problems such as electric car charging and smart grids suggest real added value for the EU’s pan-European perspective.

All three core areas of the EU budget should be framed as innovation policies. The Research Framework Programme should do more to connect innovative businesses and the European research base, in the way that, say, the Fraunhofer institutes do in Germany.

Instead of spending only 25% of the structural funds on research and development and innovation we should spend considerably more. That means combining the aim of regional convergence with low carbon targets, upgrading skills and building businesses.

I’d like to see the European Investment Bank get more involved in many of these areas. This would require the EIB to increase its risk appetite, although not by too much. But it would have the benefit of making sure investment reflected market priorities. Rules that encourage investment

Our second big problem will be investment more widely – and here I believe an important role for governments demands a change in EU rules. The Commission’s Spring forecast projected a 2.5% increase in the EU household savings rate over the next couple of years. If that shifts the EU away from growth driven excessively by consumer debt then it’s a good thing – and I’m the first to say that the UK has a particular problem here.

But it means that growth and job creation will have to be financed by new investment. And the contraction of bank lending and a general climate of risk aversion will pull that trend in the wrong direction. The Commission projects a worring10% drop in investment across the EU this year. What we can’t afford is to trade an acute credit crunch for a chronic one.

So we need to think about the way EU rules affect the flow of capital to innovation and we have to be aware of unintended consequences. Nobody can credibly argue that the EU doesn’t need greater regulation of it financial markets, and greater EU coordination. The UK has broken with the habits of a lifetime on this and has even gone further in some respects on harmonization of EU and global rules than De Larosiere himself.

But we need to look very systematically at the way we structure and impose new capital requirements – which are necessary, let me be very clear – so that they don’t close off available credit.

And while I understand the Commission’s objective of better oversight of Hedge Funds through the Alternative Investments Directive and welcome the continuing progress and negotiations under the Swedish Presidency. But any measures must be proportionate and fully consulted upon. We must be vigilant against burdening industry with excessive costs, and resist any moves that place restrictions on investor choice, leaving the EU open to accusations of protectionism. The EU must remain an attractive destination for venture capital.

However our biggest challenges in my view are adapting European rules to a structural problem in European capital markets for growth and risk capital. Even before the credit crunch we just weren’t getting enough venture capital to innovative and high tech companies. Even in this environment, US firms could tap venture capital markets for investments worth over $5billion a quarter. In the EU it was about a fifth of that.

I believe that we need new public sources of growth capital, chiefly as a way of seeding much larger public-private funds, managed by professionals just like any other venture capital operation. The UK has created an Innovation Investment Fund that will work this way – using £150million of public investment with the aim of creating a fund worth up to £1 billion. Germany has its KfW.

The new Commission should explore the same sort of thing at EU level to pool capital and risk across the EU and back high tech firms. We should ask ourselves – can we make better use of the European Investment Fund? Could it administer a much larger pool of venture capital to invest in technology funds? Or a fund of funds? What do we need to do to match the US’s pool of capital? Think about it this way: the public investment component of a fund comparable to the US market is unlikely to be more than what is spent every couple of days on the budget of the CAP.

This area of growth finance for innovation is the one big caveat to the argument that there must be a hardheaded end to the crisis flexibilities in EU State Aid rules when the temporary framework ends in 2010.

I have the greatest admiration and respect for Neelie Kroes in sticking her neck out and defending fair competition, even in tricky cases of cars and banks. She is right in principle and in practice. But new guidelines for risk capital are needed, including bigger deal sizes for near-market funds to support expensive technology-based investments. Political roadblocks to sustainable growth

Finally, we need to recognise that if we want the single market to operate effectively and to maximize our economic potential then we will have to find politically acceptable ways of tackling some big resource allocation problems. Both for existing industries, and for the industries of the future.

I don’t think the problems of solving overcapacity in the car industry can be solved by the sort of mechanisms used in the 1980s – production quotas and tariffs. But by invoking the Davignon work recently, Breughel has posed an interesting question about how we can encourage rationalisation

I don’t underestimate for a moment the political challenge in talking about continental restructuring or rationalization, but it is surely preferable to a subsidy war or wasted resources.

This kind of process will be impossible without strong Commission leadership. President Barroso proved his intellect and his authority in his first term. Now he needs to put the accent on his radicalism. The Commission also needs to take the lead in pushing Member States to redefine EU policy around innovation.

I’d go so far as to suggest that this might even mean rethinking the shape or focus of some of the Commission’s policy baronies. Even quite radically. What about a DG Innovation? What about a DG Digital Economy? And if the Commission is creating a Climate Change Directorate General what about having two Commissioners – one dealing with international climate action and the other one dealing with the transition to a low carbon economy in Europe – both more than full time jobs!

At the very least, the Commission’s ability to apply cross cutting policy on these themes needs to be tightened up – and I say that as a respectful former insider with a very high opinion of the Commission and its staff. Conclusion

I’ve made three big points today, all tied to how we redefine the EU’s core spending and policy around innovation. The basic thrust of the open single market and its rules is right and needs to be protected and pushed forward. But I see three big challenges.

First, the EU’s budget priorities are misaligned, and that needs to change. We need to start seeing that “just 1%” of EU GDP as a critical 1% of added value for the EU and the cutting edge of our investment in European innovation, especially in the skills that help people get good jobs and in low carbon job creation.

Second, EU rules risk suppressing investment in innovation. Again, change is needed. Our rules need to encourage private capital to invest and innovate, and state aid rules need to provide the right kind of space for governments to encourage and facilitate such investment. That’s a departure, but it is necessary.

Finally, we need to confront head-on the problem of the tension between what is necessary and prudent economically in the EU and what is politically possible. That means we need an innovative new European politics capable of building coalitions for very difficult European economic reform and compromise. This is the heart of the economic compact for jobs and growth that Gordon Brown proposed last week.

That means building a shared sense of our collective economic future. A clear sense that environmentally, economically, demographically, vis-à-vis China and India and America we are all basically in the same boat. This is a Europe in which leadership will be at an absolute premium. If we shy away from that, the costs will run far into our collective future.

 CHECK AGAINST DELIVERY

Introduction

Good afternoon, and thank you for inviting me to speak to you today. I am very pleased to be here.

The title of this event says it all, really – as local retailers you are right at the heart of your communities, providing an invaluable service to local people.

So I am pleased you have such an effective organisation, the ACS, to represent your interests. James [Lowman, chief executive] and his team are tireless advocates on your behalf.

I have no doubt your new chairman, Neil Turton, will keep up the good work.

Neil, congratulations on your new post. You are taking over at a challenging time for the convenience sector, but you have an excellent team to work with. And you have the full support of the Government. That’s why I am here today.

Government backing for the sector

Because I know the sector has been under real pressure as a result of the worldwide downturn.

While its origins were global, its effects have been local. And small retailers have been at the sharp end.

Local shops are a lifeline for the people who rely on them. So we want do whatever we can to support the sector, and work with you to make sure your businesses survive – and thrive.

That support is taking a number of forms – everything from financial support and business planning advice, to imaginative marketing campaigns promoting the strengths of the sector.

As the Regional Minister for Yorkshire and the Humber, I’ve seen the fantastic work being done by the Regional Development Agency, which has identified the retail and food and drink sectors as key growth areas.

The ‘Deliciously Yorkshire’ campaign is promoting the top-notch food and drink produced in the region – and the many grocers and local shops that sell them. It’s been a real success and a lot of small retailers are benefiting.

But of course, in the current climate, businesses also need the ‘nuts and bolts’ support that means they keep trading.

I know that, today, James [Lowman, ACS chief executive] has launched the ‘Heart of the Community Campaign’, which asks some tough questions of Government.

We welcome this, because it makes us challenge our own thinking, which has to be a good thing.

And I hope you would recognise that we share your concerns, and we are taking action on a number of fronts to tackle them. 

Finance

Cash flow is the number one concern for retailers today, just as it is for businesses in every other sector. So we are offering £1.3 billion in credit to viable small businesses having problems raising funds from the banks. 

 £120m of that has already been lent to retailers.  From 1 October 2009, two further types of Enterprise Finance Guarantee facility are now available via lenders – an Invoice Finance Guarantee top-up, and an Overdraft Guarantee top-up. Details are available on the “Real Help” pages of the Business Link website.

We are also allowing businesses to defer payment of some taxes. So far over 150,000 firms have reached agreement with Revenue and Customs to delay paying over £3.8 billion.

And we understand that business rates have a disproportionate impact on small companies. So in 2008/09 we have granted nearly £300 million in Small Business Rate Relief, reducing the burden on firms.

Companies can also spread their business rates over the next three years, paying 2% extra in 2009/10, and spreading the remaining 3% over the next two years. Businesses will be able to defer around £600 million across 1.6 million premises.

Retail crime

Of course, it’s important we help businesses maximise their profits so they don’t need financial help.

That’s why tackling retail crime – making sure owners keep the profits that are rightfully theirs – is one of our top priorities.

So I am pleased we are working closely with bodies such as the ACS, and others, to promote effective ways of tackling and preventing retail crime. 

We set up a £5m capital grants fund for small retailers in 50 areas especially affected by the downturn. Businesses will get up to £3,000 for alarms, security grilles, and other equipment to protect against theft. The first recipients should be announced soon.

We are also working with trade bodies to ensure small businesses know who their local neighbourhood policing officers are.

And we are committed to imposing tough penalties on those convicted of retail crime. Since 1997 the proportion of shoplifters going to prison has increased; and community penalties increasingly include an element of reparation.

But obviously we have further to go, and that’s why we are working with the ACS and others to implement the Retail Crime Action Plan.

Because it’s important we adopt a partnership approach with the retail sector to tackle these issues together.

Planning

And that partnership approach will be the key to success in other areas, too, as we shape the broader environment so small retailers can flourish.

Our draft planning policy statement, ‘Planning for Prosperous Economies’ [PPS4] will equip councils with the tools they need to nurture diversity – and maintains the ‘town centres first’ policy.

The ACS has worked closely with us on this and I thank you for that.

Draft PPS4 recognises that town centres are not only engines of the economy locally and nationally, but also lie at the heart of sustainable communities.

It requires councils to ensure a strong retail mix; and calls on them to recognise how smaller shops enhance the character and quality of town centres.

It also stipulates that the importance of shops and services in local areas should be taken into account when assessing proposals that could mean their loss.

The PPS will strengthen the tests for out of centre developments, and enable councils to reject developments that would significantly harm a town centre.

But we also know the recession is having a visible impact on our high streets, which can attract problems and damage people’s confidence in an area. That’s why we’re taking action to help councils respond. 

We’ve provided £3 million funding to 57 local authorities so they can try out ideas to boost their town centres, and we are making it easier for people to make use of empty shops. 

This is all about ensuring high streets are attractive, viable places that people want to visit.

Competition Commission proposals

Now, I know that is an issue on the minds of everyone in this room.

So I know you want to hear how the Government is going to respond to the recommendation from the Competition Commission, on setting up a Grocery Market ombudsman, and on introducing a competition test into town centre planning.

I understand your disappointment that we haven’t yet responded. But these are complex and important issues, and we need to take them all into account before we reach a decision.

We have to weigh up the possible costs or savings that would be passed on to consumers; the potential for a better deal for suppliers; and the regulatory burdens imposed supermarkets.

We expect to make a final decision shortly. At the same time we will, subject to any further developments, announce our decision on the Competition Test for town centre planning.

Energy

And let’s not forget that competition is a force for good. It can help address some of your other concerns, for example over energy prices.

That’s why the Department for Energy and Climate Change has produced a Consumer Focus guide for small businesses, to make sure you get the best possible deal from your suppliers.

We are acutely aware of the pressure that energy prices put on SMEs. So we want to help businesses make careful and active choices about the way they use energy, and the contracts they agree.

Greater energy efficiency is the other part of the equation. Even small changes will make a difference, to your carbon footprint and to your bottom line. UK businesses could save £3.3 billion a year on their energy bills. And help is available for this.

We are offering interest-free loans, from £3,000 to £400,000, to retailers and other SMEs to make energy efficient investments. An extra £100m was announced in this year’s Budget.

And in September Peter Mandelson announced that the Government would work with the sector on a Low Carbon Action Plan for Retail. I am pleased that the ACS will be playing a very active role in this important project.

It’s a good example of how a partnership approach can deliver benefits for everyone.

Change 4 life campaign

I think it’s important local retailers embrace this wider role, and secure their own future by playing an active role at the heart of their communities.

I’m delighted so many of you have signed up to take part in the Change 4 Life campaign, which is encouraging people to eat more healthily and take more exercise.

ACS members have been leading the way, using funding from the Department of Health to offer their customers a good selection of fresh fruit and vegetables, prominently displayed in-store, and promoting the benefits of healthy eating.

Project co-ordinators are working with retailers to help them maximise profits, minimise waste and promote fresh produce to the community.

Everyone is a winner – families eat better, public health improves, and retailers’ profits go up as demand rises. And now it is rolling out to every region.

Change 4 Life is a fantastic example of how retailers can improve the lives of their communities – and boost their bottom line.

Conclusion

In today’s climate that is more important than ever. I know that many of you in the convenience sector are going through tough times at the moment.

But I believe that projects such as Change 4 Life illustrate the crucial role that you play in your communities, and point the way forward. Showing how the local shop can be a hub for the people in the area. 

Because you are a vital local resource, and you are right at the heart of local life. That’s exactly where this Government wants you to remain. It would be a tragedy if that changed.

So I hope we can build on the partnership we have, giving you the support you need to help your businesses grow, to ensure we have a strong and prosperous convenience sector now and in the future.

Thank you.

Your Excellency President Patil, your Royal Highness and distinguished guests, it’s an honour to be here with you today.

I must also thank the UK-India Business Council, for organising this event and their continued work with UKTI to build ties between our two countries.

When I arrived in Brussels as Trade Commisioner, I was struck by a sense that Europe didn’t quite get the pace of Indian change and the implications for the global economy.

And I still think one of my biggest achievements as Trade Commissioner was launching an EU-India FTA as one of the EU’s key trade policy priorities in 2007. I was an early advocate in the European Commission of upgrading our strategic partnership with India. I hope it doesn’t sound too self-satisfied to say that I think I got the point about India early on and I’ve been making that point in Europe ever since.

If anything that pace of change is going to accelerate. New technologies, changing demographics and the world’s shift to low carbon are set to transform global markets in the future. As India’s manufacturing sector expands, its global footprint will get bigger and bigger. How we chart a route to sustainable growth in this changing world is the big challenge for both India and Britain.

And for all our obvious differences, I think there are some important similarities in how our two countries achieve that growth, how we rebuild global demand – a shared outlook which makes our relationship a valuable strength to develop, in the years ahead.

Rebuilding Global Demand

Our Governments have invested a huge amount in public stimulus packages over the last year or so, because the key for recovery is rebuilding private demand. That’s why the WTO Doha Round still matters more than ever – it is in effect another very major stimulus package for our economies.

The G20 Trade Ministerial in New Delhi last month took us a significant step forward – and I welcome the Indian Commerce Minister, Anand Sharma’s focus, he’s right to do that. We need to deliver on the commitments made there, and reinforced in Pittsburgh by the G20, to complete a deal by 2010.

Closer to home, an ambitious EU-India Free Trade Agreement would have similar benefits. So I hope the EU-India Summit next month helps us make progress there too.

Driving Enterprise and Innovation

India’s recent election result gave its Government a mandate for ambitious economic reform. This is indispensible to India’s future growth and prosperity.

In the UK, we believe that greater market access in India, in sectors such as financial and legal services, defence and retail could bring benefits to both our countries.

And we’re working with the Indian Government through the Joint Economic Trade Committee, and with UK and Indian business to help drive progress in these areas.

Generating High-value Growth

Of course, many British companies are already well-known and respected in Indian markets – and I want to stress the depth and breadth of our expertise.

Over the last 30 years, Britain has transformed its own manufacturing base. Building on our strengths in design, innovation and technologies, to secure a global lead in value-added, R&D intensive manufacturing sectors such as aerospace, industrial bio-tech and composite materials.

And we can help India as it seeks to refocus its own manufacturing base further up the global supply chain.

In particular, we’re committed to establishing the UK, as a leading partner in the development and delivery of low carbon solutions.

Building for Tomorrow

It is about building for tomorrow. For example, on his visit to the UK last month, Minister Nath talked of India’s plans to build hundreds of thousands of kilometres of new railway lines, highways and rural roads, as well as modernise around 39 of its airports.

That’s a huge undertaking. And leading UK businesses have extensive experience in managing these types of big infrastructure projects.

Opportunities for Growth

It’s also important, that any UK company looking to succeed in India recognises the opportunities across India, including in its Tier 2 cities. And both the UKIBC and UKTI are helping potential UK investors learn more about these opportunities.

In turn, Britain’s own cities and regions can provide India’s global entrepreneurs with one of the best environments in the world in which to grow their business.

Conclusion

Let me say this in conclusion. With bilateral trade between us still growing – reaching £12.6 billion in 2008 – despite the difficult global trading conditions, the UK-India relationship is one of the biggest strengths we have to meet our countries’ ambitions for the future.

Now is the time, for us to build on that advantage that we have, by working together. Doing what we can to stimulate global demand and develop together those partnerships and capabilities, that will help drive prosperity and opportunity for our people in the decades to come.

Speech by: Pat McFadden MP
Venue: NESTA

Introduction

It’s a real pleasure to be here at NESTA today. This is an appropriate place to host such an event because this is an institution dedicated to innovation and dedicated to backing creativity, backing enterprise and backing the ingenuity that characterizes so much of our country.

And thank you all for coming to this event that marks one year on from the Manufacturing Strategy. This is a chance to stop, pause and reflect but also a chance to look forward.

Manufacturing matters

So one year on. The sixth biggest manufacturing economy in the world.  Fifty per cent of our exports.  Seventy-five per cent of our business R and D and yet still, those of us who are passionate about this agenda, have to battle the notion that somehow we are a post industrial nation. It is not true.

But the recession, of course, has been a tough time for our manufacturers and I think it has given us an insight into why some people think like that.

Because when a firm goes to the wall, when a manufacturing plant closes, when sometimes a household name associated with a particular area is lost, we feel that we’ve really lost something important. We mourn its passing and then quickly assume that manufacturing is something we can’t do anymore.  

But, of course, that’s not true. Because although we have lost some names over the years we still have world class manufacturing companies in the UK – some of them associated with the announcements we’re making today – Rolls Royce, BAE Systems, Airbus, Jaguar Land Rover and many, many others.

At the other end of the scale I spent a lot of time in my Black Country constituency visiting small and medium enterprises. And everywhere I go, whether they’re engaged in the nuclear sector, whether they’re engaged in metallurgy, whatever area they are engaged in I see their pride, their passion and their commitment. I also see their urge to work with us to make the transition to a lower carbon economy.

And having a competitive manufacturing base really matters. Not only because it’s a vital part of a modern economy, but also because it is integrally linked to the help of our services sector too. These lines are not black and white, they are often blurred. And the best of our manufacturing companies are also serving huge service businesses and contributing hugely to our export in services as well as in manufacturing.

And that’s why we’ve worked so hard to support manufacturing over the last year both through the recession with some of the real help schemes we’ve got – and I’m thinking particularly of the scrappage scheme for the automotive industry – but also in terms of the future.

A second industrial revolution

And I want to say a word or two about this transition to low carbon. The way that we do many, many things in the future will fundamentally change.  We are actually standing on the threshold of a second industrial revolution. If you think about the first industrial revolution, so much of what drove it was about power – about coal, oil, gas.  Now as we shift to low carbon the way that we heat our homes, the way that we produce our goods, the way that we travel from A to B- all that is having to undergo fundamental change.
It’s not only a response to an environmental challenge. It’s also an enormous industrial opportunity. And as countries we have a choice. We could buy the technology from somewhere else, opt out of inventing it and making it, or we can take part in this. We can try to shape it and, at the same time, try to skill and equip our people to do the jobs of the future. I know which road I’d like to take.

And that’s why we issue no apologies as a Government for being more industrially active in the past year or two than in the past was the fashion. Because we want to shape this future.

Now the sums involved are enormous.  There are estimates that, as a sector, low carbon industries could be worth £3 trillion every year worldwide and employ more than 25 million people across the world in green collar jobs.  The only way that we will succeed in that world is, I believe, by actively trying to shape it. That’s why our manufacturing strategy is so important.

A plan for action

So we’ve tried to take an active role in shaping the future – one that we set out in our document New Industry, New Jobs.

And, at the heart of this approach, was a realisation that we had to look at where our national capabilities could be and decide on the best way to develop and enhance those capabilities in the future.

So we’re backing the best of British capability in wind, wave, low-carbon. And we’re also trying to upskill our people to do these jobs.

Government action over the past 12 months

What’s the scorecard 12 months on? What can we look back on?

Well, we launched the Low Carbon industrial strategy in July together with our colleagues in the Department of Energy and Climate Change. That’s about developing British capability. Whether it’s in wave power in the south west or whether it’s in low carbon demonstrator vehicles where, for example, a number of automotive manufacturers, including the BMW minis, are using  conventional vehicles powered by new technologies to  test how these vehicles operate in the everyday world. Some of the leading low carbon demonstrator projects in the world are happening here in the UK.

And our interest in this is also bearing fruit in other ways.  Britain has been chosen by Toyota to be the home of the first Toyota hybrid vehicle to be produced in Europe. And we’ve a site chosen by Nissan to be the main European battery plant for their new generation vehicles.

So already on the basis of the successful automotive sector we have in the UK, we have companies choosing this country to be the home of next generation technology.

And when it comes to helping UK businesses this is what we want to do. We’ve put our money where our mouth is. We established a strategic investment fund of some £750 million to support our industrial activism agenda. Part of that, for example, is about UK businesses work abroad through UKti in areas like Advanced Engineering, Energy, and Life Sciences. For example, we’re helping 600 companies exploit new supply chain opportunities in India and China.

Launch of Manufacturing Insight

But one of the two main announcements that I want to draw your attention to is the formation of Manufacturing Insight. I told you that I go round my constituency visiting family owned businesses that have been built up over the years. And they tell me that what frustrates them is that “we’ve got good jobs here, we’ve got well paid jobs here but sometimes smart people have got the wrong image of manufacturing – and they don’t want to work here”. They want to qualify and get excellent degrees in STEM subjects and then go off and do something else.

So we’ve given Manufacturing Insight a difficult but very important job and that is to try to review and revive the image of manufacturing. It’s not something they can do alone. They’ve got the Government backing and we’re working together with the RDAs and the Engineering Employers Federation on this. It’s a critically important task.  To say to young people that manufacturing isn’t something from the past. This is something for the future. And, when we look at the great names of our industrial past, we have to ask the question – who is going to be the Brunel of the low carbon economy? Who are going to be the great industrial pioneers of this second industrial revolution?

This is what we’ve got to inspire people with. So I wish the very best to Nick Hussey and to all the people working on this. To go out there, to provide an image of manufacturing, to say to young people that this is a career of tomorrow not a career of yesterday. And I’m really proud to be launching this initiative today. 

The new Manufacturing Technology Centre in Ansty

And the second thing that I really want to draw your attention to is what we’re doing – together with the East and West Midlands at Ansty. We have got a gap in a sense in the way that we develop our technology. So we’ve got absolutely fundamental research in the universities. We have increased our science budget, we make no apology for doing that, we have backed our desire for national capability and we’ve funds to do that.

We also have excellent manufacturing companies as I said with near market research capabilities. But in the middle something is missing. And that is the capacity to come together to test in a real, working, environment new products, how they’re made, what will work, what won’t.

And that’s what the Manufacturing Technology Centre at Ansty can do. So we’ve got Advantage West Midlands,  the East Midlands Development Agency, four leading research organisations: the University of Birmingham, University of Nottingham, Loughborough, The Welding Institute; some of our best known companies, as I say,  Rolls Royce, Aero Engine Controls, Airbus, Jaguar Land Rover. And we are putting £40 million of public money into this new purpose-built Manufacturing Technology Centre at Ansty, near Coventry.

It will allow companies and universities to undertake practical collaborative research and give the UK the best chance to test products on an industrial scale – cementing our position as a great, industrial, world class manufacturing nation. It’s a good example of the pro-active role government is taking as well as the excellent role that our RDAs play in supporting our economy.

A country that makes things – examples

So we don’t live in a post industrial society. You only need to look around the country to see some of this. Go to Dagenham and you’ll find Ford’s Diesel Centre –a global centre for diesel engineering design and production. Leading the way in building low CO2 emission engines.

Go to Oxfordshire. You’ll discover a knowledge cluster with facilities dedicated to tracing the effects of climate change and seeing how space based technology can be put to earth based uses. And the European Space Agency chose here to build its new facility.

Go to Sunderland, as I say, and you’ll find the battery plant.

And when the Yamazaki Mazak Corporation – the world’s largest producer of computer-controlled metal cutting machine tools – looked around for a place to situate their latest factory they didn’t choose one of our European competitors they came here to the UK to set up shop in Worcester.

Conclusion

So there is much to be confident about. Much to give us cheer and give us heart. Last year’s Manufacturing Strategy was a key first step to ensure the UK is ready to compete in a global marketplace.

There is a lot that the Government can do by being active. But it’s not something the Government can do alone. All we can do is to create the environment but this will only really work if business and investors take this seriously and we all work together to make sure the transition to low carbon and the second industrial revolution is a success for the UK.

That’s what I want us to think about today. That’s really why I believe that this is important. We want to make innovation flourish. That is what we’re here and dedicated for today. There is cause for us to take heart but there’s an immense challenge in front of us. I really do believe that it’s time to get over the idea that Britain is a post industrial, post manufacturing country. We are not. We’re proud to be a country that makes things and let’s make sure that continues.

Thank you.

I’d like to make a couple of basic points today about the creative industries in Britain. First, I want to put down a firm marker on the scale of their contribution to our prosperity in a globalised economy. Second, I want to say something about what we need to do to preserve that strength for the future, especially what we now plan to do to adapt and update our approach to copyright for a very different, interconnected and digital world.

Why the creative industries matter

I’ve been trying to think of the first time that I was really aware of just how seriously Britain’s impact as a creative economy is out of all proportion to its size. I think it was some time in the last decade, probably looking up at Norman Foster’s glass dome for the Reichstag or reflecting on Harry Potter’s decade of global conquest, or maybe it was watching Robbie Williams charm the socks off 15000 Belgians – and at least one Englishman – in Antwerp a few years ago.

Did you know that there is now almost no country on earth where you can’t watch Midsomer Murders? Which means there are a lot of people out there who have a very distorted view of the British homicide rate. Just think of it. We watch The Wire here in Britain. But in West Baltimore they watch Midsomer Murders and say “Sure, it’s pretty, but man it’s dangerous over there!”

The numbers that back up these anecdotal examples – I suspect an underestimate – are genuinely striking. The export earnings of the UK creative industries alone are worth about 16 billion pounds. That’s about 4 per cent of UK exports. They employ almost two million people in our economy.

I’m a big defender of an economy based on making things, which is why I often speak about manufacturing. But in terms of added value in a global economy the difference between making a car or a plane and making a TV show or a video game is largely a meaningless one. Especially when you consider how integral and central to the manufacturing process innovative design is.

The digitalisation of creative industry

But of course the creative industries are undergoing an immense shift, driven above all by the internet and by digital technology. We now have greater unmediated access to cultural goods than ever before, and in formats that make them easier to appropriate and share than ever before. A world where creative content is conceived, published, distributed, advertised and consumed digitally is revolutionary for the users of cultural goods, and revolutionary for the people who produce them.

In some respects it creates huge new opportunities for the creative industries. It means industries have greater ability than ever to reach new customers, to speak to them directly and to tailor creative goods to them, their needs and their tastes.

They are also less geographically bound than they have ever been – the contributors to a creative product, even one produced in hours like a newspaper, no longer even need to be in the same country, let alone the same room. Our most ambitious creative industries are going increasingly to see a world in which English is the preponderant language as their wider market, with the UK as a hinterland and as a launching pad.

This means we are going to have to work even harder to make sure the environment for creative industry here is right. At a very basic level that means making sure we have the digital infrastructure in Britain – which is one of the key questions that the Government’s Digital Britain report addressed.

It’s going to mean making sure that our education system is producing the right skills – both the fundamental intellectual and artistic confidence that is the root of creativity, but also the craft skills that underwrite so much creative endeavour. The technicians and producers and programmers and editors, and even the builders who often literally build the stage on which creative industry takes place.

But the big challenge that the digital economy poses for the creative industries, of course, concerns content producers’ control over their ideas and goods. The creative industries are literally built on the idea that it is legitimate to protect the value of creativity through copyright and intellectual property rights. If they don’t retain that, frankly they don’t have a viable business model left.

The creative sector has faced challenges to protected formats before and it has survived robustly – in spite of some Cassandra-like predictions from inside the industry. Home taping didn’t kill the music industry. Home video didn’t do for movies. But the threat faced today from online infringement, particularly unlawful file-sharing, is of a different scale altogether.

I was shocked to learn that only one of every 20 tracks downloaded in the UK is downloaded legally. One in twenty. You just can’t have sustainable creative industries under the pressure of this kind of theft – and that’s what it is. So I want to be absolutely clear. The British Government’s view is that taking people’s work without due payment is wrong and that, as an economy based on creativity, we cannot sit back and do nothing as this happens.

The trouble is that too many users of digitised cultural goods simply don’t see it that way. When 15 year old intern Matthew Robson reported back to his bosses at Morgan Stanley in the summer on the attitudes of his peers to digital content his key conclusion was pretty much: they want what they want and they don’t really want to pay for it. That was the view of a 15 year old intern at Morgan Stanley. And, of course, on the internet it’s incredibly easy to get just that. The important cultural and ethical sense that it is an issue of right and wrong is eroding before our eyes. This is not just morally unacceptable: it’s also commercially unsustainable for artists, for investors and producers alike.

A new business model

Now, it seems self-evident to me that trying to evolve new business models against these kind of attitudes is very hard, and I take my hat off to those who have tried. Further investment in new business models is important. But the Government also has a responsibility to act. That is why we have decided to intervene and legislate to tackle the problem of file-sharing, and it is why other countries, including France and the United States, are doing the same.

What we will be putting before Parliament is a proportionate measure that will give people ample awareness and opportunity to stop breaking the rules. It will be clear to them that they have been detected, that they are breaking the law and that they risk prosecution. If necessary we have also made it clear that we will go further and make technical measures available, including account suspension. In this case, there will be a proper route of appeal. But it must become clear that the days of consequence-free widespread online infringement are over.

When I reopened this issue back in the summer there was a lot of contentious debate, not surprisingly. But, let me be clear on this point: technical measures will be a last resort and I have no expectation of mass suspensions resulting. If we reach the point of suspension for an individual, they will be informed in advance – having previously received two notifications – and will have the opportunity to appeal. But the threat for persistent individuals is, and has to be, real, or no effective deterrent to breaking the law will be in place.

Neither do we want Internet Service Providers to be unfairly burdened. ISPs and rights holders will share the costs, on the basis of a flat fee that will allow both sides to budget and to plan.

That’s our side of the bargain. The aim here is to give rights holders and others the space to invest in and develop new ways of offering content, in the way that people want it, and at a price that makes sense to buyer and to seller.

But the reality is that the massive demand for easier and cheaper access to books and films and music and other content is not something that we can or should be indifferent to. The market is telling you in no uncertain terms that people want access to copyrighted material on different terms from those the industry currently wants to offer. Every time that demand is ignored, we give free-riders an excuse to keep on taking the stuff through the back door.

I strongly agree that we have to educate people on the value of intellectual property rights. Our new approach will create the launch pad for such an educational campaign. But the only way to re-establish a strong consensus around the fairness and value of copyright is to bring the whole IP regime into the modern world.

A ‘legislate and enforce’ approach to beating piracy can only ever be part of the solution. The best long term solution is there in front of our noses. It’s the market – but it has to be a market in which those who love music and film, for example, can find a deal that makes breaking the law an unnecessary risk. I know how complicated building these networks and services can be, but in that respect, the industry needs to move faster in a much more agile, commercial and market response orientated way to help itself. There are some good, cheap, legal services operating. If I can help by convening discussions or knocking heads together then I want to know.

Andrew Gowers did a fine job of looking at this from a UK perspective in 2006. But we have also recognised the need to approach this from a broader angle, recognising that many of the most important levers for this exist at European and international level.

We announced in Digital Britain that we would be looking at collective licensing and at Orphan Works, and these practical changes will make a real difference, and help make the process of clearing rights less painful without eroding the position of rights holders. However, I am announcing today a Copyright Strategy to take us to the next stage.

In particular, our strategy grasps the nettle of what a fair deal looks like between creators, rights holders, copyright users and citizens. It accepts that there is a case for easier and cheaper access to copyrighted material and that making a reality of this is a key part of the wider bargain of which tougher penalties for illegal file-sharing are but one part. We need to be clear what is and is not allowed. At present, the legal framework – almost universally ignored – disallows all sorts of perfectly sensible private use, like moving songs from computer onto an IPOD. If we are to make clear that rules are to be enforced, then all the rules need to be sensible and they need to be up-to-date.

I think this new approach is particularly relevant in two cases. For pre-commercial use of copyright material – where wider access could help transform it into innovative commercial uses for which the original holder would of course be compensated.

And for non-commercial uses in the home and among friends and families, where there needs to be a whole new approach. Together we are going to have to figure out exactly how we can do this.

No less important, the strategy recognises that we have to do this at the European level and it gives notice that the UK wants to help lead and drive this debate in Europe.

The bottom line for the Government is that the creative industries are and must remain central to a balanced, knowledge economy. They are one of the keys to the recovery now underway and our whole economic future. There is no economy on earth in which the creative industries play such an important part in overall growth and job creation, and that is an immense asset to the UK that we are determined to preserve and strengthen. Anyone who doubts that needs to take a look at the Love and Money exhibition in the Ivory Foyer, here in the Grove, which is a wonderful expo of fifty years of British creative brilliance. Today our collective challenge is to deliver the basis for the next fifty years of creative British endeavour and leadership.

I hope that our approach and the stable, predictable framework being put in place will allow good commercial decisions to be taken for the benefit of everyone including consumers, who we are all here to serve.

Speech by: Lord Davies
Venue: Drapers’ Hall, London

This speech lasts 15 minutes.

Transcript of speech

Lord Mervyn Davies, Draper’s Hall, London

Chairman, my Lords, Aldermen, Ladies and Gentlemen, pray silence for the Minister of Trade, Investment and Business, the Right Honourable Lord Davies of Abersoch.

Lord Davies

Well first of all, I should say thank you for the round of applause but it won’t stop me from starting by telling a couple of stories about bankers. But first of all can I just say thank you, Stuart. He’s one of the most exceptional people I’ve ever met. You can tell who wrote this speech!

I’ve been in Government ten months so jokes about expenses have worn a bit thin. A man needs a heart transplant, and it’s his lucky day as his doctor finds no less than three matches for his blood and tissue type. The first is from a priest, the second from a nurse and the third from a banker. The doctor asks the man which heart he would prefer and, to his surprise, the man chooses the banker. Why did he choose the banker’s heart? He replied, “Because I’m pretty sure it’s never been used.” [Laughter]

About a year ago there was a joke that went, “What do you call a banker who irons five shirts on a Sunday evening?” And if we were here twelve months ago the answer would have been an optimist, but the real problem twelve months on I have with that joke is whoever heard of a banker who irons his own shirts. [Laughter]

Now, just out of interest, because I have a huge now, huge Civil Service army working for me, I Googled, or the team did, ‘banker jokes’. I got over half a million hits. Pretty bad I thought until I checked, Anthony, how many lawyer jokes there are out there. I got over 750,000 hits. So bankers, we’ve still got some way to go.

Then just for fun I tried MP jokes – one and a half million hits. And people wonder why I agreed to be a politician.

Let us look back at the crises of the last 100 years. 1929/39 Great Depression, Latin America, the Asia crisis, the ’73 oil crisis, the ruble crisis in ’97, the dot com bust in ’99, the Enron crisis of 2000, and now 2008. So where does the October crisis rank amongst them? I suppose you have to reflect on the Chinese leader, and lots of people argue about which one it was, but maybe it was Deng Xiaoping who said when asked what he thought of the French Revolution it was too early to tell. Similarly – that was meant to get a laugh. [Laughter]

Similarly, with this crisis it is too early to tell what the full implications are. We are in the middle of an open debate about the future of the banking industry. Not the financial services industry because so many parts of the industry, and we’ve got Peter Levine here, Lord Levene, and you look at Lloyds of London, you look at many aspects of the industry, they’ve done a great job of being unaffected.

But what is clear is that the banking industry will never quite be the same, and nor should it be. Will there be huge changes such as Glass-Steagall? Should the bonus culture be killed? What are the right levels of liquidity and capital and leverage? How do we get banks to get back to what they should be doing, which is supporting small business? What is the future of trade credit insurance in Britain but also across Europe? How do we reduce the fees payable on M&A and other investment banking products which seem to be high by other benchmark industry standards? Is the model in part of investment banking of paying somewhere between 40% and 45% of revenues to all staff, is it sustainable and why is it sustainable?

There are literally hundreds of questions. My personal view is that there are three or four different types of banks. Firstly there are those true investment banks who do very little other than that type of business. Then there are the global banks who operate in over 70 countries, are very multicultural and they’re very different in their nature. Some of them don’t have a home market, some of them do. But thirdly, there are the regional banks who probably operate in between 20 and 70 counties, and finally there are the local banks who are largely dominant in one market and maybe have one or two international offshoots.

Surely a global solution to looking at these banks is the answer. The danger in the UK is that we look for a UK solution and the danger in Europe is that we look introspectively and not for a European solution. [Some applause]. No, it’s fine. As a politician I’ve been ten months, I’m not used to a round of applause, it’ll unnerve me. [Laughter].

What troubles me at the moment is that some people are out there, without mentioning names, unsettling the market with ill-thought through statements and what we have to acknowledge is that London is in competition, the UK is in competition with other financial centres.

London is a capital market of huge significance but it is part of a global marketplace. We need the US/China/India contingent to engage in the industry structure discussion, but we also need a greater voice from the institutional owners of the companies on these issues, and in particular on bonuses. The last twenty years has seen huge scientific progress in life sciences in general and genetics in particular. IT and computing has advanced at an extraordinary pace. But we’ve also seen growth in current account imbalances from the early 2000s compared to the previous decade.

The volume of trade has tripled, powered by imports of cheap Asian goods by credit-fuelled economies in the west. Now this has led to unsustainable savings in the east dependent on excessive debt in the west. Between 2002 and 2008 China saved US$1.4 trillion but the US borrowed US$3.9 trillion. But what also happened is that the world economy became interdependent. Two-thirds of Asia’s exports and commodities find final demand in the west. Most of China’s official reserves are held in US securities. And, as the late James Goldsmith observed, if you owe the bank $100 that’s your problem, but if you owe the bank $1 million that’s the bank’s problem.

But we now at this moment in history, this moment in time, when fundamentally the role of a bank is to support commerce, consumers and businesses, and assist in their economic development by facilitating business and trade. But in the interconnected world we must make sure that we don’t come up with a UK solution. Greed, lack of broad expertise, misunderstanding of risk were all contributing factors and banks have got in many cases out of touch – not all – out of touch with society.

But we should not jump to the conclusion that regulation is the answer or that London is dead. London has maintained its position as the number one financial centre in the world. It is a truly – as Giles said at our table – a truly great city. London and other financial centres in the UK, such as Liverpool, Manchester, Leeds, Glasgow, Edinburgh, etc, have a wonderful future. So much of the industry, as I said earlier, such as insurance, professional business and legal services, have been unaffected. And, as Stuart says, we must make sure that London stays competitive by investing in the infrastructure.

We must debate and sort out the future of banking, but the danger at the moment is that it is leading to pessimism. This is not a time for pessimism, it’s a time for playing to our strengths. There is a real danger of fiddling around whilst Rome is burning. India, China, Brazil, to name three, are on the move. And what I thought I’d do is give you very quickly two examples of why I say that.

Last week I met the Chief Executive of China Mobile, which has just celebrated 500 million mobile users. But I also me the CEO of ICBC, China’s largest bank, but also now the largest bank in the world by market capitalisation. Almost 40% of Indians are younger than 15. India sells more than 10 million handsets every month. Less than 40% of Indian households have a bank account, and only 2% of India’s population has any kind of insurance cover. India will produce somewhere between 800-900,000 engineers this year. Bangalore alone will produce – I was there in India for a week about three weeks ago – Bangalore alone will produce more engineers as a city than the whole of the US in its totality. So there are huge opportunities in these markets, but there are huge threats.

Now, the one observation I have – and I make no apology for saying this everywhere I go – in ten months as a Minister I’ve had the privilege of touring the world going to over 20 countries, but also going around the UK and the regions. We have a wonderful diversity in our economy. It is not all doom and gloom. Over £½ billion of loans have been made to 5,700 firms under the Enterprise Finance Guarantee Scheme. We’re the sixth largest manufacturer, we’re ahead of France. We’re the seventh largest economy. Manufacturing accounts for 50% of exports and we still have six of the top ten Formula 1 teams in the UK.

The UK claims 13% of world turnover in aerospace. The environment industry, which is very much the industry of the future, the turnover is £25 billion, it employs 400,000 people and is projected to be worth £46 billion in 2015. The UK has overtaken Denmark in having the world’s largest installed capacity of offshore wind power. The UK is a world leader in research and development. 9% of scientific papers are produced in the UK. 12% of citation is shared, basically we’re second only to the US. We rank sixth in the world by the World Bank for ease of doing business. The Economist ranks the UK top in having the strongest business environment of all European economies after 2012. There’s been an 11% increase in new foreign direct investment projects in the UK. The UK still is the number one destination in Europe for FDI, and by some distance.

One of Britain’s real success stories over the last few years has been one industry, and that’s the life sciences sector. Life science exports rose 19% last year. Biotechnology, healthcare, pharmaceutical industries in the UK together generate more than £23 billion a year in revenue, and also employ 400,000 people. All of the world’s leading pharmaceutical companies have R&D and/or manufacturing facilities in the UK. I was with the CEO of GE about two or three weeks ago; the UK is regarded by them as their natural centre outside of the States. Five of the world’s top 20 medicines were discovered in the UK, fifteen of the world’s top 75 top selling medicines were discovered and developed in the UK. Although the UK is just 3% of the global pharmaceutical market it attracts 10% of all R&D.

On Friday I was in Oxford. I visited the University but I also visited two fascinating companies: Oxitec, which is a company, a small company which is carrying out work to eradicate dengue fever, a disease that costs over £5 billion to tackle. It affects 500 million people every year. It’s a company that is literally at the cutting edge of its space. I also visited Glide Pharmaceuticals who have developed a technology which can deliver vaccinations without needles.

But let’s move on very quickly to the automotive sector. Despite what you might read in the press – and the press are here, they’re obviously always very optimistic about British industry – the automotive industry still plays a vital role in the UK economy. This diverse, vibrant and world class sector incorporates 5,000 companies and employs 800,000 people. Automotive manufacturing contributes £9.8 billion to the UK economy and accounts for about 11% of the UK’s total exports. But it also attracts significant FDI. There are more than 50 automotive design engineering companies based in the UK who collectively handle an estimated 20% of the global demand for independent vehicle design engineering services. Over 75% of the cars and commercial vehicles produced in the UK are exported, valued at around £24½ billion of product.

So in closing, let’s make sure that the debate about the banking industry does not colour the fact that Britain has excellence in advanced engineering, in mobile telephony, in life sciences, pharmaceuticals, in education, in business and financial services, in the Stock Exchange, in the maritime and creative industries. This is a country that has 4.8 million SMEs, and over 120 companies register with Companies House every hour. Manufacturing attracts more FDI to the UK than to any other country in Europe, and globally the UK is second only to the US.

And finally, let me highlight one fact for you. Life expectancy for men is 77 years and for women it’s 82. The average age of the UK is 39.6 years so I’d like to say ladies, you have obviously a huge number of years ahead of you. Gents – let’s move. [Laughter]

My message to you is basically the debate on financial services is a great one to have. It’s absolutely fundamental. But let’s make sure that that debate and discussion does not lead to talking Britain down and talking about Britain as if we have no economy, no future and that we have no industry, because factually that’s incorrect. Thank you. [Applause].

Speech by: Lord Drayson
Venue: Nikkei BP Climate Change Symposium, Tokyo

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Good afternoon. It’s an honour for me to speak to you today.

Climate change, I believe, is the defining issue of the twenty-first century. It concerns me as the government minister with responsibility for the UK’s low-carbon industrial strategy. It worries me as the father of five young children. But it also excites me as someone who has spent the bulk of his career as a science entrepreneur.

Let me begin with the scientific evidence. As most of you will know, atmospheric concentrations of carbon dioxide are higher than at any time in the last 600,000 years, and they are increasing at their fastest ever rate. Seventeen of the warmest years on record have all occurred in the past two decades. Looking forwards, the mid-range estimate from the Intergovernmental Panel on Climate Change – the IPCC – is for a two- to three-degree rise in average global temperature this century. That’s equivalent to the Earth experiencing more extreme climate change than for at least 10,000 years.

In other modelling work, UK scientists have shown that higher CO2 emissions in the short term will require greater per-annum reductions in future – in order to stabilise the global climate at two degrees over pre-industrial temperatures.

Put another way, we have to keep cumulative emissions below one trillion tons to maintain a livable atmosphere; as humans, we’ve already exhausted more than half of that since the onset of the industrial revolution.

From the statistical to the personal, the gravity of this situation was really brought home to me a few years ago, during a visit to a NASA facility in California. There I saw supercomputer models of the polar ice caps projected onto a massive screen, and watched the caps recede and expand with the seasons. The effect was startling; it looked as if the Earth was literally struggling to breathe.

And yet we’re not going to bring about a radical transformation in human behaviour – and that’s what we need – by issuing a steady stream of dire warnings and forecasts of greatly diminished lifestyles. That simply won’t work – neither in mature economies like the UK and Japan, nor in emerging economies who, quite understandably, have little time for such sermonising.

Guilt rarely serves as a motivating force, and certainly not for long. The same goes for bullying people into change, which will only generate hostility and resistance.

Instead, we have to offer people a practical, accessible, attractive low-carbon future – one which presents them with solutions built on sound science and creative engineering.

Change must feel exciting and straightforward. People need persuading that their quality of life can actually improve, not decline. Low-carbon is going to have to be cool.

I’m absolutely convinced of this. In my spare time, I’m a racing driver and team owner. When I entered that world, it was with the expressed desire to demonstrate how it’s possible to achieve high performance by going green. Drayson Racing, for example, uses a second-generation bio-ethanol fuel that consists of old grains, peelings and wood.

Let me tell you: there’s nothing quite like taking pole position in the first race of the season to dispel the scepticism of your competitors. And when a glamorous and high-profile sport like motor racing shows how green innovation delivers power, speed and efficiency, car manufacturers and the general public take note. It’s about making products that are as good as – if not better than – what’s already on the market.

And for all the challenges that global warming will pose to our planet, it also guarantees huge future markets for low-carbon technologies. It’s vital that business leaders around the world seize upon that certainty. There is no high-carbon alternative.

Climate change is with us. Science- and engineering-based solutions must be found. So companies that invest in this space know that there will be demand for their products and services.

Now, just a few years ago, many UK businesses regarded the climate change agenda as a serious threat. They associated it with higher costs and greater state interference.

Such concerns were not – are not – misplaced. Costs will always be incurred with radical shifts in technology, energy supply and usage. Despite every effort to keep them to a minimum, new forms of regulation are unavoidable when change takes place on this scale.

But the key point is this. The UK sector for low carbon, environmental goods and services is one of the few areas of our economy expected to maintain positive growth rates through this global downturn – with forecasts of more than 4 per cent per annum up to 2014/15.

Recent estimates valued our market at around £106 billion – employing 880,000 people, either directly or through the supply chain. We expect that more than one million people will have jobs in this sector – skilled jobs, with market value per employee well above our national average – by the middle of the next decade.

Low carbon, therefore, is not a threat to economic recovery; it’s the market that’s driving recovery. Not just in the service sector, but in heavy industry and engineering.

We now have a situation where UK business, led by the Confederation for British Industry, has called on government to adopt a more ambitious approach to low carbon – which I’ll come on to in a moment.

Moving away from a UK perspective, it’s well worth recognising that the global market for low-carbon, environmental goods and services was already worth £3 trillion in 2007/08 – and close to half of that was in emerging fields like carbon financing, alternative fuels and building technologies. By 2015, it could grow to an estimated £4.3 trillion.

Our estimates put Japan behind only the US and China in their share of this market – with prospects, like the UK, of four per cent year-on-year growth up to 2015.

At the same time, I’m very aware that your actions over the past three decades have made Japan’s primary energy consumption among the lowest in the world, relative to its GDP. This is the only country, for example, with fuel standards for heavy-duty vehicles. And it’s here that forward procurement standards – agreed with manufacturers – are challenging Japanese firms to improve the energy efficiency of their production methods over time.

Looking forward, and with your expertise in areas like photovoltaics, the opportunities are there to be taken. The next step is to achieve global scale with this technology: building more solar panel farms, generating more energy from smaller panels, bringing this technology to a mass consumer market.

A similar case can be made for wind power. In the UK, we’re leading the shift from onshore to offshore wind and creating the largest market in the world for this renewable. But as the turbines go up, who’s going to provide the reliable machinery to run them? At the moment, it looks like a direct drive approach will supersede gear box technology – presenting another huge opportunity for manufacturers.

Of course, making bold predictions about the size of future markets is the easy part. It’s infinitely harder to realise those opportunities.

The UK Government is absolutely clear that that task cannot be left to the private sector alone. The scale of R&D required, the underlying infrastructure needed, the importance of coordination at both the national and international level, the demand for market certainty, the mission to win over hearts and minds – these are all challenges beyond any industry operating alone.

Clean tech investors over in Silicon Valley made this point to me emphatically just a couple of weeks ago. Emerging fields like carbon capture and storage, for example, carry significant technological risk – with the huge capital needed to eliminate that risk beyond the capacity of existing markets.

Government will have to get involved to produce the solutions fast enough to tackle climate change.

We’re dealing with a scenario where public-private partnerships are the only viable answer. It’s the only way for the UK to build on its status as a pioneer in wave and tidal energy, to be the best place in Europe for advanced manufacturing, especially in low carbon.

So we’re not seeking to increase the role of the state on ideological grounds. We want to target government support where it can really count – by improving the regulatory environment, by using public procurement to send the right market signals, by helping the most innovative small businesses to become high-growth enterprises.

Our policies are focused on refurbishing the UK’s energy infrastructure, making sure that the British workforce has the skills necessary to exploit the low-carbon opportunities that will emerge, and on introducing incentives that encourage consumers to make low-carbon choices.

In that spirit of pragmatism, let me give you an example of how this works in practice. For, although I’ve been a politician for the past five years, I come to these issues with the mindset of a businessman.

You’ll forgive me – given my earlier confession about motor racing – for singling out the automotive industry.

In the UK, we have domestic legislation committing us to reduce overall emissions by 34 per cent by 2020, as against 1990 levels. If, as we hope, a comprehensive global agreement is reached in Copenhagen this December, this commitment may rise to 42 per cent.

Before going further, let me say that I strongly endorse Prime Minister Hatoyama’s pledge to cut Japan’s greenhouse gas emissions by 25 per cent within the same timeframe and against the same baseline.

The “Hatoyama Initiative” – with its emphasis on green innovation and a pledge to provide financing for developing economies – is precisely the sort of brave undertaking we need to meet the G8 target of achieving an 80 per cent emissions reduction by 2050.

Japan’s targets are not only achievable, but will bring tangible social and economic benefits – cementing your position as Asia’s leading nation for technology.

Now, at home, we’ve calculated that our surface transport will have to produce zero carbon by 2050 in a majority of sectors. But we’ve also recognised that phasing out car travel is not an option. Economic growth is fundamentally linked to individual accessibility and mobility.

In the short term, car makers will continue to reduce vehicle weight and drag, improve engine and transmission performance, and push ahead with hybrid technology. That will be enough to meet a series of tighter European restrictions on CO2 per kilometre emissions. But there’s a limit to the efficiency of internal combustion engines, which waste considerable amounts of energy through heat loss via the exhaust and cooling systems. It’s unavoidable whenever we burn fuel.

Electric vehicles – EVs – by contrast don’t burn fuel, and are over 90 per cent efficient in taking stored electrical energy and converting it into useful motive power and torque.

EVs and plug-in hybrids, therefore, represent the zero-carbon future – providing, of course, that their energy efficiency is matched by that of the power generating companies.

So the UK Government sat down with scientists and engineers from the automotive industry to define the limits of existing technologies, and the potential of new ones.

Following that process, we created the Office for Low Emission Vehicles, bringing together senior figures from our departments for business, transport, energy, local government and finance to work with the automotive industry, power generators and infrastructure companies; with experts on pricing and systems design; with academics and creative thinkers.

We’ve proposed financial incentives for private individuals and commercial buyers looking to purchase electric or plug-in hybrid cars when they hit the showrooms from around 2011 onwards.

At the same time, we’re already running the world’s largest EV and plug-in hybrid demonstrator competition in which the public will try out a range of vehicles across Britain.

I’ve test-driven some of the demonstration vehicles – as well as several more already on the market. These aren’t poor imitations of petrol cars but examples of high-quality design, engineering and manufacture – including two-seater city cars, SUVs, minivans and sports cars. These models deliver the high performance that consumers will expect in order to change their driving habits.

Though a UK-based initiative, this focus on ultra low carbon vehicles has international input. It’s no secret that the UK has a long tradition of working with Japanese companies, in the automotive sector especially.

We welcomed Nissan to Sunderland in 1984 and its plant there went on to become the most productive in Europe. Honda and Toyota soon followed thereafter – all three making substantial investment in their UK operations, and making full use of the UK’s outstanding research base.

More recently, Nissan Toyota and Calsonic Kansei made a valuable contribution to the review of the UK automotive sector that I mentioned earlier. And this year, we’ve seen Toyota announce its intention to build the Auris hybrid at Burnaston, while Nissan are planning a new battery factory in Sunderland.

In addition, Mitsubishi have joined Toyota and Nissan in supplying vehicles to our ultra low-carbon demonstrator programme.

I hope this positive relationship continues – in other sectors as well as automotive – and I think it points to broader truths.

Both the UK and Japan recognise the critical importance of science and technology in developing a low-carbon, high growth economy. Our two governments invest heavily in both basic and applied research, with an emphasis on their commercial application, and I’m only too aware that Japan accounts for a staggering 20 per cent of global R&D effort.

Indeed, this has to be a multi-national exercise: business leaders and scientists collaborating across borders to devise and deliver the technical answers to climate change – your leading-edge tech companies; our research base, the most productive in the G8.

But that exercise must be replicated among national governments too – which brings me back to the UN climate change conference in Copenhagen, due to start in little more than six weeks.

I cannot overstress the importance of reaching a bold agreement in Denmark. These talks aren’t only about safeguarding the environment we share. They will have far-reaching implications for the security and prosperity of every one of us.

According to the 2006 Stern Report, unchecked global warming could cause as much as a 20 per cent fall in global GDP. An international consensus is essential to economic recovery right now, because the push to decarbonise will be a major driver of growth over the next decade.

We must find common ground on a carbon price that stimulates investment and innovation in fully-functioning carbon markets.

We must secure commitment on limiting the average global temperature rise to two degrees Celsius.

We must provide help to developing countries – which will produce around 90 per cent of future emissions increases – through financing and sharing technologies.

The preliminary discussions have to proven to be a hard slog. But the new Japanese government’s pledge on climate change has certainly boosted the negotiating position of those countries determined to achieve the kind of fair and effective deal that can put us on the path to a low-carbon future.

In conclusion then, I’m delighted to see Japan in the vanguard of the green revolution. As the Hatoyama government continues to develop its new fiscal policies, a stable regulatory environment and mechanisms for emissions trading, the UK government is happy to assist in working out the practicalities, based on our own recent experience.

In the international arena, I’m optimistic that – with Japan and the UK joining forces – a better outcome can be realised in Denmark.

And in the vital mission of driving economic growth, I’m convinced that our scientists, engineers and entrepreneurs – by becoming first movers – will achieve great things inside the next decade: making the key technological breakthroughs, introducing them across the planet, and building world-beating companies on the back of them.

The race to be green is on. I urge you to be at the front of the grid; it’s all too easy to be left behind.

Thank you for listening.

Introduction

Good morning. It’s a pleasure to join you for the final day of your conference.

This year your theme is ‘Challenging behaviour’. I think it’s an excellent choice. Because over the past year, we have all had to face challenges that have been unprecedented in their scale and scope. Whether at national, regional or local level.

The seismic shocks in the world economy, and the freezing up of credit markets, have had far-reaching consequences on individuals, families, communities and businesses across Britain.

When I first took on this job, I travelled around all the English regions and I met many local authority chief executives. I saw for myself how hard councils have been working to protect their communities from the global economic storm.

And how they have made a very conscious choice. Not to stand back and simply let the recession take its course.

But a choice to play an active, interventionist role as champions and stewards of their economies.

You intervened to blunt the impact of the global downturn and invest in economic recovery. Marshalling resources and using them to make sure the downturn is as shallow and as painless as possible in local areas.

It’s about making the difference that allows a local employer to keep trading; and making a difference so individuals keep their jobs.

I passionately believe councils have made the right choice, and that was reinforced when I went around the country in the summer. But it does raise real questions about the future of local government.

And about the partnerships that councils must build – with local and regional partners, and with national government – to drive economic development in the future.

Local government transformed

I believe that the events of the past year should dispel, once and for all, any doubts over councils’ ability to make economic development part of their core business. And we should challenge those who say it can’t be done.

I am confident they are ready to take on that challenge – partly thanks to the big strides that we have made in reinvigorating local government over the past 12 years.

The well-being power has proved extremely valuable to councils as they have tackled the fall-out from the downturn. So every authority should consider how to exploit that power to the full, and challenge those who want to hold back on using it.

Local authorities have benefited from a decade of above-inflation funding increases, seeing their budgets rise in real terms by 39% over the period. The move to three-year budgets gives more certainty when planning finances, so that the best use can be made of the extra £8.9 billion received under the current three-year settlement.

We are also making progress on reducing the level of ring-fenced grants, to give you more control over budgets.

In 2003 we introduced new flexibilities on capital finance, including the Prudential Borrowing regime, and new powers to charge for discretionary services, and to trade in others.

The new performance framework cleared away the thicket of top-down targets and indicators, so councils can focus on local priorities instead of being directed by Whitehall.

Local Area Agreements are bolstering authorities’ role as local leaders and taking it in new directions. Comprehensive Area Assessments will improve accountability and make sure that the people who use services come first – not the people who provide them.

So over time, and working together, I think we have created a new environment that gives local government the freedom to innovate, to be more ambitious and to drive progress in creating thriving, cohesive communities.

This is world away from the mid-1990s, when authorities were demoralised, disempowered, and in too many cases performance was disappointing.

The dramatic improvement is down to investment, reform, but above all the dedication of local government staff right through the ranks.

Fighting back against recession

Because of the changes that have been made, when the global economy was struck by a storm of unprecedented ferocity last year, local government was far better equipped to be in the front line of Britain’s fight-back.

You know your local areas, you know your local businesses, so it is right that you lead your communities out of the downturn.

And you have risen to the challenge. You have acted quickly to get help to the people suffering in the recession the most. The families facing redundancy, worried about paying the bills. The small businesses whose cash flow has dried up.

You have also been working closely with the Regional Development Agencies to make sure resources and support are being targeted where they are needed most.

I am very proud of the way that Government at every level has chosen to intervene in this way, and invest heavily, to help those affected by the downturn.

We have not been prepared to repeat the mistakes of the past and allow the downturn to be more protracted and painful than it needed to be. And we are not prepared to cut off support prematurely – putting the recovery at risk.

And today, there are encouraging signs that the recovery is underway. What’s critical now is that we do the right things to drive that recovery on. And that we do not withdraw the investment and interventions, and risk choking off the recovery.

That includes councils carving out a strong role in intervening to drive local and regional economic development. The powers are there, so every authority should be ambitious in exploiting them.

Now many of you are already using Local Area Agreements to place regeneration and economic development at centre stage.

But there is certainly a big challenge here for councils and I don’t underestimate it. To play this role effectively, it’s absolutely clear that economic development must become the core business of councils, often working in partnership with the Regional Development Agencies.

The LDEDC Bill

The Local Democracy, Economic Development and Construction Bill cements these partnerships and gives more powers for the future.

The Bill paves the way for single regional strategies, which will produce a coherent blueprint for action in each region and locality. Crucially, they will be drawn up by councils and RDAs together, so local priorities and collective strength will be combined for maximum benefit. With Leaders’ Boards providing essential scrutiny and accountability.

This very ambitious approach is already working for the 15 Multi-Area Agreements, where councils can, over a wider geographical area, shape services around the needs of communities – in skills, in employment, in education and health.

We are also legislating to allow groups of councils to go further and create Economic Prosperity Boards. These are a further option for MAA partnerships that want stronger sub-regional governance, and I am keen to ensure serious economic development powers and flexibilities are placed on the table to give these new vehicles real impact.

Finally, the bill will clarify the legal position so that projects such as LAML can get off the ground. And I’d like to thank you all for responding to the consultation so quickly, allowing us to bring forward amendments to the Bill.

Efficiency

Now, it’s no secret that the fiscal environment is going to get tighter in the period ahead. So any discussion of local government’s future role has to include the need for greater efficiencies.

But there has already been excellent progress on efficiencies. More than £1.7 billion saved in the last financial year alone. That’s equivalent to £98 for the average Band D council tax payer.

Not only is that good for the public purse, releasing money to reinvest in services or hold down council tax, it also reassures the public their councils are using resources in the best way possible. In the current climate that is more important than ever.

The nine Regional Improvement and Efficiency Partnerships are essential to making this happen. Led by councillors, they are helping local partners to improve services and make savings, through service transformation or better procurement.

For every pound invested in the RIEPs, they report they are saving two pounds in return. So they are already delivering.

I can announce today that we are allocating £31 million this year from the Efficiency and Transformation Fund to the RIEPS. Giving real backing for innovative projects that will drive up standards and deliver savings.

Councils’ purchasing and procurement power to innovate and shape markets – worth something like £42billion annually – is another area that’s ripe for innovation.

Procurement is a powerful engine for the local economy, and authorities can use contracts to deliver broader economic and social benefits to their communities. Whether that is stipulating that contractors must offer apprenticeships, or calling on local suppliers wherever possible.

That is a powerful instrument that can be used to shape the local economy, and fuel the local recovery.

I want us all to think more about how to use procurement to nurture the economic recovery, and respond to strategic challenges, such as skills development, to ensure long-term economic growth.

There is a huge of amount of excellent work already going on. That’s why I recently launched the Local Innovation Awards, backed by £5 million funding.

Total place and Strengthening Local Democracy

The Total Place initiative, which we are piloting at the moment, will take all of this work on efficiency and innovation to an ambitious new level. Of course, many of you are exploring these areas already. And that’s just as it should be – obviously, you do not need permission from Whitehall to innovate.  

But what I want to do is find ways of collaborating with you to maximise this work. We share your ambition for better services and value for money, so we will look at how we can work together to improve the system.

Because this isn’t just a challenge for local government – it’s a challenge for town hall and Whitehall together.

Effective scrutiny is an essential part of this new approach. That’s why the Strengthening Local Democracy consultation is so important. Oversight not only improves services, and ensures better delivery on priorities. It also builds trust between the people who provide services and the people who use them.

Greater transparency and accountability has to be the bedrock of that trust. So today I am publishing the results of the consultation we have run on executive pay. We have had a lot of very positive contributions endorsing our proposals – including from SOLACE Enterprises – so I would like to thank all of you who responded.  

I can confirm that we will legislate to require councils to publish information on pay for their senior executives in their annual accounts. This brings local government into line with the civil service and private sector organisations.

It will very clearly show the taxpayer that Government at every level is acting fairly and responsibly in an era of constrained public expenditure.

Transparency has to be the right way forward for all of us.

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Conclusion

Transparency is also at the heart of the framework we are putting in place for local government.

It is about councils driving economic development; forging partnerships through LAAs and Total Place; greater efficiency and increased accountability occupying centre stage. But this is the floor, not the ceiling, of our ambitions. We certainly want to see how much further we can go.

I believe that to do that we have to take a partnership approach. So I want to have that dialogue with you on how we continue transforming the role of councils, equipping them to deal with the big challenges we face today and face tomorrow.

I want to know what further powers and responsibilities councils will need to live up to their evolving role as local economic guardians, and what more we in the centre should be doing. Because it’s vital we get this right.

Local authorities are engines of economic and social change, driving progress and delivering new opportunities for their citizens.

By harnessing the power of councils, and working together, we can generate prosperity for people in every part of the country – whoever they are, and wherever they live.  

Thank you.

PLEASE CHECK AGAINST DELIVERY

Good morning everyone.

I’d like to begin by thanking Kate Anderson for inviting me to talk to you today.

I must also thank Kim Clifford and the staff of George Monoux College for hosting this seminar.

This institution has, in one form or another, been serving the people of this part of London, including some of my constituents, for many hundreds of years.

I’m delighted that it continues to do so in its current role as a 6th-form college with a commitment to excellence that has been recognised by Ofsted among others.

I know very well how valuable the work colleges are already doing is.

You are at the coal face, not just supporting young people, but often very vulnerable young people; supporting their parents and making second life chances a reality for newly arrived ethnic minorities, ex-offenders and those with special needs.

This is work that goes unsung, and requires immense expertise, which is absolutely why you are at the forefront of the battle against gangs, guns and knives.

It’s my hope and belief that the website that we’re launching today, the resources and the practical experience that it will allow colleges to share, will play its part in taking that work to a new level.

However, I have also to admit that it’s not only these things that bring me here this morning.

I’m here because I am a black man who grew up in Tottenham during the 1980s.

The Tottenham of 25% Unemployment; the Tottenham of the Broadwater Farm riots; the Tottenham of the racially profiled stop and search.

And today, I am speaking as the MP of that Tottenham.

The Tottenham where, despite improvements, unemployment remains higher than the UK average.

The Tottenham where in some wards, life expectancy is 7 years lower than wards that are only 2 miles away.

I am also here because I’m a husband and a father, and one day, my two boys may be passing through colleges like this one.

After all, what parent doesn’t stay awake at night worrying about their youngsters?

What parent doesn’t fret about the safety of the local neighbourhood? Or worry about their children’s peers and friends?

So yes, when I see police outside the school gates, I feel safer.

When I hear that the Met’ are placing metal detectors at bus stops and at school gates, yes, I feel more secure.

But I know that stronger and more active policing isn’t enough.

The problem of gangs, guns and knives is solved by asking questions bigger than how many police are on the beat.

It’s a bigger question than whether to increase police powers to stop and search.

It’s a bigger question than how long should mandatory firearm sentences should be.

It’s bigger than a poster campaign.

Because many young men who carry knives or guns do so not because they hope to use them, or even because they fear they might need to. They carry them as symbols of status and power.

This is an age where youths are now transfixed by the increasingly seductive language of gang culture.

A language of get rich or die trying.

A language of fast cars and faster lives.

A language of impulse and the instantaneous, and “now” over sacrifice, delayed gratification and self-discipline.

A language which replaces the social values that once knitted communities together with a destructive law of the street.

These issues raise profound questions that we are now asking about our age.

The repercussion of living,

The repercussions of relentless consumerism,

The burden of over-commercialisation,

The reality of whether choice truly exists for the vulnerable in society.

The reason that language appeals so much, and why that resonates so deeply, is because of what it means to grow up in the 21st century.

Young adulthood is tumultuous at the best of times. My own was so because my father left us at 12.

But when he did, I had a rich network of support that provided me with the role models and father figures that would guide me and mentor me through that period regardless.

But some of the networks and people that helped me through the most – youth workers, teachers and my local priest for example – are those most pressured, or rapidly eroding away, in the 21st century.

We no longer go to church in the numbers that we used to.

Our families are smaller, and far more dispersed that they have ever been in the past.

In this world of declining kinship, decaying traditional social structures, and less deference a vacuum emerges in the lives of vulnerable young men.

And it is in this vacuum in which the gangs and gang culture flourish.

For the 59% of Black Caribbean children in this country who are growing up fatherless, their understanding of masculinity is at risk of being defined by the street and its warped notions of power, status and respect.

If the prevailing culture that our youths encounter is one where displays of wealth and the cultivation of fear are the sole indicators of respect, it is no surprise that gang culture is as widespread as we fear it to be.

Gangs and criminality becomes a short cut to symbols of wealth and power that will otherwise take years of hard work to achieve.

Yes, part of the solution to our problems must lie in effective enforcement and the police have had some success.

Gun and knife amnesties in London and other cities have worked well.

And lessons about how to organise policing in ways that draw on the support of vulnerable communities rather than alienating them have been learned from the mistakes of the past.

But the problem of gangs, guns and knives is clearly a cultural problem.

It is a question of parenting, in particular fatherhood.

How do we provide the networks of support to young adults where one or both parents are absent?

It is a question of the quality and presence of role models in the lives of young men.

How can we change the aspirations of our young people to value decent ordinary people as opposed to the superficial glamour of the drug dealer?

It is a question of neighbourhood.

We know it takes a village to raise a child.

And colleges, schools, churches and civic society are in loco parentis alongside the grass-roots movements that have brought ordinary people onto the street to say “no” to guns and knives, like Mothers Against Guns, the Haringey Peace Alliance and Value Life

They are a powerful force for good in society and we shouldn’t underestimate what they are doing to change attitudes, especially among the young.

For example, I’m proud to have been involved in setting-up the Government’s Tackling Gangs Action Programme when I was Skills Minister two years ago.

The programme aimed to reduce serious violence, particularly the use of firearms, perpetrated by young people as part of gang-related activity in London, Liverpool, Manchester and Birmingham.

And I pay tribute to the response from colleges the AoC and LSIS, who have helped steer the programme.

That’s why we are giving our full support to our partners in the further education sector and the voluntary sector, to help them find ways in which they can contribute to tackling gun and knife crime.

And it’s also why your involvement in this event is so important in shaping the next steps that we must take together.

The website that I am launching today will further contribute to the effort of tackling the culture of gangs, knives and guns.

It is a website that allows the colleges on the front line to share the crucial information about best practices and services that ensures we are all united in fighting the causes of this problem.

It is no longer the case that there are just a handful of organisations committed to fighting gangs, there now exists a coherent and co-ordinated movement across the public and private sector, which I am proud to say that Further Education colleges are at the centre of.

I’d therefore like to thank those colleges and other parts of the sector who have contributed to the work of the steering group, who have provided case studies or who have simply shared their views and experiences through their responses to the consultation.

And I’d particularly like to thank the steering group itself, which includes representatives from across the sector, for taking the lead in making sure this work has been developed by colleges for colleges.

It’s time for every college to take its full place alongside other local agencies in the urgent work that must be done to build communities that are free from fear, whether that’s in Walthamstow or Tottenham, Erdington or Toxteth.

I know the willingness to do that is there, because colleges, their staff and students alike, have the same vested interest in building a safer and more civilised society as the rest of the community.

Safer Colleges is an important step towards achieving that and I thank you all once again for your part in turning it into a reality.

No one is in doubt about the damage such industrial action will cause. But those who advocate strike action have not been clear about why it is being threatened.

My Lords, the dispute at the Royal Mail is about modernisation which has been the subject of localised strikes, particularly in London, for many months.

We know from the Hooper Review on postal services about the company’s need to change and reform in the face of a postal market being transformed as people switch to text, e-mail and direct debit, and as the growing area of mail, which is parcels, has a variety of alternative operators from which to choose.

Royal Mail has to respond to the fact that ten million fewer letters are being posted each day than three years ago and total mail volumes have fallen by a further eight per cent in the first half of this year.

In other words, if it stands still, this company faces terminal decline.

Following a previous national strike two years ago in 2007, the union – the CWU – and management reached a national agreement on pay and modernisation.

That agreement set a framework of four phases for bringing essential change to Royal Mail.

The first three have been introduced throughout the country but are being resisted in some places, as I will come to shortly. The changes have involved the introduction of more walk sorting machines and new working practices, including employees being expected to do the full number of hours they are paid to work.

Phase Four, the next phase of modernisation, is yet to be agreed in substance, rather than outline, and will be about a new framework for improving industrial relations. This will include introducing walk sequencing machines to sort the postal delivery round and developing new business opportunities, along with a new system for rewarding employees.

In the majority of Royal Mail’s workplaces Phases One to Three of the national agreement have been implemented without any local industrial action being mounted. Outdated working practices have been replaced. And efficiency is being improved.

But in other parts of the country, most notably in London, there has been repeated non-cooperation and industrial action to frustrate the agreement’s implementation.

It is claimed by union representatives that in London, management is unilaterally imposing change that goes beyond the 2007 agreement’s first three phases. Management contests this, pointing out that all London is being asked to accept is what everyone else in the country is delivering under the first three phases.

It is these local disputes that have now escalated into the threatened national strike.

My Lords, I very much regret what is happening. Candidly, I think it is totally self-defeating for our postal services and those who work to deliver them.

Taking industrial action will not resolve this dispute.

It will only serve to drive more customers away from Royal Mail:

In the delivery of parcels – where there would otherwise be a prospect of growth – Royal Mail’s reputation for reliability could be irrevocably damaged.

And in letters, it will lead to a further twist in the downward spiral of mail volumes.

Business will be quick to recognise that while you can picket a delivery office to stop the service or refuse to deliver letters, you cannot picket the ever present internet.

Royal Mail’s small business customers will look on with anger and exasperation. Just as there are signs of the economy recovering and the prospects for their businesses are improving, strikes now will set them back and put their businesses in jeopardy.

Royal Mail’s finances will be plunged into the red. Last year the company, out of a 6.7 billion pound mail business turnover, made less than 1 per cent profit. One thing this company cannot afford is strikes and industrial action.

My Lords, change in a big organisation is never easy, but for the Royal Mail it is unavoidable.

Let me make clear that contrary to what some may say, the dispute is also not about pensions. The Trustees are engaged in their periodic assessment of the pensions deficit and lest there be any doubt let me make it clear – the Government’s policy on the pensions deficit will not be dictated by strike action.

The Government was prepared to take on the pension deficit as part of a package of modernising measures set out in the Postal Services Bill. Sadly the CWU did not support those proposals.

But when it comes to financing, the Government and the taxpayer have not held back. We have made available 1.2 billion pounds to finance a modernisation and investment programme and that remains on the table.

My Lords, we are, of course, in frequent contact with both management and the union and they have continued talking today. We strongly welcome this.

Our message to them has been clear: put your customers first. Strikes are not the way to resolve differences or safeguard the future of our postal services. The Royal Mail needs management and unions to have a relentless focus on turning it into an efficient, modern postal company, protecting as many jobs as possible and providing customers with the services they need. They should put behind them, once and for all, the endless cycle of disputes.

I will, of course, continue to encourage a settlement. But I cannot impose good industrial relations on the company or disinvent the internet.

An independent third party may well be needed to help the two sides resolve their differences. ACAS is engaged, but we have to be realistic: it will be far easier for ACAS to play an effective role if the threat of a national strike is lifted.

The Government is ensuring that vital services to the public, especially those who are most vulnerable, are maintained.

The Department for Work and Pensions will, if necessary, implement plans to ensure that the small minority of pensioners and others on benefits who still receive their cheques in the post will be able to pick them up from their nearest post office.

If there were prolonged disruptions the Department for Health and NHS Trusts will, if necessary, use alternative arrangements to transport appointment notifications, blood samples and test results.

My Lords, I urge both sides to make every effort to avoid damaging industrial action and resolve this dispute. That is what is in the interests of the Royal Mail, its employees and its customers.

I commend this statement to the House.

For UK plc, HE and FE are ‘capacity costs’ – they are the costs of being in business at all. The reality is that they are rising. Because we compete on people and skills, even in technology-intensive sectors like manufacturing. And the skills we need both at the generic and specialist ends of the spectrum are getting more and more complex.

It seems to me that in equipping the UK for a post-recession global economy, higher education and adult skills will be not just important but decisive. As you know, soon we are going to be setting out new frameworks for both areas.

I want to acknowledge and applaud the engagement of the CBI on this issue, including the taskforce behind the CBI’s recent report. Central to my remarks today is the argument that that engagement could not be more important.

I also want to acknowledge up front that I accept that employers have concerns about aspects of the education system in this country. I know that many of you believe that the key problems lie in early education.

I believe in a demand led system and hearing and responding to business expectations are of course critical to that. Is Terry Leahy here today? Perhaps I shouldn’t say this, but blunt contributions like that are an important part of driving this country to improve. Every little helps.

But I think it’s worth saying that education policy is a long game, and changes to the way we teach and train deliver benefits and improvements across a timeframe of many years. Often at a rate that is always going to seem slow in business terms.

And I want us to acknowledge progress over the last decade. Levels of attainment are rising. Huge investment in school infrastructure. We have an effective Academies system ready for expansion. Both HE and FE are more responsive to employer needs now than they have ever been.

We are investing £1billion a year in workplace training and Foundation degrees. We’ve helped nearly six million adults improve their literacy and numeracy skills, with over 2.8 million getting a first through the Skills for Life strategy over the last ten years.

We also have more joint business-HE and FE collaboration than we ever have. Including a large amount of business participation on Boards of Governors and in the Sector Skills Councils. It’s important that that continues to be seen not as a formality but as central to a working relationship.

I want to make three points today. 1) I want to argue that we need to see HE and FE as a closely integrated single agenda. 2) I want to sketch briefly what I see as the strategic ambitions and constraints in HE and FE policy for the next decade. 3) I want to set out why I think government and individuals can fairly expect business to be more engaged in delivering these strategic ambitions, and what business has to gain from doing so. If you like, I want to set out what I think the flipside for business of a more demand led system should be.

Two systems, one goal

For me, HE and FE are two systems, joined by one goal. There was a time – well within most of our lifetimes – when our university and vocational training systems were seen as having distinctly different functions. Universities provided elite education and a training in the mores of professional life for about one in twenty of the population. Apprenticeships were for craftspeople – or rather craftsmen – who would go on to spend their lives in a particular trade. These were regarded not as different ways of making a living, but as different universes.

It was a division based on social prejudice as much as economic reality, and if it isn’t yet dead, it needs to be. Obviously universities and the further education system do not do the same job, teach at the same level or specialize in the same ways. But they have the same essential role which is building human capacity and higher skills.

Modern craftspeople will play a critical role in our economic future and are increasingly doing some of the highest value-added jobs in the UK economy. They are the technicians, designers and engineers who are the foundation of the UK’s advanced manufacturing sector. Teaching the practical skills in process management, IT and numeracy that are increasingly needed at all levels of employment is something that the further education sector has pioneered.

The huge expansion in UK apprenticeships has been one of the great achievements of this government, even though we recognise that we need more apprenticeships at higher levels to help address shortages in areas like skilled technicians.

Although I disagree with the CBI on the suspension of the 50% target for HE, I agree that it should never alone be the proxy for whether Britain has the high level skills needed to compete in a globalised world. We are right to insist on continuing to widen access to university education and we are right to invest heavily in making our university system and the research it does the best in the world.

But we also need to see the alternative routes to higher skills provided by apprenticeships and further education as no less valuable. We need to work for that convergence between the wider goals of the two systems.

Strategic ambitions and constraints

Both systems face the same basic strategic landscape. They both have a central role in contributing to Britain’s economic recovery and equipping us for a global economy. That’s why higher and further education were merged into a single department with a range of key other growth policy levers to create BIS.

Obviously this is only one part of a university’s role. They are academic and cultural institutions as much as engines of the economy. But part of maintaining support for public investment in that role, is demonstrating their relevance to our economic life as well.

We want to address the single biggest concern for employers which is generic skills – employability, the skills everyone now needs at work, at almost all levels. Team working, business awareness, communication skills. Business demands of graduates here are pulling very rapidly ahead. The system needs to respond and we will address it directly in both the HE Framework and the Skills Strategy.

We will also put more emphasis on identifying the strategic skills that the British economy will need in the future and new incentives for universities and colleges to work with business and industry in filling these skills gaps.

It will create a system more capable of responding quickly with funding to fill niche gaps in the skills base in critical industries such as the civil nuclear supply chain or low carbon technologies.

That will mean clear incentives to increase and improve the provision of science, technology, engineering and mathematics courses, where UK employers continue to report shortages. We already do this implicitly through the HEFCE differential funding and vulnerable subjects systems. But we will go further.

Now of course the CBI is right that the target for more STEM graduates has implications for the whole UK education system, which is why we will ensure that the ablest young scientists have access to triple science GCSEs and why we have set the target of 80000 young people taking maths A level by 2014.

The challenge for manufacturing of course is also going to be making sure fewer of those graduates decide to take their advanced degrees into the City or elsewhere – which is why I can only encourage the kinds of graduate recruitment and sponsorship – and starting bonuses – that CBI taskforce members like Nissan, Centrica and Balfour Beatty now routinely offer.

Both HE and FE also have a critical role to play in increasing social mobility in Britain. There is no silver bullet on social mobility, but education and higher skills are as close as you get to one. That means keeping up the pressure to widen access to HE – both with respect to the time in your life when you can access HE, and with respect to your social background, which should be irrelevant. Access to all forms of training is a question of equity and social justice as well of competitiveness.

That’s why we are going to put a greater emphasis on routes to higher skills that can be built around work: flexible study, foundation degrees and apprenticeships. It’s also why, along with protecting excellence, the goal of widening participation for those from less privileged backgrounds will remain a leitmotif of UK HE policy.

As the CBI have argued, we do need a greater degree of competition between institutions that encourages them to improve and tailor courses. That can mean competing for collaboration with industry, but the key drivers of change should be students, and student expectations. The more information students have on courses and their outcomes the more their choices will drive universities to improve. This is something we will directly address in the new framework.

Finally of course both HE and FE will be subject to increasingly tight fiscal constraint for the foreseeable future. I don’t accept that that this must impact on quality – in fact it must not.

Expanding investment means universities will have to deepen and diversify their sources of non-public income through commercialization of their teaching or research expertise, through a more professional approach to endowments and through greater resource efficiency.

We will also have to look at the contribution that individuals make to the cost of HE, which we will do through the independent fees review that will be launched after the publication of the HE framework.

The role of business

Over the last decade or so our expectations of the HE system in delivering economic impact have risen sharply – and rightly. Universities have responded to that willingly and actively.

But it is a three way partnership, in which business has to be central. After students themselves, you are the key clients of the higher skills system. It has to be shaped by your demand, and that demand has to be expressed clearly, coherently and quickly, both for generic and specialist skills. Business has to get better at communicating its needs, so that the system can respond and our universities are not left to make educated guesses about what business wants.

Business can and should also contribute more financially for a system that will be more vocational and more targeted on generating economic impact than ever before. But that relationship should clearly be collaborative and mutually beneficial and preferably long term. It is not something for nothing. It’s greater business engagement and support in return for a system that produces the right skills at the right time and which supports product and concept development.

We already encourage this in a range of ways: R&D tax credits, innovation vouchers, the HE Innovation Fund, support for employer co-funding of training. Our support for the TSB also encourages these ties. But, we will do more to support it.

Conclusion

The knowledge economy may have become a cliché, but it expresses a genuine reality about Britain’s future. Skilled people are our basic asset. They command better wages, get more out of work and rise higher. They are more productive and create better businesses and organisations.

I was impressed by the frankness with which the CBI HE taskforce accepted that business had not done enough to reinforce the HE system – and by its commitment to doing a lot more. The higher skills system is probably your fundamental supplier, and there is no way that a supplier relationship that important would or should ever be left to chance. It needs nurturing, strengthening, caring for. And we need to do that together.

Introduction

Thank you very much for inviting me today to what looks like an excellent conference.

Having grown up on the other side of the Pennines in Doncaster, and being MP for Doncaster Central and Minister for Yorkshire and the Humber, the question of how to drive regeneration and economic growth and ensure that it spreads right across the North is one that is close to my heart.

Supporting regeneration and economic development in the Northern regions – as in every other region – has also been a top priority for Government. That’s why, since 1997, we have targeted investment to renew our communities and support job creation.

There have been huge changes in our traditional industries, but with our targeted approach we have tried to prevent a vacuum developing by ensuring that, if traditional industries have disappeared, new knowledge-led enterprises, based on innovation, entrepreneurship and international competitiveness come in their place.

Parts of the North are gaining competitive advantage in sectors from healthcare to life sciences, process industries to our low carbon future. These developments are contributing to the North’s wider renaissance.

But we all know that there is still a lot more to do.

That’s why in the current spending round we are investing heavily in regeneration activities across the north:

• Giving the three Regional Development Agencies a combined budget of £2.6 billion;
• allocating £1.9 billion through the Working Neighbourhood Funds;
• and a further £840 million for regeneration projects through the Homes and Communities Agency.

Fighting back against recession

This work has taken on a new urgency over the past 12 months, as the world economy has been battered by an unprecedented storm. While the origins of the recession were global, its effects have been local, felt across the North East, the North West, Yorkshire and the Humber, and around the country.

In my own constituency I, like everyone here, have seen the families who have been affected by redundancy; the businesses whose cash flow has dried up.   

That’s why I believe it is absolutely necessary for government at every level to intervene, and invested heavily, to help those affected by the downturn.

We have tried to do everything we can to minimise its impact and pave the way for economic recovery. The alternative, simply standing back and leaving the recession to run its course, was not an option for us.

And we are not prepared to cut off support prematurely – putting the recovery at risk.

Because we must never lose sight of the fact that the best antidote to public debt is growth – growth that’s generated by entrepreneurs, but supported by public investment to lay the foundations of economic success.

That’s why, working with the Regional Development Agencies and with Local Authorities, and our other local and regional partners, we have taken decisive action.

I believe the Northern RDAs – the Northwest Regional Development Agency; Yorkshire Forward; and One North East – have come into their own during our fight back against the global recession.

They have provided economic leadership; they have catalysed investment; and they have played a critical role in sustaining viable companies. All these are essential building blocks for economic recovery.

Whether it’s One North East’s funding for a £2.4million pilot scheme to boost research and development.

Or the Northwest Regional Development Agency’s £23 million of financing to the region’s small businesses so they can start up, invest and grow.

Or Yorkshire Forward’s backing for emerging low-carbon industries.

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This kind of support is vital to reinforce what local authorities are doing to support local industries and to develop a strong business environment.

Local authorities know local people, local authorities know local businesses, so local authorities are best placed to drive regeneration and economic renewal in local areas.

That’s why we have asked local authorities to focus on unemployment and lead our £1billion fund to create 150,000 new jobs.

Northern local authorities have acted quickly during the downturn. Giving debt advice to people worried about paying the bills; training to get people back in to work; and a lifeline for business.

And you are using Local Area Agreements to place regeneration and economic development centre stage.

In Tameside, here in Greater Manchester, the council has set up a £12 million fund to invest in local capital projects.

Over in Hull, the council has launched the ‘Ready to Go’ scheme to work with people recently made redundant in construction and other related fields, retraining them with new skills.

In Blackpool, local agencies have got together to help vulnerable young people, to provide advice, guidance and support.

Right across the North, councils are leading from the front, making sure their areas are ready to share the economic gains as the recovery begins.

That responsiveness to local circumstances, and understanding of local needs, is absolutely crucial to unlocking the economic potential that exists everywhere.

That’s why in every region, the regional minister meets regularly with their Economic Delivery Group, made up of key public sector and business leaders, to prepare for the future. 

A regional approach works

But that will require different types of interventions in different places, and to varying degrees. So our response must be region by region, area by area, so that we are supporting local economies in the most effective way.

That’s why I believe a regional approach to regeneration and economic development is so important.

In 1999 we set up the Regional Development Agencies, to promote enterprise and drive economic growth in every region. I believe the RDAs have been extremely successful.

The independent study by PricewaterhouseCoopers, released earlier this year, showed that, on average, every £1 spent by the RDAs generates an extra £4.50 for their regional economies.

And they are beginning to narrow the historic gap in economic performance between the north and the south. By the first half of this decade the gap between the growth rate of the greater South East and the Northern regions had started to close, defying the long-term trend.

So I think these facts speak for themselves. Active regional policies deliver real economic results. They will be more important than ever in the months and year ahead.

A springboard into the upturn

Today, there are some encouraging signs that economic recovery is underway.

What’s critical now is that we do the right things to drive that recovery on, here in the north and elsewhere.

Having the necessary infrastructure is vital. I will be meeting the Transport Secretary Lord Adonis to explore options for a high-speed rail line linking the great cities of the North – Manchester, Leeds, Newcastle – with London and the continent.

A line that will draw the North and South closer together physically and symbolise the closing of the structural economic divide between the two.

We are also looking at whether new financing mechanisms could be used to invest in local and city-region regeneration projects, as we said we would do in the Budget.

Building Britain’s Future

In all of these areas, effective partnerships – pooling resources, sharing knowledge – will be absolutely critical to achieving results. We need each other’s know-how as we embark on a more activist approach to the economy.

In the summer we published Building Britain’s Future. It outlines our approach to equipping our people and businesses to compete in the new global economy that emerges from this downturn.

On education and skills; high levels of productivity and growth; and Government investment in key growth areas such as advanced manufacturing, digital networks and low carbon technologies. 

Across the north there are examples of ambitious, long-term regeneration projects that will help achieve that vision:

• Mediacity UK, under construction in Salford, will be Europe’s first purpose-built creative and digital media centre. It is the 3rd biggest construction project in Europe, generating many new jobs and continuing Salford’s renaissance.
• In North Tyneside, the former Swan Hunter shipyard has been bought by the local council and One North East, and will be transformed into a hub for the off-shore and renewable energy industries. It’s estimated the offshore wind market alone could generate £3 billion for the regional economy and create between 15,000 and 30,000 jobs.
• At Hatfield near Doncaster, Yorkshire Forward and the Local Authorities around the Humber have helped get the green light for a massive project to build a commercial carbon capture and storage plant, next to a clean coal power station on the site of the Hatfield deep mine. There are still some remaining stages to go through, but funding will include £165 million from the European Energy Programme. This project will create 2,500 jobs in plant construction and 6,000 jobs in pipeline construction.

But to achieve our ambitions we all need to work together – central government, all of you from local authorities, and the RDAs – because our economic future is a shared endeavour. 

The Local Democracy, Economic Development and Construction Bill, which has nearly finished its passage through Parliament, paves the way for single regional strategies.

These strategies will cement the partnerships we need to forge, and draw up a coherent blueprint for action in each region and locality.

They are a powerful way of ensuring that communities share the spoils of economic success. Crucially, they will be developed jointly by all of you, in local authorities and RDAs.

The Leaders’ Boards, which the new legislation puts on a statutory footing, provide essential accountability and will ensure the priorities of your local communities are at the heart of the broader frameworks taking shape.

We can already see this approach working in the Multi-Area Agreements, where councils can, over a wider geographical area, shape services around the needs of communities – in skills, employment, education, and health.

Conclusion

This is absolutely vital if we to build on the successes that, working together, we have already achieved.

Regeneration and economic development are all about reversing social, economic and physical decline; building a new low carbon economy; enabling communities everywhere to share economic prosperity; and opening up new life chances for their residents.

All of you here today should be proud of your outstanding work in the North West, In the North East and in Yorkshire and the Humber. In the past 10 years these regions have been transformed beyond recognition, and a new confidence has blossomed.

Although the last year has been difficult as the old economic certainties have been swept away, I am still full of confidence for the future – and you should be too.

The Northern regions have firm foundations – skilled citizens, world-class businesses, and an enterprising, can-do spirit – on which to build economic prosperity for everyone, whoever they are, wherever they live. Colleagues, let’s work together to make it happen.

Thank you.

“It will only serve to drive more customers away from Royal Mail. One thing this company cannot afford is strikes and industrial action.

“We are, of course, in frequent contact with both management and the union. Our message to them has been clear: put your customers first.

“The CWU should turn their backs on industrial action and sit down with the Royal Mail and resolve this dispute. That is what is in the interests of the Royal Mail, their members and the country.”

Thank you all for coming. It’s great to see so many eminent faces. This is a conference that almost certainly wouldn’t have taken place two years ago. It is about questions that we weren’t really asking in government two years ago.

They are post-banking crisis questions about the roles of government and the market. About how we build a balanced recovery.

I think they are questions that the acceleration of globalization was starting to force us to take more seriously anyway – but the banking crisis has focused our minds. And that’s a good and necessary thing.

I wouldn’t go so far as to say that industrial policy is making a comeback – at least not in the way that some of us might remember it.

But the challenge of long term, low carbon recovery and growth have pushed us to look more carefully at the way in which government can drive growth. How government policy can equip our country and our companies and our people to compete in a global economy.

Our New Industry New Jobs paper removed a negative check on the subject that has been there for two decades or more. It sometimes seems as if there are only two positions in this debate – pro-market and interventionist. Especially in the financial media. Well, New Industry New Jobs was the first small step towards a synthesis.

In my view, building that synthesis could not be more important. It will shape how we see the recovery, how we respond to the challenge implied by the public deficit. It is fundamental to how we see Britain maintaining and developing comparative advantages in the global economy. That’s why we called it New Industry New Jobs. Because that’s what it is there to achieve.

I don’t think the arguments behind New Industry New Jobs are earth-shattering, but they do have some pretty big implications for government.

One is that the choices government makes and the actions it takes are a huge part of what actually defines the shape of the market, and the capabilities of our people and companies when they compete in it.

The more conscious we are of that, the better government will be at shaping the environment in which businesses are created and grow. In part this is about setting the right frameworks for the private sector to make its investment decisions. But it can also be more ‘activist’.

For example, it should be the strategic context of our approach to skills and higher education policy. Which is why we are publishing new frameworks in the next few weeks for higher education and adult skills policy in this country that explictly increase the focus of policy on producing the skills we need to maintain existing comparative advantages and build new ones in areas like low carbon.

We’ve also been piloting programmes that use our multi billion pound procurement budget as a way to incentivise innovation, by opening the tender process wider to smaller and more innovative companies and making government a lead user of innovative technologies. The successful pilots in the NHS in the East of England show that there is huge potential to expand this across government.

And it matters more than ever right now, because the better we are seeing the knock on effects of all policy in terms of growth, the better our return on any form of public investment or public spending is going to be.

The creation of the department of Business Innovation and Skills consciously puts a large number of these policy levers in a single department with a clear remit for investing in growth. And it’s the first time to my knowledge that that has been done.

But this is a challenge for all of government, at all levels, not just the department of business. That’s why we will be publishing a new framework later in the autumn which will set out more clearly than ever before how national, regional and local delivery partners should work together to deliver key national priorities.

So, my argument is that certain kinds of market interventions to shape our industrial capacities are a good and necessary thing. That doesn’t mean state direction of industry, it means strengthening our basic capacities. I know well from my time as EU Trade Commissioner, in development economics it is routine to assume a role for public policy in capacity building. Yet we rarely use that language for our own developed economies. I think that limits us as policymakers.

Capacity building simply means recognizing that while the market is irreplaceable as the ultimate arbiter of what is long-term viable in Britain, or anywhere else, industrial strength can be lost – or never built – for reasons that are totally avoidable and that have nothing to do with long term viability and competitiveness.

What might that mean? Well, it can be a lack of growth or start-up capital. It can be a lack of information about opportunities. It can be the lack of a workforce with niche skills. It can be a lack of the right partnership between researchers and industry.

A couple of examples from BIS’ work this year make the point.

We have a very strong biosciences sector in the UK, and most analysts agree that renewable chemicals is one of the key frontiers of this sector. Now, no small UK biotech firm can sensibly bear the cost of an industrial biotech demonstrator facility, but Britain will struggle to develop strengths in renewable chemicals without one. So in June we funded one, and will create a fund to help small companies use it.

We’ve committed to funding similar technology testing facilities for plastic electronics, low carbon wind and wave power. Just yesterday we committed to funding a pharmaceutical demonstrator facility at Stevenage alongside the Welcome Trust, the RDA and Glaxo Smith Klein.

We’ve also part-funded the world’s biggest demonstrator programme for ultra low carbon vehicles – which is an important step towards shifting consumer assumptions about what is viable in low carbon transport. We’re also going to support lead users of ultra low carbon cars from 2011 with a contribution to the cost of a vehicle. Because we can’t afford to cross our fingers and hope that these technologies get off the drawing board.

There are lots more examples in the report in your conference packs that sets out where we’re investing most of the £750million strategic investment fund created at the 2009 Budget.

We’ve also started to take a much more critical look at the way in which financial markets in the UK too often fail to provide long-term risk capital for innovative small firms – a structural problem that is going to be made worse by the banking crisis and the natural risk-aversion that will come with the first few years of recovery.

For this reason we are developing new solutions to address this – the Innovation Investment Fund and the National Investment Corporation. In both cases the aim is to use public seed capital to draw in private investment for investing in innovative small firms.

The goal of today’s conference is to continue a debate around the way we can take these ideas forward. It’s a chance to look at the way other developed economies have tackled these problems – where they have got it right and where they have gone wrong. To ask where and how the UK should be targeting limited resources to get the best outcomes in terms of sustainable strengths and growth. In what sectors and what markets? In what horizontal priorities?

Today’s unemployment figures are a reminder that a genuine recovery is marked not the return to growth alone, but by a return to sustained rising employment. While we don’t know exactly what those jobs are going to be, we do know that a disproportionate number of them are going to come from innovative firms. They are going to come from new market entrants pioneering new technologies and low carbon. They are going to come from new investment.

To argue that there is no role for active public policy in reinforcing this growth seems to me either dogmatic or complacent, or both. To argue that government is essentially the problem for competitiveness seems to me to make the same basic mistake.

We’ve started to make the counterargument, and we’ve put some serious resources behind it. The point of today’s conference is to widen and deepen our thinking and to ask where we might go from here to secure Britain’s economic success.

Innovation, a bit like enterprise, is one of those things that trips very easily off a politician’s tongue. We all want it, we all support it, we all think it matters, but I can go one further. In my department it is, quite literally, our middle name.

When BIS was created we put innovation on the front of the tin very deliberately. Because we believe that innovation runs across the whole remit of the new department. It is at the heart of the knowledge economy and our response to globalization. It is at the heart of the recovery. It is key to our future success.

I want to do two things today. First, to say something about why innovation matters so much and why we have to see it as more than a niche policy issue. It’s a systemic challenge. That’s why it’s in the name of the department.

Second I want to make this more concrete by setting out what we are doing to turn good research and science into innovative development. To turn innovative ideas into innovative companies. To turn employees into innovators. And to turn the government’s procurement budget into a force for innovation.

Why innovation matters

Why does any of this matter? It matters because innovation is a whole approach to technology and practice. It’s the assumption that we could be doing this better, differently, whatever ‘this’ might be. ‘This’ can be a piece of technology. But it can also be a way of doing things. That’s an important point, because in an economy in which retail and business and financial services play such a huge part, some of the most important innovations are in processes: marketing, design, communications and administration.

I talk a lot about an investment-led recovery. Well, innovation is at the heart of that. Not just because it drives commercial invention, but more fundamentally. Because innovation is what pushes up productivity, and every pound we save by doing something better is a pound we can invest somewhere else. Innovation is at the heart of growth.

I talk a lot about the green jobs revolution. Well, innovation is at the heart of that too. In part because we’re in a race to get green technologies off the drawing board. In part because low carbon is an innovation in our whole mode of life. It will change almost everything – simply because it will change how we generate and use energy.

Britain has a strong track record here. We are the original innovation nation. We enter the twenty first century with a set of strong national resources built up carefully by the government over the last decade. A world class science base – second only to the US. A skilled workforce; an open approach to FDI; and tax credits for R&D. We also have an open competition policy that is a driver of innovation. This has helped us attract and retain some of the world’s biggest corporate investors in R&D.

The innovation infrastructure

The challenge is to see all these things not as isolated policies, but as an innovation infrastructure. That infrastructure stretches from competition policy through education and skills policy, through the intellectual property system, through risk and growth finance to the way in which we bring researchers and companies together to generate new ideas.

Globalization will put tougher demands than ever before on our innovation infrastructure. Because the knowledge that drives innovation can now spread around the world in an instant. Because skill levels and investments in science and technology are rising in the emerging economies. Britain and its companies still invest less in R&D than many EU countries – even if this is not a perfect proxy for innovation. And of course the banking crisis and the recession create their own problems for innovation – especially how we fund it.

Think of it this way: the average lifespan of an S&P 500 company now is just 11 years, which means that complacency is essentially fatal. My argument today is that complacency includes thinking that all British companies need to succeed in this innovation race is a free market and no favour. They need that but also a lot more. I want to say something quickly about four critical parts of this challenge.

Science into innovation

The first is in the recognition that we need to do more in Britain to translate our record investments in our world leading science base into commercial innovations. This was one of the key planks of the New Industry New Jobs strategy that we launched in April.

UK universities are increasingly partnering with business to do this, and our job is to reinforce that trend. I also want research councils and the Regional Development Agencies to help deliver this. And a core task of the Advanced Manufacturing Research Centres will be to horizon-scan for new technologies and act as a proactive channel between the research base, industry and potential financial backers to further development in advanced manufacturing.

And of course the TSB was created to do all of these things and more across the economy. Over the last two years it has proved its worth. Which is why we backed it with an additional £50 million in this year’s budget. This year our £750million strategic investment fund has invested in – among other things – low carbon aircraft engine technology; fuel cells, and industrial biotech by investing in the TSB. The core funding we provide for TSB is enabling it to announce investments worth over £80m today.

I’m also happy to announce today a joint £37million investment between my Department’s Strategic Investment Fund, the TSB, the East of England Development Agency, the Wellcome Trust and Glaxo Smith Kline to create a unique drug development bio-incubator in Stevenage.

It will provide access to specialist equipment and services and knowledge sharing on drug development. In its first phase it will be home to around 25 companies with plans to expand the available space five-fold.

It is looking to attract inward investments, spinouts and start ups. It will provide access to specialist equipment and services and knowledge sharing on drug development. It is a strong new platform for the work of our Office for Life Sciences. Most important it is a huge investment in our biosciences future in this country.

Ideas into companies

Our second challenge is to recognize and get to grips with the unique challenge of financing innovation. All investment is risk, but investing in innovation carries its own kinds of risks. UK financial markets have long under-delivered on finance for start-ups and expanding firms. It’s partly the steep capital costs, partly the long lead times on proof of concept and product development, partly the high costs of due diligence for relatively small investments. It’s striking that private equity over the last decade has raised more and more money, and invested less and less of it in small firm growth and innovation.

We would expect a level of risk-aversion in the early stages of recovery. But if that risk-aversion stalls the growth of a new generation of innovative British firms, then the recovery itself is at risk. It’s time to start treating this not as a market failure problem that needs tweaking, but as a structural problem that needs serious public policy solutions.

As a country we do have to start putting more money where our mouth is on innovation. And that means using more public funds as a catalyst to back up and attract the business angels and venture capitalists and even the pension fund managers who intuitively should be interested in backing long term growth.

That’s why we created the Innovation Investment Fund in July with £150million in public seed capital. Managed by venture capital specialists, it will look to leverage in funds from the private sector with the aim of creating a £1 billion fund over 10 years. The Growth Capital Review, led by Christopher Rowlands will report its conclusions at the Pre-Budget Report and to bring forward proposals for a new national investment corporation.

Like our approach to improving the links between universities and industry, this is a model that sees a critical role for public investment, but which goes out of its way to avoid turning politicians or civil servants into investment managers or technology pickers. Which is a good thing, because it took me months to get the hang of my iPod and I am still discovering new uses for my Blackberry.

Employees into innovators

The third challenge for us as a country is to embed innovation into our higher education and skills systems. When we launch our new higher education framework and skills strategy over the next few weeks, they will directly address our capacity to drive innovation by educating and training innovators.

This is not just about creating entrepreneurs, but about creating employees with the confidence to challenge the ways their companies do things. And the bosses with the confidence to listen to them.

We certainly need to get past the idea that innovation comes chiefly from some cappuccino-drinking ‘creative class’ in our societies – it has to be something that we all have a claim to. That includes the working class kids whose expectations and initiative and drive will often be the key ingredient to creating new jobs in areas struggling with economic change.

Procuring services into procuring innovation

Finally, I do believe that we can do more to drive innovation through public procurement – above all by widening the access of innovative small firms to the procurement process – the firms with new ideas who shake up existing providers.

The Technology Strategy Board has run successful Small Business Research Initiative pilot schemes in partnership with the Ministry of Defence and the Department of Health. The SBRI scheme has now been expanded to include other public sector bodies. For example, the East of England Strategic Health Authority and regional partners have recently completed a competition with TSB backing calling for innovative new approaches to home treatment and long-term patient health.

The level of interest is very high, with 11 SMEs awarded phase one contracts. The proposed solutions were in many cases new and genuinely innovative. And all the more important in the current environment is that the potential savings to the NHS run into the hundreds of millions.

The concept is very simple. The mechanism is commercial: demand and supply. It is about recognizing that the tens of billions of pounds that the government spends every year on goods and services is a major market-shaper.

By being a lead user government not only encourages innovation, it also indirectly finances it. If we demand innovation, and we make sure that innovative SMEs can compete for contracts, then we will get it. The benefits across government are clear enough. Innovation is how we get more for less. I will be pushing hard to see the SBRI concept extended and protected even through a period of fiscal constraint.

Conclusion: an innovation-led recovery

I started by saying that innovation would be decisive in Britain’s recovery. I don’t think that’s an overstatement. We are a knowledge economy. Innovation is how you actually turn knowledge into rising productivity, new solutions and new growth. Knowledge is the raw material. Innovation is the refinement process.

I’ve defined our challenge today not as pursuing a set of isolated innovation policies, but in building an innovation infrastructure for Britain today. My point in doing that was to remind us that what government does on skills, finance, science – these will decisively shape our capacity as an innovation nation. That is why we have put innovation in the name of the Department and innovation at the heart of the government’s plan for growth.

The TSB has done an exceptional job of building those capacities and my Department is committed to building on this. I want to finish by congratulating Graham, Iain and their team and their thousands of collaborators for playing such a vital part in building Britain’s future. The Government is right behind all that you are doing and helping to pioneer.

Venue: Tokyo, Japan

As always, I am glad to be back in Japan. I’ve always been an Asia-minded person but I am especially glad to have served as the UK Chair of the UK-Japan twenty first century group and to have championed Japanese commercial links with Europe as Trade Commissioner.

I am also pleased to say I still treasure the pen used to sign the post-war treaty between Britain and Japan: my grandfather was Britain’s signatory as Foreign Secretary at the time!

If we look beyond the current downturn, it’s certain that this edge of the Pacific will be the most important driver of change in the global economy and global politics. Not least because, like Europe and the US, you are having to define and manage relationships with a transforming China and a growing India.

But while change in this region is exciting, it needs to be seen in the context of Japan’s continuing relationship with its strongest economic partners, and Europe is chief amongst these.

It’s too easy and too common, in my view, for Europeans and Americans to misunderstand just how subtle and complex these regional relationships are and what they will mean for Asia’s future. We, too, need to adjust to the new influences on Japan’s future.

Today, I want to talk about two specific aspects of that future and what they mean for Japan and Britain: trade and the international economy and climate change.

It’s been an interesting few months for Japan-watchers like me in Britain and Europe. I want to congratulate Prime Minister Hatoyama on a campaign and a victory that is seen by many to mark a sea change in Japanese politics. I am officially flattered to hear that many of the reformers in Japan’s new government are looking to the UK system and Civil Service as a model for change in Japan. This is not the traditional kind of UK export – but it’s one we are pleased to supply, and will do all we can.

So, my first question is how we might capture some of that sense of change to reshape commercial ties between Britain, Europe and Japan.

In both the short and medium term, Japan and Britain face similar domestic challenges. We need to strengthen our banking sectors and invest in economic recovery. We need to convert carbon intensive industrial economies to low carbon in the space of a generation. As mature industrial democracies we all have ageing populations whose expectations of healthcare and support in old age will test our post-second war social settlements.

These are huge – even daunting – challenges. They are shared risks and somehow we have to resolve all of them as internationalists, capable of seeing both our national and collective global interests.

Copenhagen and climate change in December will be the first big test of this new political reality: a test which over the last few weeks we have sometimes seemed dangerously close to failing.

I have to say that in this area I think the new Government has made an impressive start. Its pledge to cut CO2 emissions by 25% from 1990 levels has already played an important part in bidding up ambition ahead of an eventual agreement at the Copenhagen summit. That is badly needed. It is holding firm even in the face of domestic opposition. I welcome this.

But beyond that: governing global finance and making the G20 a credible force; correcting over time the trade imbalances that have defined the global economy for the last decade; adapting to China’s new status and strength; managing the threat too often posed by North Korea. The list is not a short one.

The messages that Japan is sending – its high profile rejection of economic nationalism, its commitment to openness – could not be more important against the backdrop of global recession.

Preserving openness through the downturn

With the downturn, the question of global economic interdependence has become a question of national economic survival. Especially for a huge net exporter like Japan whose manufacturing sector has been hit extremely hard by the collapse in demand, just as many British exporters have.

So the internationalist stance of the Hatoyama government is welcome and timely and right. The joint commitment to a global recovery driven by a sustained and sustainable return to global growth and demand is something on which the UK and Japan agree closely.

Our challenge now is to continue to translate that agreement into joint advocacy for a Doha world trade deal, a G20 settlement on global financial governance and a global economy that comes out of this crisis as open as the one that went into it.

Britain rebounds

We also have to make sure that commercial ties between Japan and Britain emerge from the downturn without any permanent damage. I know that over the last year the Japanese media – often taking their cue from their British colleagues – have painted a negative picture of the prospects of the UK economy.

This is easily explained by the natural gloom of British journalists but, as a globalised economy, Britain has felt the effects of the downturn as much as most. Our large financial services sector was directly exposed to the banking crisis. But Britain’s open economy and flexible labour markets have proven strikingly resilient through this crisis, with high rates of re-employment for those unlucky enough to have lost their jobs. There are strong signs that the economy will have returned to growth by the first quarter of next year.

There have been a few important corporate testimonials to this over the last few months. Nissan and Toyota have renewed their commitment to the UK as a venue for low carbon automotive development. They and other major Japanese companies are responding not just to the very positive environment for doing business in the UK, but to the strength of our science base, our record in bioscience and manufacturing innovation, our skilled workforce, our central position in the massive European single market.

It’s a common caricature about the UK that our economy is based largely on the sharp suits in the City of London. But even the super-powered financial services sector of the last decade never eclipsed British manufacturing as a share of UK GDP.

If anything, the banking crisis has deepened the resolve of the British government to ensure that the UK remains one of the best – if not the best – place in Europe to do advanced manufacturing, especially in low carbon.

The low carbon sector in the UK will employ a million people by the middle of the next decade. It’s already worth more than a hundred billion pounds a year and has maintained positive growth rates even through the recession. The British government is investing strong support in low carbon technological innovation such as wave and wind power and the kinds of strategic skills these industries and their supply chains need.

Which country, for example, is already a pioneer in wave and tidal energy with government support? Britain. Which country is committed to having one of the world’s few heavy forging capacities for the nuclear supply chain outside of Japan? Britain. Where is the world’s biggest demonstrator programme for low carbon vehicles? Well, it’s in Britain, and its part-funded by the British government.

This has to be an area where there is scope for closer ties between the UK and Japan both in research and production. To be sure, it’s an agenda where business is often as concerned about competitiveness and costs as it is ready to focus on commercial opportunities. But that needs to change, and change quickly. Governments both here and in Britain need to insist on that. The scope for collaboration is immense. Britain and Japan are both industrial innovators who need to be confident of their capacity to benefit from even radical change. The low carbon economy isn’t a threat to recovery. It’s the key to sustainable recovery, where the earliest movers will be the biggest beneficiaries.

Open investment

There is no question that getting the best out of a low carbon partnership, or any kind of deep commercial ties, means an open investment relationship between Britain and Japan.

I made a bit of a stir here last year by strongly defending the value of foreign inward investment into Japan- even where it means foreign ownership. Yes, we should always ask tough questions of inward investment – as I said in the Wall Street Journal two weeks ago. But that’s not the same as questioning its potential value.

Japanese investment in the UK proves this. Nissan has been part of the industrial landscape of the North of England for 25 years. Honda and Toyota and hundreds of other Japanese firms like Komatsu, Panasonic, Sharp and Eisai are now an integral part of corporate Britain. These companies bring more than capital – over the last two decades they have raised standards for UK manufacturing and business as a whole. They are part of the reason why the UK remains the world’s sixth largest manufacturer.

My point is that what ultimately matters is not the colour of these companies’ passports, but their commitment to their local workforce. Their respect for the industrial heritage and local productive base.

There isn’t yet a British equivalent of Nissan or Toyota in Japan – as I was at pains to point out last year. British presence here is hardly weak – but it’s not what you’d expect in the world’s second largest economy. But the more Japan opens up, the more certain I am that a British aerospace leader; or ICT firm, or bank, or retailer, or pharmaceutical or healthcare investor could step into that role. I believe that we will both benefit when finally they do.

So, as I say, I welcome very strongly the Hatoyama government’s willingness to challenge some of the older negative assumptions about what is good for Japanese business and industry with respect to foreign influences.

And I welcome the recognition of the benefits of regulatory reform in Japan. Creating a wider and fairer field for government procurement is an example. This is the way to create public sector savings as well as a spur to innovation.

This change can have a very real effect in EU-Japan relations. If we’re serious about a credible Economic Integration Agreement between the EU and Japan then we’re going to have to tackle these tough issues.

For too long, the growth of our trade has been hampered by regulatory restrictions. We really need to lift our eyes and look beyond the obstacles remaining in the way, and commit to a new EU-Japan vision.

The fact is, it’s easy to cut a tariff. (Actually, as a former WTO negotiator with four years of Doha Round negotiations under my belt I can’t believe I just said that!). Let’s just say in principle it’s easy to cut a tariff.

It’s much tougher to identify and tackle the prejudices, the legal obstacles, the non-tariff barriers and the inter-Ministerial politics that can stand in the way of real regulatory reform. But this is what Japan needs to do. Addressing these will require real leadership and tough decisions to be made. To be totally frank, during my tenure as EU Trade Commissioner, I often felt the EU and Japan would find it too difficult to resolve these questions. I do worry that in the year and a half since I was last here we have not made a lot of material progress in improving conditions for foreign investors here. That’s the candid truth. So both sides have to try a whole lot harder and make it more of a priority. I was encouraged that Prime Minister Hatoyama recognised this when I saw him yesterday.

Conclusion: necessary internationalism

So I want to repeat the challenge I made when I visited Japan last year as EU Trade Commissioner. How can we not just maintain but strengthen an open trade and investment relationship? Then I was concerned about ensuring that the benefits of global economic integration were extended. Now I am concerned about preventing them going into reverse.

And that means tackling those areas where we have yet to see real change on the Japanese side. Recognising that just as Japan’s prosperity depends upon its trade with other countries, its competitiveness in a rapidly changing world depends on opening its markets even more to the benefits of foreign trade and investment. The new Government has made an impressive start in setting a new, internationally-minded, tone to the political debate. It has identified the values, interests and goals that Japan shares with its allies. Let’s work harder to give them real expression. We need to do this if the relationship is to grow and prosper.

The worst thing that we could do would be to take each other for granted. That’s no way to preserve a good marriage. I have confidence that the new Japanese Government will not allow that to happen.

Introduction

It is of course a serious time for Britain. Over the last two years, we’ve been through some of the toughest retail trading conditions for decades and lost some familiar names from the British high street.

The Government has backed you up in some important ways, and, when we look back our policies will have been seen to have helped make the recession shorter and shallower. The VAT cut has helped support demand and I know you’ve made representations to the Government about the timing of when the cut should end.

Through the Enterprise Finance Guarantee, just under £120 million has been lent to retail companies who would otherwise not have received bank funding.

As the CBI has just argued, at a time when our economic prospects are improving, this is not the moment to pull the Government’s support away from the economy. Given the lingering impact of the financial crisis and the continuing tight credit conditions the CBI is right to say that the fiscal and monetary stimulus are both still needed. They are in good company: across the G20 economies there is unanimity that early exit from the stimulus measures would put the recovery at risk. Our big immediate challenge is locking in the recovery, not wrecking it.

Luke is of course right that we need a long term policy for rebalancing the public finances. But growth is the best counter to recession and the best antidote to debt. And that means maintaining the present course: underpinning demand in the economy, sorting out the banks, stopping unemployment becoming long term joblessness, especially among the young, and coordinating these policies internationally and in the EU. The Government needs to support investment in our future skills, technologies and growth markets and sectors from where many future jobs will come.

Reducing the financial deficit is not a question of if, but when and how. We all know that. But an approach to rebalancing the public finances that is too early, too hasty, or too indiscriminate would undermine the very growth on which locking in the recovery depends. It would send unemployment and its costs soaring, thus causing the deficit to spiral, rather than cut in half in four years, as we have announced our intention to do. Professor David Blanchflower, the recent member of the Bank of England Monetary Policy Committee, has warned of the acute dangers to employment that would arise if spending – public spending – cuts are made too early and if the fiscal stimulus is withdrawn straight away. Frankly, those who advocate this course are either economically illiterate, or irresponsible, or both.

We all recognise that the next few years are going to bring real constraints. I have no more time than you do for airy-fairy wish-list politics. But neither do I have any time for shallow analysis or short term headline grabbing.

And as a frontline sector that depends on demand and growth more than most – retail is right to challenge government to get this right. I accept that challenge. Tonight I want to recognise the role of this critical sector and lay down some challenges of my own to you, on low carbon and skills.

The Retail Revolution:

I got pretty used to hearing from the BRC when I was EU Trade Commissioner. Because this is an industry that is built on trade, and global trade in particular. Globalisation has transformed your supply chains and the expectations of your customers.

The best British retailers have seized on that change as a driver for diversity and growth. They’ve built strong national brands, then exported those brands around the world. You now employ one in ten British workers.

I know that you spend a lot of time and money working out what your customers want and think. And it’s worth looking at the next decade through their eyes for a minute.

They’re going to put a greater emphasis on paying down personal debt and thus value for money. Their whole idea of personal service and convenience is changing driven in part, but not totally, by the internet. They’re bringing all kinds of other factors into their choices as customers: the environment, ethical sourcing and animal rights standards.

And in part because retail is often being done in ways other than over an old-fashioned counter, they’ll want high standards of service and client care. It does seem to me that for all the scale of big retail in the UK, the customer remains firmly in the driving seat. And that’s exactly as it should be.

Our basic challenge in government is to make sure that you have the flexibility to respond to that demand, and to keep on innovating. And yes Luke, I agree with you not to place an intolerable level of regulation on you that is not sufficiently tested and justified.

A big part of that is just working to keep markets open and competitive, so you can source goods and trade effectively; and on establishing a modern, digital infrastructure you and your customers rely on. I feel very passionate about that not only in my Department, but in the Government as a whole.

It also means a consumer law framework that is modern and transparent, as we argued in our recent Consumer White Paper. We’re working with you on making sure that you don’t have to be a lawyer to understand your consumer rights in this country.

And while I obviously hear Luke’s messages on the retail environment, it is worth remembering that the UK has probably the most open and competitive High Street in Europe, backed up by a flexible labour market and some of the lowest business tax rates in Europe too and that’s how we want these conditions to remain.

Growth through a low carbon future:

Of these customer expectations the low carbon transition is perhaps the most far reaching. Because it is more than just a customer preference – it’s a social imperative. We don’t just need to tap into green consumerism, we need to create and encourage and nurture it. Retailers have a major part to play both as adopters and advocates of low carbon processes and behaviours.

Initiatives like the BRC’s Better Retailing Climate are making a difference, and I welcome that. I want to harness that energy and experience as much as we can.

The 1 in 4 of our working population, who have retail experience add up to a huge store of low-carbon literacy that we can inject into our wider economy.

That’s why we’re going to work on a Low Carbon Action Plan for Retail. And I’ve tasked BIS officials to work quickly with you and our colleagues at DEFRA to develop this plan.

Investing in our people

Finally, I want to say a word about your other key constituency. Your workforce. It’s not really an exaggeration to say that the prosperity of the UK is built on productivity. With margins like yours, that is hardly news to any of you.

But we need to look at these issues from more than just the bottom line. Productivity is ultimately about skills.
Skilled workers are more motivated, upwardly mobile and loyal. And with almost 3 million employees, the UK retail sector is one of the most successful in creating employment opportunities for the long-term unemployed, older people and flexible workers. I commend the way you have tapped into these forces in our workforce.

It’s got a long, impressive history of people working their way from shop floor to boardroom, from market stall to multinational. Probably no other industry in the UK can match that record.

Over the last few years, we’ve had bankers without banking qualifications. But I find it hard to imagine a retail CEO who didn’t know their way round a shop floor.

So I want to lay down my second challenge of the night: that you work with us to enable more people to progress through a career in your industry. And you ensure that, across this sector, a job in retail is a ladder up.

I know there’s already a lot of good stuff happening such as through apprenticeships and the new retail qualifications framework.

But we need more businesses, big and small ones, to get involved – to recognise that there are no diminishing returns on investment in staff skills.

And in the coming months, Government will be launching our new Skills Strategy, setting out how we aim to meet the skills needs of this and other sectors in the future. The skills that underpin the retail sector are of course part of that.

Conclusion:

Retail is on the frontline of this recession. Thousands of businesses are working hard to respond and survive, drawing on the innovation and flexibility that’s helped them to succeed in a tough, changing retail environment.

Together, we’ve got to build on that strength for future success – increasing skills, developing a lead in low carbon and maintaining a business environment that supports the creation of wealth and jobs. And I look forward to realising this sustainable future with you in the months and years to come.

Thank you.

Speech by: Lord Drayson
Venue: Saïd Business School, Oxford

CHECK AGAINST DELIVERY

Good afternoon, everyone.

This forum takes place almost exactly a year since barely credible events on Wall Street signalled a dramatic turn for the worse in terms of this global recession. And it’s almost a year since I returned to the Government with responsibility for science and innovation. No connection, I assure you!

Today, I want to reflect briefly on where we are now – and where we are going.

But first, let me simply point out that although I stand here as a minister, I have 20 years’ experience as a science entrepreneur. I’ve been through the stresses of building companies during previous recessions: the bank manager threatening to put my company into receivership; the horrible job of making colleagues redundant; learning the hard way that, in a downturn, an entrepreneur has two jobs – first, survive, and second, plan for the upturn.

I have also served as a member of Oxford’s technology transfer board and on the university’s VC fund board, so I witnessed first-hand the transformation of our top institutions – their growing success at translating IP into profits, their improved attitude to academics pursuing commercial possibilities arising from their own research.

So I know all about the quality of our university spinouts – and the opportunities available for smart investors, especially at a time when asset prices are cheaper and potential returns that much greater.

A year ago, we needed to provide businesses with immediate practical help so they could ride out the downturn and emerge ready to exploit the upswing. The UK needed a strong industrial strategy, focusing on what we do best and fighting hard to keep it on these shores. And we had to get to grips with the problem of scale in early-stage VC, because good quality start-ups with promising intellectual property were withering on the vine.

I believe that we’ve made definite progress on these three fronts.

In terms of tangible help for companies, almost 5,000 businesses have been offered loans worth around £500 million under the Enterprise Finance Guarantee. Almost 200,000 agreements have been reached with companies to spread more than £3.4 billion in business taxes.

“New Industry, New Jobs”, meanwhile – launched this Spring – sets out the Government’s strategy for creating the best possible conditions in which UK businesses can thrive in those industries most likely to drive economic growth and create high value jobs. It explains what we will do to improve Government’s role as both customer and regulator, and in areas like skills development and support for small businesses. The Department for Business, Innovation and Skills has been charged with making it happen.

Here’s what that means in practice.

I’ve been heavily involved, for example, in establishing ways to transform the operating environment for one of the key growth sectors: life sciences.

The Office for Life Sciences, created in January, gave itself six months to produce a strategy to that end – driving innovation within the NHS, stimulating investment, making the industry more integrated and marketing it more effectively.

We were true to our word. In July, we announced a range of policies, including the Innovation Pass – a 3-year initiative allowing patients faster access to innovative medicines – and a regenerative medicine investment programme to commercialise R&D.

For me, the Office for Life Sciences has set an important precedent for how we implement industrial activism. It means business coming together with the research base and representatives from across Whitehall to agree the way forward. It means timetabled actions, not vision statements, to establish a global lead in areas where demand is clear and growing – ie focusing on growth to rebalance the economy.

Healthcare is one such area. Ultra low-carbon vehicles is another, where we’re applying the same model.

The new Office of Low Emission Vehicles also has cross-Whitehall participation, and it’s working with the automotive industry, power generating companies and others to exploit commercial opportunities and address the drivers of change. That will involve continued vehicle design and production, infrastructure development and devising the right incentives to affect consumer behaviour.

OLEV is part of a £250 million scheme to deliver a green motoring transformation, as the UK seeks to be first to electrify personal transport.

But let me devote the bulk of my attention to the VC space.

While we’ve taken steps to provide certainty about the future of the Enterprise Investment Scheme and Venture Capital Trusts – so that higher-risk SMEs can continue to secure finance – the key recent development is the new UK Innovation Investment Fund.

Many tech-based businesses are currently fighting for survival in a climate where it’s extremely hard to attract capital for investment and where it’s difficult for investors to sell or go public with other investments as a means to raise capital.

The UKIIF provides hope for many of the 1,100 tech-based businesses dependent on equity finance in the UK: in digital and life sciences, in clean tech and advanced manufacturing – the growth areas of the future.

It will be a 10-year fund of funds with a cornerstone investment from the Government of £150 million to leverage private investments up to a total of £1 billion. Three departments – Business, Energy and Health – have invested, from the conviction that supporting VC-backed companies is an essential way of driving innovation.

We’re currently recruiting a professional and experienced fund-of-funds manager, with a view to the fund being operational by the end of this year.

At that point, it will invest in a limited number of top-tier technology funds, with proven ability to generate returns. The Government will not be involved in investment decisions whatsoever. There is no political agenda.

This is about helping UK venture capital to reach the next level, through a large fund that replicates what the best of US funds already do – making investments at all stages, with the kind of scale that can build companies with global reach.

We have the technology. We have the management. We will have the capital.

That’s why we’re keen to bring in as much private sector investment as possible, and will be marketing the fund both in the UK and globally.

UKIIF represents a great opportunity. The timing is right. The capital commitment from the Government means a significant fund. We can exploit the fruits of our record investment in UK science over the past decade – which has made the research base stronger now than it’s ever been. And we will appoint a manager with the necessary expertise to generate a top-quartile return for us and other investors.

Between real help for business and concrete actions to implement a new industrial activism, I believe we have a good plan to build Britain’s future on the back of our leading position in science.

We are on the verge of getting out of this global recession, and there are some encouraging signs that recovery is underway.

What’s critical now is that we do the right things to drive that recovery on.

Like spending wisely on the programmes that are working, cutting the ones that aren’t, and insisting upon value for money in public services.

Like never losing sight of the fact that the best antidote to public debt is growth: growth that’s generated by science entrepreneurs and engineers taking calculated risks to build fantastic businesses, create jobs and get rich – for themselves, their families and their employees.

One year on from Lehman Brothers, and there’s still a great deal of soul-searching about City bonuses and ill-conceived incentive schemes that encouraged the wrong kind of risk taking.

Reforming the culture of the City clearly remains a priority, but my concern today is that we must not allow that agenda to obscure the need to encourage wealth creation. Our economic future depends on it

The bankers aren’t the issue right now. Science entrepreneurs – and the people who back them – are the ones who count now. People like you.

As we emerge from the downturn, the baton passes to you.

Now is the time to back our high-growth, science-based companies. At this stage in the economic cycle, my entrepreneurial experience tells me that this is the time to invest.

This Government is right beside you. We’re determined to support an economy that enables sustainable wealth creation and entrepreneurship. That removes the barriers and celebrates the successes of our science entrepreneurs – like those competing for the new iAwards this November.

Britain is already the best place in the world to do scientific research. We need to make it the best place in the world to build a science-based business too, and the best place to be a science entrepreneur.

I’d like us to spend the rest of our time today talking about how we do that.

Thanks for listening.

Ladies and gentlemen. Thank you Ron.

I am very pleased to be here today to help launch this year’s National Consumer Week.

This is an important event in the Trading Standards calendar – and I want to thank you all for the work you do in safeguarding communities and tackling the rogues and criminals who blight our society.

This year’s theme – Know Your Consumer Rights – is an important one.

The last year has been very difficult for everyone, with tough economic conditions putting real pressure on consumers.

It is, therefore, as important as ever that consumers are able to shop with confidence and know their rights in all situations.

As the Department for Business, we remain committed to being the voice for consumers. Committed to creating a consumer and competition regime that puts consumers at the heart of our economic prosperity.

Earlier this year we published our Consumer White Paper, which set out how we will deliver real help for consumers now and make changes to empower and protect consumers in the future.

This includes providing:

• Self-help debt advice to help people take control of their finances;
• Tougher powers for dealing with rogue traders;
• A review of the regulation of credit and store cards; and
• A ban on unsolicited credit card cheques.

We will also be introducing a new consumer advocate, whose role will include improving the co-ordination of consumer education and information campaigns.

And we will set up a new national specialist team for internet enforcement to tackle scams which rip off consumers and deter many from buying goods and services over the internet.

All this builds on much of the work we have already done to help consumers in the last year, including more funding for debt advisers, tackling rogues through the Scambusters initiative and cracking down on loan sharks.

The Know Your Rights Campaign

A big part of the new strategy is about improving consumers understanding of their rights. Empowered consumers who know their rights are confident consumers – and confident consumers spend the cash which helps business grow. So everybody wins.

And there’s a strong case for improving awareness.

My department receives many letters from consumers who have to fight for their rights. They may not always make the headlines, but their stories will be familiar to us all.

For example, how often have you taken a faulty product back to the supplier, only to be told that it’s outside the warranty period so you’d have to pay for any repairs or replacement yourself?

That happened to a lady from Cumbria, who bought an engagement ring, only for two of the diamonds to fall out of their setting. It was outside the guarantee period and the shop refused to pay for repairs.

Unsure of her rights, she sought advice from Consumer Direct and was told that under the Sale of Goods Act a product should be of satisfactory quality. The expiry of a warranty cannot take away from that.

Armed with this knowledge, and a template letter downloaded from the Consumer Direct website, she wrote to the store and received an immediate response and a full refund for the entire cost of the ring.

It’s one of many stories – but they don’t always have a happy ending.

In research carried out by BIS recently, we found that more than a quarter of shoppers are more likely to complain about goods they have bought during the recession.

According to Consumer Direct, the top ten most complained about goods so far this year include TVs, laptops and women’s clothing. And top of the list (surprise surprise) was second hand cars.

While many people say they are confident in using their rights, we have found that large numbers of shoppers – mostly those from poorer backgrounds and young people especially – have little knowledge about these rights.

And evidence suggests some businesses still need to improve their attitude to consumer rights. Our research showed around a third of shoppers felt retail staff had tried to ignore their consumer rights when they tried to return goods or get a refund.

But it’s not just about shopping in the High Street. Consumers are now just as likely to buy their goods on-line – and feel just as likely to be ripped off.

The on-line shopping market has grown rapidly in the last few years – worth more than £21 billion a year in the UK alone. More than 20 million people shopped on-line last year. And this figure will continue to grow.

So today I am pleased to be able to launch the ‘Know Your Consumer Rights Campaign’ (also a White Paper pledge) – a joint initiative led by BIS with Consumer Focus, OFT, Consumer Direct and the Trading Standards Institute.

The message at the heart of our campaign is simple – know your basic consumer rights. Remember, all goods must:

• Fit the description given
• Be of satisfactory quality, and
• Be suitable for purpose

And we say to people – if you want to find out more about your rights, contact Consumer Direct, the national advice body for information about consumer rights.

Consumer Direct has been a big success since it was launched by my department in 2004. Now managed by the OFT, it answered almost 1.6 million calls and e-mails in the last year. These include more than 870,000 complaint cases – a year-on-year increase of almost five per cent.

The OFT estimates Consumer Direct generated £127m in savings for consumers.

Our campaign will involve working in partnership with retailers in-store and online to convey these messages.

The campaign already has the support of business as well as consumers. Companies we spoke to as part of our Consumer Law Review last year said good business has nothing to fear from consumers knowing their rights.

In fact, those that do best are those who understand their consumers and are quick to fix problems when they occur.

That’s why I’m pleased that so many big name retailers have already signed up to support our campaign, including Tesco, Asda and the DIY retailers B&Q and Wickes.

We also have on-line partnerships with clothing outlets Asos.com and Figleaves.com as well as Whatafind.com.

A big thanks to all of those retailers. I see that many of them have representatives here in the audience today.

But this is just a start and we want to encourage more firms to come on board and help us promote consumer rights.

Conclusion

Today consumers will be able to speak to advisers about their consumer rights on this special exhibition stand.

The TSI will also be holding sessions at Bluewater for businesses who want to know more about improving training for staff to better understand consumer rights.

The campaign will continue over the months ahead. Our goal is to create better informed consumers. Consumers who know they have rights and know they have the full protection of the law when they need it.

It is these consumers who can best contribute to the economy, spending with confidence and helping UK business prosper and grow in the global marketplace.

Thank you

Good morning everyone. It’s a great pleasure for me to be able to join you this year.

It is great to be in Edinburgh, and to see an example of the breath of higher educations intuitions – ancient and modern, generalist and specialist. Their contrasting histories, strengths and plans for the future illustrate not only what makes Scottish higher education such a vibrant place, but also the reasons why I feel such excitement when I look around British universities as a whole.

Your President said earlier that it’s wrong to see our university system as a hierarchy rather than as a series of institutions with overlapping and contrasting missions. That is a view with which I associate myself fully.

Yesterday evening over dinner I was glad to renew some of the acquaintances I’ve made in the English university system. But I was also especially pleased to have the chance to meet university leaders from Scotland, Wales and Northern Ireland.

And it was, of course, a special pleasure to be able to congratulate Tim O’Shea on his appointment as chairman of JISC.

Last year in Cambridge, I know that John Denham spoke to you about how many new developments there had been for the sector in England in the first year of the Department for Innovation, Universities and Skills.

As if to prove John’s point, the world has now moved on and DIUS itself is now a part of history. But change continues. Not least here at UUK with the arrival of Steve Smith and, only last week, Nicola Dandridge. I wish them both well in their new posts.

Of course, Steve has already made a significant contribution to the debate on higher education – whose progress was the theme of John’s speech. The debate has carried on since the creation of the new Department and is now moving towards its conclusion.

Autumn will be busy, and this year feels busier than last. A new framework for higher education in England will be presented by Peter Mandelson.

We’ve made clear that we want the Framework to describe the vision of how Government will support universities and employers in working together to balance the supply and demand of high-level skills and the many other economically valuable things that our universities deliver.

My colleagues and I see universities as being central to our efforts to build a strong economy. My Department’s expenditure on higher education in England this year will be over £10 billion. And that’s not including more than £3 billion of the UK science budget, a large part of which of course goes to universities. One of the ways the taxpayer’s investment in the system is repaid is in the stimulus for economic growth that it delivers back.

The economic focus of the Framework will be of particular benefit to the key growth sectors we identified in the New Industry, New Jobs strategy paper. We are also working with HEFCE to look at how we can develop the funding model to help the sector further increase its economic contribution. That may mean making a larger proportion of funding contestable. But that raises important and complex questions, and our thinking on it is still developing.

That’s why the Framework is likely to ask you to move further and faster down the path you’re already on towards greater emphasis on economic outcomes. But it does not mean that we intend to take an instrumentalist approach to higher education, nor to abandon the belief that the pursuit of knowledge is a valuable end in itself.

The recession is producing challenging times for universities, just as it is for other sorts of businesses. And those of us in Government face real challenges ahead, too.

I don’t pretend the current position is easy and that we don’t have a huge task before us. But it’s a task we are determined to carry out successfully. And I know it’s one in which we have the full support of the university sector.

Let me quote just a few examples of what you’re already doing to help.

This year, there will be more students going to university than ever before, taking advantage of the record number of funded places on offer. We expect 50,000 more accepted applicants than just three years ago. And we announced in July an extra 10,000 places to support the new industries new jobs initiative. This will help to absorb the extra demand for places we have seen this year and the pressures your institutions have faced during clearing.

I must pause here to say a special thank-you to those institutions that have taken up the challenge of making these new places available at short notice.

We have also continued to expand Foundation Degrees and look likely to achieve our target of 100,000 participants next year. Likewise, the signs are that we hit our target of 5,000 employer co-funded higher education places this year.

Not only are we working to increase the vocational impact of higher education itself. We’re also trying to create more routes into higher education for people who hold vocational qualifications. Already, over 100,000 of them enter university every year. We need to grow that number, and grow it rapidly.

The interim findings of a study led by Professor Joy Carter raised a number of issues around progression to higher education through vocational routes that are helping to inform our thinking around the new Framework. I look forward to receiving her final report this autumn.

Clearly, there remain longstanding difficulties associated with any effort to promote parity of esteem between vocational and academic pathways. Many of these seem to stem from some people’s scepticism about the value of vocational qualifications and limited – albeit growing – exposure to them.

That’s why I warmly welcome the work that’s being done to improve the position. I want to especially welcome the progress that has been made towards a tariff rating of apprenticeship frameworks.

We have brought the worlds of higher education and of work closer together in other ways, too.

We have created the Economic Challenges Investment Fund in which HEFCE and the sector jointly fund initiatives to help economic recovery and which will benefit over 11,000 business and 50,000 individuals. Without your sense of initiative and willingness to roll your sleeves up that just wouldn’t be happening.

And we have introduced many graduate internships. There has been strong progress on these. We have hit our initial target of 5,000 places early, and are now moving well beyond it.

So I’m very pleased to be able to announce today the creation of up to 1,500 more placement opportunities in a new Graduate Low Carbon Future Leaders scheme.

Initially, these will help support the low-carbon marine energy industry in the South West of England and the low carbon vehicle industry in the North East. The scheme will benefit graduates by giving them hands on experience and improving their job readiness in an emerging sector of the economy where future jobs growth is predicted. Your universities will be key partners in delivering this scheme.

While I’m on the subject of the importance of giving young people practical experience of work, I want to say a special word about apprenticeships, which were a subject close to my heart even before I became Skills Minister back in 2007.

Apprenticeships have always laid a firm foundation for careers in manual trades. But we’ve proved that these days there’s no reason why the same model shouldn’t be used to open up routes into less traditional areas – like the professions and the public services. That includes the university sector. Some institutions are already to offering apprenticeships, but many others aren’t. And that’s why I want to encourage those of you whose institutions aren’t yet involved to take advantage of the work UUK and GuildHE doing to help institutions which have offered apprenticeships to share their experience with others.

UUK’s publication From Recession to Recovery showed very clearly that our universities are standing by Britain at a time when what universities produce has never been more necessary. And in its turn the Government has stood by them. In funding terms, universities have had it good for more than a decade.

Nevertheless, it’s no secret that current levels of public investment are unlikely to be sustainable in future. And indeed, I know that you’re already feeling the pressure that comes with the need to make more efficiencies.

The sector’s future prospects depend on how you face up to the financial challenges that are coming. Not least, that includes by taking a disciplined approach to pay and pensions.

But there are also more positive steps you can take, like continuing to diversify your sources of income by encouraging endowments or providing bespoke training. And by making the most of the knowledge that you produce.

Even in a tight spending environment, there’s no reason why your income can’t increase. Steve Smith spoke earlier about the proportion of GDP that this country spends on higher education being half that spent by the USA. And he’s right. But spending relative to GDP isn’t just about the Government. Private investment in universities has not kept pace with the huge increases in public spending that the last decade has brought. Any sensible analysis can only conclude that you need to find new ways to leverage more private money into the system.

And you need to make sure you take advantage of opportunities – international as well as domestic – whenever they arise.

I’ve just got back from a trip to the USA. There, President Obama recently announced a new billion dollar investment in science and research as part of its stimulus programme. That means a lot of money going into US universities and a lot of US universities looking for research partners abroad. Officials in the Department of Commerce, the White House, and in universities confirmed the importance of this investment.

While many British institutions are able to make some use of partnerships individually, the British Ambassador to the US was clear that corporately and collaboratively there is more to do.

That is why I have set up a new advisory forum under my chairmanship – the International Education and Research Advisory Forum – to bring together representatives from across Government and the higher education sector, including the British Council, to develop a more strategic and joined-up focus to our international work. The Forum had its first meeting earlier in the summer and will meet again in November.

Benefiting from knowledge transfer and the intellectual property that flows from it depends on a strong research base, a strength that was confirmed by the results of last year’s Research Assessment Exercise. A large part of the value of the RAE was that it was a UK-wide exercise that allowed the benchmarking of all our institutions. And that is why I welcome the involvement of the authorities in Scotland, Wales and Northern Ireland in the development of the new Research Excellence Framework.

In a few weeks time HEFCE will be consulting on proposals for the REF. For the first time, the REF will explicitly assess the impact that this excellent research has on the economy and society.

And since these impacts are things that happen outside of the academic realm, the consultation will propose that the panels assessing impacts will include a large proportion of the end-users of the research – businesses, public services, policymakers and so on – rather than just academics commenting on each others’ work.

I want the REF to send a strong signal and give a strong financial incentive for departments to not only do excellent research but find ways of helping turn that into impacts that benefit the economy and society as a whole.

Despite some people’s fears, we will not be solely asking panels to count the number of spinout companies or income from business. We will want panels to assess a whole range of impacts. Improved products and services for business are important, but so are things like improved quality of life, and better evidence-based Government policy-making.

Of course, the benefits to universities of producing research with impact aren’t only found in public funding. So it’s in everyone’s interests that we help you manage your institutions’ intellectual property effectively. That’s an area in which the new Department can help all UK universities. So we’re currently working with the Intellectual Property Office and UUK to update the handbook on intellectual property that they published in 2003.

Despite all I’ve said so far, I know some people don’t think our universities are doing a good job.

Last month, the chairman of the Innovation, Universities, Science and Skills Select Committee criticised you for failing to safeguard standards.

Personally, I regard Phil Willis’ comments – intentionally made on a Saturday morning to get maximum media coverage – as a piece of political grandstanding rather than a serious contribution to the debate. And I think the facts contradict him at every point.

I don’t recognise the picture he painted. I don’t think we need what amounts to a national curriculum for higher education and we certainly don’t need the ossification of the university system that would inevitably follow. And I don’t believe that diversity in the system is the same thing as inconsistency.

But having said that, I think there does remain a real challenge for you on quality in a consumer-driven 21st century.

Even if you aren’t complacent about quality, you sometimes appear to be. I think you have to recognise that and deal with it. This is indeed another area in which you have to get better at telling your story.

For English and Northern Irish institutions there will be an excellent opportunity to do just that over the coming months as you contribute to the development of the quality assurance system that will follow the current audit cycle. I know that the sector bodies are committed to developing a quality assurance system that is flexible and transparent as well as rigorous.
Clear and accurate information must be a big part of that. Learners need to know up front what their courses will involve, how much teaching they’ll get, how much independent learning is expected, and how they’ll be assessed. They should also know what happens to students when they graduate.

That’s why I’m very pleased to announce that HEFCE will be sponsoring research to find out just what information potential students want, so that they go to university understanding what to expect of their student experience.

Again, I’m not advocating a one-size-fits-all approach to things like contact hours and assessment methods. University teachers, like good teachers everywhere, need the space to express themselves and inspire their students. But I see no reason why, in any properly-planned course of study, it should not be possible to give prospective students a very clear idea of what they should expect. Quite apart from anything else, it’s more fun to teach well-prepared and motivated learners than students to whom everything comes as a surprise.

And I’m sure it won’t surprise you that this is a subject on which the Higher Education Framework will have more to say.

Quality is one of the main factors that attracts overseas students here. And the growing internationalisation of university curricula can only improve the quality of our own students’ experience.

And as we saw earlier this week, the most recent Education at a Glance figures from the OECD continue to provide evidence of our strong performance.

I know that many of you have been very concerned about the ability of the new points-based visa system to cope with the traditional August spike in applications from international students. I have been working closely with my Home Office colleague Phil Woolas to ensure that we get the balance right between maintaining robust visa arrangements whilst at the same time ensuring that institutions are able to recruit genuine international students simply and efficiently.

I was pleased to be able to host a meeting with Phil and vice chancellors towards the end of July to thrash out what were a few outstanding issues. And the latest information I have from the UK Borders Agency suggests that the teething problems that were experienced earlier in the year have by and large been resolved.

But internationalisation is not simply about numbers of international students choosing to come to the UK. The international activities of our institutions are as diverse as the sector itself. And increasingly we are seeing a greater emphasis on partnership-building and collaboration.

This is very welcome. But, as I said earlier, I also believe there is scope for this to be taken to a higher level as we look ahead. And here I think we in Government can help by providing a more strategic and clearer context within which institutions carry out their international education and research activities.

I know you have chosen European higher education as one of the themes of this conference and that is welcome. I attended the meeting of Ministers responsible for the Bologna process in April. One of the main issues we discussed was the importance of student mobility. And that’s a big challenge for you. We know from experience that compared to countries like France and Germany, significantly fewer of our students choose to spend time abroad.

I take that seriously. And it won’t come as a surprise to you that Peter Mandelson does as well. From our discussions I can tell you that his current responsibilities for trade as well as his experience as EU Trade Commissioner means he sees great value of initiatives like Bologna and the various European mobility programmes.

Employers tell us that they value the kinds of skills and experience acquired through periods of study abroad. And I have no hesitation in saying that is an area where we need to raise our game. So I urge all of you to look at ways in which course curricula can be adapted and made more flexible to include the possibility of short periods spent abroad . And I am not just talking Europe here – we should also think further afield in the big developing economies such as China and India.

I remain of the view that stepping up our efforts to “internationalise” university curricula can only improve the quality of our students’ experience.

I firmly believe that our university system and the values that it stands for must remain one of the forces that brings our society together and keeps it together. It has shown itself time and again one of the most powerful forces for social and economic progress that we have.

And that’s why it’s a pity that the general public doesn’t know enough about the contribution made by higher education to national life. Some universities have become very adept at marketing themselves internationally. But nationally, public perceptions of the social and economic successes of higher education throughout the UK often remain outdated.

About a year ago, I gave a speech in which I said that the contribution of British universities to their communities is every bit as strong as that of their US counterparts. That has been borne out by all you’ve done since then to help your communities in what is a difficult time.

But when I spoke last year I also pointed out the contrast between how much American universities make of their economic and social contribution and how little many of our own institutions do. Visit the website of any US State university and you’ll see what I mean. The payback that taxpayers get for their investment will be right up front – in words, in figures and in case studies.

I called on you then to emulate that example. For you not only to be proud of what you do, but to make the most of communicating it.

I repeat that call today. And in the current spending climate, I hope its importance will not be lost on you.

That’s why I’ve asked the Design Council to convene a workshop discussion of how the university sector can communicate its value better to a broader public. I welcome both UUK’s involvement in this work and Steve Smith’s acknowledgement of its importance in his speech earlier on.

I don’t want the outcomes of the workshop to be either soft soap or hard sell. But I do want us all to emerge with a better strategy for showing, not just stakeholder and those with an informed interest in higher education but also the people who pay for so much of higher education, the scale of the return that modern universities give on their investment.

20 years ago, a policy document called “Meet the challenge, make the change” was published by the Labour Party. In many ways, it marked the start of the process that brought us into government in 1997. The final thing I want to do today is to urge you to be equal to the challenges that change now poses for you. To be flexible enough to do what has to be done to keep pace with a changing world, yet strong enough to uphold the great values for which our universities have always stood.

How well you do that today will determine whether you’re able to deliver everything Britain asks of its universities tomorrow.

Thank you.

PLEASE CHECK AGAINST DELIVERY

Good morning.

As you may know, I’m rather keen on cars. It goes back to my boyhood growing up near Brands Hatch, and it has stayed with me throughout my life. It got me my first job at British Leyland as a sponsored engineer in 1978 ,and fuelled my passion for motor sport, which took me racing at Le Mans in the 24-hour race this June.

I tend not to count the race and road cars that I own, so as not to alarm my wife – but it’s certainly into double figures and includes some of the iconic great British cars of the last 40 years, including the Low Drag E-Type, the DB4GT, the March 712, the Vanquish and Lotus 24, the Mini Cooper (the new one).

I say that to stress to you how much of an enthusiast I am for cars and for the British car industry – and how important I believe it is for our country and for our economic prosperity that we have a successful car industry in the UK.

However, we all know how tough the last 12 months have been since I last came to this very same event.

I believe the global credit crunch, following as it did the spike in oil prices, has cruelly exposed the global overcapacity in the car industry, and accelerated the radical shift that is taking place in consumer attitudes to cars – and low-carbon cars in particular.

Our job, together, here in the UK, is to embrace this new reality and seek out the opportunities that this very difficult environment presents for the renaissance of a British car industry. Because I believe it does present such opportunities, and the very fact that this audience is so much bigger this year than last shows that you do too.

We have seen a hollowing out of our industry over past decades as much of the automotive R&D and major supply chains of the industry have gone offshore – and we have an industry that does lots of final assembly but not enough of the high added value, top-tier original equipment manufacturing.

The switch to low-carbon is our opportunity in the UK to use the tremendous expertise we still have in our automotive science and engineering base, and team it up with other expertise from clean-tech, defence and motorsport to create, here in Britain, the next generation of low-carbon cars that global consumers are desperate to buy.

We need radical new approaches that challenge the orthodoxy of vehicle design, manufacture, performance, maintenance and disposal. The complete life cycle. We need to ask difficult questions – and find better answers. Because the pace of change and technological innovation to drive performance with low-carbon impact is pushing hard on the industry

If we in the UK come up with the answers faster than the competition – and if we implement them with real drive – then we will recapture some of the market share we have lost.

That is our opportunity – and we must grab it.

This Government is right beside you to bring more power to your elbow. Not to bail out the past. But to create and capture the future.

So my message at this second Low Carbon Vehicle event is more focused and more emphatic than my message at the first one last year. Indeed, “focus” has become a theme for me as science minister – in urging the research community and business to actively prepare for an economy in which we concentrate on industries where growth is strongest; where the UK has a realistic prospect of being a global leader; and where we possess real competitive advantage.

In the car industry, I believe that means making a distinction between low-carbon and ultra low-carbon vehicles. That’s the area of greatest technical challenge but, as so often in life, it’s the area of greatest opportunity too. Our priority must be to make the world’s leading ultra-low carbon car industry in the UK.

We need to build on our domestic strengths and know-how in light-weighting, aerodynamics, powertrains, chassis engineering and styling. These are fields of British expertise.

But, we must take a strategic view of where the greatest opportunity lies for the UK, and low-carbon is an area of stiff international competition already.

By contrast, ultra-low carbon is a much more promising area, where our potential to compete with the likes of Japan, Germany, France and the US – California, in particular – is that much greater. Its also an area where our science base and inventiveness can be leveraged to a greater extent.

What’s more, we’re dealing here with a set of challenges on an entirely different scale.

There’s the R&D aspect, of course, necessary to produce plug-in hybrids and all-electric vehicles. The race is on to be early to market with viable cars, and then to build brands with global reach. But let’s face it, electric cars are not new. Recently I saw a collection of low carbon vehicles, some of which were over 100 years old. One, built in 1907, had in-hub electric motors!

Then there’s the critical matter of consumer behaviour.

Let’s be honest – there’s little public appetite for strange looking and poor performing cars, whether they are environmentally friendly or not. People want performance and efficiency.

For this to work, we must present consumers with vehicles that contain the “wow” factor – a full range of vehicle classes, not just underpowered city cars whose handling leaves many people cold. (There can be no cynical manipulation of emissions regs by trying to sell re-branded low-emission city cars packaged alongside high-emission luxury cars to average down emissions across the range.)

We must also offer people elegant systems engineering to shape consumer behaviour. I’m thinking of Oyster cards, which have made travelling around the capital so much easier, and mobile phone services, where customers don’t pay for expensive handsets and aren’t bothered by the complexities of cross-network costs. In fact, given that advanced batteries will be expensive, rental models and a variety of tariff options are likely to come into play. We’ll need to allow consumers to dip into the market and try out these vehicles without significant financial commitments.

That’s just a handful of the problems we need to solve. “Disruptive technology” is an over-used label these days, but when applied to ultra-low carbon electric vehicles, it is entirely appropriate.

I’ve joined you this morning because – self-evidently – these sizeable, interrelated challenges cannot be tackled in an uncoordinated way. There is a clear role for Government here in terms of legislation and subsidies, in creating market certainty for nascent technologies, in building a consensus around long-term goals.

To accelerate this agenda and give it a clear focus and direction the Government is creating the new Office of Low Emission Vehicles, or OLEV. It will bring together all the key Whitehall players – Business, Treasury, Transport, Energy, Local Government – to ensure that we move forward decisively in concert with industry.

We’ve no intention of OLEV being a mere talking shop. It will have a clear programme that encourages demand, supports supply and enables places where people can use these vehicles day to day.

It will have a clear timetable that builds on the successes of the last year. We’ve already allocated around £140 million to the Technology Strategy Board’s “Low Carbon Vehicle Innovation Platform” to help accelerate industry investment and facilitate new partnerships to address technical challenges.

And, back in June, the Technology Strategy Board announced the winners of its £25 million ultra-low carbon vehicles competition. Over the next 18 months more than 340 electric-drive vehicles will be trialled across the UK.

As part of a £250 million scheme to deliver a green motoring transformation, the Government has proposed help worth between £2,000 and £5,000 for private individuals and commercial buyers looking to purchase electric or plug-in hybrid cars when they hit the showrooms – which we expect from 2011 onwards.

We are also using procurement and the purchasing power of the public sector to encourage the development and take up of the latest generation of vehicles.

Through our £20 million Low Carbon Vehicle Procurement Programme. four British companies have been selected to supply all-electric vans to selected public sector organisations within months.

To help make the transition to cleaner, greener motoring we also have to look at how we can support the initial infrastructure needed to make travelling by ultra-low carbon vehicles a real and viable option.

That’s the reason the Government has allocated up to £30 million as seed money to the “Plugged In Places” electric vehicle infrastructure scheme.

I believe that this scheme has the potential to make a real difference and so I’m pleased to announce that it will go live for applications in November, with decisions on the first successful bids expected to be announced in Spring 2010.

I think it makes absolute sense to focus in the short- to mid-term on the electrification of personal transport.

The private car isn’t going away, and our economic growth is inextricably linked to people’s mobility. In big cities, public transport obviously has a major role, but so do taxis and car clubs. And beyond cities, where public transport offers no real “per passenger per kilometre” CO2 reduction versus the private car, we must ultimately replace them with ultra low carbon alternatives.

At the simplest level, then, that’s what OLEV will be working on. If it really delivers, then it will be helping to put the private car at the heart of the ultra low carbon revolution.

But let’s be clear: OLEV’s direction has not been determined from within Government.

It is industry that has set the priorities. Through the New Automotive Innovation and Growth Team, industry has worked with the Government to identify business opportunities and the necessary drivers of change.

Several of the key individuals involved in that process are speaking at this Government-sponsored conference – a conference which is unusual in that the audience is much broader than the car industry alone. The research councils, the Energy Technologies Institute, the Technology Strategy Board and various government departments are here. So are energy companies, local authorities, regional development agencies and others.

I’d like this gathering to become a major fixture in the international automotive calendar. In the meantime, our purpose over these two days is to figure out how – by developing new collaborations and sharing research – the UK can make the transformative shift to ultra low carbon vehicles. A shift by which we go a long way to displacing liquid fossil fuel, improving our energy security and establishing strength in technologies with vast commercial and social potential.

We’re on our way with this. I’ve been lucky enough to test-drive some of the demonstration vehicles. These aren’t poor imitations of petrol cars but examples of high-quality design, engineering and manufacture, including two-seater city cars, SUVs, minivans and sports cars offering bucket loads of torque and fantastic chassis dynamics.

But let me stress, technology is not the biggest challenge we face. The problem – both fascinating and daunting – is to combine innovation and know-how in a whole range of areas to produce a radical new customer experience that can fundamentally change how we get from A to B.

We’re on our way – we just need to speed it up a bit.

Thanks for listening. Now let’s have some questions and comments.

Thank you for your welcome. It is nice to be back. I first came here when the school was much smaller and the audience far fewer in number.

It is nice to be back in the place where you work to get “the truth from facts” in Deng’s words. It is very apposite for what I have to say this morning.

And also it’s nice to come now, just as you approach the 60th anniversary of the founding of the People’s Republic. China’s achievements are a cause of celebration for all of us. And I also celebrate the fact that relations between Britain and China have never been stronger. We have fifteen British government departments represented in our Beijing embassy which I think is testimony to the extent and depth of our bilateral relationship

I last spoke here as EU Trade Commissioner. It was during my time in that job that I really became convinced that China’s reemergence as a global power would redefine not only Asia but the whole landscape of international economics and politics.

All this would be difficult and complex enough – but added to that challenge is the task of governing China itself through a period of immense social, economic and environmental change.

Regional imbalances, income disparities, ethnic tensions, provision of education, health, and pensions: these are familiar challenges for most governments. But in China, the scale of these challenges and necessary speed of change is unique in the world.

All of you here this morning are the policymakers of China’s future. And politicians and leaders of my generation – in China, in Europe, in America – need to be acutely aware that the decisions that we are making now, and the decisions that we face over the next few years, will profoundly shape the world that you will face the challenge of governing in decades to come.

You will need to be the most internationalist generation of leaders in China’s history. Although we are slow to recognise it, some of the biggest problems in world politics are no longer questions of how we position our states for national advantage, but how we deploy national action to solve international problems. There is no contradiction between patriotism and internationalism.

The banking and financial crisis is an obvious example, and with it the bigger questions of how we manage a globalised economy. The challenge of development, above all in Africa as well as in Asia. But it is climate change that is perhaps the most pressing and most fundamental. This is a problem that has no solely national dimension – there are no borders in the atmosphere. It has only an international solution by definition, and I want to come back to that later in my remarks.

As someone who has spent a lot of time in international negotiating rooms this should worry me. I have seen some good and necessary global agendas stalled by parochial national politics. The Doha world trade negotiation is one obvious example. I think we are entering a new, pressured phase of globalization – one that will be defined much more by the competition for resources, an urgency to make painful compromises, the demand to change the way we govern the global economy. From policymakers and politicians this will require much more than the usual measure of flexibility. It should force us to aim for much more than the lowest common denominator of agreement because there is so much at stake, with so much more riding on the decisions we take, for so many people.

I want to say a few things about this next phase of globalization today. I will argue that our national responses to the banking crisis and the international recession will be critical to the health of the global economy for a long time to come. If we get this wrong, the consequences could be very far reaching. And China is central to this.

I will argue that climate change confronts us with an even more compelling problem of international cooperation. China is central to this too.

Finally I want to say a little about Britain and Europe and how we can continue to strengthen our relationship with China.

After the financial crisis

The last two decades have been a relatively optimistic time for the global economy – certainly a time of powerful positive economic change in China. If you traveled back in time to, say, 1979, you would find it difficult to find an economist who would predict that the Pacific Rim of Asia was about to experience the biggest and most sustained growth boom in global history. Or that Brazil and Latin America would have their own version of that export-led economic takeoff.

And this economic history didn’t happen by chance. It happened by choice. The choice to open our markets to international trade. The choice to accept a model of production based on global supply chains and the exercise of comparative advantage. The choice of economic internationalism over economic nationalism. The choice of free markets over state capitalism.

Some would argue that the banking crisis has discredited these choices, that they have somehow undermined their validity. I hear those voices both in China and back at home, in the UK and in Europe. I do not agree. I reject that view. The banking crisis was, yes, a warning: but against failing properly to regulate the financial sector and those who operate its standards. A warning about the need to globalize some of the governance of the global economy to take account of the way that the global economy now works in the twenty-first century.

But if this is the first crisis of the global economic age, it is not a crisis of globalization. Of course globalization spread the negative effects of this crisis around the world, but only just as much as it has transmitted the benefits of economic integration across all continents.

It is true, however, that the global banking crisis and the downturn have revealed weaknesses in all of our economies. Many parts of the Western mortgage and investment banking industries suffered what can only be described as a crisis of professional and regulatory competence. Britain’s households carried too much debt and its large financial services sector made it vulnerable to failures in financial markets. Collapsing global demand impacted heavily on export-led powerhouses like Germany and China – which drove home the fact that they need to balance their successful growth models with greater domestic demand.

More fundamentally, there is an imbalance at the centre of the global economy that must ultimately be righted. This is symbolised by America’s massive deficit and China’s massive surplus. It is simply not in the interests of China’s own people that their high savings are used to finance the excessive spending habits of rich countries.

In this picture of the global economy there are three salient points to make in my view. The first, as Premier Wen said back in March, is that this crisis has not undermined the basic case for open economies, in which resources are allocated in the main by markets rather than governments. We need effective governments to define the reach and limits of markets, but companies and industries, including banking, ultimately need the stimulus and the discipline of market competition to drive growth and innovation. It is the private sector in China, it is worth noting, that has produced the most additional jobs in your economy in recent years.

We have learnt some important and painful lessons about relying too heavily on the self-regulating nature of markets. But that does not discredit the case for liberal economics, it does not discredit private enterprise and markets as a whole and we need to argue back against those who see the financial crisis as an opportunity to restore the power of traditional State Control and state ownership.

This will become even more important when the global economy returns to growth and demand starts to put pressure on the supply of basic commodities. We will need global markets and the forces of supply and demand to send the necessary signals to producers to raise their productivity and keep prices down. The alternative is a race to capture supply, forcing prices up, that we will all lose from in the long run.

Of course, in Britain, the Government also places strong emphasis on social protection and personal opportunity along with our commitment to markets and private enterprise. We believe economic efficiency must go hand in hand with social justice. In this model, China has nothing to fear and much to gain from further opening. This will help rebalance the economy, and stimulate moves to high-technology, high-value added products. Resisting protectionism is essential, but not enough. China has more to lose than most from protectionism’s rise. But it also has more to gain through greater openness and greater reform.

The second point to make is that, we face the difficult reality that what happens in the global economy is the result of sovereign decisions by national governments. It is simply not possible for economies the size of China, Japan, the United States or Europe to ignore the fact that their economic policies have an international dimension and a global impact. That means we all have a legitimate interest in the good governance of all economies. That is part of what David Miliband, our Foreign Secretary in Britain, said in a speech at Peking University last year, and described as “responsible sovereignty”.

So while I would not argue that these decisions can or should be simply internationalized – of course, they cannot simply in this way – there is clearly a need for a much greater awareness of this dimension and this need for international coordination and cooperation of our policies. We need a completely renovated machinery of international economic governance, where the implications of national policy can be assessed and the global dimension debated. The G8 alone is not enough. And we are all agreed that the IFIs, like the IMF and the World Bank, need to be stronger and more representative, indeed as Britain has argued in China’s case in those institutions.

The British government believes that, finally, China is completely central to this process. It accounts for almost 10% of global trade and holds the world’s largest store of forex reserves. It is one of the great engines of global demand and may be the largest economy in the world by the middle of this century if the right decisions are taken. China is at great pains to tread lightly as it grows. But there is now no alternative to the full leadership role, that its economic status deserves.

So we might ask: how well has our response to the banking crisis and the downturn so far reflected these three arguments that I have made to you? I think the answer is broadly positive. We have seen relatively little protectionist economic policy, although this clearly remains one of the key potential risks to recovery.

And completing the Doha Round will be very important to limiting protectionism in the future. It is our insurance policy against isolationism. This is an area where Chinese leadership can really help turn things around, if others are prepared to reciprocate.

The coordination of national fiscal stimuli at the London Summit in April of the G20 also gave a significant boost to international demand – not least through the four trillion yuan package and the planned healthcare reforms here in China.

China and the other emerging economies have become absolutely central to the G20 process. Which is why it is so important that we have empowered bodies like the Financial Stability Board, and that we accelerate reforms that will make the IFIs more representative of the global economy they are monitoring and overseeing. Britain is determined to continue to drive forward this agenda when the G20 meets again in Pittsburgh later this month.

The Climate crisis

Alongside the financial crisis and the management of the global economy we now face the huge challenge of acting to limit the damaging effects of climate change, and, in the process of doing so, unleash much ‘green’ economic activity and new jobs during this century. This is a challenge that is central to the development of modern China because of the costs of dangerous climate change in your country and is critical, at the same time, for all of us. The only sustainable route to economic development is based on low carbon, energy efficient technology coupled with open markets.

Unlike in Europe, most of the homes, the offices, the power stations and infrastructure that will exist in the China of 2030 have not yet been built. That great programme, that future, is ahead of you, and it provides a great opportunity for your planning now for a low carbon future. This means that China’s capacity for green growth and innovation is potentially massive. As Europe’s leader in setting low carbon targets, Britain is an obvious partner in this work and a potential source of expertise and investment.

But a key prerequisite for the kind of green revolution that this implies is a global climate change deal at Copenhagen in December. Nobody doubts the importance of issues of equity involved in a deal that seeks to limit the carbon emissions of both the developed and the developing world. Equity is a core value, a principle that needs to be at the heart of these negotiations and of any emerging deal. Nobody would disagree that the rich world carries a unique and additional burden. But rapidly industrializing countries like China, India and Brazil clearly have an important role to play, if there is to be a deal that meets the challenge we face.

If we allow these problems to become intractable, Copenhagen risks becoming an early and defining failure for the global era. A weak deal would also be a more expensive option: expensive not in the costs of compromise and action, but in the environmental and economic costs of inaction. And by an accident of geography that’s a cost that will fall disproportionately on the poor.

Britain, Europe and China

Let me finally make a couple of points about Britain’s relationship with China, which inevitably also involves the European Union’s relationship with China. In this multi-polar world, the challenge for the EU and China is to create a strategic vision of the kind of partnership we want together to build to benefit us both. One that matches the scale of our economic relationship and the importance of our cooperation in the world. One that is based above all on constructive engagement between us.

It also needs to be durable enough to handle the frictions and to allow us to speak frankly to each other. This matters on political issues like freedom of expression, rule of law and civic freedoms.

These matter to us in their own right, but also because they underpin long-term economic development; it is, for example, confidence in the rule of law that has made Hong Kong a successful international financial centre, and why it continues to flourish.

But the need for durable relationships also matters because Britain and the European Union will continue to argue for the improvement of trading conditions for their companies here; better protection of intellectual property rights, wider access to China’s markets and for our foreign direct investment.

We will continue to test some of China’s trade practices in the WTO – just as I am sure China will test ours, as it is China’s right to do so. These things are an inevitable part of one of the largest trading relationships in the world. In the context of a durable relationship they should not cause excessive political volatility.

I recognise from my time as EU Trade Commissioner that the EU itself has an important role to play in making this relationship a success. The European Union – and I know this from my own experience – can be a complex and sometimes contradictory partner. Senior Chinese negotiators often want and need greater coherence from the European Commission, and a clearer sense of who they should be negotiating with. I believe this is one of the key foreign policy challenges for the EU and the next European Commission that will take office in a few months time. We need to develop a clearer and consistent channel for communicating with China, especially on trade and climate change issues, and other key foreign policy subjects.

But getting this relationship right is also a challenge for China itself. The EU is a willing partner. It is not an aggressive power. It is an essential component of a multipolar world and we want to do business, in every sense, with China.

Conclusion: ‘the larger trend”

There has been some talk lately about the age of the ‘G2’ – America and China setting the global agenda together. To my mind this is an attempt to simplify the world in a way that is actually quite unhelpful. In May Premier Wen said in a speech in Prague that ‘the larger trend’ in world politics is towards multipolarity and multilateralism. And I agree

Europe is China’s largest trading partner; Japan and India two of its most complex and subtle relationships; Africa one of its biggest development policy challenges. There is no simple , bipolar template that reflects this world.

If my remarks today have a simple message – and I say this in conclusion too – it is to reinforce Premier Wen’s argument about the larger trend. In global economic governance; on climate change, in geopolitics in general we are entering the era of necessary internationalism.

The choices that we will make in the next few years will be fundamental to our long term prosperity and security. If we are to preserve the open global economy that has underwritten two decades of growth then we will need to draw the right lessons from the banking crisis and keep our markets open and the state playing an appropriate but not dominant role in business and enterprise. If we are to rise to the challenge of addressing climate change then we will need to be both pragmatic and ambitious. Our task as Chinese or Europeans is to be hopeful, to be flexible, to be committed. And above all to see many of China and Europe’s biggest challenges as common problems, in need of shared solutions.

Thank you very much indeed.

Hello everyone.

I’m David Lammy, the Secretary for Intellectual Property in the UK Government and I’m very pleased to have this chance to talk to you.

An Englishman, Harold Evans, called the 20th century “The American Century”. There’s a lot of truth in that. But it was also a century marked by close partnership between the USA and Britain. It was a century in which we made war together when we had to and peace together whenever we could, in which together we laid the foundation of the world’s great international institutions, and in which we together established the global financial system.

It was a century whose culture was dominated by our shared English language, too, in which the way the world viewed itself was defined by Hemingway and Lawrence, Steinbeck and Orwell, Chandler and Christie, Wolfe and Amis. All of whose works have featured in the movies, what is beyond doubt the century’s greatest cultural phenomenon.

British people played their part with you in building that, too. Right from the time Charlie Chaplin and Stan Laurel, who had come to the USA with Fred Karno’s vaudeville show, first rode the train West.

Our partnership continues today in all of the fields I’ve mentioned, and it remains strong because we continue to share substantially the same interests and values.

And the movie industry remains a symbol of those links. Through it we project on a worldwide screen not just our talent, but our beliefs as well.

In the 21st century, there will be even more consumers, more access and more desire for movies than we saw in the 20th. That’s good for your industry and for my country.

The USA leads the world economically, and in the relative importance of its creative industries. Exports of creative services from the US grossed $71 billion1 in 2008.

But UK creative exports were worth $19 billion, despite our much smaller economy. Our creative sector has grown steadily over the last ten years and currently contributes 6.4% to our economy. Like you, I want to see that growth continue, recession or no recession.

But that brings me to an important point. The challenge of the 21st century isn’t persuading people to watch movies. That demand is there already. It’s making sure those who do watch movies are paying customers rather than pirates.

The experience of sitting in a movie theatre is still something special that people expect to pay for. But piracy – especially through downloads – is a problem that will probably get worse despite our efforts.

New generation broadband access can deliver a DVD’s content in three minutes.

Unless we face up to that we risk losing the strong position we held at the end of the last century. The way people we publish and consume works has changed. Consumers eagerly reached out to grab the potential of 21st-century technology while business and governments sleepwalked into it. They built a digital culture based on access, even if it cuts across the law.

Although creative industries and governments have moved to catch up with the digital world, we still aren’t ahead of the game. And now we must decide whether. what we want balance between anarchy and authoritarianism to be in the digital world of the future.

For me, the balance must always tilt strongly in favour of freedom. But freedom to access material is not the same thing as access for free. If the world wants to continue to enjoy the wonderful dreams that the movie industry creates for it, then the world must be a paying customer to keep the whole exercise financially viable and to allow the investment it needs to grow still more.

That means more effective law enforcement. UK Film Industry research in 2007 indicated that almost a billion dollars were lost to the film and TV industries through piracy. And that’s just not sustainable.

I’m an unlikely candidate for the title role in a remake of The Enforcer. I haven’t got a .44 magnum and I don’t want anyone to “make my day”. But I have no problem about getting tough with the organised gangs who operate multi-million dollar piracy operations, often linked to wider drug and people trafficking rackets.

I went on a police raid myself last year. In one small house we seized over sixty thousand counterfeit DVDs – including pre-release titles – at a street value of over $300,000.

But in spite of everything our law enforcers do, there will be people on the street in my part of London tonight selling illegal copies of virtually any film you might want to see. Especially the ones youngsters like and including films currently on the screens, from big-budget movies like Watchmen to low-budget hits like Mega Shark Versus Giant Octopus.

So tackling supply isn’t enough. We need to tackle demand as well. Many otherwise law-abiding ordinary people believe they are causing no harm when they buy or download illegal copyright goods. They think that creators and business have already been well paid for their work.

I want us to reach out to those people. To take to them the message that what they’re doing is wrong.

We can’t afford to underestimate the challenge. A recent report found that on one P2P network at midday on a week day, there were 1.3 million users sharing content – including films. If each downloaded one file per day, this would involve almost half a billion downloads a year.

There’s no single answer to dealing with that. We need solutions tailored to the different challenges. And government, industry and the law enforcement community absolutely must work together on this. By the right combination of enforcement, education and forward-looking policy, we can make sure we build a culture of access that is also legitimate.

But above all, we must protect the livelihoods of actors, screenwriters, animators and the whole vast industry that enables a blockbuster movie to get to the public. The film business matters. The hard work of creators and industry needs to be recognised and rewarded.

The UK film industry under the umbrella of the Federation Against Copyright Theft, supported by many in this room, is one of the biggest contributors to this work. I want to thank them for the work they have done with us.

And we are getting results: we have more than tripled the number of convictions for IP offences from 400 in 2002 to almost 1,300 in 2007. And seizures of products affecting the film industry have increased by nearly 2,000% between 2000 and 2007.

We are securing longer sentences for IP criminals and recovering their assets. Recently the courts handed out an 18-year jail sentence to a criminal involved in a multi-million dollar film piracy network. And prosecuting a criminal gang selling counterfeit goods on the internet, including films, resulted in a confiscation order of over $4 billion.

And we’re not standing still. New work against illicit P2P file sharing, including possible suspension of internet access for persistent infringers, and increased penalties for IP infringement, online and offline. We are sending a clear message: when it comes to piracy and infringement, ‘digital is not different’.

But, as I’ve already said, enforcement is not enough. It is only one part of the story. Consumers, and that means anyone with access to a computer or a cell phone, have taken a look at copyright and don’t like what they see. That creates challenges for you in the film industry and for government.

A question I sometimes ask myself as I look at my own children. Does it make sense to expect a 12 year old surfing the Internet to know what they can and can’t do with the content they find – not just in their own country, but internationally? Yes, we must teach them to respect the law. But can we really expect them to master it before they go online?

And I think most ordinary people just aren’t sure what they can and can’t do – or why they shouldn’t do it.

The teenager on a download site. If there isn’t a way to explain to them in plain English that they’re doing wrong, how can we expect them to understand that they are?

The CD owner who wants a copy on his MP3 player. Is he breaking the rules or just refusing to be ripped off?

The amateur animator who wants to mash up some content she found on the internet. Is she infringing copyright or just exercising her right to free speech?

Some people don’t understand the rules. But others do, and feel strongly that they don’t make sense.

I have some sympathy with that view. Something isn’t right with copyright. Not just in the UK but as a whole. And I want to do something about that.

Since the end of last year I’ve been consulting people on the hard questions. Does copyright work in the Digital Age? Do we need to edit it for a new audience? Is the existence of infringement on a massive scale really is a wake-up call to business and the creative industries as well as governments?

Some people tell me the Internet spells the end for intellectual property. I say they’re wrong. An effective IP regime has an important part to play. I’ve spoken to established rights holders like Universal. I’ve spoken to the newer players like Amazon, Apple and Google. I’ve involved the hardware and telecommunications companies in the debate. These businesses basically want to serve their customers.

But more than 6 months of consultation showed me the critics are right about one thing. The mechanisms by which copyright operates are too complex. Licensing, rights clearance, getting permission to use works… these are all being challenged by the Internet and consumer expectations.

The systems need to keep evolving in the digital age. I don’t want to see copyright, in England, in the USA, or anywhere in the world, lagging so far behind technology that it loses relevance. Some people tell me that content is national. They tell me the solutions lie in my backyard. But content is also global.

That’s true particularly of film. For a century, film has proved itself to be a truly global medium. And technology too is global. So we need to look to global action to solve our problems.

Everyone involved in rights clearance tells me how lengthy, difficult, and expensive it can be for everyone. A computer game developer who wants to use a music clip; a television company that wants to broadcast a classic from its archive with tens or hundreds of permissions to clear; or a film company that wants to produce a DVD remaster of a cult classic. And time is money – they need quick decisions.

The conclusion is obvious – clear and simple systems for rights clearance and permission will benefit everyone.

I want us to tackle this problem if the system isn’t going to collapse under its own weight. But it’s no good individual countries operating on their own. And getting international agreement to change could take a generation. Partnership and innovation by businesses are the way forward, not a rearguard defence of systems that aren’t delivering. We need smart laws, and smart enforcement.

If there’s one battle governments and industry both need to win, it’s the battle to keep the hearts and the minds of the people who pay our salaries. I want to see people wanting more product, buying more, not frightened out of the online store or frustrated because illegal sites are simply better. I don’t want them to be scared of watching a film or making a fan-site because they don’t understand the legal risks. I want confident consumers who choose legitimate content and use it appropriately without the need for special information or technical skills.

I have said that these are industry problems which need industry solutions. I want to see businesses reaching out to form new partnerships. I’m talking about creative companies working with Internet Service Providers to build a web where rights holders are paid, and users get easy access at a reasonable price.

I’m talking about film studios working with technology companies to educate youngsters in the links between innovation, copyright and creative works on the internet.

That’s how we can get to a world where consumers will want to support those that create the content they want while getting the access and services that the new technologies make possible.

That’s how we can begin, to adapt the words of a former US President who knew more than a little about motion pictures, to tear down this firewall.

So this is about striking a balance. I think the UK, increasingly, is getting this balance right. The UK government is acting. And we will continue to put policies in place that make IP infringement easier to detect and sanctions harder to avoid.

But we need to forge a world where there is a consensus – a common sense of fairness and respect. We need people to respect artists and their works because of what they are, not because of the law they fear, or the law they don’t know about.

We need to take them with us on a journey into the unknown. A journey that will be easier and better if we all travel together.

Thank you.

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There’s a terrible, lazy assumption made about modern Britain, and that is that we don’t make anything in this country anymore.

The reality is that British Manufacturing employs more people than the financial services sector. We are the sixth largest manufacturer in the world and manufacturing is one of our biggest exports.

So much for the myth therefore that manufacturing is dead in Britain.

And for that reason it’s critical for Britain’s fight back to growth and in the decades ahead, for us to back manufacturing. And to back manufacturing means backing advanced manufacturing.

Our future is in advanced manufacturing because that is where our competitive advantage lies.

There’s no denying British manufacturing has changed dramatically over the last 30 years – and it’s been difficult change, often involving painful and difficult adjustments for companies and their workforce. But what has emerged from that transformation is a world-leading 21st century manufacturing base in Britain.

We still have the residual image, or some people do, of 30 years ago: of smokestacks and factory gates. But manufacturing is not a muscle job anymore – unless you want to categorise the brain as a muscle. It is right smack at the centre of our knowledge economy – with high skilled jobs and representing 75% of British business R&D.

It is about niches and it’s about supply chains – high value supply chains, where we are more often building high-value components rather than finished consumer goods: what I’ve called ‘company clusters’ built around ecosystems of often hundreds of suppliers. This is a world where our best manufacturing companies, as I say, will be making individual components to slot into the high value end of the production market, as often as they make finished consumer products.

And above all it is about science and technology and sophisticated skills in innovation, in design and production.

At the cutting edge

Today is about the manufacturing that we do right at the cutting edge.

This is where the low carbon solutions are being found. Where new industrial platform technologies like plastic electronics, industrial bio-technologies, lightweight composite materials and silicon electronics are reshaping the way we think about certain products.

The point is that these technologies, and others like this, are transforming the production of everything from lipsticks to solar cells, to civil nuclear components and next generation vehicles.

These are areas where Britain has immense potential. We are already a leader. But we have to remain, all the time, ahead of the curve, because the competition is always catching up with us. And therefore, if we stand still, we will simply fall behind.

We also need to recognise the risks involved in trying to succeed in high-growth industries and technologies at an early stage of development. Risky expensive barriers, especially in the current economic conditions, from which in my view it is the Government’s job to help set businesses free. Our job is to take away those barriers which hold back the development of innovative and potentially high growing companies using these technologies.

So that’s where I believe there’s a clear role and responsibility for Government in making sure we have the best possible business environment and skilled workforce for advanced manufacturing.

We can’t do the work of the entrepreneurs – nor should we try. And we can’t displace the private sector. We can’t replicate markets – that’s not the job of Government. But where there are barriers holding such business back, our job is to intervene, and try to minimise or pull away those barriers to allow for that business growth to take place. And that’s the remit of this department, our new Department for Business, Innovation and Skills.

Today’s package

Today, we’re launching a package of major new measures to help UK advanced manufacturers seize these new opportunities.

It comprises more than £150 million of targeted investment that will increase your access to information and support; help boost our skills base, encourage the take up of new technologies and tackle challenges faced by specific sectors such as aerospace.

It includes: £45 million from the Strategic Investment Fund to help develop low-carbon aircraft engine technology. We have a good track record, but again, there are others who are catching up and we are at risk of being overtaken; so we have to stay ahead of the game.

Not only advancing and perfecting products, but making sure products and their engineering processes form part of our transition to a low carbon economy. And for that, the Government’s low carbon industrial strategy and our wider manufacturing industrial objectives and strategy are going to underpin what Government in total can do to support that activity.

£40 million of support for the SAMULET Research and Technology Programme which will strengthen the position of UK aero-engine manufacturing and its supply chain through new technologies.

A significant expansion of the Printable Electronics Centre (PETec) in Sedgefield, creating up to 1,500 new jobs in the next 5 years. I’ve been to that Centre – it has huge potential; the foundations are great; it has a long way further to go and to expand.

And developing a Centre for Excellence in Silicon Design in the South West. Both exciting technologies with huge potential.

We’re increasing access to the services available through our highly successful Manufacturing Advisory Service to enable businesses across the industry benefit from low-carbon and other growing markets. Four companies, including the excellent high-potential growth company we visited in Cambridge this morning – and three others here now – have told me how their businesses have benefitted from the support provided by the Manufacturing Advisory Service.

I congratulate them, thank them, and now they’re going to have to do more with additional resource that we are putting in to the service.

And we’re investing £45 million of funding in Rolls-Royce to build four new Advanced Manufacturing Facilities in the UK – creating and sustaining around 800 jobs and sharpening Britain’s competitive edge in aerospace and civil nuclear global supply chains.

As the advanced manufacturing industries of the future evolve, we will be right behind them as a Government. With strategies on skills, innovation and venture capital that make sure they have the platform they need for global competition.

I was very pleased that we were able to launch the Innovation Investment Fund – seed-corn investment of £150m; over the next ten years I am confident that it will grow into a venture capital fund of £1bn in scale and size; in order to help back innovative companies that need growth capital.

I want to thank the Ministerial Advisory Group, the TSB, the Regional Development Agencies – which play an essential role in deepening our industrial strategies and activism in every part of the country – the CBI, and all of the companies involved in today’s important step forward.

Conclusion – Looking to the Future

If there are two messages that I want people to take away from today’s launch it’s this.

First, that modern British manufacturing matters to our future. I’d go further – it is indispensible for our future. Which is why I am determined that this Government should continue to play its part in putting in place the conditions for our future success.

It is vital to our balanced economic mix in this country. It is at the heart of Britain’s knowledge economy. As one of the UK’s biggest exports, advanced manufacturing can and must be key to our recovery from recession. The next generation of British entrepreneurs, scientists and engineers will be among the most important Britain has ever produced. And we must back them and invest in them now.

But the second part of my answer is, this is not a government that believes in the post-industrial economy. That’s what you get when you have an internet consultant with too much time on his hands. We are committed to creating the conditions in which British manufacturing can compete and prosper. We are not, therefore, a post-industrial economy. And that is what today is about. And today is, I hope, just the start of the development and evolution of our active industrial policies that will see Government backing where there is opportunity for that intervention to place; as long as we can be sure that, as a result of our action, real impact is the result.

So – opportunity and impact. Those will be the criteria which the Government will refer to as we develop our industrial activism. And I’m very grateful for you for coming here today to start that.

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The transformation of higher education

For a century and a half now our universities have been reshaped by a process of profound transformation. We have seen a revolution in attitudes to science and the developing science of technology. A massive expansion in the range and focus of universities into the study and shaping of society has also taken place. And a deep and wide change in our social attitudes to higher education – what it is, and who it is for, and whether its provision is a private or a public responsibility.

The result is the fact that our universities have been the source of a huge amount of the progressive and critical thinking on government, education, social welfare and economics that has shaped twentieth century society.

A further result is the fact that while much of the innovative science and research in British life up until the latter half of the nineteenth century took place outside of our universities, a huge amount – if not most of – the best science and innovation since has taken place within them.

Another result is the gradual shift from a country in which higher education was the preserve of a small minority, at the end of adolescence, to one in which only a third of higher students are aged 18-22 and where there are more people enrolled this year in the Open University alone than in the entire university system nearly forty years ago when I was a student. And a society in which, I am glad to say, more than half of higher education students are women, when they made up only a quarter half a century ago.

We’ve gone from having a small number of institutions, with an essentially Victorian idea of what a university education was, to a Higher Education landscape that is now more diverse in its approaches and mission statements than it has ever been. This institution, Birkbeck, with its commitment to research and teaching excellence and its innovative approach to evening study is an exceptional example of this transformation that has taken place in our university sector.

These changes are a response to economic as well as social change. The development of an industrial and then a services economy in which mass literacy and numeracy are important and where technical education and specialization are increasingly required for higher paid employment.

My argument today is that these basic trends and the issues they have raised are still at the heart of higher education policy. Over the last decade we as a country have invested hugely in our universities, more than ever before. We have actively pursued a policy of widening access. We have put knowledge and science at the centre of our vision of our economic future, and protected its funding at unprecedented levels.

We have instituted a fees system that has, in my view, been a radical and signal success in strengthening the resources available to universities without sacrificing accessibility to students.

But we are obviously facing an incredibly difficult decade of rebuilding growth and future strengths in Britain following the international banking crisis and ensuing recession. There are tough decisions ahead. Our graduates face the toughest job market for years. And ultimately those big twentieth-century higher education questions are still with us. For what end? For whom? Paid for how?

Now I’m not even going to try to answer these questions comprehensively today. But they are the backdrop to the Higher Education Framework that I have decided will now be published in the Autumn rather than now.

It will be a flagship policy statement for the new department of Business, Innovation and Skills. I recognise of course that bringing university policy into a department with ‘Business’ in its title has not thrilled everyone in the university world. But it really puts universities in my view at the heart of policy on our future growth and prosperity in our country and I want to argue today that that is exactly where they should be – right at the heart of our policy making and the future of our country, our economy and society.

I want to set out some of my initial thinking on three broad arguments. I will say something about what the economic role of our universities should be in the twenty first century – and how we should understand the very idea of an ‘economic role’ for higher education.

I want to draw some explicit lines between that economic role and the social role of universities, particularly as engines of social mobility and life long learning. Here, Alan Milburn’s report of last week has framed the parameters of the debate extremely well in my view. Finally, I’m going to argue that these conclusions about social mobility have to be part of any debate about university fees in England.

For what end: the economic role of a university

I want to start by talking about the economic role of our universities. By this I mean the uniquely important role that universities play in preparing people for the world of twenty-first century work. And the extent to which we translate the knowledge minted in our universities into economic growth, which is fundamental to our prosperity. I want the universities to focus more on commercialising the fruits of their endeavour.

Before I expand on this, I need to be clear that I do not believe that the function of a university is limited to – or even primarily about – economic outcomes. They are not factories for producing workers. Defining the skills that directly underwrite many skilled jobs in the UK is not the same as defining useful and necessary knowledge. The case for a higher education system that invests in everything from classics to quantum physics is a compelling one.

I say this not just because the utility in knowledge is often impossible to predict. It is because knowledge is an end in itself. Because historical awareness and critical thinking are part of the inventory of a rounded human being.

But also because character and economic competitiveness are actually rather hard to disentangle. If the modern economy is built on specialisms, it is also built on a raft of soft skills such as intellectual confidence, logical thinking, communication and working and collaborating in teams.

I believe that these things come above all not from particular disciplines, but from the discipline of good teaching. And for me, that raises an important challenge for universities. We have become very good at developing criteria for assessing research excellence in universities, and for incentivising research excellence. We also need to look in my view for ways of incentivising excellence in academic teaching – which is not quite the same thing.

But, as I say, the modern global economy puts a premium on specialization. It is an economy of supply chains and niches. The sectors in which British firms have potential comparative advantage in the next decade – low carbon, digital communications, life science, the creative industries: these are all absolutely reliant on high levels of knowledge, of skill and innovation. They will also draw heavily on our capacity for research and our ability to commercialise it. So our universities are inescapably central to our economic future.

I am struck that we are building on very strong foundations here. Graduate employment rates and wage premia suggest we are developing highly employable people. British universities and businesses are collaborating at record levels. Increasingly they are doing this in areas beyond the well-established research-intensive sectors such as pharmaceuticals. Just last week the Royal Society published a report highlighting the value of research collaboration in the services sector.

The quality of the UK’s universities and research base has played a critical role in attracting inward investment from knowledge-intensive businesses like Microsoft and Pfizer. These companies are not here out of fellow-feeling –they are here above all for a world-class university system and a science base that is second only to that of the US in productivity.

That same level of quality has also seen us become the second biggest destination for another kind of import: overseas students, for whom the UK is now the second largest destination after the United States.

We live in a world where 2 billion people are younger than 25 and where the appetite for Anglophone education is simply immense. So this is something we value hugely and we will continue to welcome genuine international students and ensure that the country’s immigration system, and the implementation of the student tier of the points-based approach, will fully support this recruitment in future – and I have my eagle eye well trained.

We will also throw our weight behind UK universities looking to export their brands globally as the Prime Minister and I are already doing in our own foreign investment visits.

As far as producing employable people is concerned, the key is surely the relationship between universities, employers and students. Some of our biggest companies will still say they can’t find sufficient well-qualified graduates in Britain – especially in core disciplines like engineering. We need employers to communicate clearly and constructively to universities the skills they need so that courses can adapt and evolve – something that businesses have not always done effectively. Perhaps they have been shy or felt that they would not receive a hearing? We need universities to communicate to students the career trajectories from different subject choices, and the likely market demand for their skills.

But we also need to have some sense of the wider strategic picture on skills and national capabilities. Not least because public resources are finite and it is hard to justify having no collective sense of where the marginal pound in British higher education should be properly focused. That is why we tied the funding for 10000 additional students this year to the skills that the economy will need for the future, particularly science, technology, engineering and mathematics degrees.

We also need to encourage and assist universities in exploiting the intellectual property they generate to drive wider economic growth. The Innovation Investment Fund that Paul Drayson developed and that we launched as part of Building Britain’s Future will provide a huge new pool of venture capital for university spinouts. I hope that over the coming 10 years the Innovation Investment Fund will grow to £1 billion and we have already as a Government set the seeds for that growth.

But we also need to look for ways to encourage further collaboration between researchers and industry. It strikes me that one of the biggest challenges here lies not with universities, but with businesses. Especially with small firms, who simply don’t realize the resources they have down the road in the local lab.

This is why we need to keep looking for innovative ways to bring businesses and researchers together, including incentives for collaboration in the new Research Excellence Framework.

I am also keen to do some further work on the unique role of postgraduate education, which is often the point where students develop specialist skills to complement a more general undergraduate education. It is also a major export earner for the UK, and one which we have perhaps taken too much for granted. For that reason, I have decided to launch a review of postgraduate provision in Britain, led by Professor Adrian Smith, the director general of Science and Research in my department. It will draw on expertise from universities and businesses and report back in early 2010.

So, to sum up, it seems to me that in defining the economic role of universities we come up with a set of linked challenges all of which are tied to the critical role of universities at the heart of a knowledge economy.

Equipping people as rounded intellectual beings but also giving them the skills they will need in a global economy.

Turning more of the knowledge that is generated in UK universities into jobs and growth, especially by bringing businesses and universities together to collaborate even more than they do now.

These are management challenges for individual universities; but they are a strategic challenge also for the UK as a whole. The diversity of mission statements and the autonomy of universities in defining precisely how they serve their students and customers is clearly vital. But there is also a need for a collective strategic vision for the sector and its role in our national economic life. That is the balance we will aim to strike in the Higher Education Framework when we publish in the Autumn.

For whom: social mobility and lifelong learning

This picture of the economic role of higher education has some immediate and obvious implications for how we see its social role. If a university education is an entry ticket to the best paid employment and a preparation for a globalised world of work, then access to it will inevitably define the degree of social mobility that we’re able to achieve in Britain.

We are doing better, but not well enough. I am impatient about this progress and intend to turn up the spotlight on university admissions.

Alan Milburn’s report was a milestone. As he set out, this is a much bigger issue than just higher education. It has implications for parental attitudes and the whole education system, especially the journey towards or away from university that begins in the early teens, or indeed even earlier than that.

In thirteen years as MP for Hartlepool I saw first hand the damage that can be done by low expectations and by barriers to social mobility. I have always believed that a fair Britain is one in which the daughter of a Hartlepool shopkeeper has the same shot at being a High Court Judge as the son of a Surrey stockbroker.

Now of course it is true that university education is not the only way to prepare successfully for modern economic life. Indeed I believe that one of the great challenges for this government is now further defining and promoting different pathways into non-graduate careers, building on our strengths in further education and developing adult skills. We now have quarter of a million apprentices in this country – five times more than we did a decade ago when this Government started out – which opens up the potential to develop over time a whole new offer to young British people for professional development.

Nevertheless, a university education remains the gateway to the professions and a ticket to higher lifetime earnings on average. So I think we have to ask: why, for all the work in the sector and all the seriousness with which it has tackled this question are we still making only limited progress in widening access to Higher Education to young people from poorer backgrounds – especially at our most selective universities?

We clearly need to look again at how, and how early we identify and engage potential candidates for university. I am attracted to the idea of stronger links between the professions, universities and schools – work experience, early mentoring, clearer lines of communication about what preparing for university and a career in the professions means at every stage of secondary education.

And I agree with Alan that as well as the usual criteria of standardized testing, there is a strong case for using other more contextual benchmarks for talent spotting that look at the way candidates have exploited the opportunities open to them in their lives. Some universities in the UK are using such approaches already. There is good evidence that they work. And any Vice Chancellor that takes a broad and innovative approach to identifying talent will have the firm backing of the government and of me.

I also think we need to ask whether the higher education system adequately supports mature students and part timers. I think we have taken huge steps in all these areas – not least in the pathbreaking model of the Open University and here at Birkbeck, which openly positions itself as “London’s evening university”.

But we need to be that serious about adult skills and life-long higher and further education, for a number of simple reasons. First: almost half of British university students are already mature students. Second, most of the future British workforce of the 2020s is already in their twenties or older, and it is their skills that will determine our economic capabilities at that critical point. Third, the demographics of an ageing population mean that even with an influx of foreign students, the student market is going to get progressively older, and demand will reflect that.

There is clearly a place for the conventional, campus-based, full time, away-from-home model of study leading to a final degree – to state the obvious. But we need to keep encouraging the alternatives that are springing up: two-year honours degrees, part time modular degrees, modular programmes that don’t have to lead to a full degree.

These are controversial issues and they evoke passionate views. But they need reasoned debate and I don’t shy away from that. My provisional conclusion, suggested by the ideas I have just floated, is that we need to do more in these directions.

Rightly, we have invested heavily in excellence in British universities. We have an obligation to ensure that the chance to benefit from that excellence is determined by natural talent rather than social background. We also need to ensure that higher education can be an integral part of a whole working life, not just its antechamber.

Paid for how: funding and access

Which brings me to my final point, which is about funding. Bluntly put: excellence is not cheap. When this Government came to office, we faced the challenge of maintaining a world class university sector, with higher participation rates. And I was in the Cabinet Office at the start of the Government’s term and I

remember sitting in meetings as we took on the funding gap in the order of many millions of pounds, which was accompanied by debate from all sides. We now face the same challenge with inevitable pressure on public resources. We cannot duck the issue: everything we want to achieve in higher education depends on a solid, sustainable system of funding for higher education.

Part of the solution must be widening the sources of funding universities can draw on. This might be a more professional and confident approach to seeking endowments and donations. It can be growing income from research collaboration with industry or even government. It can be marketing a university brand around the world. Universities are doing more of all of these and I welcome and encourage that. But they alone do not represent a sustainable funding model for the sector as a whole.

Inevitably we are going to come back to the balance of state and user funding. And this raises the issue of fees, and their role in paying for world class institutions. I have no intention of pre-empting the independent fees review that we will launch in the Autumn on this question. But I would make a simple point that follows from everything I have just said.

I do not believe that we can separate the issues of fees, access and student support. Any institution that wants to use greater costs to the student to fund excellence must face an equal expectation to ensure that its services remain accessible to more than just those with the ability to pay.

There is a lively debate in this country on how we should fund higher education and I welcome that debate and I am going to nurture it. It is time for that debate to reach some absolutely hard and fast conclusions. But whatever funding mix for higher education we develop, there must always be a link between what an institution charges and its performance in widening access and supporting those without the ability to pay.

Conclusion: higher education in modern life

I realize that this is an audience probably used to sitting through overlong lectures, but I have no intention of pushing my luck, so let me sum up. I’ve sketched out what I think are some of the biggest issues that I want to tackle in setting the direction of higher education in our new framework in the Autumn. I haven’t been exhaustive this morning and I’ve asked more questions than I have answered, but that was partly the point because you are going to have to help me and the Government find these answers. We won’t find them alone.

However, I think I’ve made it clear what sort of Universities Secretary I am and where I am coming from. I’ve argued that in a modern economy and society universities are a social trust. They have three great roles: passing on existing knowledge, generating new knowledge, and helping ensure that new knowledge underwrites our collective prosperity wherever possible. I believe that the way we enable and equip our universities to do these things will say more about how we understand the unique challenges of prospering in a globalised economy and culture at the start of the third millennium than almost anything else a government can do.

I’ve argued that there is no tension between a more strategic view of Britain’s universities as critical to our knowledge economy and our future economic growth and their essential autonomy or their cultural and civilisational role. That is fundamental to my entire approach to policy in respect of universities. The man in Whitehall – and increasingly the woman – does not know best how to run a university.

Far from the gross caricature of academic insularity, I have been incredibly struck, since my appointment, by the massive appetite in the sector for what I can only call ‘relevance’ to our economic and social challenges in a globalised economy. I have yet to find a Vice-Chancellor in an ivory tower in respect of dealing with these economic challenges – maybe by the chance I have covered the length and breadth of the country I will, but not so far. I’ve been asked many times by university leaders with respect to the economy: ‘how can universities help?” For that reason, I believe the logical home for university policy is in a new department whose core remit is investing in economic growth, investing in our future. Building our national strengths in knowledge and innovation. These are also the remits of a modern university.

However, I’ve argued that we are at risk – as are all countries that aspire to excellence in their higher education sector – of failing properly to exploit the role of university education as a means of social mobility.

I think that the historic anti-elitism of some parts of the left on education policy has often been a dead end because it has confused excellence and privilege. Those two things are not the same. But the only way to square that circle is a higher education system that widens access and increases social mobility even as it fosters excellence. It is not enough for universities simply to confer life advantages from one generation of professionals to their children. Everyone should be able to aspire to those advantages – on the basis of merit, not the lottery of birth.

Finally, I argued that we cannot separate these issues from the question of how higher education is funded in England. We have to face up to the challenge of paying for excellence. But whatever the outcome of the fees review, our expectations of institutions in widening access and supporting poorer students must advance in lockstep. The path to an equal opportunity Britain must run through all our universities.

I started by suggesting the last hundred and fifty years have seen a revolution in British universities. I’ll finish by saying that it seems to me that this has been an undeniably progressive revolution.

It has embedded science in our national intellectual culture and widened access to knowledge, education and critical thinking to a degree that is hard to exaggerate. It has fundamentally reshaped our liberal arts culture and our democracy. It has underwritten the creation of new industries and better jobs for literally millions of people and played a crucial role in equipping British people to prosper in a globalised economy and culture.

However, for us as a country it is also an unfinished revolution. And in that fact, for us, lies both the challenge and also the huge opportunity.

In this debate Pat McFadden examines the impact of three European judgements – Viking, Laval and Ruffert – on the Posted Workers Directive. The Directive, which was introduced 10 years ago, operates throughout the EU and allows companies to post their workers to another member state on a temporary basis in any sector of the economy.

Read the debate in Hansard

I’m very honoured to be here for this year’s National Apprenticeship Awards. Many thanks to our host – the National Apprenticeships Service – for inviting me.

I am here tonight in my capacity as Minister for Apprenticeships. For the first time, the Prime Minister has given this responsibility to a Minister reporting to two Government Departments.

Working within the Department for Business, Innovation and Skills to ensure that Apprenticeships are positioned to help business and people, excel and thrive in the future world economy. This is especially important and challenging during the difficult global economic climate.

Working within the Department for Children Schools and Families my focus is equip our young people with the skills they need for success in their working lives.

When young people are looking to get into work, or get on at work, it is vital to learn new and relevant skills so set you apart from the crowd.

I am sure that you will agree, that the talent showcased through our celebration tonight – that Apprentices can and do stand out from the crowd.

That is why we have committed to make sure that Apprenticeships are a mainstream option for 16-18 year olds and aim to ensure that an Apprenticeship place is available for all suitably qualified young people by 2013. We expect that one in five of all young people will be undertaking an Apprenticeship within the next decade.

As a new Minister I have been impressed by the huge range of Apprenticeships across all sectors of the economy.

But our aspiration is to grow the range of Apprenticeship opportunities so that many more people and businesses can reap the benefits. We can only succeed if many more employers can be convinced that taking on an Apprentice is a sound business decision.

We also need to make sure that employers understand that Apprenticeships are no longer only about traditional trades but are available in across a wide range of industry sectors and occupations.

Our showcase of talent tonight through the Apprenticeship Awards helps us to do just that. So I thank you all for your support.

Our host, Matt Dawson, is of course living proof that apprenticeships stretch across all sectors – from the tough, competitive world of international rugby to the very different but equally competitive world of Strictly Come Dancing.

I very impressed by the fantastic energy and enthusiasm evident here tonight. The unleashing of this commitment to skills and training is an exhilarating experience for me and I am sure for all of you.

This commitment and the life-changing impact of Apprenticeships on individuals is as worthy of celebration as University graduation and I am glad we are recognising that tonight.

Also I am absolutely convinced of the need to get the Apprenticeship message across to even more employers. Apprenticeships are good for business – good businesses believe in and deliver Apprenticeships.

I am grateful for the efforts of all here tonight, those who organise, plan and deliver Apprenticeship frameworks. Without your efforts young people and adults and employers would not benefit from a high quality training programme.

I recognise that investing in skills, investing in your workforce, investing for the future – in trying economic times is not the easiest choice. However, you are all proof of the value of Apprenticeships. I urge you all to keep up the good work.

Finally, I would like to congratulate all the Apprentices and employers recognised regionally and nationally in the 2009 Apprenticeship Awards.

Thank you.

Pat McFadden takes part in a debate on the Diageo plants in Kilmarnock and Hurlford.

Read the debate in Hansard

It’s a real delight to be with you today for my first major speech as the Minister for local government and Minister for regional economic coordination.
As I was looking at the delegate list on the way here I was struck by how varied and distinguished the audience is today. It is a testament to the Local Government Information Unit’s success and reach over the past 25 years. So it’s no surprise you were voted Think Tank of the year last July.

I want to thank you for bringing together such a thought-provoking essay collection in the publication ‘Do Regions Matter?’. I’ve been looking closely at the ideas it contains. This is one of the key issues we are facing at the moment.

In my foreword to that publication, and in my speech to you today, I want to set out how I want to work across Government – to speak for our regions in Whitehall and Westminster, and help local authorities drive economic growth in all areas of the country.

But I do want to emphasise that one of my key objectives is to make sure that we do have a very open dialogue. It is that kind of collective thinking, that exchange of ideas, that dialogue, that organisations like the LGIU provide so well and that I want to take advantage over the coming months and years.

As I hope everyone today will recognise, the Government is absolutely committed to economic prosperity and opportunity for all – whoever they are; wherever they live – and thriving, cohesive communities are built on strong local and regional economies.

We all know that at the moment, because of the global downturn, people are worried about their jobs and their homes and we have to be there to help them.

The Prime Minister has made it very clear that minimising the effects of the downturn and achieving a rapid upturn is the Government’s top priority.

Every area of the country is feeling the downturn, but in different ways, and to different degrees. So our response must be region by region, area by area, so that we are supporting local economies in the most effective way.

My role is to make sure that we are connecting local, regional and national action.

I want to support the work of Local Authorities, Regional Development Agencies, delivery partners and the business community, bringing together my role in Communities and Local Government as Local Government Minister with my role in the Department for Business, Innovation and Skills, and coordinating the work of the regional ministers. But giving it a new, sharper focus on the economy.

The importance of regions

So as you have probably gathered, I strongly believe regions do matter.

I have always been in favour of regional government. I worked with John Prescott on the Alternative Regional Strategy, which formed the basis of many of the structures we see today. I campaigned hard in the referendum in the North East, and I was disappointed with the outcome.

But my view is not rooted in dogma. It is based on the clear evidence that a regional approach to economic development does work.

In 1999 we set up the Regional Development Agencies, to promote enterprise and drive economic growth in every region. And I don’t agree with the argument that they have been a costly failure. I believe the RDAs have been extremely successful.

The independent study by PricewaterhouseCoopers, released earlier this year, showed that, on average, every £1 spent by the RDAs generates an extra £4.50 for their regional economies.

RDAs have also created or safeguarded 720,000 jobs between 2002 and 2008.

And they are beginning to narrow the historic gap in economic performance across the English regions. By the first half of this decade the gap between the growth rate of the greater South East, and the Northern, Midland and South West regions had started to close, defying the long-term trend.

So I think these facts speak for themselves. Active regional policies deliver real economic results.

The RDAs have flourished during our fight back against the global recession. They have been able to provide economic leadership; they have been able to catalyse investment in key infrastructure projects; they have worked to attract vital inward investment; and they have played a critical role in sustaining viable companies. All these are essential building blocks for economic recovery.

As well as supporting businesses, through the ‘Real Help’ initiatives, there are examples of RDAs around the country intervening to blunt the impact of the recession:

• Advantage West Midlands has used its Transition Bridge Fund to give loans totalling £9.2million so far to companies, securing 3,156 jobs.
• One North East is funding a £2.4million pilot scheme to boost research and development. Matched by private investment, the fund could generate a return of up to £20million over three years.
• And the East of England Development Agency has put an extra £1million into its main skills programme to provide retraining, advice and support to 2,600 people facing redundancy.
  Interventions like these can be absolutely vital to reinforce what local councils are doing to support local industries and to develop a strong business environment.

The Regional Improvement & Efficiency Partnerships, led by local councillors, harness the expertise of local authorities to drive forward greater efficiency, innovation, citizen engagement and collaborative procurement.

They have been very successful at regional level, and that’s why I am pleased to announce today that I can confirm we are investing another £68m in the RIEPs this year.

All this is part of our planning for the future so we are prepared for the upturn when it comes. Because, despite the worldwide downturn, the global economy is set to double in size over the next two decades.

Building Britain’s Future

That’s why, last month, Gordon Brown launched Building Britain’s Future. It set out the smarter, more strategic approach to industrial policy that the Government needs to take, to ensure our people and businesses are equipped to compete in the new global economy that will emerge from this downturn.

What we need to do now is work together – Whitehall, town halls and RDAs – to translate that vision for the future into a blueprint for action in every region and every local area.

The new Single Regional Strategies will be crucial to that process. These will enable councils and RDAs to set their economic priorities and target investment on growth sectors.

For example, the South West RDA is earmarking £11million to develop new capabilities in aerospace technologies; and in the Midlands, the East Midlands Development Agency and Advantage West Midlands are investing over £40million in the Manufacturing Technology Centre near Coventry.

But the success of the strategies depends on local government. Councils have to be at the front of the drive to develop local and regional economies.

Over the past twelve years the government has given Local Authorities more freedom and flexibility, whether through Local Area Agreements; through Multi Area Agreements, which have provided a new framework for joint working between councils; or through the first ever three-year finance settlement.

But I want to go further and help focus local authorities and regions squarely on improving our economic prosperity.

Strengthening local and regional economies

So let me set out my three main priorities for the coming months and years.

First, it’s vital we continue to give councils a strong economic role to help get through this recession as quickly and painlessly as possible.

Councils know their local areas, they know their local businesses and it is right that they lead their communities out of the downturn – and it’s right that Government supports them. That’s why we have asked councils to focus on worklessness and lead our £1billion fund to create 150,000 new jobs.

We are determined not to leave another generation on the employment scrapheap, which happened in previous recessions.

Already, through Local Area Agreements, Councils are tackling economic priorities in their areas.

Today I am publishing research that CLG commissioned, which shows that councils are increasingly making economic development a priority, and that the LAA process is valued locally because it brings stakeholders together to decide upon local economic priorities and, importantly, how they can work together.

We’ve seen fast action from Local Authorities during the downturn. Giving debt advice to people worried about paying the bills; training to get people back in to work; and support for business.

Local Authorities in Yorkshire and Humber have signed up to an economic pledge, which cements their commitment to the economy of their areas. The Authorities have made twelve promises to their area – for example, paying bills promptly to keep cash flowing to local companies; helping get people into Council jobs and other local jobs; and using the Councils’ buying power to benefit local businesses and to benefit the local economy.

To translate commitment into action, close co-operation can often be absolutely essential. We can already see this working in the ten Multi-Area Agreements, where councils can, over a wider geographical area, shape services around the needs of communities – in skills, employment, education, and health.

We are currently legislating to allow groups of councils to create Economic Prosperity Boards. These will provide a further option for MAA partnerships that want stronger sub-regional governance, and I am keen to ensure that serious economic development powers and flexibilities are placed on the table to give these new vehicles real impact.

But we certainly need to think further about other ways to motivate local leaders to help businesses with job creation. This might include a new set of incentives to drive the fight against worklessness further up the agenda of every single local authority.

As I have said, economic development now needs to become the core business of councils, working in partnership with RDAs.

That is why today I can announce that I am reopening the LABGI scheme with £100m over the next two years – money which councils are free to use to help increase local business and jobs so they can drive their economies beyond the downturn.

And there are other opportunities for Authorities to do more for their communities. Yes, we need to think about incentives for job creation. But there are already powers available – like charging, trading and the wellbeing power.

There are some good examples of councils applying real imagination to economic problems:

• Broxtowe Borough Council has brought the Citizens’ Advice Bureau into its main council offices, so residents find it much easier to access the CAB’s valuable advice.
• In East Sussex small businesses are being offered specialist advice on how to survive an economic downturn. The county council has teamed up with Business Link Sussex to develop an intensive programme aimed at supporting up to 300 local businesses.
• Wakefield is leading the way in providing mortgage assistance loans, and has set up a new council scheme specifically aimed at assisting homeowners at risk of losing their homes through repossession.

And if those powers don’t go far enough then let’s hear your new ideas. Tell me what more is needed to better serve local communities. I think it is vital that we examine very carefully, across government, ideas that can help local economies in these difficult times.

Exploiting economic potential wherever it exists

Secondly, we need to ensure no towns or cities are left behind.

When the country last faced serious economic difficulty in the 1980s and 1990s, local problems were still tackled centrally with top-down solutions. Councils didn’t feel they had the powers, the skills or the financial resources to respond. In a sense, London stood alone as an economic powerhouse with its own local control.

But today, what we’re seeing is that London is one of those areas hit hardest, so we need other cities and regions to drive and support growth more than ever before. Industrial strength and competitive advantage in the regions must provide the foundation for our national economic success.

Over the last 12 years we have made that possible by regenerating our towns and cities. And now Leeds and Manchester are at the forefront of that as the city-regions pilots, but that does not mean other areas shouldn’t up their game too. Let me make it clear that success isn’t just for urban areas. The Pennine Lancashire MAA shows what ambition rural areas can show with the drive to make it happen.

Our English regions don’t need permission from Whitehall to get on with driving their economy and I want to make sure we remove any barriers in their way. So those are the ideas I want to hear.

The need for innovation

Thirdly, alongside the push for greater efficiency we will continue to ensure Local government finance is on a firm and secure footing. Any savings councils make can be recycled back into services or used to keep council tax down.

Councils are often the largest employers in many towns and cities and they purchase billions of pounds of goods and services. But we should be asking ourselves whether our procurement practices allow authorities to support and invest in their local economies, keeping local firms involved and giving local businesses a fair chance to bid for these tenders. We should think about how we can perhaps do more to support that.

Local councils and regional agencies have done a tremendous amount of innovative thinking over the last 12 years. We in government need to support that innovation and make sure it continues to flourish in difficult economic times.

We need to celebrate that innovation and make sure we are always introducing fresh thinking into our policy development.

Conclusion

I think we can take inspiration for fresh thinking from the founder of the building we meet in today.

Sir Henry Wellcome was a well known pharmaceutical entrepreneur and founded one of the world’s largest medical charities – the Wellcome Trust.

But what you might not know is that he started his career in the 19th century by marketing his first invention – invisible ink. He advertised his invention as ‘Wellcome’s magic ink’ in his local newspaper. Pretty impressive at the age of 16.

He was an innovator – although customers for his so-called ‘magic ink’ may have been disappointed to discover that it was actually made from ordinary lemon juice!

Our innovations are more tangible. Based on evidence. Affecting people’s lives for the better. But we should always think creatively about how to work together.

This Government has, I believe, already made great strides in protecting the country against the worst excesses of the global downturn.

Our challenge – together – is to do more, to go further, to dig deeper to boost our economies, so we are ready to springboard into the upturn.

We need to support our people and communities in difficult times and prepare them for the future. Together, I believe we can do that.

Thank you.

As I was looking at the delegate list on the way here I was struck by how varied and distinguished the audience is today. It is a testament to the Local Government Information Unit’s success and reach over the past 25 years. So it’s no surprise you were voted Think Tank of the year last July.

Thank you for inviting me to talk about my old stomping ground of trade, which I’m pleased is folded in to my new responsibilities.

I know the IGD is celebrating its centenary (1909-2009) this year, but I imagine people who work in grocery retail must look back at just the last twenty years and shake their heads at the way your industry has changed.

The technology behind the logistics and inventory. Certainly the change in British tastes and eating habits. The modern British supermarket is an all-purpose, exotic bazaar geared to all tastes and needs compared to its seventies’ equivalent. You know, these days, even in Hartlepool, it’s probably harder to find mushy peas than guacamole!

While a big part of the grocery trade will always be local – not least because carbon and quality conscious customers are going to demand it that way – this is nevertheless a truly globalised industry. Because the tastes and expectations it serves are now globalised. And the markets that supply it are now globalised – as well.

What has happened to your supply chains is part of a general trend towards fragmentation that has reshaped the way we think both about production and supply.

The net effect of this change is to give a huge number of people, from customers who like the choice and the price effect, to buyers and inventory managers, to developing country producers, a stake in an open trading system.

Many of our producers have the same stake. It’s easy to forget in this high tech world that British cheese and Scotch whisky – for example – are hundred-million and multi-billion pound UK export industries. Just the kind of balance-of-payments-improving industries that we will need more of over the next decade.

What I want to say something about today is the way this is forcing government to change the way it looks at production and supply in the economy. What it means in the recession, but also for trade policy in the longer term.

Threats to the open trading system

Now, even two years ago when trade was booming I would have said that it would be a mistake to take the openness of that trading system for granted. The fact that we have had a twenty-year bull market in trade liberalisation doesn’t mean it cannot go backwards.

You see that in the unease many people feel in the US and Europe about China’s growing trading strength.

We saw that at the height of the commodity price boom two years ago when net food exporters put up trade barriers in the name of food security, thereby guaranteeing food insecurity for their food-importing neighbours.

It’s worrying that countries including China and the Gulf States are buying up farmland and resources in Africa as a way of trying to guarantee their own supply.

It suggests that they just don’t believe – or they are not willing to trust that others believe – that the best way to control price volatility is to make the market as transparent and open as possible, so the supply and demand signals can push up productivity and food production. And if commodity prices rise again, then this is a huge potential source of international tension.

Now, of course trade is no longer booming today in the current period, as it was before. The WTO are now predicting a 10% fall this year and volumes are lower than at any time since the second world war. Trade is being hit from two sides: from a massive global slump in demand, and from the contraction in the supply of trade credit as a result of the banking crisis.

The challenge we face is making sure that this slump is reversible, is temporary. Because the openness or otherwise of the trading system will determine how quickly a return to growth and demand can be transmitted around the global economy.

I don’t think this is the nineteen thirties we are looking at now. I think that peer pressure and business and consumer pressure and WTO rules make it very unlikely that we will see a repeat of the Smoot-Hawley tariff wars of the inter-war period.

But economic nationalism is showing up in other ways. In Buy America, in Buy China. In the small print of stimulus packages and the support packages which are being introduced for certain industries.

So we need to be on our guard against protectionism. It is right and good that G20 and G8 leaders have kept this at the top of the agenda, as we saw in today’s reports from yesterday’s meeting. We need to support the WTO in applying peer pressure to countries that try to free ride on the general openness of the trading system.

We are part-funding the Global Trade Alert initiative, a new independent watchdog that will provide independent analysis to the public of trade distorting policies.

We also need strongly to support the next European Commission in taking a forceful line on rolling back bank crisis and other measures taken within the European single market when they are no longer needed.

It would be a disaster for us, if we were to see an erosion that would undermine the single market – we cannot allow these measures to permanently damage the European Single Market.

The real driver of greater trade integration

But we also need to recognise that the real force driving and sustaining greater trade integration isn’t the WTO or governments negotiating FTAs – its traders trading.

It’s the retail and supply chain businesses that are sourcing and supplying internationally, and indirectly the customers that benefit from that.

It’s ultimately these businesses that can and will pressure governments to keep domestic tariffs down and markets open, because they and their customers can really quantify the costs of protectionism. They feel it in their pockets.

I draw three conclusions from this.

Openness to imports

The first is that we have to make sure that it is easy to import into the UK and into Europe.

In a supply chain economy, or the supply chain of a modern major grocery business, every cost at the border goes straight to the bottom line, and probably ultimately to the high street. And for a big re-exporter of imported parts and unfinished products as we are in the EU, that makes little sense.

Tariffs also keep internal prices higher than world markets, which is of dubious value if you’re a shopper.

Anyway, to help importers we have been looking at a range of ways to ease their burdens. Last year’s Pre-Budget Report asked the Department for Business and HMRC to lead a work programme to review the costs of complying with international trade regulation at the UK border.

This sector has made a big contribution to that, for which, I thank you. Our final Action Plan will be published alongside the 2009 Pre-Budget Report.

Support for exporters

Second is that we have to give exporters the help that they need. The UK needs, in any event, to strengthen its export performance as a counterbalance to a necessary balancing of consumer spending in the economy.

UKTI already does a huge amount of work in this area and I know it works with many of your members. We strengthened it with new funds at the Budget.

We have also been working on two further forms of support for exporters to reflect the fact that about a quarter of British businesses say they are having problem getting trade credit in the current environment.

We’re consulting on a scheme to underwrite letters of credit from banks for exporters. As well as possible plans to expand the business model of ECGD to provide a wider range of support for exporters, both in the short and the medium term.

A world trade deal

Finally, and at a completely different level of global aspiration, we need a global trade deal, and we need to understand why it is important that we have one.

If I’m right about the basic role of business as the main force behind trade integration, then the key role of the WTO may not be to drive forward trade liberalization in huge strides.

This is because trade opening is often too sensitive and involves too many domestic pressures and vested interests to really be negotiated under international pressure.

The key role of the WTO system is therefore periodically to lock in that new openness with a trade deal, to make sure that what has been incrementally achieved through voluntary means is locked in – so that the gains cannot be lost, so that there cannot be a slip back to protectionism.

Because a trade deal locks tariffs at around their current level or lower, it acts like an insurance policy against future protectionism.

But Doha would also lock in recent reforms of the Common Agricultural Policy, which are helping to improve competitiveness of the food industry across the EU. And it will cut many of the EU’s highest agricultural tariffs, which would be good for food processors and retailers.

There is a lot of openness that is at risk. Its fifteen years since the last global deal, and that is fifteen years worth of trade liberalization that can be rolled back without breaking a single WTO rule.

Which is why a trade deal matters so much now, in a recession, when economic nationalism is that extra bit tempting, rather than less.

We have a new Indian administration that has clearly signaled its willingness to come back to the negotiating table for the trade round. The US has an internationalist President who seems open to the prospect of a deal, despite scepticism from Congress and some parts of the business lobby. And with commitment from the G8+5 group of countries yesterday to conclusion in 2010, we need to keep up the pressure.

Conclusion: trade and the upturn

So, in conclusion. I don’t think you can separate the basic issues of trade policy from the recession and our response to it.

We know that it is exports and investment that will drive recovery out of this recession.

The trade policy choices we make in Europe and others make across the global economy will determine the cost of the commodities on your shelves, the cost of your goods to the customer.

And ultimately they will help determine how quickly and effectively a return to growth in the global economy can become a sustained upturn.

One of the things I think the UK has done well over the last decade is to make the case for a globalised economy internationally and in Europe. And we have got to keep doing precisely that. As I say, our challenge now is to make sure that that trading system survives the downturn and that your businesses thrive in the upturn and beyond.

One thing everyone says about London: it’s a global city. And it’s a great city. And it isn’t an island. It faces opportunity and challenges because it is making its living in the world. Doesn’t feel like anywhere else in Europe. Globalisation’s left its mark on London and London’s leaving its mark on globalisation.

But this is also Britain’s first city, driving investment and innovation across our regions. And London needs to keep looking out not just at the world but to its British hinterland.

Vulnerabilities… and strengths

Obviously, London as a global capital, and world-leader in financial services, has felt the effects of this global crisis.

Disposable spending is down which hurts retail and global demand is badly down, which hurts any London business which exports.

But this city’s wider economy has always been about more than just finance – a major international centre for business services, the creative industries, IT, tourism and hospitality.

With one of the largest and most diverse clusters of Higher Education Institutions in the world, it’s a leading location for cutting-edge R&D and hi-tech, innovative companies.

Also cultural leadership – in the arts, design and media.

This is what makes London a magnet – for people, FDI, ideas.

And over 900 businesses, more than half of them are from London, have already won £3.5 billion of work supplying the Olympic Delivery Authority. We need to turn that huge economic opportunity and showcase into a legacy of skills, infrastructure and experience for the capital’s economy.

Challenges for London

But other global cities like Paris, New York, Dubai and Shanghai are investing in their comparative advantages too.

And the next great wave of global wealth creation will probably be on the west coast of the Pacific Ocean – that’s a challenge for London.

Building London’s future…

But the other big trends of this century all go in London’s favour – the continuing expansion of the global services economy, low carbon, the need for new solutions to urban living, digital communications and fragmented supply chains.

Last week, in Building Britain’s Future – the Government set out a prospectus for Britain’s economic recovery and renewal based on the pursuit of those markets.

The new Department for Business, Innovation and Skills brings together in one place the policy levers to do this. To my knowledge it’s the first time a government has taken that strategic choice. Our focus is to equip the UK to compete in a 21st century world economy.

[Political content removed]

Investing in our strengths

Wherever you can point to future potential in the UK economy you will find this government focusing on how active policy can tap it.

World-class infrastructure for a business capital of the world? We’re working with the Mayor and LDA to deliver the infrastructure improvements this 21st century city needs.

Crossrail alone will add over £20 billion to the UK’s economy, creating thousands of extra jobs and boosting capacity. We’re not making the wrong decisions in this downturn, as have been made in previous downturns. Nor are we cutting investment in other infrastructure and skills, in our schools and hospitals and other essential economic capabilities.

For the same reason we made the decision to allow Heathrow to develop its third runway, albeit subject to some of the strictest environmental criteria ever imposed. London lives and dies by its transport infrastructure.

And we’re funding world-leading numbers of ultra-low carbon vehicles through the Technology Strategy Board, and supporting innovative UK companies in the transformation of this industry. London is also leading the way in the use of electric vehicles and we will keep on working with the Mayor on his plans.

Our Digital Britain action plan will also get broadband to just about every home and business in the UK in the next few years – building a digital infrastructure, that can power London, and the UK’s, creativity.

And our people? London’s a highly skilled region. But there’s still a large part of its workforce that doesn’t have the skills or qualifications that they need. With record investment, we’re supporting LSEB in its work to integrate and streamline the skills and employment support now available.

The City

No less fundamental is the City, even if it has taken a knock. Over the last ten years, we’ve built and supported one of the world’s most competitive business and investment environments – helping cement London’s global reputation as a financial centre. And we’re committed to maintain it across the sector in areas including private equity and hedge funds.

As the Chancellor set out yesterday, we’ve got to work hard to get the regulation right on this. And we’ve got to be engaged in shaping the reform of European and global regulation to ensure a stable, competitive UK financial services sector.

And, incidentally, we won’t influence EU policy by cutting ourselves off from Europe. We won’t persuade others to adopt our point of view in Europe by isolating ourselves in Europe. [Political content removed].

But the City faces a challenge: no doubt about it. Culture change in many boardrooms and back offices. A bit more old fashioned banking.

I believe the point about the City’s future competitiveness lies not in it being less regulated than anywhere else, but in a level global playing field, where the comparative advantages of London make their own case.

Conclusion

But being a global city is about more than just global finance and big business.

It’s about the creative industries built on London’s strengths as a global cultural capital.

Start-ups being launched from a kitchen table in Tower Hamlets.

Architects who are greening buildings and the designers working on low carbon technologies.

Businesses – large and small – building their links in Europe and other key markets. Like any economy London’s diversity is its strength.

And it might seem beside the point to spend so much time talking up the resilience of a city that has prospered on this spot for more than a millennium.

But in a recession it is important to remind ourselves of our strengths even as we put all our energies into fixing our vulnerabilities. One thing London doesn’t suffer from is a lack of confidence. That together with the brilliant personality of its citizens will turn out to be its strongest asset of all.

Check Against Delivery

In this House of Commons debate, Pat McFadden discusses the importance of manufacturing to the UK, emphasises this is the sixth biggest manufacturing economy in the world and explains how an active industrial approach will help prepare the country for the upturn.

Read the debate in Hansard

The choice

It’s a pleasure and a privilege to be invited to open the Peter Callum Centre for Entrepreneurship. I want to pay tribute to you – and to recognize your immense contribution. Not least in the form of the new seed fund you have established for financial and personal services start-ups. I must say that Peter’s desire, as an entrepreneur who made his fortune in the City , to give something back and help launch the next generation of financial services entrepreneurs, is really an inspiration. I thank him very warmly on behalf of the government for his generosity. It’s in this spirit that I want to say something about entrepreneurship tonight, why it matters and the kind of economy and government that encourages it.

Tonight I want to try and pick out some big trends that I think are shaping or will shape entrepreneurship, and what government needs to do to keep up with these trends. I also want to make the case for a government that is active in its support of enterprise – and what, in my view, that should mean.

As George Bush no doubt eventually found out, entrepreneur is the noun that comes from the French verb ‘entreprendre’, which means to start to do something. In French, the meaning of the word goes much wider than starting a business, but it always implies a choice to act, which is why in English it is often translated as ‘to undertake’. The point is that there is nothing passive about it. That spirit of “choosing to act” is ultimately what powers enterprise in an economy.

About 99% of the UK economy is made up of small and medium sized firms. They employ more than half of British workers. Behind every one of those businesses is an individual with the imagination and guts to make that real personal choice – and it’s a hard one – to go out on their own. That choice is incredibly important in our economy and our society. It is often how new ideas get commercialized. It is how market incumbents get shaken up. It is how jobs get created and how supply chains get built.

If you take just the example of low carbon technologies and processes, the role of new market entrants is going to be critical to driving change: because the really radical new thinking may not come from market incumbents.

If enterprise policy has a single fundamental priority it has to be making it easier to make that choice. That means building a regulatory framework that makes it as easy as possible for new firms to enter the market, recruit staff and start trading. It means putting in place the whole ecosystem that supports it: the access to finance, the digital infrastructure, the education and training that builds both competence and confidence. In large part because of the focus we have put on enterprise education, and encouraging business startups since 1997, the UK now ranks in the top ten economies in the world for ease of starting a business. But I think there are some very big trends that are going to change the way both entrepreneurs and government need to think about entrepreneurialism.

An economy of niches

First, entrepreneurship fits well with one of the features of the global economy, which is the increasing fragmenting of value chains, which is turning the global economy into billions of niche markets for which scale is less important than sophistication, speed or innovation. Look, for example, at the growing number of bioscience startups that are being spun off from universities on the back of individual innovations in pharmaceuticals and renewable chemicals.

The old vertically integrated firm may end up – is already – giving way to something like a ‘company cluster’ – a dense network of suppliers, often spread around Europe or the world. To carve out a niche in this world you don’t have to make a better car, you have to make a better component.

A more flexible working life

Second, entrepreneurship is about asserting a measure of control over your personal economic future. In a globalised economy that leaves many people feeling disempowered, that is important and valuable. With people living and working longer, and as more and more people look for ways to make their working lives more flexible, to fit work around children, or other interests, entrepreneurship is a way of being economically independent without the constraints of a large organisation.

Of course, we also have a large cohort of people affected by the recession, who may be thinking about striking out on their own. I encourage them to do so, as Peter does. There’s no point in waiting until after the upturn has begun to start thinking about creating a business.

So as well as defending labour market flexibility, we’re going to have to junk any idea that entrepreneurship is the exclusive preserve of the young and hungry. Or that entrepreneurialism is something you’re born with. Of course we need to encourage young entrepreneurs, not least because entrepreneurship can be such an important driver of social mobility. But we also need to recognise and support midlife entrepreneurs, post-corporate entrepreneurs, post-retirement entrepreneurs, fighting-the-recession entrepreneurs. And we need to recognise that the motivations for entrepreneurship are far wider than the desire to get rich – they can be a desire for flexibility, independence and control.

The changing nature of public service provision

Third, I think the way in which people expect public services to be delivered is changing. People don’t want standardized services delivered by monolithic bureaucracies. They want services tailored to local and individual needs and accountable to local communities, and as taxpayers they want them delivered cost effectively.

So to my mind one of the big goals of our enterprise policy should be encouraging entrepreneurs to think about innovative ways to provide public services. This is something we are encouraging through our reform of the Small Business Research Initiative, which encourages SMEs to deliver niche services in an innovative way. We are also making it easier for SMEs to compete for billions of pounds worth of public procurement contracts.

The potential that entrepreneurialism offers in this area is really exemplified in the huge and growing strength of the social enterprise sector in the UK, which testifies to the way in which entrepreneurs can make a living coming up with innovative ways to contribute to and enrich our civic life.

Digital communications

Finally, the digital economy seems to me certain hugely to shake up entrepreneurship in the same way that it is shaking up the workplace, and the way business and finance work. Networked business tips the balance in favour of entrepreneurs and small businesses in many ways.

What do I mean by that? Well, I came across many examples in my time as European Trade Commissioner. I would be in Guangzhou or Chengdu or Sao Paulo and I’d meet small British companies who had recognised that a website in Britain could be a shop window in Brazil or China. That their firms could potentially be global from the day they were founded.

But also that the same process worked in reverse. So they could build cost competitiveness by sourcing inputs from around the world. And you can, at a pinch, pretty much run the first stages of this business model from your kitchen table with a broadband connection.

Even where SMEs remain local and relatively low tech – as most of them will – they are still going to increasingly draw on the internet to reach and communicate with customers and suppliers. The key reason that my department has built up the online resources available to startups and small companies at businesslink.gov is because it is the basic way modern small businesses engage with the world. They often don’t visit a bank manager with a business plan before they start up. They don’t always have an accountant. So they probably won’t have wandered into a government business advisory service.

What is an enterprise economy?

So: a changing global economy, changing attitudes to lifestyle and public services, the digital economy. All changing the landscape for entrepreneurs. The challenge for government is keeping up, and making sure the enterprise environment in the UK and Europe keeps up. And that forces us to think about what an enterprise economy has to look like.

Now, most entrepreneurs, when asked what the government can best do for them are of course going to say: get out of the way. I certainly have no quibble with that. Entrepreneurialism is first and foremost an individual attitude. But an enterprise economy is not an economy defined by the absence of government as such. It is an economy where the government knows when to get out of the way, and how and when public policy can actually unlock greater productivity or potential.

It needs government to think about the things entrepreneurs build on when they build businesses. One of the things that you learn from day one when you handle trade policy with sub-Saharan African countries, is that the problem for most of these economies is certainly not a lack of entrepreneurialism. They have it in spades. You see entrepreneurialism on every corner: market stalls, micro-businesses, mobile phone banking.

The problem is roads – or the lack of them. It’s the fact that three quarters of a business’ profits disappear into the costs of running generators because the electricity supply doesn’t work. It’s illiteracy, and a lack of the necessary expertise to meet export requirements for the EU and the US. It’s education and infrastructure, and something that operates a lot like infrastructure in a modern economy and is just as fundamental: credit. What these countries need is not governments that get out of the way, but governments with the resources to help create and then nurture an enterprise economy in the first place.

Now it might seem odd, even in bad taste, to compare sub-Saharan Africa to the UK. But the basic logic of capacity building to support enterprise applies here as well. And that is the point of my argument. An enterprise economy needs well designed regulation that keeps the burden on growing small businesses as light as possible, easy to navigate company law, an intellectual property regime that helps new market entrants protect and exploit their ideas quickly.

A trade policy that keeps markets open so that exports can flow out and inputs are easy to import. This is more of a challenge than it sounds, because a lot of post-war trade policy- anti-dumping rules for example – still echoes the assumption that goods are not produced across borders.

But it is not just legal and commercial frameworks. It is also the resources that businesses draw on. Three make the point well: innovation, infrastructure and credit. I’ll look at each in turn.

Innovation, infrastructure, credit

First, innovation. The high tech entrepreneur who commercialises an innovative new low carbon technology has not usually thought the whole thing up from scratch and built it in her garden shed. She is building on a technological education or perhaps the skills she learnt in further education. She is drawing on the UK’s basic science base, she often needs access to funding to support trials of pre-commercial technology. For a range of reasons these things won’t be supplied by the market alone: because of the spillovers, the risk and the lack of profit incentives. So the government is going to have to complement the market.

In the New Industry New Jobs strategy we launched in April we set out how the government should do this. Continuing to protect our basic investment in our science base, even through the downturn. And supporting more businesses in using that expertise to drive innovation. Building a skills system that helps people learn new skills and reshape careers right through their lives and keeping that skills system going through the recession. Increasing funding to business-run bodies like the Technology Strategy Board that fund innovative technology trials as the Chancellor did, by £50million, in the Budget.

Investing in demonstrator facilities for new platform technologies like renewable chemicals and providing a fund that enables startups to use these facilities, as we announced last month. And as we have been doing with ultra low carbon demonstration models this year. And you will see more such investments in the months ahead, especially when we launch our Low Carbon Industrial Strategy next week.

Second, digital infrastructure. This will be as important to the twenty first century British entrepreneur as the roads and canals were to the nineteenth century British industrialist. The commitments the Government made in its Digital Britain report, brought together by Lord Carter, to ensuring that pretty much every home and businesses in the UK has access to high speed broadband by the middle of this decade are testament to that. Laying the bulk of that infrastructure will be funded by commercial incentives, but the final third will require a strategic investment from government, which is what the Digital Britain strategy designed.

Finally, credit and venture capital. This room may be full of market fundamentalists who believe that if you can’t find a bank or a venture capitalist to fund it, then an idea by definition isn’t viable. Something tells me not.

Obviously finance is a critical test for an entrepreneur. But we also know that there are equity gaps in the UK market, especially for startups and firms at the first expansion phase, often because the sums of money required are too small to justify the due diligence. In the US, more than 30% of investment goes into venture capital, while only 4% does here – which means that as a country we are largely not putting our money where our mouth is on supporting innovative companies. This means that innovative ideas are going to the US for commercialization and capital investment. And at the moment with a lot of Business Angels retrenching and focusing on their existing investments, and the cost and availability of bank credit volatile, then there is a very strong case for public policy that tries to leverage private funds into investing in startups.

In Building Britain’s Future we addressed this by launching the Innovation Investment Fund, which will use £150million in public funds first to leverage matched funding from private investors, but ultimately to generate up to a billion pounds over the next decade for venture capital investments.

One of our persistent problems in the UK is producing middle sized companies out of small ones. There is a range of reasons why this might be the case, but part of the problem is an equity gap for early stage growth capital. Which is why as part of New Industry New Jobs we also launched a review of ways of addressing this, possibly through the creation of a new Industrial and Commercial Finance Company similar to the one created in the 1940s to fund UK growth firms. This review, which is being led by Christopher Rowlands will report in time for the Pre Budget in the autumn.

A different kind of industrial policy

The point I want to make by focusing on these areas where enterprise depends on the right approaches from government is pretty basic. Like any economic activity, enterprise and entrepreneurialism need the right frameworks from government. It is possible and necessary to think about activist government supporting enterprise without going down the road of national ownership of industry, blocking trade competition or trying to build national champions.

This was the case we made in New Industry New Jobs and which will be one of the core frameworks for the new department of Business, Innovation and Skills.

It turns the traditional and frankly rather retrograde logic of government industrial policy on its head by investing not in particular jobs, but in individual people. Not in individual enterprises, but in the enterprise environment.

This kind of approach to investing in the UK’s future economic strengths is directly relevant to entrepreneurs, no matter how small, because it shapes the resources they can draw on in making their vision a reality. It means providing the education and skills entrepreneurs need. Building the infrastructure to support them, especially for a digital economy. Making sure that there is venture capital out there to fund good ideas. Making sure that innovative firms have the resources to trial pre-commercial technologies.

The right place for most of this government activism is down in the superstructure of the economy. It’s not up in lights, but it’s an integral and fundamental part of what ultimately makes UK firms economically competitive.

This kind of approach is not only critical to returning the UK economy to growth, but for our long term prosperity in a global economy where we don’t have the luxury of wasting the potential of a single one of Britain’s people.

Of course entrepreneurialism is not just about national competitiveness. It’s a driver of social mobility, a way of injecting life into local economies and social enterprises, a source of pride and self determination, a way of extending or diversifying a working life. It’s an attitude we can’t lose by cultivating in Britain. Which is why although my title is Secretary of State for Business, I have always seen my core role as defending and promoting enterprise in the widest sense, which is not just about the needs of existing businesses, but the businesses that don’t yet exist, but are going to exist tomorrow, next month, next year. And it’s pondering on that, that I can again say how pleased I am to have a chance to inaugurate officially the Centre for Entrepreneurship, and that I believe that so much of what I have described tonight will be embodied and championed here.

Introduction

Thank you Larry. Good morning everyone.

The publication today of our new Consumer White Paper – A Better deal for Consumers comes at a critical time for the UK.

Consumers are very much at the heart of our economy, driving the competitive markets which bring prosperity to us all.

But the downturn has hit consumers and business – putting a real strain on family finances, leaving many firms feeling the squeeze as customers become increasingly conscious of every pound and penny they spend.

The Government has already done much to help, targeting action to keep money in the pockets of the hardest hit and protecting them from falling into debt.

But we need to do more – now and for the future.

The White Paper

A Better Deal for Consumers sets out the real help we will provide now for those in financial difficulty, and in the longer term how we will boost confidence and help consumers take greater responsibility for themselves.

This is in line with the Prime Minister’s plan for Building Britain’s Future that provides a radical vision for a fairer, stronger and more prosperous society for all.

The White Paper sets out how we will protect consumers from firms who trade unfairly, and ensure that enforcement against the minority of rogue traders is effective and proportionate.

I want to stress that in these extremely challenging economic times, we still need to minimise the burdens of regulation on business. The policies set out here are designed to crackdown on the unscrupulous, but they will enable the honest business to thrive on a level, competitive playing field.

Consumer Credit

First let me start by setting out our plans around consumer credit.

We need to guard against reckless lending and borrowing, and ensure that businesses play fair by consumers.

We need to supplement the real help we’re already providing with long-term measures to enable people to keep their finances on a solid footing.

The White Paper measures include a review of the regulation of credit cards and store cards.

This will examine:

• If restrictions should be placed on card providers’ ability to raise interest rates on existing debts

• If minimum monthly repayments should be raised to ensure that people who only make the minimum payment will be in a position to pay off their debts over a reasonable period
• If the practice of increasing borrowers’ credit limits without their prior consent should be banned
• And in what order debts built up on a credit card should be paid off

We will also legislate to ban the sending of unsolicited credit card cheques to customers.

And we are announcing that the FSA will set up an online credit card comparison tool as part of its Money-made-clear site.

There will also be new requirements on lenders to ensure they check consumers’ creditworthiness before they offer them a loan. This will be complemented by a new requirement to explain financial products to consumers before they buy – including the consequences of failure to repay.

This will be implemented through the Consumer Credit Directive, which will come into force in June next year.

We will curb excessive fees and charges – all arrears and default fees and charges on credit accounts should be transparent, cost reflective and reasonable.

The issue is currently the subject of a test case brought by the OFT and seven banks and building societies in relation to fees and charges for overdrafts.

Once the House of Lords has made its decision on the test case, the Government will work with interested parties to move the market to a more efficient, equitable, and transparent system as quickly as possible.

There will also be an OFT review into High Cost Credit, looking at markets such as doorstep lending and ‘pay-day’ loans where the typical APR is 50 per cent or higher.

We will also look to ban the way bills of sale are used to support consumer loans such as ‘log book’ lending – a big cause of complaints from consumers.

We will do more to help those in debt help themselves.  The Money Advice Trust will launch a self-help debt advice toolkit this autumn to help people get a better deal for themselves when negotiating with creditors. I’m pleased to announce that the Government is providing funding for this important initiative.

And the new Debtor’s Guide will be published shortly by the Insolvency Service for consumers and businesses. This will help those in difficulty with debt to understand their options and where to go for help.

Consumer Protection

I now want to talk about measures we will be taking to improve consumer protection outside the area of credit and debt.

That is why today I am announcing the creation of a new role – the Consumer Advocate.

My ministerial colleagues and I have been impressed by the experience of other European countries who have appointed a consumer champion with the power and authority to act on behalf of consumers.

Our new Consumer Advocate will be a high profile consumer champion, tasked initially with the responsibility of promoting consumer education and information.

Also in this area, we will be working closely with Consumer Focus and the OFT to launch a new consumer rights campaign in the Autumn.

And we propose to give the Advocate new powers to spearhead fair compensation for groups of consumers. As a public figure, he or she will have to carry out these tasks in a manner which is fair to business.

I want to see more individual consumers benefiting from enforcement activity – not the mass compensation culture that we see emerging elsewhere but the reasonable expectation that consumers who buy things in good faith shouldn’t be out of pocket when things go wrong.

That is why we want to look at how we can use new powers in the Regulatory Enforcement and Sanctions Act to ensure consumers get fairly compensated.

And in circumstances where traders fail to respond to reasonable requests to reimburse consumers, the Consumer Advocate would have the power to take action through the courts to require compensation for a group of consumers. This should never be used lightly but we need a mechanism to ensure access to justice is a reality for consumers.

Finally, another important role for the Advocate will be to help recover money for consumers who have been scammed by rogues overseas.

The White Paper sets out our plans for a Consumer Bill of Rights.

This Bill will strengthen, modernise and simplify UK consumer sales law – making statutory rights less confusing for consumers and retailers alike whilst ensuring that consumers continue to enjoy a high level of protection.

It will look at developing rules on new ‘digital’ products, ensuring the principles of consumer protection apply.

It will also implement the forthcoming EU Consumer Rights Directive. Among other things, this will bring in a 14-day ‘cooling off’ period for off-premises and distance sales.

Rogue Traders

The Bill will also contain legislation to ban persistent rogue traders from continuing to trade with consumers.

A few unscrupulous traders treat fines as a business overhead or simply ignore them. In these cases a banning order will be more effective than existing options, such as county court judgements.

Fighting Fund

Trading Standards officers provide a valuable service to communities by tackling rogue traders. The Government proposes a new fighting fund to enable TSOs to pursue them through the courts.

The fighting fund will be targeted at Trading Standards investigations which cover national issues or are beyond the scope of local authorities’ boundaries.

Internet Enforcement

A new enforcement team will be established to protect consumers from e-crime. Government will ensure enforcers from the OFT, Trading Standards and the police share information to investigate and take action to protect consumers.

A single point for consumers to report on-line scams and problems such as non-delivery of goods will aim to boost confidence in buying goods and services over the internet.

Conclusion

I’ve set out a brief summary of the proposals – which taken together further provides practical, real help now and in the future for consumers.

They will ensure that we learn the lessons from the recession, and prepare for the upturn.

So that we have consumers who are free from unsustainable levels of debt and are confident in the marketplace.

Today’s White Paper is good for business, fair for consumers and key to helping us achieve long-term prosperity and social justice.

It shows how the Government is determined to build for Britain’s future, by putting Britain firmly on the path to recovery and seizing future opportunities for economic growth.

Thank you.

Speech by: Lord Drayson
Venue: Central Hall, Westminister

CHECK AGAINST DELIVERY

Newspaper headlines are going to feature, I’m sure, in today’s discussion, so let me give you one of my own: “Politician praises journalist shock!”

No matter what country you come from, the relationship between the media and politicians is always a fraught one. But despite having faced some pretty hostile attention from the British media as a businessman who got interested and involved in politics, I really believe that UK science journalists do a great job. Not only do they do a great job, but it’s vital for the success and happiness of our country.

Now I’m not saying that science journalism in the UK has never been at fault. There have been some problems in the past on some important stories, but no-one operates in a vacuum, least of all science journalists.

They need access to the scientists themselves, they need access to politicians. They rely upon editors allowing them to develop their stories as science journalists.

What matters is that everyone who’s involved in the communication of science here in the UK has learnt some really important lessons, and that the damaging episodes which certainly took place in the past have created a collective understanding of how to do this better.

In the late 1990s, when I was working within the biotechnology industry, the GM debate was an example of how things can go wrong. The debate was hijacked by commercial interests. It led to a fear fest. When we look back at coverage at the height of the “Frankenstein foods” drama – and that’s a label which still remains today – not a single news article was written by a science journalist.

The result was that the serious issues which surrounded, or should have surrounded, the debate on GM foods – issues such as the environment, food security, biodiversity – just got lost.

Even worse was the farrago around the MMR vaccine, again at the end of the 1990s. It started off, I believe, with bad science. In this case, the highly respected Lancet held a press conference at which a tenuous link was made between MMR and autism.

This was then seized on by news desks and columnists. In 1998, the Daily Mail alone had 700 stories on MMR, and the shrill coverage led to a significant drop in vaccination rates and subsequent measles outbreaks in the UK.

I believe that through the inaction of politicians, science correspondents, the science and medical communities overall, we allowed this to happen, and it took way too long for the right people to examine what was dodgy research and to speak out against it.

I’m sure you have parallels in your countries.

So, having highlighted those two events, on what grounds am I arguing that British science journalism is now much stronger?

MMR and GM foods led to a period of introspection and reflection here in the United Kingdom, within politics, within the science community and among science journalists.

One of the specific outputs from that was the creation of the Science Media Centre, which has done a tremendous job in providing a resource, both for the science community and science journalists, that enables science to be effectively reported in a 24/7 news environment. I’m really pleased about the way in which the SMC model is now being taken up around the world.

Also the way in which the UK Government has responded – the practice of departments having their own Chief Scientific Advisers (and we’re now getting to the stage where almost all departments have one) shows that we take this very seriously.

I’m the first Science Minister in the Cabinet. We have the first Cabinet Committee focused entirely on science and innovation. These steps have put science right at the heart of government policy.

And the fact that we have more press offices staffed by trained scientists – people who really do understand the issues and the science behind them – means they can work proactively with the media. The result has been that the quality and positive impact of British science journalism has significantly improved.

I want to give you two examples in contrast to GM and MMR.

Animal hybrid embryo research: now there have been some really quite “out there” headlines. But the scientists, the press officers, the media advisers in this area supported science correspondents in drafting balanced stories based on good science – which explained the methodologies and the safeguards, as well as giving a sense of the potential benefits in the long term.

In the case of swine flu, I think we have learnt from experiences of the past – the way in which the Medical Research Council here in the UK had virologists lined up to talk about the swine flu outbreak right away, in their own laboratories; the way in which science correspondents, especially BBC broadcasters, took hold of the story.

The key to this is that the science journalists were in charge of the story, not generalist journalists.

In-depth, transparent coverage about science and public health aspects provided an important counterbalance to the reporting of, say, holidaymakers returning from Mexico.

If you look at coverage of the Large Hadron Collider, of Aberystwyth University robot Adam identifying a gene in yeast which humans had been unable to find, you’ll see how science journalism in this country is not just finding a way to get good science talked about, but it is finding the right way to make it interesting.

Quality science sensationally written is acceptable, if that’s what’s needed to get it out to the general public. I applaud journalists for taking a critical look at what politicians are doing – at, say, the recent comments on GM by Prince Charles.

It’s clear to me that when science correspondents are centre stage, when politicians make sure that they have access, when the scientists talk to them – that’s when it really works. And that’s what’s happening in Britain, to a high standard.

But I won’t just give you anecdotes and my personal impressions. Let me give you some actual scientific data, because Britain has historical data on public perceptions of science and of its practitioners.

In 2008, 72 per cent of the public surveyed said that they trust scientists to tell the truth, up seven percentage points on 1997.

A separate survey last year found that 82 per cent of people agreed that they were “amazed by the achievements of science”, while there was a 10 percentage point drop in those concerned or worried about science.

This, to me, suggests that science correspondents are getting things right.

And we’re also changing the way that we’re judging academic performance in government. We believe that scientists have a duty, particularly when they’re funded by taxpayers, to engage in the public arena, to communicate the challenges, the potential ethical concerns of their work – and that will be factored into the revised research assessment framework.

As Science Minister I launched, with the Prime Minister, a campaign which was unusual in that it talks about science but it isn’t aimed at scientists and the scientific elite. What we need to get over to the general public is how science is part of our everyday lives. The “Science: [So what? So everything]” campaign uses celebrities who, not necessarily scientists themselves, really understand how important science is to what they do.

I’m not unaware, though, of the challenges that science journalism faces. Perhaps not so much here in the UK, but in other countries where there have been cuts – at the Boston Globe, at Le Monde. Nature recently reported that CNN has closed its science and technology unit.

The digital revolution poses a challenge too, but it’s also an opportunity for us to use new media. The discipline of Tweeting in 140 characters has given me an insight into just how brilliant some headline writers are. I tweeted yesterday, telling people I was coming here, and asked what’s the collective noun for 900 science journalists. If you want to know what people said, you’ll have to go to my Twitter page.

Now, there’s an obvious tension between good quality, analytical scientific reporting which demands objectivity and nuance – and stories which actually make the news and raise awareness. I know that scientists are naturally suspicious of anyone expressing certainties.

I must admit, I did initially shudder when I saw this headline in the Sun: “Sex Kills”. If you change two letters, you get “Sex Sells,” which captures the Sun’s editorial policy.

But look past this headline and the the reporting of how prostaglandin, a chemical in semen, speeds the growth of both cervical and womb cancer, is good science. It does explain the medical science adequately, it does get this over very clearly to the general public. And in terms of impact it’s absolutely brilliant; you have to admire the sub-editors.

Here’s another one. The UK Government announced a couple of years ago that it was giving the go-ahead for human-animal hybrid embryos in draft legislation. The Sun’s headline: “I’m a bit of a cow.”

Again, it accurately reported the science. And – crucially for me – both stories were written by a science correspondent.

We also need good reporting which transmits the “wow factor” of science. I mean wow, I don’t mean hype. We do need to inspire the future generations of physicists, chemists and engineers. For all of the effort we’re putting in to improving careers advice, to improving the quality of education, it’s the joy of science – the joy of discovery, of asking new questions and then going out and doing your best to find the answers – which it’s very important for us to get over; and this, again, is where science journalism has a huge impact.

We want a society that’s awestruck by science, not dumbstruck by it. We want a scientifically literate society in this country. That’s why I say that sensational science reporting is fine so long as it’s accurate and it’s covering good science.

So, I think that we’re in a strong place. I think we’ve learnt a lot. I think that so long as we maintain this trend, we can have some confidence that positive science journalism will be a pillar for a successful and happy country – a country at ease with the challenges of science, a country that believes that it’s good at science, and understands how to have a debate about it.

Thank you.

Speech by: Pat McFadden MP
Venue: Didcot

Introduction

Thank you. It’s great to be here. I just want to set out for a few minutes why we, as a Government, have produced this document Building Britain’s Future. And I want to speak in particular about why the Government has brought together in one Department these issues of business, innovation and skills. The starting point really is the economic circumstances of the last couple of years. It has obviously, in every part of the country, been a difficult time.

Dealing with the recession

We have seen people lose their jobs. We have seen the greatest contraction in world output and trade for decades. We’ve seen the near collapse of the banking system –putting in peril, had it been allowed to happen, people’s savings, the credit, the oil that makes the economy run. So it has been a very difficult time not only here but right across the world. And we have to ask ourselves in the midst of this – what is government’s job here? What is the role of the state? It’s a fundamental and important question for every government of whatever political colour when facing up to these issues.

And our answer really is two-fold. We have to support the economy today and do what we can to make the recession as short and as shallow as possible. That doesn’t mean that we can protect every worker or every business from the effects of this. I don’t believe any government, certainly no government in an open, outward looking trading economy such as our own could say they could do that. But we certainly have to do what we can to support the economy at the moment. And that’s what we’ve been doing in a number of ways.

Shaping the economy

But there’s a second side of this coin and that’s really what I want to concentrate on today. Which is how do you shape the economy of the future? What do you, as a state, have to say about the areas where you want Britain to excel? What do you have to say about how you’re going to equip people with the skills needed to make sure that the opportunities created by economic change can be fulfilled? And that’s really at the core of this document Building Britain’s Future. There are other important areas that we’ve heard about in terms of public services and so on but a lot of it is really about shaping this economy of the future.

The Diamond Light Synchrotron

And so where better to come, in some ways, than the visit that we were on about half an hour ago to the Diamond Light Synchrotron nearby? Leading edge, technological and scientific research with applications in medicine, in engineering and in pure fundamental research. And it’s not something that markets alone, that companies alone, would have created. It happened, on time and on budget, because as a country we took a decision that that was the kind of facility that we needed for the future.

Now that was a forward looking and innovative decision that we took some years ago. We’re just beginning, we’re just in the early stages of seeing the fruition of that investment. I met not only the people running Diamond Light today, but also companies that have located here precisely because that facility is here. Companies who told me their productivity had increased because of the brain power and the power to carry out experiments on a much faster and greater scale than would have been possible before that facility was there.

A low carbon economy

And when we look elsewhere we can see similar areas where it makes sense to say we, as a country, want to make sure we’re at the head of the game in these areas. If we think for example about the low carbon economy. About how we heat our homes, how we generate our energy, how we transport ourselves it is quite clear that, in a generation from now, these things are going to be done in a completely different way.

So again the question we ask is what role is there for Government in this, if one at all? Now we believe there is one. So when it comes to the low carbon economy we want to make sure that Britain is there. Be it in low carbon vehicles, be it in the new generation of nuclear power, be it in other areas. For example, we’ve set aside a Strategic Investment Fund, a proportion of which is precisely for the low carbon economy. The total fund is £750 million and about a third of that is specifically for low carbon research – for low carbon projects backed by ourselves and by the Department of Energy and Climate Change. And that is precisely the kind of area that we want the country to succeed in.

Digital Britain

A couple of weeks ago we produced a Digital Britain strategy because we also know that the information economy is absolutely vital to our country’s future. And we know that, left to itself, the market alone will not hook up every house with broadband. It may provide for the big conurbations but not for all of it. And, as a country, we don’t want to see a nation of digital haves and digital have nots because this is going to be as fundamental in the future as having an electricity or a water supply in your home. So again we made a decision that, when it comes to the digital economy, we want Britain to be in the forefront. These are the kind of things that Building Britain’s Future is about.

The Innovation Fund

And there’s one other thing that I’d like to mention specifically in the document. That is the idea of establishing a £150 million Innovation Fund from Government. It is geared to levering in a total investment of up to £1billion over the next ten years in a venture capital environment. This will mean we back the best technologies, the leading research. It will ensure we are better in future at taking the great creativity and the great fundamental research that we have in the United Kingdom and bringing it to market – brought to fruition by aspiring young companies. We believe there is a market gap there. We believe that, working together with the private sector, we can do more to promote companies in those fields and more to back them. And that was an important part of the document that we published yesterday.

Active industrialism

Now I know that politics in recent months has been fixated on other issues. I think everybody involved in politics has to acknowledge that the system must be changed. That the public need confidence that politicians of all parties are trying to serve them rather than pursuing any self interest. And that’s something that we’ve got to do. But we’ve also got to get back to governing and facing up to the issues facing the country. And that’s what this document is about too. It’s about saying that there are critical issues for us as a country in the future, be they on low carbon, on digital, on venture capital for young aspiring companies and taking a view that we have an active role in supporting that in the future.

Conclusion – Building Britain’s Future

So when we talk about Building Britain’s Future we’re not talking about simply rewinding the economy to some time in 2006 before the financial crisis hit. We’re actually talking about seeing where the curve of change in the 21st century is going and making sure that Britain is at the leading edge of that curve. That’s what the document is all about.

I’ve talked about the Innovation Fund. There are other pledges in this publication about social housing, about training places for young people. We don’t want to see another generation who lose their jobs and end up not getting a second chance. This document covers many areas. But the area that I really want to concentrate on today is Britain’s economic future because we’ve all got a part to play in creating this.

And here, in this region, you’ve got so much that is already happening in these fields and so much that can contribute – not only to the immediate area – but right around the country. What we want to make sure is that excellence like that is backed by government so it can grow and prosper and the whole country can benefit from it.

Thank you very much.

ENDS

Speech by: Lord Young
Venue: Le Meridien, Piccadilly, London

Introduction

Good morning.

Now I’ve just taken over as the Postal Services Minister and, although I’ve only been in this role for a few weeks, it is not unfamiliar territory to me having been in the Communication Workers Union.

So I understand many of the challenges and concerns that we’ll be looking at today.

But it’s good to be here today, good to be discussing the future of postal services with a roomful of industry experts.

With your collective wisdom, brain power and experience I feel sure the industry will be in safe hands in the coming years.

And the other thing that gives me cause for real optimism is the sheer size of the opportunity in this sector. Quite rightly we have spent a lot of time looking at the nuts and bolts of plans for Royal Mail but, in a sense, today is about taking a wider look at the possibilities for mail in the 21st century.

We should not play down those opportunities because ultimately that’s where the future of the postal sector lies and why our reforms are needed.

New age, new opportunities

We are on the verge of seeing the greatest revolution in postal services since Rowland Hill introduced the one price goes anywhere postage stamp.

When I was young – a few years ago – communication used to be a simple business. If you wanted someone to get a message you spoke to them, you rang them up, or you simply posted them a letter. And that was it.

But the internet has turned everything on its head. Twitter, Facebook, Myspace, google, instant messenger. There are a myriad of ways to communicate with people you know, people you want to know, people you don’t want to know and people who you didn’t even know existed. And every other transaction that you can think of – whether it’s how you pay your bills or how businesses contact you – has been transformed.

The global scale of the digital communications sector is aptly illustrated by the ranking of the sector among global brands: six of the top 10 global brands by value this year are in the digital sector, one Chinese, one British and four American.

Now like anything else aspects of the internet are subject to the vagaries of fashion. But the liberating principle behind the internet is here to stay. The internet has given people to taste a freedom they’re not about to give up. Freedom to access services in their own time, at their own convenience, 24 hours a day. That’s the challenge.

Today, the typical British consumer spends nearly half of their waking life engaged in one form or another with the products and services of the communications sector. According to Richard Hooper e-commerce is set to double to around £78bn by 2010.

And on current definitions the Digital Britain sectors account for nearly £1 in every £10 that the whole economy produces each year. So every single business, every single industry, every single sector is affected by this digital whirlwind.

Effect of digital on postal services

And postal services are no exception. Indeed, the Hooper Review also showed that the online world is already having a marked effect on the industry.

Overall mail volumes have fallen by 5.5 per cent over the last year. Royal Mail expects the volume of mail to fall by 10 per cent in the coming year, 3 per cent more than predicted in the Hooper Review, because of increased competition with other technologies. In fact, Royal Mail lost £500 million to digital media in 2007/8.

And Royal Mail isn’t alone. The Post Office network has, for several years, been caught in the headlights of the digital juggernaut. For example, some one million users a month are renewing their car tax online – with more than half doing so outside Post Office opening hours. And that has reduced the numbers coming through the doors of their local branch.

The digital revolution is changing the way we behave and we have to adapt our products, our services and our marketing strategies or we face a continual decline.

But change doesn’t need to be a bad thing. In his Digital Britain report Stephen Carter said we’ve reached a tipping point in relation to the online world. “We’re moving from conferring advantage on those who are in it to conferring active disadvantage to those who are without.”

And what this means is that the future for the postal service can’t be about pressing the rewind button. If anything, the sector has to fast forward and grasp the business opportunities of the digital age.

And these opportunities are real. There isn’t any alternative.

Mail might be down but posting of packets and parcels is up – a direct result of the e-bay effect and the rise of internet retailers.

UK customers spent £42bn online in 2007 and that has generated 860 million parcels.

Liberalisation too offers new possibilities for the postal sector.

Now I know there are those who believe liberalisation is threatening the universal service. But I don’t agree that it’s threatening it. It presents a challenge. The competitive postal market is still in the early stages of development. But a Postcomm report as far back as 2007 found that real benefits were spreading to smaller businesses.

And Hooper is quite explicit in saying that “we would expect both smaller businesses and residential customers to benefit from choice, a more efficient service and new products”.

People taking advantage of digital opportunities

So there is an opportunity here for postal services but is also considerable cause for optimism. And the postal sector doesn’t have to look far to find examples of companies and individuals who are taking advantage of the broadband boom and putting the customer at the heart of what they do.

Recently, the Prime Minister met some of the country’s most innovative entrepreneurs. They included Karen Hanton who runs Top Table – a pioneering online booking system for restaurants. Karen now has more than three million customers and is poised to go global.

Stephen Collins also has had similar success. A man with cerebral palsy, he has used technology to set up as an online retailer offering specifically selected products and services for disabled people of all ages.

These individuals understand the internet’s ability to allow people to do familiar things differently, more quickly, more cheaply, at all hours of night and day. A 24-hour service.

Meanwhile, other communities are using the internet as a way of reconnecting our rural areas with a wider world. Alston in Cumbria was once known as one of the country’s most remote spots. Thanks to broadband it now claims to be “Broadband Capital of Britain” with 330 homes and small businesses connected to the Cybermoor wireless broadband service, out of a possible 1000.

Postal sector starting to seize the opportunities

So there are opportunities out there for postal services. But how can you take advantage? What should you be doing?

For me it’s about using innovation to help the sender generate more revenue and help the recipient get more satisfaction. In other words, it’s about putting the customer at the very heart of what we do.

Already you can see things are happening. Take packets and parcels for example. In April, Post Office Limited signed a deal with DX Group, enabling DX’s customers to collect items from Post Office branches that couldn’t be delivered. This is the first time that a private mails company has offered access to its services via the Post Office network.

Elsewhere integrated marketing products are being developed that bring together post and digital communications.

Postal operators are introducing more track and trace services. That means you can trace your package from the moment it leaves your hand to the moment it’s handed to the recipient.

And, incidentally, what’s interesting about this innovation is that it’s an example of how the postal sector is cottoning on to the need for people to update their skills.

Royal Mail’s track and trace services depend on the skills of more than 37,000 postmen in operating hand held Portable Digital Assistants – creating one of the UK’s biggest corporate WiFi networks.

Royal Mail is also adapting to our 24 hour, real time world in other ways. Before Christmas, it delivered thousands of packets and parcels in the evening just so people would be able to receive them on the day itself.

And postal operators are also seeking to adapt to the demand for more sustainable services. For example, Royal Mail’s new Sustainable Mail service for business customers guarantees that all paper products contain recycled materials and that envelopes are clearly printed with instructions to recipients on how to stop getting unwanted mail.

These are just a few examples of developments in the mail market that show a willingness to use new technology to tailor services specifically for businesses and consumers. And it’s an excellent start.

Government taking an active role – the right conditions

But the truth is we’re going to have to go much further, much faster if we’re to keep pace with the speed and scale of this digital revolution. And that means Government must take a more hands-on, active role.

Of course, we recognise the inherent dangers of that. We have to be careful that active involvement does not become interference. We can’t micro-manage Royal Mail and Post Offices. But I am also clear that our role should also be about creating the right environment for postal services to flourish in a new communications era.

And where the right conditions aren’t in place we have to change them. For example, I believe that, in this new world, postal regulation must be seen in the context of the whole of the communications sector – which is why we are proposing to move regulation of the postal sector to Ofcom. I see that as an important move.

Government too has a responsibility to make sure the universal service survives whatever the change to the communications environment. After all, the universal service lies at the very heart of the Government’s approach to the postal sector.

People depend on it for their communication and business needs. And, at a time of deep recession, the one-price goes anywhere concept is a lifesaver to many struggling to pay bills and make ends meet.

Now Hooper was very clear that the universal service is “under threat” and “the status quo untenable”. So Government cannot stand by and do nothing.

But Royal Mail is the only postal operator capable of delivering the universal service.

And – despite its recent profit – it clearly isn’t in a position to generate the money it needs to modernise and invest in its future.

The company also has a very large pension deficit – £5.9 billion at the last count – which is expected to increase substantially when the next valuation is announced.

So our proposals are designed to help Royal Mail transform itself so that the universal service meet all customers needs in this digital age.

Our Royal Mail plans

Now my focus today has not been Royal Mail per se’ but the wider postal market.

But, of course, this is an area of central importance not just to the people here today but to the public at large.

You will have already seen Lord Mandelson’s comments in the media in recent days so I won’t go over old ground.

But I will reiterate this. We are committed to implementing the Hooper Review in its entirety. His recommendations stand together and need to be implemented as a whole.

And this Government clearly intends to press ahead with our Postal Services Bill.

Our reforms are essential to securing Royal Mail’s future.

A healthy Royal Mail is good for everyone. Good for customers. Good for employees. And I’d like to stress at that point that we are concerned that we create a future for Royal Mail where there is a shared vision, where we can see it as an expanded service, and that change isn’t just seen as job cuts because that’s not the way to get employee engagement.

It’s important that there is modernisation with a purpose, that’s about expanding its operation and offering a whole new range of services

And that’s good for the postal services sector as a whole.

Conclusion

So despite falling volumes of mail, despite huge competition from new previously undreamt of forms of communication, I believe there are huge possibilities for the postal sector in this new digital, technological age.

I want to see postal services doing more to provide innovative products and offer a real choice to its customers. I want to see a vibrant postal market offering its customers – large and small – the services that they need to go about their every day life or business.

Our challenge in Government is to prepare the groundwork. To create the right conditions for you to continue to grow your businesses. But we can only open the envelope. It’s up to you, the experts in this room, to deliver success.

Thank you. 

Ends

The Minister puts the case for the introduction of new regulations that will raise the national minimum wage from 1 October and stop tips being used to make up pay for the purposes of the national minimum wage.

Read the response in Hansard

Speech by: Kevin Brennan MP
Venue: Churchill Rooms, House of Commons, London

Good afternoon.

I’m delighted to have been given this opportunity to speak to you today. The All Parliamentary Group does excellent work. Not only to encourage and facilitate a cohesive political approach to policy development in the sector, but also raising awareness of the principal issues facing building services and engineering, including training.

New Department

It’s particularly timely given the creation of the Department for Business, Innovation and Skills and its clear remit to lead the fight against the recession and build Britain’s capabilities to compete in the global economy.

The establishment of the new Department expresses the commitment set out in New Industry, New Jobs to build Britain’s resources of skill, knowledge and creativity through an active approach to skills.

It is true that the future economy is going to look very different. Growing and ageing populations, new technologies and the transition to a low carbon economy all offer opportunities. We must seize and maximise these opportunities.

Progress on Skills

We have a firm foundation of skills improvement upon which to build. Since we published World Class Skills in 2006, we have made excellent progress to increase the skills levels of the nation so we can compete in an increasingly globalised marketplace.

More than 5.7 million adults have improved their basic skills. We have rescued and expanded apprenticeships, with numbers trebling to 225,000 in 2007/08. We have created the Train to Gain service for employers which has been highly successful, engaging with 127,000 employers through the Skills brokerage Service, enabling 971,000 employees to begin programmes.

We’ve also make good progress on higher level skills. Thirty one per cent of the working age population are now qualified at Level 4 and above. Our target is to reach forty per cent by 2020.

We are ensuring our universities deliver the kind of graduates employers want, with the skills that they need. Universities are working as never before in close collaboration with business. They are tapping into the willingness of employers to invest in the future through co-funded places. And the matched funding pot of the Economic Challenge Investment Fund will stimulate long term relationships. Supporting businesses affected by recession will illustrate the benefits of collaborative working with the HE sector and lead to greater sustainability.

Response to the Downturn

As well as making real and significant progress on improving the skills levels of the nation, we are supporting people and business through the downturn. For example, we have boosted the number of apprenticeships by a further 35,000; we are helping people who face redundancy or are unemployed through a package of support; and it is why we have made Train to Gain more flexible to respond to employers’ needs.

We are delighted that so many employers are investing in training their staff in these difficult economic circumstances.
I know that the downturn is placing significant pressures on the construction industry and its supply chain. Government is working closely with all sides of the industry to mitigate its impact.

But now we need to do more.

We will continue reforming the skills system and improving the skills of the nation. We will continue to reform qualifications so they are flexible enough to take young people where they want to go and meet the skills requirements of employers. And we will continue supporting individuals and business so they can survive the recession.

But Government will also do all it can to ensure that workers get their share of the jobs of the future in those growth industries. We must have the skills required – delivered in the right place and at the right time – that will enable to UK to seize the opportunities of a new global economy.

Public Procurement

We can exploit the huge potential of government procurement, harnessing our buying power to promote skills training and apprenticeships. Government is committed to taking action. We will routinely consider skills issues and promote training through our massive public procurement programme – worth around £175 billion a year.

Innovation and Construction

There are major projects out there which will offer great opportunities for construction and engineering firms, like nuclear new build, rail and renewable energy projects.

We must ensure Government and industry do whatever it takes to build productivity and improve skills to help put British firms in the best place to compete for these contracts and reap the benefits of innovation.

The Government’s Review of productivity and skills in engineering construction will help this happen.

Low Carbon/Green Jobs

Environmental industries are predicted to grow by forty five percent over the next decade. Sharpening our focus on supporting skills development in those low carbon industries, occupations and technologies will drive our economic growth.
There is a vital role for Government in aligning the efforts of employers and skills partners in brokering the solutions we need. We are looking at how we can develop our current funding system so that it is more responsive to emerging demand through increasing the flexibility of funding in-year.

Progress is already being made to this end. For example, the Office of Nuclear Development is working with a range of bodies including my department and the Skills Academy for Nuclear to determine the gaps in the nuclear engineering skills base, and we will produce a strategy for closing that gap.

Future

It has never been more important that employers continue to invest in skills, not just to survive downturn, but to be more competitive when business picks up again.

Despite the current economic outlook, longer-term trends remain clear: globally, there is an increasing need for more highly skilled workers. The coming decade offers new opportunities for Britain, with up to a billion skilled jobs likely to be created worldwide in the coming years.

Government has a huge role – through policies on taxation, regulation and expenditure, infrastructure, procurement and innovation – to influence the UK business environment, and help get the right support in place now, during these exceptionally tough times, we can ensure we build for tomorrow.

We must make sure we have the skills required to seize the opportunities of a new global economy and support our businesses through the recession and into future.

PLEASE CHECK AGAINST DELIVERY

Introduction

My thanks to Angela, who has been a stalwart voice for the industry through an incredibly tough two years. Probably the toughest tenure of anyone in your position for a very long time. You have a great team behind you. And I congratulate you all for your work.

If there is any respite it is that there are some tentative signs that the financial system is stabilizing. There are signs of life in both equity and bond markets and share prices have regained a little ground. Interbank rates are down and the main lending banks are certainly more open for business – and that’s a message we have to get out to the rest of the UK economy and to the world.

And although there’s perhaps not a lot of sympathy out there, I do want to acknowledge the thousands of workers in the banking and finance sector who have lost their jobs over the last year. Most of whom didn’t have large pensions to look forward to.

In the real economy things remain extremely difficult, but on average 200,000 people a month move off unemployment in the UK and there is evidence that after working down inventories, managers are gradually starting to build up stocks again.

It’s very fragile, but it reinforces the fact that the government’s bold intervention to stabilize the banks and maintain demand in the economy was absolutely the right thing to do, all the more courageous as the Prime Minister did not have much peer group solidarity at the time when we made our first moves. The subsequent coordinated action that was taken internationally will, in time, also be vindicated.

Our economic resilience demonstrates that the flexibility of the labour market we have built on since 1997 is a great asset at times of strain. As is our commitment to supporting those who lose their jobs with training and help finding work.

We have worked closely with you over the last year to ensure that lending to small and medium sized firms is maintained. Especially for those small and mid-sized firms that can’t go to equity and bond markets. The lending guarantees and the working capital guarantee have both helped do that, and they are a reminder that the government’s purpose in stabilising the banks was the resumption of credit in the real economy, which is critical to all our recovery. So there are clear expectations that credit must be available – and not just available, but reasonably priced as well.

The next step for the banking industry

But of course surviving the credit crunch is only the first step for the financial sector and the banking industry in particular. Repairing its balance sheets is the second. What I want to speak about this evening is where we go from here and what we do to put the financial sector on a sound footing for the future.

That process is going to test the appetite for change from an industry that’s not used to this degree of scrutiny and criticism. One that’s not used to having its prerogatives questioned. Now obviously, different banks and financial institutions have weathered the last two years – and managed the last ten years – in different ways. But I think we can speak of a challenge for the industry as a whole.

And I have to say this. In a decade or more of exposure to businesses on pretty much a day-to-day basis, I have never felt such a sense of distrust and anger between the financial sector and the rest of the economy that exists.

People are furious about risk taking and astronomical pay. People are asking how financial services appeared to move so easily from being an asset to a liability to the economy.

And people who are on short-time working or face the prospect of redundancy or their business failing will be looking askance at reports of bonuses being paid out again, unless these really are tied to the toughest of challenges and achievement, and even then for many they will be hard to swallow.

Now, let me quickly add that I understand that people are equally looking askance at the behaviour of many politicians as well. Politicians and bankers share a need to demonstrate to the public that we are getting our houses in order. Politics and banking both ultimately work on trust. That’s the currency of both. Well, we have to ‘re-mint’ that trust in a serious way.

Rules will not replace judgment

When the government publishes its Financial Services Strategy it will be clear that we are committed to the success of this sector. And I personally feel a very strong commitment to financial services, because for all the years I was traveling round as EU Trade Commission and beyond, I know how important they are to Britain’s international standing and investment – an absolutely solid and indispensable platform for our position in the global economy.

But it will be equally clear that we are convinced that the status quo ante is not an option. The FSA and the EU are both going to get a new rulebook. Things are going to change.

These rules will shift us to greater macro-prudential supervision – looking out for systemic risk. They’ll create new capitalization requirements that lean into the economic cycle and account better for different kinds of risk. They’ll reshape the landscape for derivatives.

They will have to address the important fact that it is not the bigness or smallness of banks that matters so much as the implications of their failure for the rest of us.

Where institutions operate under an explicit or implicit government guarantee because of their deposit bases or role in the market, then they must clearly be expected to take a fundamentally different approach to risk and failure.

These are necessary shifts in a regulatory framework that must have the medium term stability of the financial system as its core priority.

In this country we are also going to use the forthcoming Consumer White Paper to put the squeeze on unscrupulous selling, including of financial products.

As many people have argued, we will also need to look at how best to enhance the Tripartite system – the coordination between the Treasury, the Bank of England and the FSA.

The Bank’s role in financial stability issues has already been strengthened, with a new statutory duty and a Financial Stability Committee. But while I think there is an argument for the Bank taking a more direct role in financial stability issues, I don’t support a twin peaks system of regulation. I believe the lesson of the last year or so is that we need a stronger regulator, not a weaker one. Others are moving towards consolidation because they have seen it work well here.

We need to keep prudential and conduct of business expertise in one place, in a regulator capable of seeing all parts of the picture at once. That regulator has to be the FSA.

However it is important for politicians and the public to recognise that there are no regulatory silver bullets.

None of these new rules will replace judgment, both professional and political. You can’t regulate away risk, and nor should you want to, because there is risk in all innovation and investment.

None of these rules will replace the need for politicians and central bankers willing to call time on asset bubbles.

They will not replace shareholders and boards willing to challenge excessive incentives tied to excessive risk or unsustainable growth models.

They will not replace managers who know the difference between innovating and sidestepping the rules. And between genuine hedging and speculative trading – or gambling as we non-specialists usually call it.

Alistair Darling said last week that the banking revolution needs to start in the boardroom and he got some criticism for the apparent lack of radicalism in that suggestion.

But he is absolutely right, and it only lacks radicalism if the people in those boardrooms are not radical enough. If they lack a commitment to change or lack a vision of Britain’s long-term banking future, or think that with the urgency of the crisis behind us, the pressure or need for substantial change will pass.

I look forward to seeing the interim recommendations of Sir David Walker’s review of corporate governance in the financial sector and we need to use them to shape a debate about boardroom approaches to risk, to pay and to corporate strategy.

The role of the BBA

Angela, you personally and the BBA as an institution, have done a useful service in lobbying for a considered regulatory response to the credit crunch. We need to recognise that alongside the Turner Review, by far the most important part of that response is going to come from the EU.

I have always been a strong defender of EU regulation in this area. I think it responds to the reality of a single European financial market and to the need to have an agreed European voice in the debate on global prudential standards. Lord Turner is right that it is necessary and desirable and unavoidable.

But Brussels has to recognise that EU rules will affect the UK far more than any other European state. We have more skin in this game than the rest of Europe put together. We expect this to be recognised and while we will be working for stronger European rules, I want to make it clear that we will also be defending the UK’s interests. I am sure my friends in Brussels will understand and appreciate my message tonight.

So I want to urge you today to focus on Brussels. You need to be building sectoral alliances in other member states and all of us need to be pushing back against a knee-jerk political response, from the Parliament or from the Commission, in favour of reasoned argument. This is especially the case in areas like private equity, where an ill-considered approach risks making Europe an unattractive place for investors.

You are right to argue that while we need to look again at the way capitalization requirements reflect the assets on bank’s trading books, and the risks inherent in different banking models, not all liabilities carry the same risks. Currencies are not CDOs.

You are right to argue for a global approach to regulating financial services to minimize the risk of regulatory arbitrage. The ultimate test of the competitiveness of the UK financial sector is not the lightness of the regulatory touch, but the levelness of the international playing field.

I want to stress this – I do not believe that the competitiveness of the City can lie in being less regulated than anywhere else.

You are also right to argue that there is an important distinction between the setting of standards and rules internationally and the day-to-day supervision and execution of these rules and standards.

The UK pushed hard to have this argument recognised at the EU level, where the urgent need for new harmonized rules has to come with the recognition that because it is ultimately national taxpayers’ money on the line, it must be national supervisors executing the rules. It’s a basic principle of fiscal accountability.

Finally, and perhaps most importantly, you have been right of course to warn that there will be some kind of trade off between new rules, especially on liquidity and capital requirements, and the funds banks have available for lending in the rest of the economy.

This is critically important as the economy returns to growth, and the government is committed to ensuring that we strike the right balance here and in Europe, in respect of banks and other financial institutions, whose lending and equity we depend on.

If there has been one message from the BBA that has been driven home more than any other over the last year it is that these judgments must be based on sound impact assessments and analysis. You have urged rightly the FSA to do its homework.

But the reality is that the most powerful tool available to regulators and government in getting these judgments right is the data your industry provides. Three months after the Turner Review we still do not have the kind of data – not all of it – that we need, and you will have to build a compelling case. This is an omission, in my view, that needs fixing.

The next British economy

Let me say this in conclusion.

Today the government has been launching a prospectus for Britain’s economic recovery and renewal. It touches on a wide range of policy areas that will define the next decade in this country. Constitutional change. Further public service reform. Climate change. Our ageing population.

But it also sets out our plans for continuing to equip the UK to compete in a global economy through its knowledge, its innovation, our enterprise and our skills. The creation of a new department of Business Innovation and Skills, bringing those policy levers together in one place, is part of that wider vision of what a country needs in order to prosper in the twenty first century.

We often talk about the need to balance the UK economy away from financial services. But the economy is already a lot less ‘unbalanced’ than some people think.

Manufacturing actually accounts for a significantly greater share of UK GDP than financial services (7.6/12.6%). It’s always interesting when you tell French politicians this – they look at you as if it must be some kind of Anglo Saxon accounting!

We do need to keep investing in our basic strengths in advanced manufacturing and precision engineering, in science and biotech, in green technologies, in the creative industries – so that this balance is retained and strengthened.

But the point is that the financial sector, as well as being a major export earner in its own right, underwrites all these other parts of our economy. It is its banker, its insurer, its advisor, its lawyer. There is no British economy without our financial sector.

I know you don’t like banking being described as a utility, but long term, stable credit is as fundamental to our economy as electricity or any of our infrastructure in this country.

We certainly need bankers who don’t think it’s a slight on their dynamism or ambition to think that way.

Ironically, I think one of our biggest problems may be premature good economic news. When it comes to change and the changes this sector needs to take on, it may become harder to maintain the urgency of reform, especially internationally, as banks restructure their balance sheets and pay back government loans and the bonuses go up again and the economy returns to growth and the crowds go back to hating journalists and estate agents more than politicians and bankers.

Everyone’s a reformed drinker at the height of the hangover. The real test of commitment is when the headache clears.

But no one should doubt our commitment to using this window of opportunity to redesign our own and international financial standards and supervision.

Nor should they underestimate our commitment to a strong, international British banking industry. Just as they shouldn’t doubt the resilience and capacity for renewal of the industry itself.

There will have to be a change in boardrooms. For politicians and regulators there is going to have to be a lot more thinking outside of national and sectoral silos.

This is something we can and will achieve together for the long term future of the British banking industry and, therefore, for the future good of our economy and our country as a whole.

Many thanks for the opportunity to speak today on the future of competition policy following the credit crunch.

The topic today goes right to the heart of the mission for the new Department of Business, Innovation and Skills. We’ve got a very clear remit from the Prime Minister to build Britain’s capabilities to compete in the global economy. In doing so we shall remain vocal supporters of open markets and champions of competition policy.

Because – and this is my key argument today – they are the right means to achieving our end goal of competitiveness.

In the fast-changing global economy, the UK and the EU must be focussed constantly on how we promote productivity and competitiveness. Our actions and policies must be viewed within this context.

The importance of competition

Let me first re-state the case for competition as the driver of productivity. There is no incentive for less efficient firms to innovate and achieve more when they are protected from competition. Business flourishes in open, competitive markets, so we must do all we can to create this environment.

According to the World Bank, Britain is sixth in the world for ease of doing business. This is because our strong competition rules and the EU’s openness to trade have ensured that we have a dynamic economy.

The UK has one of the best competition regimes in the world. This has not happened by accident, but because we’ve worked hard with the Competition Commission and other UK competition authorities to build this. And I agree with Peter Freeman, John Fingleton and others who have urged us to hold our nerve, that we remain absolutely determined not to weaken this framework.

A robust and consistent competition framework benefits business and consumers. The European Commission’s fights against cartels is estimated to have brought 20 billion Euros in direct and indirect consumer benefits across the EU over the last four years.

The Office of Fair Trading estimates that it has saved consumers £326m per year on average from April 2005 to March 2008.

Action during the downturn

During a downturn, the role of competition comes into even sharper focus. Governments receive more pressure and more calls for their assistance. But the UK Government will not waver from our strong view that maintaining competitive markets will help UK economic recovery.

This is not the same as saying that we will be passive bystanders when problems arise. Far from it, there is a clear case for targeted action to preserve the UK’s competitiveness that does not mean we are anti-competition.

Let me look first at the exceptional set of actions we undertook to ensure stability in the UK economy in the face of the unprecedented economic and financial crisis.

We acted in the banking sector to recapitalise banks and guarantee toxic assets and deposits and new lending for essential infrastructure programmes. This was essential to shore up lending for consumers and businesses and restore confidence in banks.

Also it was vital to avoid the unprecedented banking crisis having even more wide reaching and catastrophic effects in the wider economy. This decision was not taken lightly and should not be considered to be an easy ride for the banks.

We have attached strict conditions to the assistance provided. Banks wishing to participate in the Asset Protection Scheme for example must make additional lending to households and businesses.

But the overarching priority in the banking sector must be first to ensure the continuing supply of credit to the wider economy. This means returning the banks to solvency and profitability, and maintaining financial stability.

And in the wider economy, the UK has put several schemes in place. Take the UK’s automotive assistance programme.

This will primarily deliver loan guarantees to healthy companies who would, under normal circumstances, be able to secure loans from banks without the need for a third party guarantee.

This investment will create or sustain jobs, develop cutting-edge technology, bring special value to the UK, reduce CO2 emissions and maintain R&D in UK vehicle manufacturing.

It is plain to me that without this support, a number of important investments in the UK automotive sector will not happen.

These actions were not taken lightly or without controversy either.

The measures we are delivering are limited in duration and are subject to tight conditions to ensure that industries restructure or invest in R&D&I and deliver new products that will ensure their viability.

I do not believe these actions compromise competition policy. They were taken to ensure that our businesses maintain essential investment and remain able to compete strongly in the global economy.

State Aid

This brings me to the broader principles of State Aid.

The ongoing programme of state aid reform led by the Commission has enabled Member States to deliver state aid interventions more effectively and quickly.

When state aid is used well it is an effective tool with which to address market failures which hamper our economies and damage businesses, individuals and the environment.

But used incorrectly it harms competition to the detriment of us all. All interventions must be closely scrutinised to ensure that they are limited in amount and duration to the minimum necessary.

The Commission acted rapidly to create targeted flexibilities in state aid and competition rules to enable governments to take extraordinary action to fight off the crisis, especially the need to inject equity into banks.

However, this new flexibility should be seen as a short term response to the turbulence in financial markets and its knock on effect on the real economy. It should be regarded as a temporary measure justified by prevailing economic conditions.

We must be robust in the face of calls for long term weakening of the State Aid regime, especially for larger companies, and remain committed to withdraw the framework, as planned, after 2010. This will ensure the continuation of a level playing field for companies and competitiveness across the EU.

The EU in particular must continue to lead the way and work together to avoid protectionism, now more than ever.

It must defend free markets and competition policy and the integrity and openness of the Single Market. The single market has served us well and made the UK and the EU a great place to do business.

Looking ahead, there must be a clear and targeted agenda for taking the opening of the single market forward, focusing on areas where it will make a real difference for European competitiveness.

Future challenge – industrial activism

But advocating open markets and effective competition policy should not mean passively accepting that this is all Government can do to shape our economic and business competitiveness.

We do need to reassert an active industrial policy. This is the exact purpose of the new Department for Business, Innovation and Skills, and follows the strategy set out in our New Industry, New Jobs document.

This strategy for competitiveness is not in conflict with, but is complementary to, our strategy for competition.

As global competition intensifies and new technologies and processes transform our lives and industry, we will have to do all we can as a country to build on our strengths. So that we develop the new capabilities that will enable us to benefit fully from these changes.

The world economy is set to double in size and we need to make sure we are in a good position to take advantage of this. There are many ways we can do this without reverting to protectionism or economic nationalism in Europe.

We can do so by focusing on the way we regulate business and the things that shape the business environment – through our science and R&D policies, our education and skills policies.

We also need to look carefully at the future drivers of the economy such as digital infrastructure, or our low carbon policies.

Government action to promote these areas does not mean creating national champions or running industries directly. But it means creating the conditions for our economy to compete in the global economy for decades to come.

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Speech by: Pat McFadden
Venue: 1 Whitehall Place

Thank you very much.

BIS – a new Department

It’s a great pleasure for me to be here. And I want to explain a little bit about what we are thinking in the formation of this new Department and in the government in terms of the industrial economic situation going forward.

Dealing with the recession

For all of us, right across the world, this has been an absolutely extraordinary situation to be dealing with in the last year.

We had the initial collapse of finance and credit and then the unrolling of that to the rest of the economy.

And, after many years of stable economic growth, it has prompted a question in all our minds as to how government should react and what our job description should be going forward.

And that’s really the thinking behind us in the UK bringing together our policy on business, our policy on science and innovation, and our policy on higher education into one department.

And the thinking really is this.

Of course, during an economic recession governments have to deal with the issues confronting them.

For example, today we have sad news 2,000 people in the steel industry in the UK are going to lose their jobs.

And when that happens the government has to be there for people. The government has to do what it can to help them through that situation and to find another job.

No government can ever say that it can stop an economic recession having an impact in terms of people losing their jobs or companies experiencing the effects of that.

But what we can do, in contrast sometimes to what happened in the past, is to step in and say we can help you get a second chance.

We can help you make a new start.

For those steel workers that is precisely what we will do.

Preparing for the upturn

But we would only be doing half our job if we simply confronted the issues facing us in the course of the recession.

It demands, I believe, a deeper response a deeper rethinking of what government should be doing in terms of shaping the economy of the future.

And that is to try and think beyond the immediate problem to what kind of economy is going to emerge from this recession.

And that is part of our Department’s job and we regard that very much in Government as part of our job.

That’s why we’ve brought things together in this new Department.

Trading with Australia

Now, one thing that’s for sure, is that Britain’s economic future relies on continuing to be a great trading nation.

Here we celebrate the relationship between Britain and Australia economically and that’s a hugely important relationship with bilateral trade worth some £10 billion a year – I believe it could be a lot more – but that is strong economic relationship.

And, of course, we have a social, cultural and sporting relationship which is longer and deeper than that.

Part of the reason that this is so important is that, for a country of our size, placed where we are in the world, we survive or will survive by the extent to which we’re connected, trading and operating with the rest of the world.

I continually meet people who say to me – you don’t realise what a fantastic country Britain is. That people, anywhere in the world, can come here, make a business invest and do well.

It is not always true around the world. We’re very proud that it’s true here and Australian companies – many of the countries who are here today – are benefiting from those opportunities and I want that to continue for a long, long time to come.

And I want us to build and grow on what we are doing already.

The Olympics

There’s also another particular focal point, of course, for our economic and trading relationship and that is the Olympics in 2012.

Ever since London was awarded the Olympics I’ve been interested not only in trying to create the greatest sporting festival on earth but in the fact that this is the biggest infrastructure and single investment project in the UK in the coming years.

Now I represent a constituency in Wolverhampton in the Midlands – the heartland of Britain’s manufacturing tradition.

And I want to make sure that companies from all parts of the country benefit from those investment projects and that the benefit of all the services and manufacturing that goes into the Games is reflected round the country.

And I think Australian companies, the Australian experience after Sydney, has got a great deal to teach us.

Because what I’ve been interested in, not only through the Sydney Olympics but then seeing the Olympics since in Athens, Beijing and in London to come, is how Australian firms – who started off developing an expertise in producing that event – have continued to prosper.

And we see that already in our own Olympics where the Chief Executive of our Olympic Delivery Authority David Higgins – an Australian who worked on Sydney – is now helping London to deliver what, we hope, will be an absolutely fantastic Olympic Games in a few years’ time.

And these opportunities are not theoretical they are real.

Examples of Australian Olympic business success

For example the lighting control systems in the hotels and the Olympic venues were created by a Sydney company called Dynalite.

The artificial turf in the hockey field engineered by Queensland’s Sports Technology International and Argus Solutions from New South Wales providing the mobile phone antenna in the ‘Bird’s Nest’ stadium in Beijing.

So the expertise gained from creating one Olympic Games can benefit a country in the future.

You’ve already shown us how that can be done in Australia and I want to see a similar success through the United Kingdom hosting the Olympic Games.

The shift to low carbon

But I talked a bit about shaping the economy in the future. And there’s one particular area that I want to highlight and that is the shift to a low carbon economy.

Because what strikes me, as someone of my age and my generation, is that looking into the future the way we heat our homes, the way that we transport ourselves, the way that we produce our energy, the way we produce our goods and services – all of that is going to change profoundly in the years to come.

And I don’t need to tell anyone from Australia about the impact of climate change after the hottest years, year on year, unfolding there.

The effects of climate change

Predictions for the future suggest that this extreme weather will continue. Rising sea levels, intense droughts, threats to national treasures like the Great Barrier Reef.

And we too, here in Britain, are feeling these effects with significant floods in recent years.

And last week we released our climate change projections. And they painted a sobering picture of warmer, wetter winters, hotter, drier summers, sea levels rising, more severe weather.

And it’s these overwhelming environmental factors that have driven our countries to create targets to substantially cut greenhouse gas emission by 2050.

And, two thirds of those emissions come from the way we use and the way that we produce and so the need for low carbon solutions has never been greater.

And this is absolutely at the heart of how the United Kingdom and I believe Australia see our economic future. That’s at the heart of what our Department is doing.

Low carbon business opportunities

And despite the problems that I’ve outlined, in terms of the impact of climate change, there are also opportunities because it’s currently estimated that the world will need to spend around £1.1 trillion per year, over the next four decades, to halve our carbon emissions by 2050.

So this is a real chance for companies with creativity, energy and enterprise to build up the national low carbon infrastructure.

To create new innovative solutions to old problems and create new markets.

This morning I met with leading industrialists in the civil nuclear field to talk about how we, as a country, produce our energy in future years.

Nuclear is not the only area, of course. Clean coal, bio-gas, off-shore wind, solar power and sea power.

An active industrial approach

We’re taking an active industrial approach to these issues in the United Kingdom.

We’re investing in low carbon and renewable power.

In the recent Budget we announced a Strategic Investment Fund much of which will be shared between my Department and the Department of Energy and Climate Change.

To make sure that we not only meet our goals but create the best economic chance for companies to do so.

And there is a social side to this. It is one thing to create goals and it’s one thing to say we’ll have so much done by nuclear but governments also have to give their companies, and their people, the best chance to make the most of these opportunities.

And that’s a question about education and skills and investment in people. Because if we simply create the goals but we don’t give our populations the chance to acquire the skills and equip themselves to make the most of these opportunities we’re not doing a complete job. And that’s why we’ve brought education together with business and industrial policy.

That doesn’t mean we’re going to take a utilitarian view of education. That we’re going to neglect the universal love of learning that must be at the heart of any world class education system.

But it does mean that we care as much about the opportunities of people to participate in the creation of this low carbon economy as we do about the creation of the low carbon economy itself.

Opportunity for low carbon in the Australian market

Now the Australian market for environmental goods and services has been estimated at around £11 billion in 2006 with annual growth of seven per cent.

At a Governmental level co-operation is already taking place on practical projects such as emissions monitoring and measurement, renewable energy and efficiency.

Individual companies are also working together.

For example Melbourne company Coolnrg a ’social purpose, for-profit’ organisation brokered a deal in the UK to distribute 4.5m energy saving light bulbs in partnership with the Sun newspaper and Southern Electric.

Australian company, Sims Recycling Solutions, has opened a recycling plant costing £12 million in Newport, Wales, creating 200 jobs.

So there’s already companies investing both here and in Australia to create the kind of economy that I’m talking about and Britain too is returning the compliment by making investments in Australia.

And the winner of this year’s Emergency Planning Society’s most innovative product of the year was Floodstop.

This is an easy-to-assemble barrier for protecting households or premises from flood damage.

And the inventor Simon Phelps identified Australia early on as, of course, a potential market for this product.

He said: “It seemed a natural place to expand to. We’ve already received interest from a large Australian company.”

So there are opportunities there.

It’s Britain’s openness as a country, it’s our welcome to people from Australia and to people from around the world, it’s our enthusiasm for the entrepreneurship, the ideas, the investment, and the people from abroad that makes us a good home for this.

And I think there’s probably no better example of that than the large Australian community here in the United Kingdom, the large Australian business community in the United Kingdom, and the strong relationship that exists between our two countries on every level.

Conclusion

So, yes, we’re good friends. Yes we’ve got a long relationship.

But I think, particularly at this time, when the economic and the political task is much more than business as usual.

It’s much more than steady as you go.

It’s actually a more fundamental task because out of the destruction of the old comes the birth of the new.

And that’s why, for your Government in Australia, for our Government here this question of how to renew and how to create the economy of the future is absolutely a fundamental part of our job description over the coming years.

We’re up for the task here and I know that the Australian government and the Australian people are too.

What I hope, through events like this and through the mutual investment and mutual co-operation between companies and between our governments, is that we both do the best job we can. Not just for our economies and business but most fundamentally for our populations too.

Thank you very much for inviting me here today and good day.

Speech by: Kevin Brennan
Venue: Congress House, Great Russell Street, London

Good morning.

Let me say how pleased I am that, as national leading employers, you are actively engaging with the Building Britain’s Future: New Industry, New Jobs strategy Government set out in April.

Just this morning I heard first hand some of the challenges and opportunities this strategy places in front of you.

I genuinely believe that we have one of the best business environments in the world. We are one of the largest economic and industrial powers. We have a strong, flexible labour market with increasingly high skills at all levels.

It is important we work together through this extremely tough economic period, and ensure we are prepared to take advantage of the opportunities from the upturn.

New Department

That is exactly why the Department for Business, Innovation and Skills has been formed.

The Prime Minister gave the department a very clear remit to lead the fight against the recession and build Britain’s capabilities to compete in the global economy.

The creation of this new Department expresses the commitment set out in New Industry, New Jobs to build Britain’s resources of skill, knowledge and creativity by taking an active approach.

Investment in education and skills will be an integral part of Government’s economic and industrial policy – getting the right skills, in the right place, at the right time, particularly in growth sectors, such as low carbon.

The future economy is going to look very different. Growing and ageing populations, new technologies and the transition to a low carbon economy all offer opportunities. We must seize and maximise them.

The strong foundations of our skills system

We already have a strong skills foundation upon which to build. Since we published World Class Skills in 2006, we have made excellent progress to increase the skills levels of the nation so we can compete in an increasingly globalised marketplace.

More than 5.7 million adults have improved their basic skills. We have rescued and expanded apprenticeships, with numbers trebling to 225,000 in 2007/08. It offers a way for business of all sizes to develop their future workforce. We have created the Train to Gain service for employers which has been highly successful.

And we are supporting people and business through the downturn. For example, we have boosted the number of apprenticeships by a further 35,000; we are helping people who face redundancy or are unemployed through a package of support; and it is why we have made Train to Gain more flexible to respond to employers’ needs.

We are delighted that so many employers are investing in training their staff in these difficult economic circumstances. More than 127,000 employers have now engaged with Train to Gain enabling almost 1 million people to begin learning.

Investing in skills is exactly what we should continue to do during a downturn.

What will we to do to build on this firm foundation?

Building on this foundation, Government will do all it can to ensure workers get their share of the jobs of the future in the key industries, technologies and services that drive economic growth and help UK businesses compete in the emerging growth areas.

Procurement

We will make smarter use of Government levers to shape and raise demand for training. One of those levers is maximising the use of procurement and regulatory frameworks in skills development.

Public procurement also plays a key role in encouraging the development of new technologies and providing innovative solutions that provide better public services and respond to societal challenges.

In these difficult economic circumstances, we need to make sure every pound of taxpayers’ money works hard. So Government spending must be harnessed to create demand for new innovative products and services.

So Government is driving change to ensure public sector procurers seek solutions that provide best value for money whilst encouraging business innovation.

Digital Britain

Earlier this month Government published the Digital Britain Report setting out our strategic vision for ensuring that the UK is at the leading edge of the global digital economy and is one of the central policy commitments in the Government’s Building Britain’s Future plan.

So our challenge is to ensure we have a good flow of talent of people with skills at all levels into digital industries. The report sets out how we can do so through school, HE and company training.

Crucially, digital life skills are a foundation for participation and employability in a digital society.

Government welcomes the findings of Estelle Morris’s review on digital skills, and we will look seriously at how we can do more to improve basic computer skills for adults most in need – including the unemployed, those at risk of redundancy and older people – as well as those in jobs.

Innovation and Construction

There are major projects out there which will offer great opportunities for construction and engineering firms, like nuclear new build, rail and renewable energy projects.

We need to ensure the Government and industry do whatever it takes to build productivity and improve skills to help put British firms in the best place to compete for contracts and reap the benefits of innovation.

The Government’s Review of productivity and skills in engineering construction will help ensure this happens.

Low Carbon

To prosper in a global economy and capitalise on the growth opportunities, we must create the conditions for the UK to be the leading place in the world to be an innovative low carbon business, developing low carbon products and services.

Following the budget, we published ‘Investing in a Low Carbon Britain’, which identified the first steps towards putting our vision into practice.

To support this and increase UK capability, the Government announced £405 million will be targeted to help establish UK as a market leader in renewables technology and advanced green manufacturing in the next two years, the Budget also announced a further £50 million for the Technology Strategy Board to increase its capacity for supporting innovation in areas of high growth potential, such as low carbon technologies and advanced manufacturing.

Future

Despite the current economic outlook, longer-term trends remain clear: globally, there is an increasing need for more highly skilled workers. The coming decade offers new opportunities for Britain, with up to a billion skilled jobs likely to be created worldwide in the coming years.

Government has a huge role – through policies on taxation, regulation and expenditure, infrastructure, procurement and innovation – to influence the UK business environment, and help get the right support in place now, during these exceptionally tough times, we can ensure we build for tomorrow.

It is vital firms continue to invest in the skills of their workforce despite unprecedented pressures. In an open letter last winter, the UK Commission for Employment and Skills pointed out that companies that don’t train their staff are two and a half times more likely to fail than those that do.

We must make sure we have the skills required to seize the opportunities of a new global economy and support our businesses through the recession and into future.

PLEASE CHECK AGAINST DELIVERY

Speech by: Pat McFadden
Venue: Lancaster House, London,

Introduction

China is a country of huge strategic importance to the UK across a broad range of areas of mutual interest: globalisation; trade; climate change; sustainable development; security; culture.

Education plays a key role in developing that wider relationship and our collaboration is going from strength to strength at all levels – from primary schools to PhD scholarships.

The Framework agreed between our two Prime Ministers, “Sino-UK Partners in Education”, provides an excellent basis from which to launch future co-operation.

The world is going through an unprecedented economic crisis threatening jobs in both our countries.

We face similar challenges and, now more than ever, our countries must work together to equip our graduates and workers with the skills they need to find employment in challenging times and to build workforces fit for the knowledge economy of the future.

We face these challenges from a strong position, with many bilateral education and skills programmes already in place between our two countries.

In fact, we are benefiting from co-operation at all levels of our educational system.

To demonstrate I would like to look more closely at four key levels of collaboration – schools, higher education, graduate research and lastly advanced scientific research.

1. Schools

The first level of co-operation is, of course, with our schools.

We attach great importance to learning more about China – and for China to learn more about us.

Notably, the British Museum recently announced a major touring exhibition on Chinese history and culture.

That’s why we are encouraging more young people to gain first hand experience of living, studying and working in another country at an early age as well as developing a better understanding of what globalisation means for both countries.

So joint co-operation between schools in the UK and China is very important.

In two weeks time over 700 students and their teachers will be leaving for this year’s Chinese Language immersion courses in China.

We welcome the generous contribution of Hanban whose support has made this by far the largest and most successful programme of its type in the world.

The Prime Minister’s Global Fellowship programme last summer provided 39 life-changing opportunities for school and college leavers in China.

We will be running a similar programme this year, as well as a Prime Minister’s Global Teachers programme.

We also share a responsibility with China to instil a stronger global dimension into the learning experience of our children and young people.

We are funding several programmes and initiatives to promote these sustainable relationships. For example, through programmes such as:

• The Teachers International Development programme
• School and area linking visits
• Joint curriculum projects

The Chinese Language assistants’ programme has seen around 90 English language assistants go to China each year while an even higher number of Chinese language assistants come to teach in British classrooms.

The success of the Language Assistants Programme has helped 500 secondary schools in England offer Chinese lessons to their pupils. In addition, after their time working in China, many English language assistants are inspired to learn Chinese.

Recent years has also seen significant growth in the numbers of institutional links between our schools, our colleges and universities.

And I am very grateful for the support given by a number of UK partner organisations including the British Council, the Specialist Schools and Academies Trust and HSBC.

2. Higher Education collaboration

Joint co-operation is also extremely important in further and in higher education.

Both our countries have strong traditions of excellence here.

The UK receives more international students from China than from any other country.

There are an estimated 67,000 students from mainland China studying in the UK at universities, colleges and on short courses.

Based on research by the Higher Education Statistics Agency 55,000 of these students are enrolled at British Universities, making the UK the top choice Higher Education destination within the EU for Chinese students

We are encouraging an increasing number of British students to go to China to study. The Study China programme, now in its second year, provides an opportunity for over 200 UK undergraduates each year to spend three weeks in China, studying language, history, culture and business.

UK institutions were the first foreign institutions to be granted permission by the Ministry of Education to set up campuses or collaborative ventures in China.

They involve the universities of Liverpool and Nottingham and a consortium of universities from Northern England.

In order, to share our knowledge, we have engaged in long-term policy projects.

The British Council, HEFCE and the wider UK university sector have worked with the Chinese Ministry of Education’s National Centre for Educational Development and Research to examine issues of governance and management of the Higher Education system, such as institutional autonomy.

The next policy area identified is the role of universities in regional development.

Both countries are committed to high academic standard and quality of provision.

And both sides welcome continued discussions between the respective national organisations responsible for quality assurance. This will help take forward cooperation on the development of quality assurance and enhancement processes for UK-China collaborative programmes and courses.

Graduate Work Experience Programme

I am also pleased that, since its introduction in 2006, the UK-China Graduate Work Experience Programme has given over 400 Chinese university graduates the opportunity to spend up to one year working and living in the UK.

It has equipped them with key skills for gaining employment; and created a bond that will be of mutual benefit in future years.

And I look forward to the programme being extended this summer – giving 25 UK graduates the opportunity to live and work in China. My Departmental officials are working with their Chinese counterparts on finalising details for the reciprocal programme.

Mutual recognition

Both sides recognise the progress that has been made in clarifying the arrangements for securing recognition of UK accredited degrees delivered though collaborative arrangements between UK recognised listed bodies.

The UK Government’s Designated Body to lead on mutual recognition, the National Recognition Information Centre for the UK, has been working closely on the issue with the Chinese Service Centre for Scholarly Exchange.

Both Bodies have recently agreed a process whereby UK Institutions whose recognition has been withheld can have their cases considered. This process is being piloted and, once it has been formalised, guidance will be issued to the UK Higher Education sector.

As part of this, Quality Assurance Agency guidance on recruiting students from China will be issued as well.

3. Graduate research

The third area where we are collaborating well is in graduate research.

Here it’s worth singling out the Scholarships for Excellence and the Fellowship for Excellence programmes.

Jointly funded by the United Kingdom and China, the Scholarships for Excellence programme has benefited over 100 young and outstanding Chinese PhD students and post doctoral researchers in science and technology since its launch in 2005.

The Fellowships for Excellence programme has so far enabled more than 30 young and outstanding post doctoral researchers to conduct cutting edge research at a Chinese university or research institution

This year it will enable up to 15 post doctoral candidates to undertake research and create lasting research links with a mainland Chinese research department, with a further five awards available for researchers wishing to undertake research in Hong Kong.

The UK is committed to working with China to explore other approaches to promoting collaborative working between our institutions.

I am pleased that today we can witness the exchange of documents agreeing the Scotland-China Higher Education Research Partnership for PhD Studies.

This is an innovative approach demonstrating the benefits of cooperation.
A formal agreement will be exchanged between Stephen Kerr from the Scottish Government and one of your delegation during the signing ceremony.

4. Advanced scientific research

The fourth area where we are working well together is in the field of advanced scientific research.

In March this year the UK and China marked in Beijing 30 years of successful science and technology co-operation between a wide range of Chinese and UK bodies.

The Networking Scheme has had a key role in this by providing grants for visits to and from China and arranging scientific workshops on themed events.
Both countries have a good appreciation of each others’ basic science, its excellence and influence on the public and private sectors.
The next 30 years will see a transformation of science and technology co-operation.

We need to maximise the benefit of our science, knowledge and innovation.

Most importantly, developing practical applications to tackle the global issues both nations face (for example: infectious diseases; food security; ageing population). The role of education within this plays an increasingly important part.

We recognise the Chinese Ministry of Education’s evaluation of the Networking Scheme indicated positive impact. And we are now conducting a review of the networking scheme with China (and other countries).

A decision on further funding for the scheme will be based on the outcomes of this review, due later in 2009.

Conclusion

So we are working together at all levels to further our understanding of each other’s country, its people, history, language and culture. And this understanding underpins any meaningful bilateral relationship.

In this adjournment debate Pat McFadden explains the purpose of the Royal Mail database and explains why county information is not a required part of the postal address.

Read the debate in Hansard

I want to really welcome UNITE’s decision to hold this conference and in particular its theme. Namely: how we translate the huge economic and technological – and social – shift that will come with climate change into innovation and jobs in Britain. This is one of the top two or three priorities I have in the new Department.

The roots of UNITE lie in the last industrial revolution. Its founding organisations were created to give a voice to the workers who built industrial Britain, and made the goods it shipped around the world.

Now it is carving out a voice for people living and working in a global economy – bigger, louder and more complicated – learning to compete in new ways and on new skills. And of course, preparing for a revolution in the way we work and live.

I want to pay tribute to Dougie Rooney, who has always been passionate about something that I am also passionate about, which is the excellence of British manufacturing and its capacity to compete and win in a global economy.

It’s fallen out of fashion to see our economic future as a shared endeavour rather than just the sum of the actions of sixty million busy individuals. But I think that’s how we have to see the process of climbing out of this recession and preparing for the upturn. Renewing our economic strengths for a future global economy that is going to test our people and our companies more than ever before.

Along with our native British enterprise and entrepreneurialism we need a government that values and invests in knowledge and science and skills and innovation and infrastructure, including through the downturn. We are not making the mistake of previous recessions – retracting rather than holding our nerve.

Because these investments will make the difference between people with the knowledge and confidence to adapt and prosper and people who fear change because they haven’t been given the chance to turn it to their advantage. It will be the difference between a British economy that maintains the standards of living, social mobility and opportunity we want, and one that can’t.

The new Department of Business, Innovation and Skills is in essence the department for these things. It is a department for knowledge, in people and technology, in products and skills. A department that puts the key policy levers that affect our learning, enterprise and innovation in one place. With a clear remit to invest in our economic future.

Big change, big opportunity

The transition to low carbon is a vital part of that – because it’s going to involve huge change, as well as huge opportunity. It’s going to make many existing technologies and business models redundant. But it will bring new ones to provide fresh sources of value and productivity.

From one point of view it is a hugely exciting time. The race to decarbonise air and road travel is going to be one of the defining engineering challenges of the century. Something which no doubt keeps our friends at Rolls Royce up at night. With excitement, rather than worry!

We’ve got to capture this sense of opportunity. The only way to really make the politics of climate change something positive, rather than something that frightens people or turns them off, is to make sure those opportunities are real. That they mean new, well paid, smart jobs here in Britain.

Obviously there are opportunities across a whole range of technologies and sectors in how we change the way we generate energy and produce carbon. Carbon Capture and Storage. Wind and wave power. Green vehicles. Industrial Biotechnology. Composites and plastic electronics and lightweight materials.

But I want to focus today on the nuclear industry, not least because this is clearly somewhere where the potential signs for Britain are good. We have a nuclear heritage, with a strong skill base in this country. We’ve been building, managing and now decommissioning reactors for more than forty years. The sector employs some 33000 people across the UK.

It’s a growth market, and a global market. The IAEA believe that at any one time between now and the year 2030 there will be up to 50 reactors under construction around the world. That’s a massive growth industry and we need to be part of it.

In Britain, all but Sizewell B of the current fleet of reactors will be retired by 2023. This means, if we are to take nuclear in the energy mix we have today into the future, we can expect to see at least 8 new reactors built in this country in the near future. And as we move to decarbonise energy supply further, I do not see why there would not be more after that.

The reactors for the UK are realistically going to be Westinghouse and Areva designs but the supply chain that will maintain them offers a considerable opportunity for technicians and for UK-based firms capable of producing the complex components required.

Policies for a nuclear renaissance

There are a number of things that the government can do in partnership with industry to help ensure that those supply chain jobs come here. And that they power a genuine nuclear renaissance in this country – one that sees us exporting skills and technologies as well as servicing plants in the UK.

The first we have already done, if somewhat belatedly – which is simply to commit to a nuclear future for the UK. To say: this is an essential part of our future energy mix, it is part of our future. The capital investment this sector requires is substantial and it is impossible without that kind of long term certainty.

We also recognise that the key area where the UK and the world lacks supply is in forging capacity for ultra large components and reactor pressure vessels. There are only a handful of such forges in the world and a UK-based facility would be an immense commercial asset to this country. We are looking carefully at both private and public sector options for encouraging the development of such capacity in the UK.

We are also working with the Regional Development Agencies on plans to establish a national network of businesses and universities, including the existing Advanced Manufacturing Centres and the Nuclear Laboratory at Sellafield. This group will represent a source of excellence that will help constantly drive up the quality of the civil nuclear industry in Britain to meet the demanding standards of the nuclear supply chain.

This quality was testified to again last week when Areva announced that it had added 8 new UK companies to its approved vendor list. That’s a recognition of the expertise and potential in this country – and investors should take note.

As well as Areva, an exceptional line up of top tier companies have chosen the UK to build their civil nuclear strengths: Rolls Royce, Doosan Babcock, Westinghouse, EDF, BAE. Over the next few months I want to engage further all these firms to work with other UK-based firms, especially SMEs, in building up the wider nuclear supply chain in the UK. We’ll use our Low Carbon Industrial Strategy in July to set out proposals.

Lastly of course, we’re going to invest in the people who actually make a nuclear supply chain possible. The Office of Nuclear Development is working with a range of bodies including my department and the Skills Academy for Nuclear to determine the gaps in the nuclear engineering skills base, and we will produce a strategy for closing that gap.

New opportunities, new jobs

This April we published a Government policy framework entitled New Industries, New Jobs. I’m sure you’re all familiar with it, so I’ll paraphrase. Its basic argument is that industrial success in the twenty first century needs governments that understand the need for stable, long term frameworks for private investment and which are capable of aligning all their policies to achieve key, strategic industrial outcomes. For too long in Britain we have interpreted Government’s belief in markets to mean there is nothing we can do to make them work better. That a reluctance to interfere means sitting on the sidelines doing nothing.

But I believe Government can act to remove barriers to market in individual sectors where they are holding back the competitive potential of UK firms. Much of it is about investing in our basic strengths as a country. Our infrastructure. Our science and knowledge base. Above all, our people and their confidence, adaptability and skills. It is also about getting our planning decisions right. Making sure there is finance available for innovation and growth. Just as Government must not get in the way, it must not abdicate either.

The title of this conference basically sums up the challenge: new energy, new opportunities, new UK manufacturing, new UK jobs. I can’t really sum up our ambition any better than that.

But our ambition must be properly organised, every advantage seized. And that’s the message I want to go out from this Conference today.

We’ve spent a lot of the last year trying to finger the villain in the banking crisis, and there is plenty of blame to go around. Skewed incentives and incompetent risk management in financial institutions. Regulatory failure. Excessive leverage. Unsustainable levels of consumer debt, especially to fund home ownership.

But what enabled the banking crisis to happen was a structural imbalance in the growth model of the global economy over the last two decades. And for defenders of globalization as a progressive force it is a big problem.

That model, which essentially developed with the liberalization of the Chinese and Indian economies in the late eighties and early 90s has produced unprecedented global growth and poverty reduction, but it also developed a serious weakness at its centre. Unless we address that weakness, any other counter-recessionary strategy is palliative at best. That’s my theme for today – but I want to start with a general point about reform of economic governance.

Why improving economic conditions must not be bad for reform

There is a sense in which a crisis can focus your mind. And although this may sound odd, the better things get, the greater the temptation will be to slip back into thinking that the status quo ante was sustainable, or only needs a few tweaks here and there.

We see this in the financial services industry, where buying out government equity stakes seems to be tempting some banks to think that the events of 2008 can now be put behind them, like an unfortunate memory. This despite the fact that there are huge amounts of bad debt still on bank books, and Western banks are still relatively lightly capitalized and asset prices are still potentially volatile.

There is a huge and necessary regulatory and professional reform agenda out there. New capitalization rules, new remuneration structures, new rules for trading in derivatives that keep them in clearing houses or exchanges so that we know what risk is going where and how the market prices it.

We need to do this outside the domestic silos that characterize national regulation. New regional and global perspectives on risk, probably a new push for international accounting standards. We will never end regulatory arbitrage until we commit to greater harmonization.

My point is that we must not let the first signs of health in equity markets and real economies lull us back into complacency. Voters, shareholders, bank customers and politicians are mad now and want change – and that is both good and bad (because mad is never the ideal state for policy making!). But they will move on – and that is also both good and bad. The window for necessary change may not be as wide as we think.

But the same risk applies to the even bigger problem of the imbalances at the centre of the global economy. In fact the risk is bigger – because the problem is that much tougher to solve. And most people barely register that it exists.

The flaw in the model

Reduced to its crudest form the problem over the last decade has been this: credit was too cheap in the developed world. The surpluses that built behind export-led growth models in the emerging world contributed to record financial flows, pushing down interest rates here and across the developed world.

That encouraged investors to look for riskier and riskier investments in order to increase their yield. It also encouraged people to buy houses they couldn’t afford from people who shouldn’t have lent them the money in the first place. That debt was sold on around the world. The end of the housing bubble revealed the risk in the system, and we know the rest.

If these imbalances are going to be moderated in an orderly way China will have to save less, boost domestic demand and continue to move towards greater currency flexibility. It’s stimulus package went some way in this direction, and its plans to expand social welfare systems will also help reduce heavy savings rates

Surplus economies like Germany and Japan are both going to have to spend and invest more to counterbalance their dependence on export led growth. The trade surpluses of these countries leave them far too dependent on the health of global demand – the main reason why Germany’s recession is so deep.

Both consumers and governments in the US and the UK are going to have to repair their balance sheets. The US will ultimately have to rebalance somewhat away imported capital, and the Obama Administration’s stimulus plans are rooted in the recognition that the US needs to keep on developing its skills base and its productive capacity.

We in the UK face similar challenges. We are going to have to save more, invest more and export more. This is one of the motivations behind the new work that we have been doing on twenty first century ‘industrial policy’ in the UK: investing in the skill base and infrastructure that underwrites our export competitiveness.

The precise detail of this process matters less here than the simple problem it represents. That problem is this: the stability of the global economy is the sum of sovereign national macroeconomic policies on interest rates, currency levels, domestic spending and demand. There is no mechanism to mediate between these policies or enforce action that would counter systemic risk, in financial markets or at the general level of the global economy.

My point? Nobody was asleep at the wheel of globalization, because there is no wheel to speak of.

Is it fixable?

Is fixing this actually possible? Is it possible to preserve the benefits of open trade and an open global economy and address macroeconomic risk and refuse to accept some kind responsibility for the global consequences of domestic policy? The answer has to be: not really.

No government in the global economy, and certainly not economies on the scale of the US, China, Japan and the EU can claim a prerogative over domestic action that entirely ignores the systemic affects of its policies.

Free market true-believers may resist the conclusion, but the only way to preserve a global growth model based on the huge benefits of dynamic markets is more and better financial regulation and better global governance.

The only way forward is a totally renovated approach to international coordination of macroeconomic policy and some very far-sighted governments.

We need to strengthen and depoliticise the IMF, give it a new surveillance role that covers all aspects of systemic risk. It should be mandated to make clear recommendations to governments on systemic risks or weaknesses. And governments should be expected to treat those recommendations in the utmost seriousness.

We will need to bring the power of peer pressure to bear – much as we have done over the last year on trade barriers and protectionism. Bodies like the OECD are vital for this, but they must be able to engage the emerging market economies and create a global peer group.

Given the obvious dissatisfaction in China and the other emerging economies with the status quo, we need to think imaginatively and quickly about how we do this so that we can tackle issues like tax havens and tax evasion at the next G20 meeting in Pittsburgh.

As I noted before, we need much greater coordination of financial regulation, ensuring that market participants are not able to trade off one regulatory jurisdiction against another. There will be cries that this is putting the competitiveness of national sectors at risk in the short term, and that’s not something that we should dismiss out of hand.

But as Lord Turner of the UK FSA put it last week: our goal is competitive financial markets and institutions, not competitiveness for its own sake. It’s hard to see how we collectively gain from a light touch system that blows up once a decade!

The G20 leaders have taken the first steps down this road. Britain and its Prime Minister and Chancellor have shown real leadership and I am proud of that. But just to state the problem in these simple terms is to make it clear how seriously the task will test our collective commitment.

Before we shrug this off as pie in the sky, I’d just point out that the global trading system is governed by WTO rules that are collectively owned and largely respected. It is often clumsy and slow, but it binds state’s policy choices in a very real way and we accept it because it does so for what we all accept is a good reason. I’m not suggesting that such a model could work for the issues I’ve raised today – but it does suggest that global economic governance is not a pipedream.

The other bit of good news lies in the fact that in general removing the imbalances in the global economy is in the domestic interests of the key players. China needs greater domestic demand to shift its economy away from heavy dependence on export growth – as do Germany and Japan. The US and the UK need more sustainable levels of consumer debt and a stronger tradable goods and services sector.

A global economy in which these imbalances persist will be an economy in which it will get harder and harder to strike global trade deals.

It will get harder and harder to create a global climate change settlement, because agreeing any transfers of resources and technologies will require a general perception that the global economy is balanced: that all the major economies are contributing proportionately to global demand.

A system in which half the world’s excessive saving funds – and depends on – half the world’s excessive spending is not a durable system for anyone!

The trick is going to be in the timing and the politics of the domestic policy choices this will require. It will require a new mindset. And it will not happen overnight.

The open and constructive engagement of the US going to be critical to this, and I’m not just saying that out of deference to our hosts.

The bill for globalization has arrived

As I said, I think the biggest risk for a progressive response to the credit crunch is that in our relief at a return to growth we lose the urgency for reform of both financial markets and also the governance of the imbalances in the global economy

In some ways it is understandable. But the status quo ante is not an option.

If we value an open global economy as a tool for progressive ends – as a way of generating economic growth and eliminating poverty then we are going to have to think like internationalists.

A crisis like the credit crunch erodes the confidence of ordinary people in open economies, open financial markets. When we fail to address the flaws in that model we put it at risk politically and practically. Especially when we fall back into ideological arguments about markets or defensive national positions on regulation.

The bill for the benefits of an open global economy has arrived, and it can only be paid in greater global governance.