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Northern Regeneration and Renewal Summit

Rt. Hon. Lord Mandelson,  First Secretary of State, Secretary of State for Business, Innovation & Skills, Lord President of the Council
Manchester,  23 October 2008

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Introduction

Two centuries ago, this site was a place, where people from across the North would meet to discuss the issues of the day – from free trade and labour reform to democracy and equality.

As a Northerner by adoption, it actually means quite a lot to me to be making my first speech as the new Business Secretary here in the North, to Northern representatives about Northern regeneration.

I want to thank the organisers of this event for the opportunity to do so. And I hope by the way you’ve had an interesting and productive last two days.

I know how the North embraces newcomers. When I was first selected in Hartlepool, there was the usual fuss in the local papers about an out-of-towner being selected. And one day, early on in my selection – in the market in Hartlepool – a lady came up to me and said, “Look dear, ignore all this nonsense about you not coming from Hartlepool, your predecessor didn’t belong to these parts either. He was from Easington.”

As I’m sure you know, Easington is around 7 miles outside of Hartlepool.

Background

So, as the Governor of the Bank of England said in Leeds on Tuesday, the British economy cannot insulate itself from the global financial recession. It might be nice to imagine we can, but we can’t.

That is the background to what I am saying.

We have been caught in a global whirlwind of extraordinary force.

What began as a crisis for American banks has become a looming threat to British jobs and British living standards, as it has to the rest of Europe.

Today I want to assure you that your Government, our Government, is not going to turn tail and run with the storm. We are not going to wrap our heads in a blanket and hope what is happening around us will somehow go away. Under the Prime Minister’s leadership we are going to face these storms with resolution and see the country through the worst whatever that brings.

These are extraordinary times. We have to re-examine afresh the once comfortable mantras of an age of uninterrupted growth and market exuberance, as we’ve seen during the last decade.

We have to be open to new ideas and new thinking. I want to tell you that under my leadership this is what the Department for Business intends to be.

Over the coming months I see my task, alongside the rest of the Government’s, as two-fold. We must do the maximum we can, in the short to medium term, to help business weather the worst of the storm. And then we should start, at the same time, laying the foundations of our future prosperity, through a fresh approach to business and industry strategy that leads us out through to the other side of the crisis now around us.

A modern industrial policy. Not a return to the ‘picking winners’ policies of the 60s and 70s. But a coherent drive across every part of government - in partnership with business and the regions - to foster the high value-added indigenous growth that will sustain our prosperity in the very fast-changing global age.

That new approach has to be built on the principles we have nurtured in the last decade. Positive engagement with globalisation - not seeking to turn away or to erect a protective wall, because we cannot. A strong commitment to competition, combining enterprise and fairness - but applied to tackling the new circumstances of today.

First, that Britain’s great strengths in financial services cannot be our only strength for the future. Through this downturn we need stronger policies for the development of the creative industries, and research-intensive, high value-added manufacturing and services - industries, sectors and businesses where the generation, application and exploitation of knowledge are key to the creation of wealth.

It’s by maximising our strengths in these areas that Britain will thrive in the future in a competitive global economy.

A decade ago, at the then named DTI, I published a White Paper, “Building the Knowledge Driven Economy”. Today, my view is that the pace of construction of that Knowledge Driven Economy needs to be accelerated. And developing the strategy for the Knowledge Economy will be an urgent priority for my Department, under my personal leadership.

Second, that the switch to a low carbon economy and taking the steps needed to protect our energy security, represents a massive economic opportunity for the future that has now to be seized, not lost or put back.

I welcome the creation of the new Department of Energy and Climate Change. In its new Secretary of State, Ed Miliband, we have one of brightest and also one of the nicest, rising talents of New Labour, in my view. I intend to work with Ed to ensure Britain fully benefits from both the inward investment opportunities and the new indigenous growth in the regions that the low carbon economy offers.

Third, that we will achieve neither of these hugely important ambitions for our country – a knowledge-based economy nor low-carbon economy – without a stronger regional dimension to our industrial policy. Our policies for growth need to be policies for better balanced growth throughout the United Kingdom.

Now, above all, is the time to build on the regional policy successes of the last decade – the resurgence of our Northern Cities, the work of the Development Agencies in building new knowledge clusters of growth, the explosion of creativity in the regions. [Political content removed]

There’s a lot of intellectual speculation about what the global financial crisis means for our attitudes to free markets. People say the age of neo-liberalism is dead.

If by that people mean we need responsible business behaviour in place of irresponsibility and greed; proper sensible regulation – where it’s needed – In place of dogmatic deregulation; a recognition that markets can sometimes fail instead of automatically serving the public interest - then I agree. I agree with all of these propositions. And by the way I always have.

But let me be equally clear: I do not think the present crisis justifies a loss of faith in business; nor the abandonment of the creative power of competition; nor a turn against private enterprise. I am on the side of the entrepreneur and I always will be. And successful businesses and having more of them is a big part of the solution to our challenges – they are not the problem.

The enterprises they start, the companies they run and the jobs they do are the lifeblood of our communities. They drive our economy forward. They create the opportunities that offer a better life, whatever background or circumstance.

What we need now more than ever is not needless regulation of enterprise that ends up stifling it, but a deeper richer public-private partnership. And it is to strengthening that partnership in the cause of building a new modern industrial and regional policy that I wish to dedicate my energies in my return to the Department I love.

Immediate support for business

Now top of my in-tray is ensuring SMEs have the strong focus and targeted support they need to get through this current crisis.

Every-day, I talk to business organisations and businesses across the country.

And I worry when I hear that they are facing cash-flow problems; that good businesses have difficulties getting the finance they need; or that they’ve had to cut back on training for their people.

Because what we’re seeing, is what the global credit crunch means on the ground.

I shall do my utmost to deliver three things for business.

The confidence that our banking system is sound and open for business for SMEs.

The certainty they can be paid for their products and services on time and get all necessary investment to grow.

And finally, the clarity they need to access the advice, training and support that can help them not just survive now, but to succeed in the future.

The measures the Government has announced in recent weeks – to stabilise the banking system; promote prompt payment – the lead we have given in Central Government now being followed up by other parts of the public sector, boost capital and liquidity in the market and improve support and guidance – are vital. But they may not be enough.

In the days and months to come, we will continue to look for responses, for solutions that can make a genuine difference, and help business, but especially small firms, get through the difficult times ahead.

As a government, we are in the market for new ideas for new times.

We are always listening. And I mean that.

Business Support

Over the last year, a record number of companies, here in the North West, have used Business Link services.

But when companies across the country told us they found the many publicly-funded support products on offer confusing, the Government knew that it needed to act.

So we’ve streamlined the thousands of schemes and initiatives previously on offer to deliver a more targeted, consistent and effective package of solutions.

That will make it easier for small firms to get essential help in areas critical to their business such as finance, growth, skills, innovation and resource efficiency.

And I’m pleased to be launching today the rollout of a new “Solutions for Businesses” package. By March 2009, all 30 support products – streamlined from a previously byzantine 3,000 – will be available to those that need them via Business Link.

Collectively my officials calculate that this leaner, more focused support package could deliver up to an estimated £1.4 billion of value, per year. While quicker, easier access will save companies time and money previously spent searching for the help that they need.

The Future

But the bigger long term question is how as a country we move forward from crisis to a sustainable and successful industrial future.

Here in the North, the last decade has seen a restructuring of your economy and a further move away from traditional manufacturing to more high-value sectors. This is good because it puts the region in a stronger position to meet the challenges of the current global crisis; and lays a solid foundation for even greater prosperity, as we build the low-carbon, knowledge economy essential to our future.

Just as two centuries ago, the industrial revolution reshaped the landscape around us – creating the great cities of Manchester, Liverpool, Birmingham, Leeds, Newcastle and Sheffield – our creative industries, our cutting-edge universities, most research intensive sectors and innovative companies are reshaping the North once again.

Driving – as they have since 1997 – the emergence of a stronger, more diverse economic base and the transformation of the North’s great cities.

They’ve drawn on that old industrial tradition, not just to create beautiful skylines – with the banks of the River Tyne, for example, again brought back to life by the Baltic Centre, the Millennium Bridge and the Sage.

Or help Liverpool showcase its genius and talent as Europe’s current capital of culture. And Manchester to be home to some of our most high-value industries, world-wide brands and successful people.

But also to sell your thinking, your expertise and your success around the world – in the large, populous and growing markets of the emerging economies where I have just spent 4 years as Trade Commissioner.

The National Biomanufacturing Centre at Speke and the Daresbury Science & Innovation Campus – supported by the North West Development Agency – are just two, powerful examples of the region’s continued investment in R&D to develop new technologies and businesses for the future.

The MediaCity project in Salford is part of the UK’s most important media cluster outside of London. And an example of how the North, as a whole, is seeking to thrive in this global, digital age.

A strong energy cluster also in the North East is using the engineering skills and expertise built over centuries to support our energy industries for future.

Alongside, the Energy Coast Masterplan – recently launched in Cumbria – which aims to attract international investment, R&D, innovation and skills to develop the low-carbon technologies we and the rest of the world need.

But I know from my days as Hartlepool’s MP, not everyone yet is feeling the benefits of this growth. In the smaller industrial towns away from our resurgent cities there remain big problems of worklessness and deprivation.

Achieving long-term prosperity for all has to be our mission. Central Government, Regional bodies, Local authorities, business, communities and individuals - we’ve all got a role to play in batting back that tired old cliché, that the Northern Economy hurts the most when the national economy suffers. Or that its last, great heyday was in the first industrial revolution.

Tired, out of date, irrelevant clichés that need to be put behind us.

As Secretary of State for Business, my mandate is clear.

It’s not, as recommended by the think-tank Policy Exchange, to help everyone in the North move to London or Cambridge. But to strengthen the industries and sectors in the regions that will power our success in the new, global knowledge economy.

For me, the role of Regional Development Agencies will be crucial in this process. Led by business, working in partnership with local authorities, universities and others, they are the key economic co-ordination body in each region. Not just for the North, but the country as a whole.

I don’t say this because my department sponsors them, or even because back in 1998 I helped create them. But because their record demonstrates they can deliver for their regions, quickly and smartly.

For example, RDAs have made a strong contribution to the development of the “Solutions for Business” support launched today. And Business Link will play a critical role in delivering this on the ground.

So RDAs will continue to be key in delivering business and industry support and will play a strategic role in the future direction of our regions. Of course nothing is perfect and incapable of improvement. But without them, without the Agencies, the regional economies would be, all but, defenceless in the face of the storm.

Last month, backed with £150 million, we published our Manufacturing Strategy. It set out a powerful long-term vision for UK manufacturing to ensure this industry can grow. Let me underline to you my firm belief that manufacturing is as critical to our economy as ever. Not the same manufacturing as in the past, but the manufacturing crucial to our future.

Yes, it must adapt to the challenges. But with my experience as Trade Commissioner, I know it can capitalise even further on the opportunities now emerging in markets such as China, India, South East Asia, Russia and Latin-America.

In the wider economy, the National Economic Council and the Regional Economic Council – which I will co-chair with the Chancellor – will ensure that information flows quickly and effectively between national and regional levels.

But this conference, and the bigger national debate that surrounds it, isn’t solely about what Government and its agencies will do for the North but also about what the North is doing for itself.

The Northern Way has already contributed to improving the North’s transport infrastructure. And it has recently sponsored a report by the OECD on how the North can make best use of its unique assets to compete on a world stage.

Not just a shopping list of demands for more public investment. But proactively looking at how the North’s economy can be re-positioned to forge ahead in the global economy.

Conclusion

Let’s not forget what so far has been achieved

Over half a million more people are working in the North than ten years ago.

The North’s economy has grown by around a fifth since 1997.

You’ve helped communities transform their villages, their towns and their cities with increased investment in health, education, policing and infrastructure.

And the strong economic growth and personal success – achieved here and across our country – means we’re more resilient and in better shape to deal with these challenges than ever before.

But there’s still a lot of work to be done. And I know the anxieties felt by businesses and individuals about their prospects now and in the future, in the face of the global economic uncertainty, I know these concerns are very real.

The issues I raised over ten years ago are even more pressing today than they where then.

Here and across our country, I want us to combine economic liberalism with industrial activism. All of us working together to ensure our traditional industries and skills base can meet the modern challenges of this competitive age and new businesses can grow to create jobs and wealth in our economy.

And I’m determined to do all I can to help us take the immediate, effective action needed to get businesses and people through the current global crisis.

And then develop the long-term measures necessary to ensure the talents, skills and opportunities fundamental to our future success and prosperity are realised.

Thank you.