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Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)The Importance of People and Knowledge - Towards a New Industry Policy for the 21st Century - The London Business School |
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I see this speech as an opportunity to step back from the hectic pace of Government business and from pre-occupation with the events of the day, to reflect on the principles that brought us into Government and to think about the future and how we can remain true to our principles but also shape Government to meet the challenges of a modern world. I came into politics to be radical. Not to be rooted in the past nor - as many Governments before have been - overwhelmed by events in the present. But a Government with a clear vision of the future direction of British society and the British economy. We are witnessing a fundamental shift taking place in our economy and society. It is driven by globalisation, knowledge, technology and innovation. It is changing the nature of work and of the workforce itself. These new groups have new demands and aspirations. The old era of the industrial economy with its big unions and big government has gone. I think it has gone for ever. The new economy has as its cornerstones knowledge, skills, innovation and enterprise. Its most valuable assets are knowledge and creativity. The successful economies of the future will excel at generating and disseminating knowledge and exploiting it commercially. New Labour?s partnership with business is critical to national prosperity. Business needs to be confident and profitable to create wealth, maintain and generate jobs and support sustainable economic growth. It is the private sector that will be at the forefront of wealth creation and employment generation in the 21st century. What then will be the role of government? Government has a vital role in promoting competitive markets, encouraging long-term research and investment and helping to equip citizens with skills and aspirations they need to succeed in the modern economy. Dynamic markets and international competition are vital spurs to economic growth and innovation. We must ensure that dynamic markets are the servants of society. My approach is clear - competition wherever possible, regulation only when absolutely essential. The main source of value and competitive advantage in the modern economy is human and intellectual capital. For most of our history wealth and power has come from the control of physical assets - land, raw materials, coal, iron and steel. In the next century it will come from human capital - investing in knowledge, skills and learning will be the priority. It also means that a whole range of new policies and approaches are needed to promote a more entrepreneurial, knowledge rich economy. But on the eve of a new century we need to think about the sort of society we want to become. I believe that we need a knowledge driven society. Knowledge can be both empowering, liberating and a source of economic well being. That is why our agenda is founded on empowering people through education, learning, skills. At its most basic we want a society in which people are more able to take charge of their lives. We also want them to raise their sights, to collaborate, to compete, to share ideas and to share risks. That is why we need a new coalition between Government, business and society. This is at the heart of the politics of our Government. Look around the world today and its chief characteristic is change. The force of change outside our country is driving the need for change within it. The market can be a good servant. It is not a good master. We must make sure that markets work effectively. This means having a strong and robust competition policy and consumers who are well informed and confident. The market left to its own devices cannot educate or equip us for this world of rapid change. We can only do it together. To be conservative in a world of change is to condemn yourself to opposition. That is why we as a party have changed. In government we have demonstrated the nature of this change. Half way through a Parliament is often the most challenging time. Voices call for consolidation and a reconsideration of our objectives and direction. But this is not the time to stand still. It is the moment to push forward on our agenda of modernisation and reform. To coin a phrase for this government "there will be no turning back". If the world changes but we as a political party do not then we become redundant. Our principles become dogma. That is why as a party we have changed. Not to betray our principles but to fulfil them. Not to lose our identity but to keep our relevance. It is because of change that we are a progressive force and not an historical footnote. It is only by governing as new Labour that we will be able to be more than a one term government which shines brightly then ends in disappointment. There can be no distractions or diversions. Our objective must be a dynamic knowledge based economy founded on individual empowerment and opportunity. Where government enables but does not dictate and the power of the market is harnessed to serve the public interest. The implications for public policy The challenge for public policy makers is how to prepare Britain for a world in which knowledge is the new currency. Successful economies and societies will be those that can adapt to the demands of such rapid change, that are flexible and creative and manage change rather than being submerged by it. They will be those which find ways to include all their people, not just a new knowledge elite. An approach built around a new coalition, but with the objectives the left of centre political parties have always aspired to: to create a better standard of life for our people, to ensure British business succeeds at home and abroad, and to tackle exploitation in all its forms. An approach which recognises that the role of Government has fundamentally changed, but that it still has a critical part to play in improving the performance of the British economy and in improving life for all. First and foremost, we can create a stable macro-economic environment, ending the wealth destroying cycle of boom and bust that has dogged Britain?s post-war development. Stability matters more than ever in the new economy. Because more than ever we need businesses to invest in knowledge - be it through R&D, or through training, as well continuously to take risks to stay ahead in fast moving markets. We can ill-afford this vital investment to be put off through fears about the economy and its long term stability. That?s why we took such firm and decisive action straight after the election - giving the Bank of England independence, and tackling the hole in the public finances which we inherited. Education In this new economy, the educated and trained individual will be king. Already graduates earn twice as much on average as those with no qualifications. But because of the increasing importance of knowledge, the average salary for graduates is also growing far more quickly - more than half as fast again. Those with no qualifications are four times more likely to be out of work. We cannot allow the growing importance of knowledge to create a new generation of haves and have-nots. That?s why we are investing so heavily in education as a Government, giving an extra £19 billion over the next three years to our schools and colleges, and why we are so committed to raising standards. Infrastructure We also need the right infrastructure. What my Department has set out to do is to build the infrastructure of the knowledge driven economy. We have aimed as high by declaring that we want to make Britain the best place in the world for electronic trading. In the two years since the election we have done much to turn this ambition into reality. The key is the provision of a comprehensive electronic communications network. OFTEL has opened up BT?s local network to allow the competitive provision of higher bandwidth services and consultation on licensing new spectrum to allow broadband wireless services. And we have also placed the UK at the vanguard of Europe in terms of the licensing of third generation mobile services. But we also need to give people access to these networks That is why we are creating 800 IT learning centres, giving community based access to the National Grid for Learning and the University for Industry. That is why we are encouraging the recycling of computers for those who cannot afford new ones. And that is why we have set a target of 1.5million SMEs wired to the digital market place. And we also need to ensure that people have confidence in these technologies if we are to truly realise the enormous potential of the e-commerce revolution. We will achieve this through the Electronic Communications Bill which we will publish in draft on Friday, and programmes such as the Information Society Initiative and the creation of "Trust UK", an industry led body aimed at boosting confidence in internet shopping through an on-line hall mark to identify best practice websites, committed to following a stringent code of conduct. But the Government is doing more than encouraging progress - in some areas we are leading the charge. We have said that all Government services will be capable of being delivered electronically by 2008, and by 2001 we aim to conduct 90% of routine procurement electronically. The last two years But getting the infrastructure right is only the beginning. I would like to highlight three areas where my Department has focused its efforts over the last two years - creating competitive markets, setting minimum standards and fostering enterprise. As the world opens up British firms will only succeed in winning market share if they have access to markets and the capability to compete. Opening up markets will also be one of my priorities - we are driving this forward in the UK where for example there is now full competition in electricity and gas supply. We need to open markets in Europe where we have been at the heart of the campaign to complete the single market. Only yesterday I was pleased to issue a joint statement with Minister Bersani, my Italian counterpart, pledging joint action between our two countries to ensure we do have liberalisation of the European energy market. And at the WTO Ministerial meeting in Seattle in November we will work with others to continue the drive for global free trade and increased liberalisation of goods and services. Within those markets competition will always be the greatest spur for innovation and the provision of genuine consumer choice. Next year will see the start of a new competition regime in the UK which will ensure that anti-competitive practices and the abuse of dominant positions can be halted and punished. I believe that the consumer also has a key part to play in the drive to improve our competitive position and raise productivity. That is why tomorrow we shall be announcing to Parliament a White Paper on Consumer issues. This will help to create the link between informed consumers and world class businesses which provide better service and better value. We will increase access to advice for consumers, and promote better research of consumer issues. We will also ensure that the consumer interest is properly represented in Government. Another area where some concerns have been expressed is employment law. But again the changes we have made are an integral part of our broader policy to improve our competitive edge. I believe that our commitment to setting minimum standards in the workplace is necessary to create a motivated and productive workforce. Of course, we accept entirely the need to avoid over-regulating businesses. I don?t want undue burdens. That is counter-productive. The challenge for Government is to strike the right balance. But I believe that the changes we have made are important - we are living in a world where the nature of work and the needs of those who work are changing dramatically. we need to ensure a balance between rights and responsibilities in the workplace. I have also sought to focus the Department?s attention on areas where we can really make a difference. In the knowledge driven economy it is small firms that will play a key role. That is why we have set up the Small Business Service to give them a powerful voice at the heart of Government and to ensure that Government services are delivered to them in an easily accessible coherent manner. The nature of those services has also changed, with greater emphasis on high value added, knowledge-based companies. These companies will benefit from the creation of the Enterprise Fund, greater support from the regional venture capital fund and the refocusing of regional selective assistance that will target Government support on those firms that can genuinely make a difference. But if firms of all sizes are to realise their full potential they must master the art of innovation - in short, knowledge needs to be created, located, adapted and exploited. In a world where product lead times are becoming ever shorter, companies need constantly to develop and adopt the best products, techniques and practices. A measure of the importance the Government places on this is the increase in science budget of £1.4bn. At the same time in DTI our innovation budget was boosted by 20%. But those are only the headline measures. At all levels we are working with others to increase the transfer of knowledge and expertise. We are working with the CBI on their Fit for the Future campaign. We are working with the SMMT on the Industry Forum. We are working with the universities on the science enterprise challenge and the newly created Reach Out Fund. And today I can announce that DTI will be joining with the Engineering and Physical Sciences Research Council to launch a call for four Faraday Partnerships in the autumn. We will be investing £30 million into these Faraday Partnerships. Faraday Partnerships are a key part of the Government?s objective to enable our universities, independent research organisations, manufacturing industry and the finance providers to work more coherently together. They are a unique way of putting in place in this country the sort of enterprise that we see on the West Coast of the USA; people from the research, business and finance communities working together to bring new products to market more quickly and efficiently than we have achieved before. They will aim to promote those technologies and industrial sectors that are going to be vital for the UK?s industrial success. I want the Faraday Partnerships to look at areas such as IT and communications; electronics; aspects of biotechnology; new materials; environmental control and modelling; and efficient transport systems. We have a remarkable track record in this country of world class research in fields such as these. We want to ensure that our research lead is carried through into industrial application and exploitation. Most of all, Faraday Partnerships will achieve success by changing attitudes: bringing people together so that they can each make a valuable contribution to the wider picture. Tackling our lack of ambition If we are to exploit the potential of our companies and our people to the full, then we also need to see a revolution in attitudes. There is a great British tradition of praising the plucky loser and looking down on success. There is also a tendency to look down on entrepreneurs - it is far better to be a lawyer, a banker or even a politician than to admit to a desire to want to pursue individual success or enrichment. I am encouraged by the fact that the younger generation coming through appear to be both far more ambitious and far more excited by the idea of pursuing a business idea. What we need to do is to promote this greater enthusiasm for enterprise and hard-work across all ages. Too many of us still conform to the old stereotype of the British preferring people to fail than achieve genuine and deserved success. Clearly shifting British culture onto a more enterprising and less risk-averse track will take time. But we must all aspire to change the national mood if we are to create an outward looking, confident society, fit to take on the 21st Century. The public sector too needs to change or risk being left behind by events. The public sector is moving far more slowly than the pace of change in science, technology and commerce. The answer must lie in the modernisation of all our social, political institutions. We need to look at everything afresh. From the detail of individual policies down to how we develop policy, communicate and deliver it. This doesn?t mean we should throw everything we have inherited overboard, but that we must secure a faster rate of innovation and learning in policy making and the public sector. This is important, because the public sector will play a critical role in this new economy. If the public sector is averse to trying things, perhaps putting bureaucratic process before effective outcomes, then it will be a drag on success in the new economy. And we cannot afford that. Conclusion All individuals and all businesses stand to be affected to some degree or other by the new realities of the knowledge driven economy. The more creative you are, the more dynamic and enterprising, the more you stand to benefit. We must embrace change, not resist it. We must recognise that this is not solely about new technology, but about new ways of working, of communicating, and now sources of value. This programme of action - of which of course I have only scraped the surface - is a distinctive approach to industry policy. And it is an approach which I firmly believe offers the best prospect of putting Britain onto a path for sustainable growth, and for creating wealth, jobs and opportunity for all the people of Britain. More importantly I believe it is an approach that will work. |
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Other speeches by Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)
(the following are available from the archive) |
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