Liz Symons has asked me to apologise for her not being able to attend as Guest of Honour. I am delighted to stand in for her and talk to you this evening, and to hear your views first hand.
We have welcomed many foreign-owned companies to the UK and are still doing so. Last year saw a record level of inward investment successes, some 884 projects, expecting to create over 71,000 new jobs. London in particular has been the recipient of a significant proportion of this investment. London today is an exciting city for business. It has :
- a strong knowledge base, 40 HEIs including Imperial College and University College, with combined grant and contract income of £200m, and educating over 300,000 at any one time;
- the strongest venture capital industry in Europe, centred on London. According to the British Venture Capital Association, its members invested £2.4 billion in 241 London firms in 1999;
- an increasing number of high-tech firms – 68 in bio-technology alone, an increase of 18 in 18 months; and
- London's dominance as a global financial centre is a national asset. Yet again it has been voted Europe's top business city, for the 4th time running. Its attraction for e-commerce and ICT projects make London the leading European location for investment in these sectors. Today it is one of the hubs of the global knowledge economy.
But the marketing of London has to be right as well. Since 1994, Michael and the London First Centre team, have been actively involved in around 500 projects, creating 25,000 new jobs. I congratulate London First Centre – a testimony to their commitment.
So, what are the Government doing to help?
Economic policy
The Government's main role is to create the right economic environment for investment. We are doing that successfully. The UK is enjoying the longest period of sustained low inflation, and the lowest long-term interest rates since the 1960s.
But there is no doubt that the weakness of the euro is causing difficulties for British manufacturers as they are forced at home and abroad to compete with Eurozone companies. At the same time, we must place these difficulties in context. The experience of the last 50 years tells us that you can't devalue your way to manufacturing success. The potential benefits of euro membership in terms of trade, transparency, costs and currency stability, lead us to support it in principle. But the economic conditions must be right, which is why the Government is committed to a rigorous and comprehensive assessment of the five economic tests, which include the impact of membership on investment and jobs.
Let me move on now to talk about some particular issues which I know concern you, and what the Government are doing to address your concerns.
Knowledge Economy
The current Government have taken major steps to build on our outstanding record of scientific discovery and turn the UK into a knowledge economy. With only 1 % of the world's population, the UK funds 4.5% of the world's science but produces 8% of the world's scientific papers and receives 9% of citations.
The 1998 Comprehensive Spending Review increased the science budget by 15% over three years. And in July last year, the Government continued its programme of investment. The 2000 Spending Review added £725 million to the Science Budget over three years including specific funding to boost research in key new areas, such as genomics, that will shape life in the 21st Century. To give you a scale of what funding, from 2001 to 2004, the Science Budget will increase by 7% per year in real terms.
We have also taken steps to increase knowledge transfer, by setting up the highly successful University Challenge Fund, which gives seed corn money so that ideas from the lab can be developed so that they are of interest to venture capitalists, and Science Enterprise Centres, which are about giving young scientists and engineers access to entrepreneurial skills.
These are already beginning to show impressive results. Last year there were 199 spin-off companies from universities, compared to an average of 70 each year for the previous 5 years. There has also been a sharp increase in the number of patents filed, up 22% between 1998/99 and 1999/2000, and the proportion of research income funded by companies in the UK is also up and is now at a higher level than even the USA.
Tax
As far as taxation is concerned, we have reduced Corporation tax, made major reforms to capital gains tax, and introduced an R&D tax credits scheme for small and medium sized enterprises. The format of an equivalent scheme for large companies is likely to be announced in the Chancellor's April 17 Budget.
Regulation
Another area which always concerns business is the level of regulations. In fact, according to the OECD's Economic Outlook 1999 study, the UK has the lowest level of product market regulation of any OECD country, including the USA.
At the same time we want to eliminate unnecessary regulation and minimise the burdens imposed by regulation that is necessary.
That is why we published yesterday the Regulatory Reform Action Plan – bringing together in one document over 250 proposals for better regulation. This is a programme for action – not just a wish list. Where possible, Departments have given published targets for delivery.
Skills availability
The UK compares compares well internationally: 17% of the UK population aged 25-64 are educated to degree level, putting us 8th out of 29 countries in the OECD. The picture is improving; the UK is now amongst the world leaders (including USA, Norway and the Netherlands) where the graduation rate is around 1 in 3 for people of typical graduation age. We should recognise that not all skills gaps/shortages are at HE level; evidence from the Skills Task Force and Skills in England 2001 suggests that skills gaps/shortages are more acute at the intermediate level. The introduction of Graduate Apprenticeships will help to ensure that graduates have the right skills to enter the workforce.
Transport infrastructure
And we are putting extra investment into transport. The Government's 10 Year Plan, published in July 2000 involves increased funding of £181 billion over a decade, £133 billion of this public funding. The Plan sets out to reduce congestion, increase integration and offer a wider choice of quicker more reliable transport. You will also probably be aware that Stephen Byers published a Green Paper before Christmas, proposing comprehensive reforms of the planning system and if you have any views on this key issue we would be delighted to hear them.
"Aftercare"
In the DTI we are responsible for inward investment but it is also part of our job to listen and help investors like you, who are already here. We want to listen to your problems and difficulties and work with you to develop real added-value solutions. Invest·UK are leading on this. Liz Symons regularly has breakfast meetings with groups of inward investors to hear at first hand their experiences of operating in the UK.
And, finally
My thanks to Bloombergs and London First Centre for the excellent Dinner this evening.
I will be happy to answer any questions you may have
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