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Newsroom & speeches
104/05
02 December 2005
2005 has seen the doubling of oil prices, the threat of the recurrence of global inflation, and the shift of almost 1 million manufacturing jobs from Europe, Japan and America to Asia. And the starting point of this conference today is that each of us - companies, governments, individuals - are having to respond to the scale, speed and scope of a transformed global economy.
And it is my pleasure and privilege to thank all British businesses represented here today for your leadership of the economy, and in challenging times your resolve, your courage to change and your determination to do what is best for enterprise and best for Britain.
And let me also welcome distinguished guests here today from every continent, joining our dialogue which I hope will lead to a consensus and in time to a shared economic purpose that can make globalisation work best for Britain.
And in visiting, as I have done this year, many of our trading partners internationally and companies large and small domestically – and I see many of you here now – I know that our country's economic future depends on how we work together.
This, our third enterprise conference, is a concrete expression of our partnership.
I believe we have listened to, and learned from, the debate at the previous two conferences, tried to forge a shared agenda and acted to take it forward.
You told us that if we are to confront the challenges of globalisation, we needed to tackle the issue of regulation. So earlier this year, we accepted in full the recommendations of the Hampton and Arculus reports to cut red tape.
You told us that if we are to lead in the high-tech value added industries of the future, our ambition must be to become world-class in science, hence our 10 year framework for science which sets out a step-change for research and development across the UK and I want to say more about this today.
And you told us that if we are to attract the best companies and be world-class, we can never settle for being second best but instead have to be world leaders in education and skills.
So today’s conference matters because what you think and tell us will continue to be critical in ensuring we focus on the right issues and pursue the right goals.
Like you I want a Britain that is a leader in the world's fastest growing, most wealth-creating sectors at the cutting edge of global advance – in capital markets and financial services; in science and innovation; in creativity and enterprise; in skills and education.
More than ever, as we have discovered, in one of the most challenging years for the global economy, the foundation for growth is economic stability. We know that in a global economy investment flows to the stable economies and away from the volatile. So when I present my Pre-Budget Report on Monday, I will show how Britain has taken long-term decisions on monetary and fiscal policy and moved from being one of the stop-go economies of the world to one of the most stable.
Under our monetary and fiscal regime we will maintain low inflation, low public debt and a long-term commitment to strong fiscal discipline. And nothing we do will endanger that position.
Upon our foundation of stability, Britain can become the location of choice and the place to do business. Take financial services and capital markets: today Britain exports twice as much in business services as we import and four times as much in financial services.
And I want to congratulate businesses here on their drive, global competitiveness and innovation which have made the City of London alongside New York the leading financial centres of the world - London, the world’s largest foreign exchange market, the largest foreign equity market, the largest bond market - London's success born not out of serving a large domestic economy, but on winning the lion’s share of international business.
I want us to build on our advantages - your talent for innovation, the critical mass of skills now in London, our openness to the world including our deepening links with China and India, a unique combination of language, time zone and a legal system that makes English law the law of choice for international contracts. And now the determination of the financial services authority to extend their risk-based approach of financial regulation that is both a light touch and a limited touch.
All strengths that we wish to develop so that we become the preferred international marketplace not just for European companies but also for growing Chinese, Indian and other companies and the multinational headquarters of choice.
To meet our next ambition, to become world leaders in science, we cannot rest upon our heritage of scientific invention and achievement: we must build upon it, at all times looking to convert our scientific genius into commercial success.
Today a higher share of our growth is delivered by science based innovations than in any other industrial nation including the USA, and Britain has a higher share of inward investment in research and development than any of our major competitors.
Our ten year framework for science - a public-private partnership between government and business - is already leading to £2.5 billion more science investment.
Just as the Victorians built great entrepreneurial cities, so too for a new age, business and government are developing science and technology cities where universities research institutes and high-tech companies come together to create clusters of creative activity.
British universities already lead the world in medical research - pioneering some of the most remarkable breakthroughs of the past half century from the discovery of the Y-chromosome to DNA profiling to the mapping of one third of the human genome.
British pharmaceutical and biomedical companies already lead the world in applying research - contributing £3.7 billion to our exports.
And our National Health Service has, over the last fifty years, pioneered some of the great medical breakthroughs: the world’s first ever test tube baby; magnetic resonance imaging, the MRI that allows early detection and treatment of potentially life threatening diseases; the first combined liver and bone marrow transplant.
How much stronger we will become from what I can announce today - thanks to the work of Sir David Cooksey - a strengthened clinical research partnership linking our universities, our pharmaceutical and biomedical companies and our NHS.
In advance of Patricia Hewitt announcing the new research and development strategy for the NHS in January - I can announce the establishment of a new National Institute for Health Research in the NHS, which will comprise around 10 major centres of excellence, initially, 250 clinical academic fellowships and 100 clinical lectureships a year
A new IT network will make the unparalleled data base of the NHS available to improve our understanding of health so that in future Britain will be the premier location for developing new drugs and treatments and testing and tracking them.
And as a result of this new partnership, our major pharmaceutical and biomedical companies are today announcing that they expect to make further investment in medical R&D in Britain of up to £500 million, rising to an additional £1 billion.
Britain should also be the world's number one centre for genetic and stem cell research, building on our world leading regulatory regime.
I can today also announce we are taking forward new public-private partnership to invest in pre-commercial aspects of stem cell research and to coordinate future research.
And in support of this, the medical research council is today announcing an extra £50 million in total – including £40 million for basic stem cell research and clinical trials and nearly £10 million, for consolidating the UK stem cell bank.
And because of the importance of a strong and clear regime of intellectual property law to the location and development of companies in the UK, I am asking Andrew Gowers, former editor of the Financial Times, to consult with business and advise us on any updating of the law necessary.
Our inventiveness ranges beyond science and medicine. Today the dynamism of British business is leading the world in many of the most modern and creative industries.
Our creative industries from digital electronics and communications to film, design and fashion - once only 1 per cent of our economy - now contribute 8 per cent.
In the last eight years Britain's knowledge intensive sector has grown twice as fast as the overall economy - highlighting the extraordinary creative talent Britain possesses.
The opportunity now is to build on this extraordinary promise and ensure Britain becomes the world leader in creative industries.
And the challenge is not just to encourage creative industries, but to encourage all industries to be creative.
Today, Sir George Cox is publishing his report on creative industries and I can announce we will take forward his recommendations.
Sir Terence Conran and Lord Foster have agreed to work with him, the London Development Agency, creative industry and business leaders to develop a new creativity and innovation centre in London as a national hub of international stature that will be a showcase for British design.
At the same time we will create a network of centres across the country, a centre in every region that will also nurture emerging talent.
At each stage we must maximize our flexibility and minimise the barriers – from overregulation to underinvestment – that hold business back.
On planning, we should make our planning laws, more flexible and more responsive
On competition, we will maintain the stability of the new competition regime and on tax we will continue to ensure we provide rewards for success and incentives for investment.
On regulation, we will apply our risk-based approach across the board, review all European regulations, and I call on Europe to apply a competitiveness test to existing as well as proposed new rules.
And on transport, where we all know we are still paying the price for decades of underinvestment, we are doubling investment and will work with you on the basis of the Eddington Review of long-term needs to agree future priorities and how the public and private sectors can work together to deliver them.
But to become world leaders in any sector, we must be world leaders in education. All of us know that as global restructuring moves mass production to other areas Britain's future success will be founded upon high levels of skills.
Britain is today undertaking the first stage of an audit of Britain's skills needs to 2020 – and I thank Lord Leitch, who is here this morning, for this work. And after the publication of the conclusion next week a national debate will lead to decisions about our vocational training goals for the future.
I want business to join the debate - and today Sir Terry Leahy will lead a discussion on our educational priorities. And at all times whether it be schools, colleges or universities I assure you that we will insist that investment must be matched by reform.
I turn to trade.
For Britain, the pioneer of free trade, the English Channel has never been a moat but a highway for commerce, the oceans around us never cutting British enterprise off but providing the route to markets in every continent of the world.
And we have always stood against protectionism and in favour of open trade
In the next few days an opportunity presents itself which may not come again for ten or perhaps even twenty years – negotiations on world trade in Hong Kong.
In our view the trade round could bring wide-scale benefits to all economies, developed and developing, and contribute to the economic reform agenda.
As recently acknowledged by the Secretary General of the WTO Pascal Lamy, at the heart of the discussion is the future of agriculture protectionism.
On that Britain has long argued that we need to have a long-term view of agricultural policy in our own countries.
The paper which Margaret Beckett and I have published today contributes to the debate already underway on how to achieve a sustainable future for agriculture and helps answer those who have asked what the UK Government means when it calls for further CAP reform.
And it is because we believe that, through reform, there can be progress on trade, we continue to argue for an ambitious and balanced outcome to the Hong Kong meetings.
Countries now being urged to move on services and non-market access may be prepared to make progress if there is willingness to take steps on agriculture.
And it is this we must discuss internationally in the next few days.
So, for Britain’s long term future, the foundation is stability.
The priority to encourage enterprise is to invest in science research and the creative industries, maximise flexibility and open up trade.
At every point building the best educated, most highly skilled workforce in the world.
Beyond this conference I want to continue to encourage business to define what is needed for Britain to become more competitive and more enterprising and I invite you to help us do this.
And if we work together then I believe we shall prove that Britain is made for globalisation and globalisation is made for Britain.
