Mr Chairman, thank you for that introduction.
I am delighted to be here - for two key reasons:
First, simply to acknowledge the critical importance of the chemicals industry – in all its forms and guises – to our national economic well-being.
It has been the hidden bedrock of the UK's manufacturing base for many generations. Today it is a growing highly-skilled, innovative, technology-based, and R&D-intensive sector – epitomising in many ways our wider goals and the wider challenges for the UK economy.
The Government believes strongly that the Chemical Industry provides huge opportunities for the future which we must as a country move effectively to exploit.
My second reason for wanting to be here lies in the particular theme of this Conference : sustainability and competitiveness.
How we set about trying to achieve these twin goals seems to me to be one of the key questions for industry at the beginning of the 21st century.
I therefore want to focus in this talk on how Government and this industry may be able to work better together to help address some of the issues and challenges that face the Chemical Industry, so that between us, we can drive up both sustainability and competitiveness.. We are committed to building the conditions in which a strong, dynamic, and innovative chemicals industry can thrive and prosper.
UK Chemicals Industry
For the UK to succeed as a global economic force, our manufacturing industries will have to be at the competitive edge.
We see the Government as having six major roles in helping companies achieve this goal. There are:
Firstly, bringing economic stability; we now have the best macro-economic framework we have had for many decades, though I recognise that the weakening demand in world markets and the weakness of the Euro have created a very tough environment for industry. - Secondly, removing barriers to investment and ensuring that we set a balanced regulatory regime;
- Thirdly, creating the right competitive frameworks which deliver open and dynamic markets.
- Fourthly, developing the right education and training framework to provide, through our schools and colleges, the aptitudes and skills that industry need.
- Fifthly, investing in scientific and technological research relevant to the needs of industry;
- And, sixthly, of course, ensuring fairness and justice at work.
Competitiveness
The radical review of the DTI which has recently taken place has clarified the goal of the DTI as being to help drive up the productivity of UK industry by providing the best possible micro economic environment. To do this we must become truly customer focused and ensure the best possible delivery of our services. So, together, how do we raise productivity and competitiveness in the UK?
Well, there are a number of actions we must take.
The first is performance improvement. Searching out best practice in lean manufacturing and process efficiencies.
I appreciate that it is sometimes difficult for individual companies to access best practice. That is why the DTI - working with the CIA and other partners - is putting one and a half million pounds into the establishment of the Process Industries Centre for Manufacturing Excellence - better known to some of you as PICME - to help companies identify where waste and inefficiency exists in their business, and then help that company realise those savings.
It has already identified impressive savings for some of its first client companies and I would urge and encourage delegates to take the opportunity to visit the PICME stand here at this Conference.
Secondly, the Government recognises the need to support business clusters at the regional level through the Regional Development Agencies. The chemical industry clusters are particularly well-placed to take advantage of this and the Regional Chemical Initiatives provide a sound base from which to access the opportunities.
The importance of the chemicals industry in many of the industrial heartlands has been recognised in the regional economic strategies of the RDAs in the North West, in the North East and in Yorkshire and Humberside. Scottish Enterprise has a similar focus on chemicals in Scotland. This recognition will I hope bring both support and resources that will make a real difference and add real value.
Human resources are also key. Clearly, having the right level and mix of skills is fundamental to the competitiveness and productivity challenge we face as a nation.
That is why the Government has recently invited employers to set up new Sector Skills Councils (SSC) with the aim of leading the drive to boost skills and workforce development in their sectors and through this improve productivity.
The recent success of the CIA, together with the United Kingdom Offshore Operators Association and the United Kingdom Process Industries Association, in piloting this initiative through their successful application to become a "trail-blazer" Sector Skills Council is greatly to be welcomed.
This is a great opportunity to build upon the work which has already been done through the National Training Organisations and to demonstrate the added value and potential of Sector Skills Councils for employers and for government.
This Government also recognises that it has three central roles to play in maximising the contribution that the science and engineering base makes to wealth creation.
First, the Government has a key role in funding basic and strategic research. This is a public good which cannot be provided by the private sector. Funding basic and strategic research not only makes cultural sense, it also make financial sense. Today, commercial success often flows directly from basic research.
Secondly, the Government has a crucial role to play in encouraging the exploitation of knowledge and new technologies. As innovation and technology become ever more important in the knowledge driven economy, the Government is determined to provide the mechanisms and resources to exploit successful breakthroughs.
Thirdly, science does not take place in a vacuum. It is part of the fabric of modern society. And it is the nature of science constantly to raise questions which challenge society's values and produce innovations which affect people's lives. So Government's third key role must be to help the consumer. Our task is to ensure that people can be confident about the new products that science can deliver. Confident about the way that risks are assessed and managed. Confident that scientific progress always takes account of their views and values.
Investing in the science base and key technologies is a high priority if the UK is to remain a world leader in scientific research. As the lead investor in scientific research, Government is in a unique position to create the environment for the best research and to influence the rewards available to those seeking a career in science. World-class science needs world-class facilities and people. That is why the Government has put a lot more money into the science and engineering base.
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, that will shape life in the 21st Century. To give you a scale of that funding, from 2001 to 2004, the Science Budget will increase by 7% per year in real terms.
While we are pleased with the progress already made, we are always looking at ways of improving the funding of science in the UK. I am leading a second Science and Research cross-cutting review as part of the 2002 spending review. We will take stock of all the studies commissioned since the last Spending Review. We will review current funding mechanisms with a view to maximizing the impact of available resources for science. The Review will report by March
This investment by the Government needs to be matched by industry. I am concerned that the latest Government R & D Scoreboard suggests that in the Chemical sector, excluding Pharmaceuticals, the investment in R & D is below the level of companies worldwide. I have some doubts about the way these figures are calculated, and we are doing some more detailed work on them, but they are a cause of concern.
Faraday Partnerships
A particular initiative I would like to mention is Faraday Partnerships Initiative, which is aimed at stimulating and supporting innovation by strengthening links between industry and universities. Since its inception in 1997 the DTI and EPSRC have provided nearly £40m in funding for Faraday Partnerships.
Industry participants range from very small firms to multinationals and I am pleased that almost half of the 18 Partnerships have been awarded funding so far are chemical related and include areas as diverse as biocatalysis, colloid technology, photonics, plastics processing and green chemical technologies.
Inward Investment
We also have an active programme to attract new chemicals investment to the UK to improve our technological and competitive base, and to help fill in gaps in the chemicals supply chain. We are also adopting a more flexible application of Regional Selective Assistance recognizing the high-skilled and high value-added jobs that the chemical industry offers.
Only last month the Japanese firm, Nippon Gohsei, announced a £65m greenfield site investment to build an EVOH plant on Humberside. This is the UK chemical sector's first major capital investment in a completely new plant for some years and the first ever from Japan. We aim to attract more.
Sustainability
I would now like to turn to the subject of sustainability. I am sure you will all agree that the chemicals industry itself has an important role in ensuring it conducts its business in a safe, environmentally-friendly and sustainable way. How the industry performs in these areas should not be driven by regulation alone. A key element in this is the industry's ability to innovate. This should be the driver that enables the industry to break out of the cycle of a poor reputation leading to pressure for increased regulation.
I know the industry has been taking steps to improve its reputation through individual actions and programmes such as Responsible Care and its important contribution to the UK Chemicals Stakeholder Forum, and I congratulate it on doing so.
Indeed, I sense that the industry as a whole is now recognising that how it is perceived by those outside has a direct impact on how successfully and competively it operates – from being able to attract a well-qualified and motivated workforce, to making its case persuasively to those in Government and elsewhere who regulate it. This is a move that I wholeheartedly endorse.
Any speech on sustainability and competitiveness would be incomplete without referring to the EU Chemicals Strategy. This issue continues to be high on the Government's agenda as well as that of the CIA and individual companies. I know you will be having some more detailed presentations about the Strategy later.
Let me start by saying that we agree with the broad aims and objectives of the Strategy. We need to ensure that effective action is taken to identify and phase out those chemicals that pose an unacceptable risk to human health and the environment, whilst minimising animal testing. But this must not be at the expense of a competitive chemicals industry.
There is a balance to be struck between the need to provide a regulatory framework in which the European public has confidence and the need to ensure that the European chemicals industry can continue to innovate and invest to maintain its global competitiveness.
The European Commission's White Paper proposals provide a good starting point for such a regime. But as they stand, they do not provide a workable solution. So we are working closely with the Commission's working groups to develop a proportionate and effective approach to future chemicals regulation. Detailed discussions about this will continue over the coming months.
Innovation and Growth Team
If we are to maintain and develop the UK's chemical industry through a period of accelerating global change and competition we will have to raise our collective game still further. I am therefore delighted to be able to use this Conference forum to formally announce the establishment of an 'Innovation and Growth Team' covering this sector.
It represents an exciting opportunity for the industry and its stakeholders to work in partnership with the Department to address the key challenges facing the industry in a strategic and coherent way, establishing a common vision for the future and making recommendations to industry and Government on how to achieve that vision.
It will generate new discussions around the growth and sustainability of a competitive chemicals industry. It will consider key issues affecting the chemicals industry. I hope it will be novel and dynamic, and challenge existing thinking both from industry and from Government.
In short, the IGT will represent a major step forward in the way that Government engages with the chemicals industry and all its stakeholders in determining future policy.
I am delighted to announce that Byron Grote has agreed to Chair the IGT, and also that Barry Stickings will be Deputy Chairman. Both Byron and Barry will bring international business perspectives. They will make a formidable leadership team.
The IGT will include members from the industry, as well as the customer base, the City, Universities, environmental groups and senior Government officials.
The aim of the Chemicals IGT will be to pull together, in a systematic and strategic manner, the new trends and emerging factors which contribute to competitiveness. And to establish a vision for a future chemicals industry so that the UK makes the most of its opportunities as the global industry restructures and develops.
The IGT will be expected to take a fairly long-term view but then relate its vision back to consequential actions to be taken both now and over the new few years.
It will operate through 4 Strategy Groups which are likely to focus on:
- Reputation and Regulation – their links and interdependencies
- Markets and Supply Chains – from feedstocks to end-users
- Innovation and Technology Pull-Through – harnessing global science and technology
- Skills and Training – and the broader competencies for the future
And it will determine how issues arising should best be tackled by Government and industry together.
This work should clearly link up - both to other sectors, for example pharmaceuticals, biotechnology and electronics; and be cross-departmental - not just DTI-focussed; it must be innovative and examine opportunities for growth whilst challenging existing mechanisms and methods.
Where the IGT recommends specific actions, these will be delivery-orientated and will include targets for measurable change.
In conclusion, I hope that many of you in this room will make a contribution to the work of the Innovation and Growth Team. This is a real opportunity for all stakeholders in the chemicals industry to influence the future shape of Government policy and to create a new paradigm for working collectively for the benefit of all.
The Government is ready to take the necessary steps as an investor, facilitator and regulator to support these efforts to develop a competitive chemicals industry that embraces sustainability. We believe that the chemical industry has a major role to play in building a healthier, safer society, a cleaner environment and a dynamic knowledge economy for the 21st century.
Finally, I would like to end by paying tribute to all the work that Elliott Finer has done during his time at the helm of the CIA in driving many of these issues forward. I know that the work of the CIA is highly regarded by its members, but it is also held in high regard by Government. Yours will be a tough act to follow. May I take this opportunity to wish you well in your retirement.
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