Introduction
Thank you for the welcome. Thank you also for providing the perfect venue and
audience for me to set out my plans and aspirations for my tenure at the DTI.
Coming just over a month into my new job, the timing couldn’t be better.
I have always taken the view that politics is about more than just winning elections.
It is about ideas, values, and principles. It is these which give coherence to a
government and provide it with a sense of purpose and direction.
So what does this mean for the Department of Trade and Industry.
I am clear that being pro-business is compatible with social justice and fairness.
I firmly believe that the best way to address inequality and social exclusion is to
create a more affluent, more successful Britain with opportunities for everyone to fulfil
their full potential. Opportunities that come with the success of British business at home
and abroad.
The reality is that wealth creation is more important than wealth redistribution. It is
successful and prosperous businesses which can employ more and more people and also ensure
that public finances are sound, so that we have the resources to fund those essential
public services like health and education.
That’s why there is a fundamental role for business at heart of this
Government’s thinking and it ensures an important role and part to be played by the
DTI.
Given the circumstances surrounding my arrival at the DTI, you will perhaps not be
surprised to hear that I arrived in a reflective mood.
What is the DTI for?
What is the role of industry policy in the last year of the 20th century and into the
next?
These are important questions to get right:
I’ve no doubt that Government has an important role to play in creating an
environment which encourages enterprise and creates wealth and jobs.
DTI must be in the vanguard of change, recognising that the old way of doing things is
not good enough, and the status quo is no longer an option.
Between them, Margaret Beckett and Peter Mandelson set out an ambitious programme of
reform. This is work which I intend to pursue and deliver.
A programme based on a fundamental understanding of the role both business and
Government can and should play in the economy.
Businesses create jobs and wealth.
Entrepreneurs take risks in the face of uncertainty and open up new markets.
Governments should and must not hinder them, but work to ensure the market functions
properly and contribute to a strong, just and fair society.
There can be no return to the outdated interventionism of the old left. The corporate
state was tried and it simply did not work.
But neither did naive reliance on laissez-faire. This led to destructive individualism
and a crippling obsession with what Government should not do.
Now I want the DTI to play a far more positive role in the market place working with
businesses large and small in their efforts to develop products, gain customers and make
profits; here, in Europe and the rest of the world.
A new role for the DTI to enable business to cope with a modern world.
This is the model for public policy set out in the Government’s Competitiveness
White Paper.
I cannot overstate the importance of the White Paper as a manifesto for the DTI. 1999
is the year of delivery for the Department and the Government as a whole. For my
Department that means implementing the White Paper. That is why we will publish in March a
clear implementation plan to show how all 75 commitments will be delivered and on what
timescale
Our real task is to change fundamentally British attitudes towards enterprise and
towards work. We must end the poverty of ambition that has held us back for too long.
Enterprise and responsible risk-taking
The time is right to embark on a crusade for greater enterprise throughout the
economy and begin a fresh campaign to encourage what I call responsible risk taking.
In Government, business, our universities and schools and throughout society we must
foster a new spirit, prepared to seize opportunities - to turn new ideas into successful
products and services - and committed to constant innovation and improved performance.
To foster a climate of responsible risk taking, we must also tackle head-on the stigma
attached to business failure in this country.
At present our bankruptcy laws make no distinction between the responsible risk taker
and those individuals who deliberately set out to cheat their creditors or abuse limited
liability.
I believe that the law in this area can and should be improved and have established a
working group to review our insolvency and bankruptcy laws. They will report to me by the
end of April.
I want careful consideration given to how we deal and protect with responsible risk
takers - those entrepreneurs who have ideas, put in a lot of their own money, work hard,
but for one reason or another then fail.
In other countries such people are not simply written off and regarded as failures:
they are regarded as people who have learned from their own personal experiences.
Whilst protecting the responsible risk taker we must come down hard on those who
exploit the system - often inflicting pain and financial ruin on individuals and
businesses in the process. Such people have nothing but contempt for their creditors. I
will bring forward legislative proposals to enable us to handle the disqualification of
unfit directors more efficiently and effectively.
I want an insolvency regime which is complementary to enterprise and responsible risk
taking. Both to help the enterprising recover from bankruptcy and to reduce the inhibition
on those who fear the consequences of failure.
Attitudes to work
As a Government we are committed to getting people off welfare and into work. To do
this, we must make work pay, which is why we are reforming the benefits system and
introducing the Working Family Tax Credit and the National Minimum Wage.
But as well as encouraging people into work, we need them to feel valued and motivated
while they are at work.
Our best companies already recognise the importance of committed and productive staff.
I believe the Employment Relations Bill which I published last week aims to extend this
culture of partnership and trust to all businesses.
However, I want to give you this guarantee and assurance - we will not allow regulation
to stifle enterprise and innovation. And with new rights comes increased responsibility on
all employees.
I do not propose that there will be a drip drip of employment legislation. That is why
the Employment Relations Bill will be our final word on these matters on this side of the
General Election.
Preparing for the knowledge driven economy
Second, as well as changing attitudes, we must also prepare the UK to take
advantage of the new knowledge driven economy.
Success in this fast moving world depends critically on how well we exploit our most
valuable and distinctive assets: our knowledge - including our world class science base,
our skills and our ideas. The first industrial revolution was based on investment in
capital and machinery. The revolution we are going through now requires investment in
human capital - skills learning and education.
Preparing Britain for this new world will be a great challenge, but I also believe a
great opportunity.
In some areas, we are already enjoying the benefits that come from successfully
exploiting the knowledge base we have.
In pharmaceuticals and biotechnology we lead the world in genetic and medical research.
Our telecommunications industry, where a combination of market liberalisation and
technological advance has created a number of world-beating businesses.
Or take Nissan in Sunderland for example, Europe’s most productive car plant.
This is the sort of success we need to celebrate and support.
And the sort we must emulate throughout the UK economy, in all businesses large
and small.
Because building the knowledge driven economy is not just about creating high-tech
firms, based on leading edge science.
That’s a mistake too many make.
Important though these industries of the future are, we must also improve the
performance of older, more traditional sectors who don’t realise importance of the
knowledge driven economy.
The task of modernising the British economy will largely fall to businesses and
individual entrepreneurs. But the Government is determined to play its part:
By investing to build British capabilities - in particular our science and
engineering base, and skills;
By promoting greater competition, principally by empowering consumers but through
regulation where necessary, for example to promote more competition in the energy markets;
And by acting as a catalyst to collaboration between businesses, encouraging
greater business to business learning and the take up and endorsement of best practice.
I want to touch on four areas that I consider to be of the utmost importance for 1999.
Science
Science is a major priority. It underpins our quality of life and is an invaluable
source of wealth, economic regeneration and employment.
Science has been neglected for far too long by successive Governments. It is a subject
I take very seriously. As a Government we must not interfere unduly. We must be a
supportive friend, laying down the framework and acknowledging public concerns.
British science is and must stay world class. Our world-class science base is a
critical source of competitive advantage - a source of ideas and skilled personnel. But
let me be clear, without public confidence our ability to lead in science based industries
will be put at risk.
This Government is ending years of neglect in scientific research. The Government, in
partnership with the Wellcome Trust will be investing an additional £1.4 billion in the
science base over the next 3 years.
At least half of this money will go to the life sciences. It is here, perhaps more than
any other area of contemporary science, that we are pushing back the boundaries of our
understanding.
The development of Dolly the sheep and of genetically modified food are radical new
steps which affect all our lives - and indeed the very definition of life itself.
Science has the potential to revolutionise our lives. It offers enormous opportunities
to improve our quality of life, in terms of health, agriculture food and environmental
protection, both here and in developing countries.
Our first task is to build up public confidence in science and in the response of
politicians to the advice they receive. The public inquiry on BSE has highlighted the sort
of mistakes we must not repeat.
To restore public confidence openness and transparency are essential. I want a public
debate because that is the only way we can build public confidence in science and
biotechnology.
Skills
Second, I am sure that no-one in this room would disagree that the UK potentially
has a serious skills problem and in some sectors it is already there. A shortage of people
with up-to-date engineering, electronic and leading edge technology skills.
Many nations face similar difficulties. But our competitive position depends on how
well we address this fundamental issue.
I intend to work closely with David Blunkett to promote ideas as to how we can invest
in skills as well as to create an enthusiastic learning culture in the workplace.
Europe
Third, Europe.
We will continue to make the case for economic reform in Europe as the basis for
creating sustainable growth - and with it, greater wealth and employment. As the single
currency makes markets more transparent and increases competition, the need for reform is
greater than ever. We must build on the work started on liberalising product and capital
markets and resist burdensome regulation of the labour markets.
I also want to take my ideas about enterprise and responsible risk taking to the wider
European audience. Despite what you may read in the paper, many of our EU partners are
very interested in just this agenda to ensure the competitiveness in Europe in the next
century.
As for the UK, we must face up to the fact that the euro is here. We must rise to its
challenge and seize the new opportunities it presents.
First, the UK must be well prepared to deal in the euro, indeed I feel we already are.
This is vital so that British business can take full advantage of the opportunities.
Specifically, it is also vital that the City remains and is seen to remain the pre-eminent
financial centre in Europe.
As for our own membership, we are convinced that "prepare and decide" is the
best policy. Part of this is knowing what a changeover would actually require in practice.
The Chancellor will shortly be publishing an outline change-over plan.
This is sensible planning, not "making up our minds prematurely", as the
eurosceptics would have us believe. It is all part of the preparation that public and
private sector will need to make before we can make any decisions over membership.
Trade policy
We must not lose sight of the opportunities that have flowed from the new age of
globalisation. We have benefited from the integration of the international economy. Now we
must manage it through more difficult times.
A shared commitment to open trade and orderly progress - certainly among the G7 and in
the EU - has been a driving force for growth - even in countries that not so long ago
seemed permanently left behind.
Now the trend is stalled, and in some places even reversed - but I believe that is a
temporary setback, not a permanent condition. The essential answer to the problems of the
moment is not less globalisation - not new national structures to separate and isolate
economies, but stronger international structures to make globalisation work in harder
times as well as easy ones.
Our urgent need is closer co-operation, continuing dialogue, and an unwavering
commitment to open commerce. We must not let temporary instability put global progress at
risk.
As the economic weather turns, as a storm in one region threatens to spread, there are
easy but dangerous shelters - a return to protectionism, the breakdown of co-operation,
the rise of beggar thy neighbour policies. But this can only yield further worsening of
the situation, not renewed growth.
Let us be clear, protectionism anywhere is a threat to prosperity everywhere. Closing
off national economies only increases national and international instability. And across
the world, it is the poorest, the most vulnerable members of society who suffer from
financial crisis and stagnation.
We will therefore continue to work for a new round of trade liberalisation and better
market access for our exporters of goods and services.
And in the light of recent events I can assure you that we will wish to see
improvements to the mechanism for settling disputes so that we can resolve differences
without recourse to damaging retaliation.
Conclusion
Let me say in conclusion that in the new global economy, neither the United Kingdom
nor any other country or trading bloc can afford the easy illusion of isolationism. We are
all part and ultimately product of events happening in the global economy. Never in all of
economic history have so many depended so much on genuine economic co-operation between
the leading industrialised nations.
We must never forget that the path of open trade and open capital markets that we have
travelled in the last 30 or 40 years has brought unprecedented growth, greater opportunity
and a better life for people across the world. The Single Market is undoubtedly one of
Europe’s greatest achievements. No sensible policy-maker wants to turn the clock back
to protectionism or the belief that we can operate in isolation from the very real
pressures and challenges facing the world economy. To do so would be a simple recipe to
export employment and growth to more competitive rivals outside Europe. But to move
forward, we need active governments, acting together through reformed international
institutions.
For the DTI, here in the UK it means marrying together an open, competitive and
successful economy which allows businesses to prosper with a just, decent and humane
society.
The questions are sophisticated and technical. But we must never forget that they are
also human questions. They involve the living standards of people as well as the level of
financial transactions. They involve not only the value of capital or trade or investment,
but the deepest values of our societies.
This Government believes the problems of our time can be met with a vision, an
intelligence, and an energy which will make the world economy stronger, more stable, and
more prosperous - ultimately more open not just to the free flow of goods, but to the
rising tide of people’s aspirations. We must make markets work - in tough times as
well as easy ones. That is the burden and responsibility of all of us who lead in the era
of globalisation.
It is a burden that this Government intends to discharge on behalf of our people and
our country.
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