I am delighted to have this opportunity to say a few words about increasing innovation and Government policy for the 21st Century. I am pleased too that the APGDI and Design Council are raising the profile of design and innovation with an event such as this as both of them are crucial to our competitiveness and quality of life. Let me start by congratulating the APGDI on the work they have done to launch their new identity and website.
I want to start by raising the question of why innovation is so important. It has almost become the industrial religion of the late 20th and early 21st century, with business seeing it as a way to increase profits and market share, and Government wanting more of it to create jobs, wealth and increase productivity.
I think the answer lies in globalisation and the major advances being made in semi-conductors, fibre optics, genetics and software.
Today across the globe we are doing more research more productively than previous generations. The dramatic changes taking place at the beginning of the 21st Century are matched by those that took place at the beginning of the 20 th Century, radio, aviation and mass production. What has changed is the scale and the fact that new technologies will affect everyone, across the globe. Existing industries and public services, education, transport and healthcare will be transformed by these advances.
In this globalised economy, capital is mobile, technology can migrate quickly, and goods can be made cheaply in low cost countries and shipped to developed markets. Countries like Britain cannot compete simply on low labour costs, the supply of raw materials, or land. We must seek competitive advantage by exploiting capabilities which our competitors cannot easily match or imitate. These distinctive capabilities are knowledge, skills and creativity - capabilities which generate high productivity, effective business processes and high value goods and services.
And we are good at innovation and design. This excellence has been demonstrated by the Millennium Products project which the Design Council ran from 1997. The project sought to celebrate British innovation and design by identifying new products and services created in Britain and successfully exploited in the international marketplace. Over 1,000 such Millennium Products were identified and the innovation stories behind them are being used in two ways. Firstly, to tell the world that British innovation and design delivers the goods and that Britain continues to be a nation with which it is good to do business. And secondly, Millennium Products have been used at home - through the "Sharing Innovation" project between the Design Council and the DTI - to carry the innovation and design message to companies in this country.
Innovation is not an orderly or simple process. It is not a pipeline, where at one end public money can be stuffed into basic research in universities and national laboratories in the certain knowledge that new technology and commercial applications will pop out of the other. It is a complex process with numerous players and a network of feedback connections. Nevertheless the Government can take action to create the right climate for innovation and in our two recent White Papers we have laid out a clear set of policies for science and innovation.
Last year we published the Science and Innovation White Paper - this set a framework for the Government's role as the key investor in the science base and as a facilitator for innovation. The recent White Paper on Enterprise, Skills and Innovation, published this February, picked up this agenda and emphasised the importance of science and innovation to regional and national economic growth, and the need to raise the skills of the whole workforce.
On the first of these we have made immediate progress. We have already increased the Science Budget by 15% over the last three years and there will be a further 7% real terms increase over the next three. That means new programmes of £750 million and £1billion to invest in science infrastructure. We are making real progress in turning round some of our outdated science facilities so that our scientists and engineers can better investigate the key technologies of the future.
In the second area, we are doing a lot to facilitate collaboration, exploitation and business innovation. We have established a Higher Education Innovation fund of £140m over 3 years as a third stream of funding to universities for knowledge transfer, alongside the funds they receive for research and teaching, providing £30million to extend the highly successful University Challenge Fund and Science Enterprise Centres; and creating Regional Innovation Funds of £50million a year to enable Regional Development Agencies to support clusters and incubators.
I do not share the view that entrepreneurs and innovators in Britain have been less competent and dynamic than their counterparts overseas. That may have been true in the past, but in the last twenty five years, as British industry has been forced to compete on a global scale and competition policy has been given greater weight by Government, there has been a welcome increase in entrepreneurial activity, especially, but not only, in high technology industries.
We lead in Europe in the biotechnology industry and opto-electronics,Vodafone has become the world's largest mobile telephone operator and the area around Cambridge, "silicon fen" is an outstanding example of a dynamic, high-tech cluster.
Conclusion
Before I close, I expect some of you will have heard that Patricia Hewitt has initiated an immediate review of DTI's support to business, including our support for innovation. The voice of the business sector has been saying that whilst individual schemes are very worthwhile, the plethora of schemes and the multitude of ways of accessing them is bewildering. We aim to tackle this, in consultation with our stakeholders and customers. I hope that you will take the opportunity to have your say, so that we can get the best from our resources and better help UK firms get to the future first.
As I'm sure many of you know, I believe passionately that in the UK we have a major opportunity to use our scientific and technological skills to create wealth and improve the quality of our lives. Innovation and design have an important and exciting role to play in achieving this national objective.
Thank you for listening.
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