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Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)Encouraging Innovation in Europe |
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People often talk about the "new economy" or the "knowledge economy" as if it only applies to certain sectors of industry or is still some way in the future. That it's something only youngsters in dot.com companies participate in. In fact it's here and it's now. It affects us all. When we use a mobile phone or send an e-mail. When our children learn to use a computer at school. The modern economy is fast moving, dynamic and ever-changing. To be successful companies must master the art of innovation, constantly developing and adopting the best products, techniques and practices available to them.
Successful economies and societies will be those that can adapt to the demands of rapid change, that are flexible and creative and manage change rather than being submerged by it. That find ways to include all their people. Innovation - our focus today - has a central role to play in helping us meet these challenges. It is the private sector that will be at the forefront of wealth creation and employment generation in the 21st century. But Governments have a key role to play in creating the right climate for businesses to flourish. It will be governments that put in place the building blocks for the future. Ensuring that the science base is properly funded and linked to industry. That the skills of our workforce meet the future needs of industry. That we have the communications infrastructure we need to be at the forefront of the IT revolution. To create a modern regulatory framework that drives innovation and encourages growth and increased productivity.
And we must do so not only at a national level but in a way that ensures all parts of our countries can benefit. Since last year, we have been working together to benchmark our experience in Britain and Germany. We have been looking at how we can create a dynamic and enterprising United Kingdom and Germany. We have made real progress through this conference series and the research project being published today. Within the European Union we all have much to learn from each other,and from other countries like the United States. In Europe we have struggled to generate the dynamic approach which has helped to put the US economy on top of the world. But things are changing,and rapidly. Member States are embracing a clear programme of economic reform. Belgium and Ireland have taken steps to minimise the burden of regulation. Italy, France and Germany are introducing labour market reforms. Just last week France announced a package of tax cuts, including reductions in social security contributions, reducing labour costs- significant cuts in corporation tax for small firms, and lower income tax. In the UK and in Germany ,as well as in Portugal, Greece, and Austria;we are also reducing taxation to encourage new businesses. Here in Germany the Government has launched the most ambitious tax reduction programme in the history of the Federal Republic. In Britain, we have reduced corporation tax to its lowest level ever. Our Governments in Britain and in Germany have both introduced programmes to promote the use of information technology and the internet, investing in education and training and taking action to prevent a "digital divide" between IT "haves and have nots". At the Lisbon summit earlier this year, European heads of state unanimously adopted a programme of economic reforms at national and EU level. With the aim of making Europe the world's most successful knowledge-based economy by 2010. They agreed measures to widen access to research and development, to remove barriers to enterprise and to improve skills and training. These reforms will benefit all sectors of the economy, manufacturing industry as much as dot.com companies. They benefit all our people,by creating more jobs and wealth. I believe that the only way of building public confidence in Europe is if this reform agenda is maintained. We have already made good progress. We have taken swift legislative action at EU level, since Lisbon, to put in place the firm legal framework that business and consumers need to buy and sell over the internet with confidence. We've agreed a European Small Firms? Charter backed up by benchmarked national policies for enterprise and an action plan to cut the cost and the time of setting up new businesses. We've also agreed measures to bring down the cost of Internet access and to encourage commercial exploitation of research. These reforms show Europe is changing and that the radical programme of economic reform agreed at Lisbon is being implemented. We must keep up the momentum. We are seeing strong economic growth here in Germany and elsewhere in Europe. But unemployment in many member states remains too high. Economic growth is not translating into jobs. That is why we must press on with economic reform. Ensuring open and competitive markets, reducing burdens on business and introducing flexibility in labour markets. Only by creating more competitive economies can full employment become an achievable goal. In the 21st century the changes affecting industry are happening at an ever increasing speed. Industry and Government need to act at internet speed, not legislative speed, if we are to keep up with this change. That means that Governments must - like business - focus on the future. To embrace change and not to resist it. That means looking at national and European policies and considering what we need for a dynamic knowledge economy. Not clinging to old ways of doing things - just because we've always done them that way. Above all, we should not lose sight of our goal: making Europe the world's most dynamic knowledge-based economy. It is essential that we do this because we have to be absolutely clear that our national interest and the interests of British business lies overwhelmingly in Europe. To pretend otherwise is to put wishful thinking before reality and to allow prejudice to triumph over economic reason. However, we must ensure that our commitment to Europe does not lead us to defend the status quo and a belief that simply leaving things as they are will be good enough. The key question for Europe is whether it has the will to take on and reject the attitudes and vested interests of the past and in so doing move decisively to gain a lead in the new economy and industries of the future. We must see that it does. To do so will begin to rebuild confidence in Europe and a belief that its economies can move forward. It will make a big difference to British attitudes to Europe. In the United States a single market of over 270 million consumers, with a single set of industrial standards and rules has enabled businesses to be able to take greater risks in developing new products and services. With such a large market, with no trade barriers, there have been greater potential rewards, and incentives, for entrepreneurs to innovate. In the European Union, with 380 million consumers - increasing to around 500 million with enlargement - the single market gives us the opportunity to secure even greater benefits. That is why we need to work harder to make that single market work properly. Sometimes decisions that help boost the single market are difficult for Member States. But we must strive to overcome these,because the prize is so big. For businesses, Europe is not just some abstract political argument but the reality of everyday life. Access to a single market of 380 million consumers. Our membership of the European Union strengthens our influence in the world,opening trade, strengthening security. People can now easily study, train and work across Europe. And consumers have guaranteed and enforceable rights wherever they shop in Europe. If we are to be prosperous, confident, secure nations, our future lies in Europe. Yet some in Britain still call for withdrawal or renegotiation of the Treaty. They do so not from a position of defending the national interest, British jobs or influence, but from a position of political dogma. It is important that people understand the consequences of the positions advocated by those who deny that our future lies with, and as part of, Europe. In Britain alone, over 3 million jobs depend on membership of the European Union. Those that toy with leaving Europe play political games with those jobs. Leaving the European Union would mean turning our backs on a market worth £240 billion per year in trade for the UK. Acting constructively in Europe is in all our interests. Like all Member States, Britain sometimes faces difficult decisions. But it is incumbent on us all to find solutions which bring benefits for all. Opening up competition across Europe is vital to driving innovation. Today Dr Muller and I are issuing a joint statement, calling for rapid acceleration of competition in energy and telecoms markets in Europe. I know energy liberalisation is an issue which raises some difficulties for some Member States ? including France. But the benefits are clear. We have seen greater innovation, spurred by competition. Customers enjoy even lower prices if they buy both gas and electricity from the same supplier, and the consumer has the choice of "green" supplies. There are new payment methods to help low-volume consumers, and greater use of e-commerce. But the cost of energy in Europe is still much higher than elsewhere. With energy costs on average 30% higher in Europe than in the United States, our industry is being held back. By rigging their energy markets against competition, some European countries are preventing other industries from competing effectively in the global market. Until the reform process is complete European businesses will continue to be at a disadvantage in comparison to the USA. Germany and the UK have been working closely to open the European energy market. In the modern economy, competitive advantage comes from knowledge and new ideas. That means companies must develop and protect intellectual property. Intellectual property is the most valuable asset in this knowledge economy. In America the highest value companies such as Microsoft, Intel, Merck, Cisco and Disney are all characterised by their intellectual property rights and knowledge content. We must modernise the regulatory framework in Europe in this area. Innovation and ideas must be adequately rewarded within the new knowledge-based economy, particularly through patent protection. The Lisbon summit agreed to ensure that a Community patent is available by the end of 2001 so that simple Community-wide patent protection is available in the European Union. Giving British, German, European companies the benefits which their American counterparts enjoy. We need a successful Community Patent system alongside existing national and European patent systems. We are working with Germany and our other European partners to achieve this. But in order for industry to have confidence in the system we will need to ensure low costs and pan-European arrangements for dealing with patent disputes. These are not simple issues, and some compromises will be necessary. The same challenges face the existing European patent system. Work on reforming the system began in Paris last year. We are taking this forward with a conference in London this October, followed by a Diplomatic Conference to revise the European Patent Convention. I am particularly pleased that progress has been made on the issue of translations, with Germany playing a key role. We now need to make similar progress on pan-European litigation arrangements. That is what industry needs and expects. Energy liberalisation and intellectual property are just two areas where joint action at a European level is needed to remove barriers to innovation. Much needs to be done at a national level too. We can learn from each other,as we are today,on how we can support business growth through the education system and provide the skills and training needed in a dynamic economy. But evidence from Germany, the US and elsewhere suggests that we must also take a strong regional approach. To develop a dynamic knowledge economy across Europe, in all our countries, we must maximise the potential of all our regions. Our goal must be to develop dynamic knowledge economies in every region. The global economy is made up of a patchwork of regions and cities. Whilst finance and trade are global, knowledge and innovation tends to be localised. Concentrated round local and regional networks, linking universities and businesses. That means we need to take a regional approach to enterprise and innovation. In the United States many of the successful companies of recent years have grown from regional bases, like Microsoft in Seattle, or developed around clusters, such as Silicon Valley. And in Germany the Länder have played a significant role in the economic performance of this country. Tailoring economic policies and support for business to meet regional needs. In the United Kingdom we have set up devolved administrations in Scotland, Wales and Northern Ireland and established regional development agencies to raise the economic performance of each of the English regions. We have introduced new incentives to increase the number of commercial spin outs from universities across the UK. New support for clusters and business incubators in each of the English regions. Increased regional investment in enterprise, e-commerce, innovation, science and export services. And we have given Regional Development Agencies greater flexibility and resources to target regional priorities.
We need to do more still to tackle the underperformance of many of our regions. To increase the use of new technology, innovation and enterprise in all our regions. In Germany and in Britain our regions were at the heart of the first industrial revolution. I firmly believe that they have the potential to be the beneficiaries of the knowledge and information based revolution that we are now living through. At the start of the 21st century the challenge we face is to both embrace the knowledge economy and ensure that in the process we avoid widening the inequalities that already exist in our society. The knowledge economy requires the opportunity rich society,in which all can benefit and new ideas can come to the fore. There will be people who will resist change. They have existed throughout history. Always preferring to cling to the comfort blanket of the status quo. It is the task of governments and business to lead people through this process of change. Not addressing the problems of the past, but looking forward. So that people are the partners in change not the victims of change. I believe that governments learning from each other, working constructively together, can meet this challenge. Not through protectionism but through openness and free trade. Not by resisting change but by equipping people to cope with change. Not by standing still but by radical economic reform. Building from a platform of stability that opens up innovation, competition, enterprise and opportunity for all. In all regions, all countries across Europe. In so doing we can be confident and face the future knowing that by working together we can meet the challenges of the 21st century. |
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Other speeches by Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)
(the following are available from the archive) |
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