Through areas such as innovation and high-skilled job creation, the automotive sector will be driving the UK’s economic growth. With the industry at a technological turning point in radically reducing carbon emissions, investment now will be critical to its success.

To ensure that the UK’s car industry can build on its strengths and develop the new capabilities needed to compete in a competitive global market, the Council will have an important strategic role in helping to achieve these goals.

The move is part of the Government’s positive response to the wide ranging recommendations made in a report from the New Automotive Innovation and Growth Team (NAIGT) published earlier this year, setting out its 20-year vision for the automotive industry.

The Council will be chaired jointly by Lord Mandelson and by ex-Ford boss Richard Parry-Jones. The Automotive Council will be tasked with taking forward the agreed actions from the NAIGT report including the importance of the technology road maps and developing a stronger supply chain.

Business Secretary Lord Mandelson said:

“The Automotive Council will be an opportunity for Government and industry to work together on the long term strategic development of the sector. The car industry needs to capitalise on the economic opportunities and job creation offered by the shift to low carbon.

“I am delighted that Richard Parry-Jones will be continuing the good work he started with NAIGT as chairman of the Automotive Council.”

Automotive Council Chairman Richard Parry-Jones said:

“I’m delighted to co-Chair the Automotive Council and take forward the long term strategic agenda laid out in the NAIGT report. The UK must raise its game to compete for international investment in automotive R&D and manufacturing.

“To do that, the UK’s car manufacturers need an ever more strategic, collaborative relationship with the Government and to be working with the supply chain and other stakeholders to achieve long term goals. I want the Council to make that happen.”

The first meeting is expected to be held in December.

Read the original press release

Notes to editors

1. NAIGT report and the Government’s response
2. The NAIGT’s other main recommendation was to establish a technology roadmap to include the trialling of low carbon vehicles. The Government announced a project in July that will see over 340 low carbon vehicles being tried out on the UK’s roads. A common research agenda will help direct government funding to those areas most critical to the deployment of low and ultra low carbon vehicles. The ownership of this agenda will lie with the Technology Strategy Board and the Automotive Council, working with the Office for Low Emission Vehicles.
3. A list of Council members will be published in due course.

The Report identifies four key recommendations and these will be developed by establishing a pilot scheme, which focuses on a particular sector that crosses several Government Departments.  This will demonstrate good practice in action, and act as a model for successful engagement between Trade Associations and Government.

Ian Lucas, Minister for Business and Regulatory Reform, welcomed today’s announcement.  He said: “It is important that BIS positions itself as a strong voice for business at the heart of Government, and we will need to change not just what we do, but how we do it.

“The way Government sees its own role in the market needs to change in order to deliver a more coherent and effective approach. Government can promote investment, growth and jobs in Britain through policy consistency across departments, regulatory certainty, smart public procurement and a readiness to intervene where necessary.

“This involves Government acting creatively and pragmatically in new ways to supplement the market, but not substitute itself for the market. We have published our “Building Britain’s Future – New Industry, New Jobs” policy statement which identifies key areas where Government action can have the most impact. 

“We are investing in growth to speed recovery and building manufacturing capability and services, which is essential to ensure British people and businesses can compete successfully for the jobs of the future”.

The ‘VOBB’ Project offers enormous potential for Trade Associations to represent their members in an effectively coordinated fashion when interacting with Government, and quickly cascading messages about Government policy. 

“By building on the solid partnership that already exists between BIS and the Trade Association Forum, it is intended that the Project can be the catalyst for much improved methods of better collaborative working that helps boost the value of communication between businesses and Government.”

Engaging well with employees makes good sense, and good business. Building a productive relationship with employees ensures that everyone is working to the same goals, and giving their best as they do so.

Effective engagement is a fundamental business requirement. Recent research indicates that:

The cost of ‘disengaged’ employees to the UK economy is between £59.4 and £64.7 billion

Engaged employees generate 43% more revenue than disengaged ones

Good engagement is even more important in a downturn – employees can play a central role in helping businesses to survive a recession, but employers must be careful not to trade off short-term gains in productivity with staff engagement and longer-term loyalty and motivation.

To help businesses with the ‘why’, ‘what’ and ‘how’ of employee engagement, the Department of Business Innovation and Skills has launched the People InterAction campaign.

As well raising awareness of the benefits of effective employee engagement, the campaign will also be deliver a range of practical, no-nonsense support that employers – particularly SMEs – can download free of charge and put into practice from early 2010.

The People Interaction campaign is a response to recommendations in ‘Engaging for Success’, an independent study exploring the benefits and drivers of employee engagement in the workplace by David MacLeod and Nita Clarke.

My Lords, I would like to make a statement on our policies for skills and their role in our future economic growth.

An active government approach to equipping this country for globalisation means making sure we have the skills that underwrite the industries and jobs of the future. That means skills for the high tech, low carbon, more high-value added sectors that drive the growth that underwrites everything else we want to achieve as a society. These skills are becoming more sophisticated and even more vital.

My Lords, I also start from the position that skills in our society must always be an individual’s ladder up. That’s why the skills system also needs to mesh with our university system. We need schools and colleges to make a strong vocational offer, which leads to a clear vocational route from apprenticeship to technician to Foundation degree and beyond.

Equipping unemployed people with the skills they need to get jobs in key sectors will be essential to a strong recovery. And let us remember that, by equipping more of the domestic population with the right skills to compete for jobs, we help employers become less reliant on migrant labour.

Addressing these skills challenges has been the focus of our Skills Strategy in recent years, and remains the foundation on which our new policies build.

We recognise that skills have historically been an area of British competitive weakness. Since 1997 we have made real progress in tackling the economic and social scandal of adult illiteracy and innumeracy. We will not abandon our promise of basic skills for all.

We have eradicated much of the poor quality that blighted our further education system. We have transformed work place training through Train to Gain which has trained over one million employees and helped them get on in work.

We have revived apprenticeships, which were allowed to wither away in the 80s and 90s. The Apprenticeship, Skills Children and Learning Bill which received its Third Reading in this House yesterday will ensure this progress is sustained.

This Skills Strategy builds on the progress made. It reflects some important decisions and marks a radical shift in the balance of our skills priorities. It reflects the world we find ourselves in: a world where higher level skills have never been more important to our growth, and where the skills challenge has to be tackled within more constrained resources.

So we have made some difficult choices. The crisis help we targeted to help counter the effects of the recession will progressively be refocused on the skills we need for a sustained recovery.

We have taken three key decisions:

• We will change the focus of our skills system so that a new premium is put on higher skills, especially the technician skills that are the foundation of high tech, low carbon industry.
• We will empower learners through more choice and better information to drive up the quality of the system through skills accounts.
• We will dramatically reduce the number of publicly supported bodies delivering skills policy, working with the UK Commission for Employment and Skills to reduce them by over thirty.

These choices will target public investment on the most relevant skills for the future, at the highest possible levels of quality and marketability.

The first of these decisions reflects the need for a new focus on the skills we need in the laboratory, the high-tech factory floor and the computer facility. We will create a new, modern class of technicians, something that has long been identified as a gap in our labour market.

To build this technician class, we will further expand the apprenticeship system, by creating thirty-five thousand new advanced places for those aged nineteen to thirty over the next two years. The aim of creating this technician class will also be aided by the new generation of University Technical Colleges whose creation we are supporting.

To turn these apprenticeships into potential ladders to university, from 2011, all apprenticeship frameworks at levels three and four will be required to have UCAS tariff points just like A-levels, so that holders can apply for, and make their way into university. We will also commit to Alan Milburn’s Panel on Fair Access to the Professions’ recommendation that we create an Apprenticeship Scholarship Fund that will provide one-off bursaries of up to one thousand pounds for one thousand apprentices entering higher education every year.

We will take a more strategic approach to the skills we fund. That means prioritising strategic skills in key industries like advanced manufacturing, low carbon, digital technologies and biosciences and in important growth sectors such as healthcare. Our decisions in the next bidding round of the National Skills Academies programme will reflect these core national priorities.

The second of our decisions is to increase the power of learners to drive up quality in the skills training sector by giving them more choice over where and when they train and better information on how to exercise that choice.

To give effect to that greater choice, we will set up new Skills Accounts which will enable students to shop around for training, backed by good information on how well different courses and colleges can meet their needs.

Critically, we are going to more than treble the number of public and private institutions where accounts can be used to over one thousand five hundred – not only creating new options for learners but creating a big incentive for providers to design courses that attract students.

The FE sector has made significant strides in improving the quality of its provision over the last decade. Many of our colleges are performing at world-class levels and overall success rates have increased by over 40% in the last 10 years. We will build on this by providing progressively greater autonomy to colleges that demonstrate teaching excellence – but also by cutting funding to low priority and poorly provided courses. We will invest in the courses that employers judge are in line with their needs and requirements.

Finally, we have decided to simplify the organizational clutter of public bodies delivering skills policy. We welcome the recommendation of the UK Commission for Employment and Skills to reduce the number of separate publicly funded agencies by over 30 and will work with them and others to make this happen. Our new model will make the Regional Development Agencies responsible for leading the regional skills strategy in each area, working in partnership with local authorities and others.

Conclusion

My Lords, this skills strategy shares its fundamental challenge with our recent Higher Education Framework. They must equip our people to prosper in a globalised knowledge economy. They must contribute to our return to sustained and sustainable growth.

The goal of this strategy is a skills system defined not simply by targets based on achieved qualifications, but by ‘real world’ outcomes. Relevant, quality skills, with real market value.

It will be driven by the realities of a changing global economy – by demand from the British businesses and individuals who have to prosper in that economy. The clearer that demand is, the better the system will work.

Our expectations of business will rise. We will strengthen the role of employer-led Sector Skills Councils and business-led Regional Development Agencies in shaping an excellent supply of courses and training, designed in direct response to local and national employer needs.

But we will also expect businesses to make a greater contribution to the funding of skills training for their workforce. We need a culture in which all employers take the view that the skills of their staff are one of the best investments they can make.

Our ambition is that, thanks in large part to the innovations in this strategy, three-quarters of people should participate in higher education or complete an advanced apprenticeship or equivalent technician-level course by the age of 30.

This strategy empowers the further education system above all to compete to meet the needs of businesses and learners. That will put further education where it belongs, right at the heart of the knowledge economy, at the heart of our recovery and our future prosperity.

Download Skills for Growth – The National Skills Strategy
Read the full press release

Skills for Growth – The National Skills Strategy sets out a pathway to achieving a bold new ambition for three quarters of the population to go to university or get an advanced technical qualification by the age of 30. The Government will:

• Create a modern class of technicians, through a dramatic expansion of advanced apprenticeships, creating 35,000 new places over the next two years;
• Give every adult a personal skills account, empowering learners to shop around for training with new information on how well different courses and colleges can meet their needs;
• Radically simplify the way in which skills policy is delivered – working with the UK Commission for Employment and Skills to reduce the number of public bodies by more than 30.

Lord Mandelson said:

“Higher level skills have never been more important to our growth. This strategy marks a radical shift in our skills priorities. It shows how we’ll make sure we’ve got the skills to power the new industries and jobs of the future.

“We need engineers to lay the cables to expand access to high-speed internet, skilled people to build the electric vehicles of the future, and technicians to develop the medicines that will save lives.

“The goal of this strategy is a skills system defined not simply by targets based on achieved qualifications, but by ‘real world’ outcomes. Relevant, quality skills, with real market value.”

In addition, the Government will:

• Work with business to focus funding on the areas of the economy that can do most to drive growth and jobs, deploying around £100m to support around 160,000 training places in areas such as life sciences, digital media and technology, advanced manufacturing, engineering, construction and low carbon energy;
• Offering 1,000 new scholarships worth £1,000 each, to encourage the best apprentices to progress into higher education; and
• Give more employers the chance to drive and shape training provision through launching a fifth competitive bidding round of the National Skills Academies programme.

Lord Mandelson spoke about Europe’s role in the world; how we need to get our economic, political and institutional act together, whilst outlining some new ideas on how the work of the European Commission could be reorganised, particularly in the wake of the economic crisis.

Hear the speech:

Lord Mandelson said:

“We are approaching a decisive break with the economic past – a totally reordered global economy. The idea that this doesn’t require serious new thinking in Europe is just not credible – it must be based based on new strengths and capabilities to enable us to compete in a much tougher global economy.

“We will either step into a meaningful role in a multipolar world, or make do with a walk-on role. Will we drive the agenda, or become a subsidiary of a process driven and shaped elsewhere, above all by the G2, meaning the US and China. We need policies and structures for this changed world.  So it is time that Europe got real.”

Lord Mandelson offered a wide range of suggestions for refocusing EU policy around innovation and investment in growth, including:

• Refocusing the EU’s structural and research funds to support innovation.
• Potentially amending EU State Aid rules to boost growth in high-tech industries including low-carbon.
• Driving forward the benefits of a single market, especially by making open trade in services a reality.
• Rethinking some of the organisation of the European  Commission to reflect the importance of innovation, the digital economy and climate change.

• Full text of Lord Mandelson’s speech
• Press release: A different Europe for a new economic era
• View images of Lord Mandelson’s speech in our Flickr set

In this speech Lord Mandelson argues that in the face of the challenges of globalisation, decarbonisation and economic recovery, Europe has a “leadership deficit” that needs to be filled. He argues for reform of the EU budget to refocus it on low carbon and innovation and sets out some new ideas for the reshaping of the European Commission to reflect a new growth agenda (“more like a government investing intelligently in Europe’s capacity and less like a grant office”). He also argues that although the EU’s State Aid rules must revert to their tougher pre-credit crunch standards in 2010, there is a strong case for adapting the rules to facilitate certain kinds of public-private investment in venture and growth capital funds for innovative high-tech companies. He also makes the case for similar vehicles at the EU level.

Access audio, video and images of this speech.

Speech by: Lord Mandelson

Brussels

Obviously at the start of new Commission there’s always a crowded market for advice. So I offer this analysis advisedly. But I do feel that perhaps more than any time in its previous history the EU faces a ‘what kind of Europe do we want?’ moment.

That choice is of course hundreds of individual choices about economic and foreign policy. But they boil down to a future picture for Europe’s weight in the world anchored in two things: the growth and strength of its single market; and second, the coherence with which it projects its policies externally.

We are approaching a decisive break with the economic past – a totally re-ordered global economy. And the idea that this doesn’t require serious new thinking in Europe is just not credible.

We will either step into a meaningful economic and political role in a multipolar world; or we will have merely walk on role, forced to follow other’s lead. In other words will we drive the agenda, or become a subsidiary of a process driven and shaped elsewhere, but above all by the G2, meaning the US and China?

Europe needs an effective role, based on growing economic strength. So we have to equip ourselves with policies and structures for this changed world. It is, therefore, time for Europe to face some facts.

The fact of new emerging powers and economic forces in the world and the implications for our absolute capacity to shape global outcomes in a way that reflects European interests and values. In this world, Europe is the essential force multiplier for every one of its member states.

The fact that one of Europe’s key deficits is leadership. Lisbon is very valuable and certainly gives us a new institutional toolkit. But it is personalities and policies that will make the difference. The point I will keep coming back to today is that we have a problem of leadership in Europe and political willingness to drive change. This does not boil down to a single individual and his ideas, however relevant. It is about an entire attitude of mind.

It has become a truism to say that the only way that even the largest European member states will address the biggest challenges they face, including, of course, climate change and energy security, is through collective action. The same applies to our relationships with Russia, China and the US. It is a truism, because it is self-evidently true.

But we also face a daunting internal economic agenda, which cannot be separated from these problems of external influence projection. We are a community of values – democracy, multilateralism, pluralism, openness, sustainability, equity – and the promotion of these values abroad should always be one of the EU’s core goals. But we are also a market and an economy, and whether we like it or not, our external political influence will inevitably be tied to our economic strength.

That strength matters for its own sake – it determines the number of quality jobs and personal security and sustainable growth that ultimately underwrite everything else we want to achieve as a European society. European people, it seems to me, will judge Europe above all on its ability to deliver a low carbon, high growth, high employment, banking-crisis-free future.

These are the critical problems for the way we invest in and shape the future of the single market. But on the whole they are simply not resolvable by passing more powers to the centre. That is just not politically possible, nor necessarily desirable, given national obligations to national taxpayers.

This basic balance between the need for stability and strength for the European whole, and the need for greater accountability in the national parts, is what we have aimed for in financial markets reform and banking supervision.

This is a problem we are going to face repeatedly, and a balance we are going to have to strike again and again. We need to encourage investment in low carbon growth and high technology, and we need to do this in a way that optimizes resources across the single market – but who should, or could, decide where public money is invested?

We have industries, like the car sector, that have excess capacity, that almost all analysts recognise need to be rationalized on a European scale, but no politically agreed way of even discussing this collectively.

So the policies that address these and other problems will need a new European leadership and a whole new magnitude of political cooperation. We will have to choose the Europe we want. The right choice in my view will be the difficult choice, because it will involve painful change. An agent of change

Whether we like it or not, this recession and its preceding financial crisis will be an agent of change in Europe. It will test more than ever what is viable economically and what is not.

But Europe also faces two big waves of even more disruptive change. The transition to low carbon, which will make many current business models untenable. And the continued push to raise productivity and move Europe’s economy right to the top of global value chains in response to globalization, which will mean replacing a lot of low skilled employment with higher skilled employment. On the way we will have to create millions, probably tens of millions, of new jobs.

All of which means we will have to be deeply innovative, in every sense. The problem is that although the EU itself is an incredible historical innovation, the EU as a group of institutions does not drive with innovation in the way we need. The EU is a tapdancer with 27 feet. Our challenge is getting that strange animal to dance. Where we have it right

First we need to recognise where Europe has essentially got it right, at least in the direction of travel. Where we have got it right is in the fundamental openness of the single market, which has held up pretty well through the banking crisis and the downturn. The existence of the euro has increased the overall stability of the system and removed the risk of competitive devaluations.

We have got it right in our commitment to open competition as the basic dynamic for improving productivity. Our commitment to labour and product market reform, our commitment to better regulation. There have been plenty of people who have argued that the banking crisis has put these things in question, but they are wrong.

And as you’d expect from a former Trade Commissioner, I think that our open trade policy is central to that – and I hope that both Doha and our FTA agenda will remain high up the agenda of the next Commission.

We haven’t delivered as well as we might have on those commitments over the last decade, but they must remain central to our conception of European prosperity.

And they need to be pushed forward. In particular I think that the next big step for the single market is making a reality of open trade in services, especially professional services, and I think the next Commission’s work should be targeted in this area. I also think we are long overdue for a Community patent, and I think, in particular, we need a fast track patent for green technologies.

These are the kinds of ideas I hope Mario Monti focuses on in his work in helping President Barroso define his 2020 agenda. That agenda should be radical. Spending money better

But this Commission also needs to recognise that we need to challenge some important parts of the European status quo. I’m thinking in particular of some of our attitudes to what government can do to equip the EU economy for growth and innovation, and how European rules and policies could reflect that. This statement is often interpreted in Europe as a signal for a return to dirigisme. It isn’t and shouldn’t be.

What we need is an entirely different kind of activist government that, rather than trying to direct industry or counter the basic logic of comparative advantage or commercial viability as we too often have in the past, invests heavily in the things from which that viability and comparative advantage emerges: education, adult skills, a flexible labour market, infrastructure, our science and research base and the effectiveness of our capital markets.

The challenge for the EU is to make these investments in its future in a way that is coherent and self-reinforcing across the single market – even though 99% of those investments will be made by Member States.

But we also need to think more strategically about the way the EU itself spends money – think more like a government investing intelligently in Europe’s capacity and less like a grant office. Our first big problem in my view is that we simply do not put innovation at the heart of the EU budget. I have heard so many people say that the EU budget is “only” 1% of EU GDP, as if this was an excuse for spending it badly.

That one percent, targeted well, could make a huge difference. It is unacceptable that we only spend 5% on low-carbon initiatives when this is an area where network and infrastructure problems such as electric car charging and smart grids suggest real added value for the EU’s pan-European perspective.

All three core areas of the EU budget should be framed as innovation policies. The Research Framework Programme should do more to connect innovative businesses and the European research base, in the way that, say, the Fraunhofer institutes do in Germany.

Instead of spending only 25% of the structural funds on research and development and innovation we should spend considerably more. That means combining the aim of regional convergence with low carbon targets, upgrading skills and building businesses.

I’d like to see the European Investment Bank get more involved in many of these areas. This would require the EIB to increase its risk appetite, although not by too much. But it would have the benefit of making sure investment reflected market priorities. Rules that encourage investment

Our second big problem will be investment more widely – and here I believe an important role for governments demands a change in EU rules. The Commission’s Spring forecast projected a 2.5% increase in the EU household savings rate over the next couple of years. If that shifts the EU away from growth driven excessively by consumer debt then it’s a good thing – and I’m the first to say that the UK has a particular problem here.

But it means that growth and job creation will have to be financed by new investment. And the contraction of bank lending and a general climate of risk aversion will pull that trend in the wrong direction. The Commission projects a worring10% drop in investment across the EU this year. What we can’t afford is to trade an acute credit crunch for a chronic one.

So we need to think about the way EU rules affect the flow of capital to innovation and we have to be aware of unintended consequences. Nobody can credibly argue that the EU doesn’t need greater regulation of it financial markets, and greater EU coordination. The UK has broken with the habits of a lifetime on this and has even gone further in some respects on harmonization of EU and global rules than De Larosiere himself.

But we need to look very systematically at the way we structure and impose new capital requirements – which are necessary, let me be very clear – so that they don’t close off available credit.

And while I understand the Commission’s objective of better oversight of Hedge Funds through the Alternative Investments Directive and welcome the continuing progress and negotiations under the Swedish Presidency. But any measures must be proportionate and fully consulted upon. We must be vigilant against burdening industry with excessive costs, and resist any moves that place restrictions on investor choice, leaving the EU open to accusations of protectionism. The EU must remain an attractive destination for venture capital.

However our biggest challenges in my view are adapting European rules to a structural problem in European capital markets for growth and risk capital. Even before the credit crunch we just weren’t getting enough venture capital to innovative and high tech companies. Even in this environment, US firms could tap venture capital markets for investments worth over $5billion a quarter. In the EU it was about a fifth of that.

I believe that we need new public sources of growth capital, chiefly as a way of seeding much larger public-private funds, managed by professionals just like any other venture capital operation. The UK has created an Innovation Investment Fund that will work this way – using £150million of public investment with the aim of creating a fund worth up to £1 billion. Germany has its KfW.

The new Commission should explore the same sort of thing at EU level to pool capital and risk across the EU and back high tech firms. We should ask ourselves – can we make better use of the European Investment Fund? Could it administer a much larger pool of venture capital to invest in technology funds? Or a fund of funds? What do we need to do to match the US’s pool of capital? Think about it this way: the public investment component of a fund comparable to the US market is unlikely to be more than what is spent every couple of days on the budget of the CAP.

This area of growth finance for innovation is the one big caveat to the argument that there must be a hardheaded end to the crisis flexibilities in EU State Aid rules when the temporary framework ends in 2010.

I have the greatest admiration and respect for Neelie Kroes in sticking her neck out and defending fair competition, even in tricky cases of cars and banks. She is right in principle and in practice. But new guidelines for risk capital are needed, including bigger deal sizes for near-market funds to support expensive technology-based investments. Political roadblocks to sustainable growth

Finally, we need to recognise that if we want the single market to operate effectively and to maximize our economic potential then we will have to find politically acceptable ways of tackling some big resource allocation problems. Both for existing industries, and for the industries of the future.

I don’t think the problems of solving overcapacity in the car industry can be solved by the sort of mechanisms used in the 1980s – production quotas and tariffs. But by invoking the Davignon work recently, Breughel has posed an interesting question about how we can encourage rationalisation

I don’t underestimate for a moment the political challenge in talking about continental restructuring or rationalization, but it is surely preferable to a subsidy war or wasted resources.

This kind of process will be impossible without strong Commission leadership. President Barroso proved his intellect and his authority in his first term. Now he needs to put the accent on his radicalism. The Commission also needs to take the lead in pushing Member States to redefine EU policy around innovation.

I’d go so far as to suggest that this might even mean rethinking the shape or focus of some of the Commission’s policy baronies. Even quite radically. What about a DG Innovation? What about a DG Digital Economy? And if the Commission is creating a Climate Change Directorate General what about having two Commissioners – one dealing with international climate action and the other one dealing with the transition to a low carbon economy in Europe – both more than full time jobs!

At the very least, the Commission’s ability to apply cross cutting policy on these themes needs to be tightened up – and I say that as a respectful former insider with a very high opinion of the Commission and its staff. Conclusion

I’ve made three big points today, all tied to how we redefine the EU’s core spending and policy around innovation. The basic thrust of the open single market and its rules is right and needs to be protected and pushed forward. But I see three big challenges.

First, the EU’s budget priorities are misaligned, and that needs to change. We need to start seeing that “just 1%” of EU GDP as a critical 1% of added value for the EU and the cutting edge of our investment in European innovation, especially in the skills that help people get good jobs and in low carbon job creation.

Second, EU rules risk suppressing investment in innovation. Again, change is needed. Our rules need to encourage private capital to invest and innovate, and state aid rules need to provide the right kind of space for governments to encourage and facilitate such investment. That’s a departure, but it is necessary.

Finally, we need to confront head-on the problem of the tension between what is necessary and prudent economically in the EU and what is politically possible. That means we need an innovative new European politics capable of building coalitions for very difficult European economic reform and compromise. This is the heart of the economic compact for jobs and growth that Gordon Brown proposed last week.

That means building a shared sense of our collective economic future. A clear sense that environmentally, economically, demographically, vis-à-vis China and India and America we are all basically in the same boat. This is a Europe in which leadership will be at an absolute premium. If we shy away from that, the costs will run far into our collective future.

The development of the T.27 – the brain child of Gordon Murray Design and Zytek Automotive Technology – has been made possible through a £4.5m investment from the TSB. With a total cost of £9m, a new research and development project will allow the consortium to develop four prototypes of the vehicle by February 2011.

Science and Innovation Minister Lord Drayson, who today test drove the T.25 – the existing petrol version of the car – said:

“The T27 is a great example of smart engineering and sustainable design. It’s timely too, as the UK must demonstrate its readiness to exploit the emerging low-carbon vehicles market. The challenge is far greater than simply meeting stricter EU emissions targets. We need to expand our car industry through green innovation.”

The T.27 is a sustainable vehicle, which means it will be designed in a way that minimises the use of materials and keeps the vehicle’s embedded carbon as low as possible. The aim is to ensure that the environmental impact of the materials and energy used are as low as can be. The iStream® production process is also highly-efficient and flexible, thereby helping to reduce costs.

Gordon Murray, Chief Executive and Technical Director of Gordon Murray Design said:

“The iStream® manufacturing process behind the T.25 and T.27 is all about sustainable, low energy process by design. The T.27 programme is a great opportunity for us and our partners to create what will be the world’s most efficient electric vehicle.”

The aim of the 16 month project is to develop prototypes that will put the consortium in the position where they can further explore the possibility of scaling up and building a manufacturing facility, with the ultimate goal of making this affordable, fun and environmentally-friendly car widely available on the open market.

Press notice
Read the full press notice here.

Images
View the BIS Flickr album here.

Links
The Technology Strategy Board is an executive non-departmental public body (NDPB), established by the Government in 2007 and sponsored by the Department for Business, Innovation and Skills (BIS).

Gordon Murray Design Limited is a new British company operating from Shalford in Surrey.  The new company aims to be the world leader in automotive design  by having a complete in-house capability for design, prototyping and development.

Zytek AutomotiveTechnology is a British engineering company with expertise in the design, development and manufacture of hybrid and electric drivetrains.

500 businesses from across the UK heard that, with less than 1000 days to go to the London 2012 Olympic and Paralympic Games, there are still approximately £1.7 billion worth of contracts to be awarded.

Peter Mandelson, Business Secretary, said:

“Today’s event showcases the £1.7 billion still on offer for businesses in the London 2012 Olympic project, and the springboard it provides to win business in other sporting events worldwide. ”

Tessa Jowell, Olympics Minister, said:

“Today shows that there are still plenty of opportunities for British businesses to benefit from the Olympics. In these tough economic times London 2012 is helping to keep order books busy. The skill and ingenuity of the whole country is helping deliver the Games, which are on time and on budget.

London 2012 Chairman Sebastian Coe said:

“LOCOG, the Organising Committee, now moves from planning to delivery and as we seek to procure the goods and services we need to stage a successful Games, we will be contracting around £700m worth of work.  From 900,000 pieces of sporting equipment to 17,000 or so beds for the Olympic Village, opportunities exist for companies of all sizes to be part of London 2012.”

Companies attending will also be encouraged to use the experience of London 2012 to target contracts on offer from other host nations including

• Canada, hosts of the Vancouver 2010 Winter Games

• South Africa, FIFA 2010 World Cup

• Russia, Sochi 2014 Winter Games

• Brazil, FIFA World Cup 2014

• Rio 2016 Olympic Games

Press notice
Read the full press notice here.

Images
To download hi resolution images of today’s summit, visit the BIS Flickr photo album here.

Links

For more information about the government support on offer for businesses interested in taking advantage of the opportunities of the 2012 Games, see www.competefor.com or www.businesslink.gov.uk

UKTI offers expertise and contacts through its extensive network of specialists in the UK, and in British embassies and other diplomatic offices around the world.

The Department for Culture, Media and Sport (DCMS) is the host department of the London 2012 Olympic and Paralympic Games.

The London Organising Committee of the Olympic Games and Paralympic Games (LOCOG) is responsible for preparing and staging the Games in 2012

The Olympic Delivery Authority (ODA) is the public body responsible for developing and building the new venues and infrastructure for the Games and their use after 2012.

Download ‘Higher Ambitions’

Lord Mandelson’s vision to sustain university success in more challenging and competitive times sets out the Government’s approach on the major issues facing universities, including the need to make greater contributions to the economy, widening access and strengthening our research capacity.

The higher education framework, Higher Ambitions, sets out a strategy for universities to remain world class, providing the nation with the high level skills needed to remain competitive, while continuing to attract the brightest students and researchers.

Key measures set out in the framework include:

• More competition between universities, giving greater priority to programmes that meet the need for high level skills;
• Business to be more engaged in the funding and design of programmes, sponsorship of students, and work placements;
• Creating more part-time, work-based and foundation degrees to make it easier for adults to go to university, with routes from apprenticeships through to Foundation Degrees and other vocational programmes;
• Encouraging universities to consider contextual data in admissions, as one way of ensuring that higher education is available to all young people who have the ability to benefit;
• Universities setting out clearly what students can expect in terms of the nature and quality of courses offered;
• Sustaining our world class research base by continuing to focus on excellence, concentrating research funding where needed to secure critical mass and impact; and
• Encouraging collaboration between universities on world class research, especially in high cost science.

In the House of Lords Lord Mandelson said:

“Able people and bright ideas are the foundation stones of a thriving knowledge economy and in the next ten years we will want more, not fewer people in higher education, and more not less quality research.

“We have made great progress in the number of young people going to university at 18 or 19 to do a three year degree. But the challenge for the next decade is to offer a wider range of new study opportunities – part-time, work-based, foundation degrees and studying whilst at home – to a greater range of people.

“All students must continue to enter higher education on their merit. But I believe this means taking account of a student’s academic attainment, their aptitude and their potential. Many universities are already developing their use of contextual data in admissions and we hope that all universities will look at their examples and consider incorporating such data in their admissions processes.

“The Government also want universities to make an even bigger contribution to Britain’s economic recovery and future growth.

“We have therefore decided to give greater priority to programmes that meet the need for high level skills, especially in key areas such as science, technology, engineering and maths. There will be a greater element of competition between universities for new contestable funding as an incentive to fulfil this priority. With employers and universities, we will identify where the supply of graduates is not meeting demand for key skills. And we will seek to re-balance this, by asking HEFCE to prioritise the courses and subjects which match these skills needs.

“We will look to business to be more active partners with our universities. We want employers to be fully engaged in the funding and design of university programmes, the sponsorship of students, and offering work placements.

“In the decade ahead we will expect more from our universities than ever before. They will need to use their resources more effectively, reach out to a wider range of potential students and devise new sources of income, at the same time as they maintain teaching and research excellence.”

The Department for Business, Innovation and Skills also announced that Sir Martin Harris, the Director for Fair Access, will consult with Vice Chancellors and provide the Government with a report on what further action could be taken to widen access to highly selective universities for those from under privileged backgrounds.

Lord Mandelson added:

“Wider and fairer access to university is a question of basic social justice and it is right that able students with the talent and ability to attend highly selective university are given a fair chance to do so, regardless of where they live or the school they attend.”

Download ‘Higher Ambitions’

Your Excellency President Patil, your Royal Highness and distinguished guests, it’s an honour to be here with you today.

I must also thank the UK-India Business Council, for organising this event and their continued work with UKTI to build ties between our two countries.

When I arrived in Brussels as Trade Commisioner, I was struck by a sense that Europe didn’t quite get the pace of Indian change and the implications for the global economy.

And I still think one of my biggest achievements as Trade Commissioner was launching an EU-India FTA as one of the EU’s key trade policy priorities in 2007. I was an early advocate in the European Commission of upgrading our strategic partnership with India. I hope it doesn’t sound too self-satisfied to say that I think I got the point about India early on and I’ve been making that point in Europe ever since.

If anything that pace of change is going to accelerate. New technologies, changing demographics and the world’s shift to low carbon are set to transform global markets in the future. As India’s manufacturing sector expands, its global footprint will get bigger and bigger. How we chart a route to sustainable growth in this changing world is the big challenge for both India and Britain.

And for all our obvious differences, I think there are some important similarities in how our two countries achieve that growth, how we rebuild global demand – a shared outlook which makes our relationship a valuable strength to develop, in the years ahead.

Rebuilding Global Demand

Our Governments have invested a huge amount in public stimulus packages over the last year or so, because the key for recovery is rebuilding private demand. That’s why the WTO Doha Round still matters more than ever – it is in effect another very major stimulus package for our economies.

The G20 Trade Ministerial in New Delhi last month took us a significant step forward – and I welcome the Indian Commerce Minister, Anand Sharma’s focus, he’s right to do that. We need to deliver on the commitments made there, and reinforced in Pittsburgh by the G20, to complete a deal by 2010.

Closer to home, an ambitious EU-India Free Trade Agreement would have similar benefits. So I hope the EU-India Summit next month helps us make progress there too.

Driving Enterprise and Innovation

India’s recent election result gave its Government a mandate for ambitious economic reform. This is indispensible to India’s future growth and prosperity.

In the UK, we believe that greater market access in India, in sectors such as financial and legal services, defence and retail could bring benefits to both our countries.

And we’re working with the Indian Government through the Joint Economic Trade Committee, and with UK and Indian business to help drive progress in these areas.

Generating High-value Growth

Of course, many British companies are already well-known and respected in Indian markets – and I want to stress the depth and breadth of our expertise.

Over the last 30 years, Britain has transformed its own manufacturing base. Building on our strengths in design, innovation and technologies, to secure a global lead in value-added, R&D intensive manufacturing sectors such as aerospace, industrial bio-tech and composite materials.

And we can help India as it seeks to refocus its own manufacturing base further up the global supply chain.

In particular, we’re committed to establishing the UK, as a leading partner in the development and delivery of low carbon solutions.

Building for Tomorrow

It is about building for tomorrow. For example, on his visit to the UK last month, Minister Nath talked of India’s plans to build hundreds of thousands of kilometres of new railway lines, highways and rural roads, as well as modernise around 39 of its airports.

That’s a huge undertaking. And leading UK businesses have extensive experience in managing these types of big infrastructure projects.

Opportunities for Growth

It’s also important, that any UK company looking to succeed in India recognises the opportunities across India, including in its Tier 2 cities. And both the UKIBC and UKTI are helping potential UK investors learn more about these opportunities.

In turn, Britain’s own cities and regions can provide India’s global entrepreneurs with one of the best environments in the world in which to grow their business.

Conclusion

Let me say this in conclusion. With bilateral trade between us still growing – reaching £12.6 billion in 2008 – despite the difficult global trading conditions, the UK-India relationship is one of the biggest strengths we have to meet our countries’ ambitions for the future.

Now is the time, for us to build on that advantage that we have, by working together. Doing what we can to stimulate global demand and develop together those partnerships and capabilities, that will help drive prosperity and opportunity for our people in the decades to come.

Since the Manufacturing Strategy was published in 2008, Government has set out a new activist approach to supporting the economy. The transition to low carbon and a move to high tech high value-added manufacturing give the industry new opportunities to build on its strong base. The Government is investing in MTC and similar facilities to help UK manufacturing realise those opportunities.

In a speech today to industry leaders from across manufacturing, Business Minister Pat McFadden set out the need for an investment in skills as well as new technologies. For the sector to continue to grow and succeed it needs to have people with the right skills in the right place at the right time, he said.

The Minister will also formally launch Manufacturing Insight, a new industry backed body charged with improving the public perception of the sector and highlighting the diverse range of careers available.

Business Minister Pat McFadden said:

“Britain has a great manufacturing future, not just a great manufacturing past. We are the sixth largest manufacturing economy globally. But the face of manufacturing here is changing and we need to embrace and support the numerous opportunities created as a result.”

“That’s why we’re investing in centres like Ansty Park to help business and universities collaborate and commercialise new and innovative products and processes.”

The new centre at Ansty Park in the Midlands will form part of a national network of manufacturing centres offering support for business and universities. The network will support innovation in manufacturing, helping new and emerging products and processes get to market. The £40 million investment comes from Advantage West Midlands and East Midlands Development agency.

Up to twenty projects have already been identified to use the new centre at Ansty Park and it is hoped that up to 150 highly skilled jobs will be created. Over the next ten years a total of £130 million will be invested in the centre and constitutes the largest investment in a manufacturing research facility for many years.

Images

High resolution images are available for download and reuse from the BIS Flickr photo album here.

Press notice
Read the full BIS press notice here.

Manufacturing Strategy
View the original Manufacturing Strategy document here.

Speech by: Pat McFadden MP
Venue: NESTA

Introduction

It’s a real pleasure to be here at NESTA today. This is an appropriate place to host such an event because this is an institution dedicated to innovation and dedicated to backing creativity, backing enterprise and backing the ingenuity that characterizes so much of our country.

And thank you all for coming to this event that marks one year on from the Manufacturing Strategy. This is a chance to stop, pause and reflect but also a chance to look forward.

Manufacturing matters

So one year on. The sixth biggest manufacturing economy in the world.  Fifty per cent of our exports.  Seventy-five per cent of our business R and D and yet still, those of us who are passionate about this agenda, have to battle the notion that somehow we are a post industrial nation. It is not true.

But the recession, of course, has been a tough time for our manufacturers and I think it has given us an insight into why some people think like that.

Because when a firm goes to the wall, when a manufacturing plant closes, when sometimes a household name associated with a particular area is lost, we feel that we’ve really lost something important. We mourn its passing and then quickly assume that manufacturing is something we can’t do anymore.  

But, of course, that’s not true. Because although we have lost some names over the years we still have world class manufacturing companies in the UK – some of them associated with the announcements we’re making today – Rolls Royce, BAE Systems, Airbus, Jaguar Land Rover and many, many others.

At the other end of the scale I spent a lot of time in my Black Country constituency visiting small and medium enterprises. And everywhere I go, whether they’re engaged in the nuclear sector, whether they’re engaged in metallurgy, whatever area they are engaged in I see their pride, their passion and their commitment. I also see their urge to work with us to make the transition to a lower carbon economy.

And having a competitive manufacturing base really matters. Not only because it’s a vital part of a modern economy, but also because it is integrally linked to the help of our services sector too. These lines are not black and white, they are often blurred. And the best of our manufacturing companies are also serving huge service businesses and contributing hugely to our export in services as well as in manufacturing.

And that’s why we’ve worked so hard to support manufacturing over the last year both through the recession with some of the real help schemes we’ve got – and I’m thinking particularly of the scrappage scheme for the automotive industry – but also in terms of the future.

A second industrial revolution

And I want to say a word or two about this transition to low carbon. The way that we do many, many things in the future will fundamentally change.  We are actually standing on the threshold of a second industrial revolution. If you think about the first industrial revolution, so much of what drove it was about power – about coal, oil, gas.  Now as we shift to low carbon the way that we heat our homes, the way that we produce our goods, the way that we travel from A to B- all that is having to undergo fundamental change.
It’s not only a response to an environmental challenge. It’s also an enormous industrial opportunity. And as countries we have a choice. We could buy the technology from somewhere else, opt out of inventing it and making it, or we can take part in this. We can try to shape it and, at the same time, try to skill and equip our people to do the jobs of the future. I know which road I’d like to take.

And that’s why we issue no apologies as a Government for being more industrially active in the past year or two than in the past was the fashion. Because we want to shape this future.

Now the sums involved are enormous.  There are estimates that, as a sector, low carbon industries could be worth £3 trillion every year worldwide and employ more than 25 million people across the world in green collar jobs.  The only way that we will succeed in that world is, I believe, by actively trying to shape it. That’s why our manufacturing strategy is so important.

A plan for action

So we’ve tried to take an active role in shaping the future – one that we set out in our document New Industry, New Jobs.

And, at the heart of this approach, was a realisation that we had to look at where our national capabilities could be and decide on the best way to develop and enhance those capabilities in the future.

So we’re backing the best of British capability in wind, wave, low-carbon. And we’re also trying to upskill our people to do these jobs.

Government action over the past 12 months

What’s the scorecard 12 months on? What can we look back on?

Well, we launched the Low Carbon industrial strategy in July together with our colleagues in the Department of Energy and Climate Change. That’s about developing British capability. Whether it’s in wave power in the south west or whether it’s in low carbon demonstrator vehicles where, for example, a number of automotive manufacturers, including the BMW minis, are using  conventional vehicles powered by new technologies to  test how these vehicles operate in the everyday world. Some of the leading low carbon demonstrator projects in the world are happening here in the UK.

And our interest in this is also bearing fruit in other ways.  Britain has been chosen by Toyota to be the home of the first Toyota hybrid vehicle to be produced in Europe. And we’ve a site chosen by Nissan to be the main European battery plant for their new generation vehicles.

So already on the basis of the successful automotive sector we have in the UK, we have companies choosing this country to be the home of next generation technology.

And when it comes to helping UK businesses this is what we want to do. We’ve put our money where our mouth is. We established a strategic investment fund of some £750 million to support our industrial activism agenda. Part of that, for example, is about UK businesses work abroad through UKti in areas like Advanced Engineering, Energy, and Life Sciences. For example, we’re helping 600 companies exploit new supply chain opportunities in India and China.

Launch of Manufacturing Insight

But one of the two main announcements that I want to draw your attention to is the formation of Manufacturing Insight. I told you that I go round my constituency visiting family owned businesses that have been built up over the years. And they tell me that what frustrates them is that “we’ve got good jobs here, we’ve got well paid jobs here but sometimes smart people have got the wrong image of manufacturing – and they don’t want to work here”. They want to qualify and get excellent degrees in STEM subjects and then go off and do something else.

So we’ve given Manufacturing Insight a difficult but very important job and that is to try to review and revive the image of manufacturing. It’s not something they can do alone. They’ve got the Government backing and we’re working together with the RDAs and the Engineering Employers Federation on this. It’s a critically important task.  To say to young people that manufacturing isn’t something from the past. This is something for the future. And, when we look at the great names of our industrial past, we have to ask the question – who is going to be the Brunel of the low carbon economy? Who are going to be the great industrial pioneers of this second industrial revolution?

This is what we’ve got to inspire people with. So I wish the very best to Nick Hussey and to all the people working on this. To go out there, to provide an image of manufacturing, to say to young people that this is a career of tomorrow not a career of yesterday. And I’m really proud to be launching this initiative today. 

The new Manufacturing Technology Centre in Ansty

And the second thing that I really want to draw your attention to is what we’re doing – together with the East and West Midlands at Ansty. We have got a gap in a sense in the way that we develop our technology. So we’ve got absolutely fundamental research in the universities. We have increased our science budget, we make no apology for doing that, we have backed our desire for national capability and we’ve funds to do that.

We also have excellent manufacturing companies as I said with near market research capabilities. But in the middle something is missing. And that is the capacity to come together to test in a real, working, environment new products, how they’re made, what will work, what won’t.

And that’s what the Manufacturing Technology Centre at Ansty can do. So we’ve got Advantage West Midlands,  the East Midlands Development Agency, four leading research organisations: the University of Birmingham, University of Nottingham, Loughborough, The Welding Institute; some of our best known companies, as I say,  Rolls Royce, Aero Engine Controls, Airbus, Jaguar Land Rover. And we are putting £40 million of public money into this new purpose-built Manufacturing Technology Centre at Ansty, near Coventry.

It will allow companies and universities to undertake practical collaborative research and give the UK the best chance to test products on an industrial scale – cementing our position as a great, industrial, world class manufacturing nation. It’s a good example of the pro-active role government is taking as well as the excellent role that our RDAs play in supporting our economy.

A country that makes things – examples

So we don’t live in a post industrial society. You only need to look around the country to see some of this. Go to Dagenham and you’ll find Ford’s Diesel Centre –a global centre for diesel engineering design and production. Leading the way in building low CO2 emission engines.

Go to Oxfordshire. You’ll discover a knowledge cluster with facilities dedicated to tracing the effects of climate change and seeing how space based technology can be put to earth based uses. And the European Space Agency chose here to build its new facility.

Go to Sunderland, as I say, and you’ll find the battery plant.

And when the Yamazaki Mazak Corporation – the world’s largest producer of computer-controlled metal cutting machine tools – looked around for a place to situate their latest factory they didn’t choose one of our European competitors they came here to the UK to set up shop in Worcester.

Conclusion

So there is much to be confident about. Much to give us cheer and give us heart. Last year’s Manufacturing Strategy was a key first step to ensure the UK is ready to compete in a global marketplace.

There is a lot that the Government can do by being active. But it’s not something the Government can do alone. All we can do is to create the environment but this will only really work if business and investors take this seriously and we all work together to make sure the transition to low carbon and the second industrial revolution is a success for the UK.

That’s what I want us to think about today. That’s really why I believe that this is important. We want to make innovation flourish. That is what we’re here and dedicated for today. There is cause for us to take heart but there’s an immense challenge in front of us. I really do believe that it’s time to get over the idea that Britain is a post industrial, post manufacturing country. We are not. We’re proud to be a country that makes things and let’s make sure that continues.

Thank you.

I’d like to make a couple of basic points today about the creative industries in Britain. First, I want to put down a firm marker on the scale of their contribution to our prosperity in a globalised economy. Second, I want to say something about what we need to do to preserve that strength for the future, especially what we now plan to do to adapt and update our approach to copyright for a very different, interconnected and digital world.

Why the creative industries matter

I’ve been trying to think of the first time that I was really aware of just how seriously Britain’s impact as a creative economy is out of all proportion to its size. I think it was some time in the last decade, probably looking up at Norman Foster’s glass dome for the Reichstag or reflecting on Harry Potter’s decade of global conquest, or maybe it was watching Robbie Williams charm the socks off 15000 Belgians – and at least one Englishman – in Antwerp a few years ago.

Did you know that there is now almost no country on earth where you can’t watch Midsomer Murders? Which means there are a lot of people out there who have a very distorted view of the British homicide rate. Just think of it. We watch The Wire here in Britain. But in West Baltimore they watch Midsomer Murders and say “Sure, it’s pretty, but man it’s dangerous over there!”

The numbers that back up these anecdotal examples – I suspect an underestimate – are genuinely striking. The export earnings of the UK creative industries alone are worth about 16 billion pounds. That’s about 4 per cent of UK exports. They employ almost two million people in our economy.

I’m a big defender of an economy based on making things, which is why I often speak about manufacturing. But in terms of added value in a global economy the difference between making a car or a plane and making a TV show or a video game is largely a meaningless one. Especially when you consider how integral and central to the manufacturing process innovative design is.

The digitalisation of creative industry

But of course the creative industries are undergoing an immense shift, driven above all by the internet and by digital technology. We now have greater unmediated access to cultural goods than ever before, and in formats that make them easier to appropriate and share than ever before. A world where creative content is conceived, published, distributed, advertised and consumed digitally is revolutionary for the users of cultural goods, and revolutionary for the people who produce them.

In some respects it creates huge new opportunities for the creative industries. It means industries have greater ability than ever to reach new customers, to speak to them directly and to tailor creative goods to them, their needs and their tastes.

They are also less geographically bound than they have ever been – the contributors to a creative product, even one produced in hours like a newspaper, no longer even need to be in the same country, let alone the same room. Our most ambitious creative industries are going increasingly to see a world in which English is the preponderant language as their wider market, with the UK as a hinterland and as a launching pad.

This means we are going to have to work even harder to make sure the environment for creative industry here is right. At a very basic level that means making sure we have the digital infrastructure in Britain – which is one of the key questions that the Government’s Digital Britain report addressed.

It’s going to mean making sure that our education system is producing the right skills – both the fundamental intellectual and artistic confidence that is the root of creativity, but also the craft skills that underwrite so much creative endeavour. The technicians and producers and programmers and editors, and even the builders who often literally build the stage on which creative industry takes place.

But the big challenge that the digital economy poses for the creative industries, of course, concerns content producers’ control over their ideas and goods. The creative industries are literally built on the idea that it is legitimate to protect the value of creativity through copyright and intellectual property rights. If they don’t retain that, frankly they don’t have a viable business model left.

The creative sector has faced challenges to protected formats before and it has survived robustly – in spite of some Cassandra-like predictions from inside the industry. Home taping didn’t kill the music industry. Home video didn’t do for movies. But the threat faced today from online infringement, particularly unlawful file-sharing, is of a different scale altogether.

I was shocked to learn that only one of every 20 tracks downloaded in the UK is downloaded legally. One in twenty. You just can’t have sustainable creative industries under the pressure of this kind of theft – and that’s what it is. So I want to be absolutely clear. The British Government’s view is that taking people’s work without due payment is wrong and that, as an economy based on creativity, we cannot sit back and do nothing as this happens.

The trouble is that too many users of digitised cultural goods simply don’t see it that way. When 15 year old intern Matthew Robson reported back to his bosses at Morgan Stanley in the summer on the attitudes of his peers to digital content his key conclusion was pretty much: they want what they want and they don’t really want to pay for it. That was the view of a 15 year old intern at Morgan Stanley. And, of course, on the internet it’s incredibly easy to get just that. The important cultural and ethical sense that it is an issue of right and wrong is eroding before our eyes. This is not just morally unacceptable: it’s also commercially unsustainable for artists, for investors and producers alike.

A new business model

Now, it seems self-evident to me that trying to evolve new business models against these kind of attitudes is very hard, and I take my hat off to those who have tried. Further investment in new business models is important. But the Government also has a responsibility to act. That is why we have decided to intervene and legislate to tackle the problem of file-sharing, and it is why other countries, including France and the United States, are doing the same.

What we will be putting before Parliament is a proportionate measure that will give people ample awareness and opportunity to stop breaking the rules. It will be clear to them that they have been detected, that they are breaking the law and that they risk prosecution. If necessary we have also made it clear that we will go further and make technical measures available, including account suspension. In this case, there will be a proper route of appeal. But it must become clear that the days of consequence-free widespread online infringement are over.

When I reopened this issue back in the summer there was a lot of contentious debate, not surprisingly. But, let me be clear on this point: technical measures will be a last resort and I have no expectation of mass suspensions resulting. If we reach the point of suspension for an individual, they will be informed in advance – having previously received two notifications – and will have the opportunity to appeal. But the threat for persistent individuals is, and has to be, real, or no effective deterrent to breaking the law will be in place.

Neither do we want Internet Service Providers to be unfairly burdened. ISPs and rights holders will share the costs, on the basis of a flat fee that will allow both sides to budget and to plan.

That’s our side of the bargain. The aim here is to give rights holders and others the space to invest in and develop new ways of offering content, in the way that people want it, and at a price that makes sense to buyer and to seller.

But the reality is that the massive demand for easier and cheaper access to books and films and music and other content is not something that we can or should be indifferent to. The market is telling you in no uncertain terms that people want access to copyrighted material on different terms from those the industry currently wants to offer. Every time that demand is ignored, we give free-riders an excuse to keep on taking the stuff through the back door.

I strongly agree that we have to educate people on the value of intellectual property rights. Our new approach will create the launch pad for such an educational campaign. But the only way to re-establish a strong consensus around the fairness and value of copyright is to bring the whole IP regime into the modern world.

A ‘legislate and enforce’ approach to beating piracy can only ever be part of the solution. The best long term solution is there in front of our noses. It’s the market – but it has to be a market in which those who love music and film, for example, can find a deal that makes breaking the law an unnecessary risk. I know how complicated building these networks and services can be, but in that respect, the industry needs to move faster in a much more agile, commercial and market response orientated way to help itself. There are some good, cheap, legal services operating. If I can help by convening discussions or knocking heads together then I want to know.

Andrew Gowers did a fine job of looking at this from a UK perspective in 2006. But we have also recognised the need to approach this from a broader angle, recognising that many of the most important levers for this exist at European and international level.

We announced in Digital Britain that we would be looking at collective licensing and at Orphan Works, and these practical changes will make a real difference, and help make the process of clearing rights less painful without eroding the position of rights holders. However, I am announcing today a Copyright Strategy to take us to the next stage.

In particular, our strategy grasps the nettle of what a fair deal looks like between creators, rights holders, copyright users and citizens. It accepts that there is a case for easier and cheaper access to copyrighted material and that making a reality of this is a key part of the wider bargain of which tougher penalties for illegal file-sharing are but one part. We need to be clear what is and is not allowed. At present, the legal framework – almost universally ignored – disallows all sorts of perfectly sensible private use, like moving songs from computer onto an IPOD. If we are to make clear that rules are to be enforced, then all the rules need to be sensible and they need to be up-to-date.

I think this new approach is particularly relevant in two cases. For pre-commercial use of copyright material – where wider access could help transform it into innovative commercial uses for which the original holder would of course be compensated.

And for non-commercial uses in the home and among friends and families, where there needs to be a whole new approach. Together we are going to have to figure out exactly how we can do this.

No less important, the strategy recognises that we have to do this at the European level and it gives notice that the UK wants to help lead and drive this debate in Europe.

The bottom line for the Government is that the creative industries are and must remain central to a balanced, knowledge economy. They are one of the keys to the recovery now underway and our whole economic future. There is no economy on earth in which the creative industries play such an important part in overall growth and job creation, and that is an immense asset to the UK that we are determined to preserve and strengthen. Anyone who doubts that needs to take a look at the Love and Money exhibition in the Ivory Foyer, here in the Grove, which is a wonderful expo of fifty years of British creative brilliance. Today our collective challenge is to deliver the basis for the next fifty years of creative British endeavour and leadership.

I hope that our approach and the stable, predictable framework being put in place will allow good commercial decisions to be taken for the benefit of everyone including consumers, who we are all here to serve.

Speech by: Lord Davies
Venue: Drapers’ Hall, London

This speech lasts 15 minutes.

Transcript of speech

Lord Mervyn Davies, Draper’s Hall, London

Chairman, my Lords, Aldermen, Ladies and Gentlemen, pray silence for the Minister of Trade, Investment and Business, the Right Honourable Lord Davies of Abersoch.

Lord Davies

Well first of all, I should say thank you for the round of applause but it won’t stop me from starting by telling a couple of stories about bankers. But first of all can I just say thank you, Stuart. He’s one of the most exceptional people I’ve ever met. You can tell who wrote this speech!

I’ve been in Government ten months so jokes about expenses have worn a bit thin. A man needs a heart transplant, and it’s his lucky day as his doctor finds no less than three matches for his blood and tissue type. The first is from a priest, the second from a nurse and the third from a banker. The doctor asks the man which heart he would prefer and, to his surprise, the man chooses the banker. Why did he choose the banker’s heart? He replied, “Because I’m pretty sure it’s never been used.” [Laughter]

About a year ago there was a joke that went, “What do you call a banker who irons five shirts on a Sunday evening?” And if we were here twelve months ago the answer would have been an optimist, but the real problem twelve months on I have with that joke is whoever heard of a banker who irons his own shirts. [Laughter]

Now, just out of interest, because I have a huge now, huge Civil Service army working for me, I Googled, or the team did, ‘banker jokes’. I got over half a million hits. Pretty bad I thought until I checked, Anthony, how many lawyer jokes there are out there. I got over 750,000 hits. So bankers, we’ve still got some way to go.

Then just for fun I tried MP jokes – one and a half million hits. And people wonder why I agreed to be a politician.

Let us look back at the crises of the last 100 years. 1929/39 Great Depression, Latin America, the Asia crisis, the ’73 oil crisis, the ruble crisis in ’97, the dot com bust in ’99, the Enron crisis of 2000, and now 2008. So where does the October crisis rank amongst them? I suppose you have to reflect on the Chinese leader, and lots of people argue about which one it was, but maybe it was Deng Xiaoping who said when asked what he thought of the French Revolution it was too early to tell. Similarly – that was meant to get a laugh. [Laughter]

Similarly, with this crisis it is too early to tell what the full implications are. We are in the middle of an open debate about the future of the banking industry. Not the financial services industry because so many parts of the industry, and we’ve got Peter Levine here, Lord Levene, and you look at Lloyds of London, you look at many aspects of the industry, they’ve done a great job of being unaffected.

But what is clear is that the banking industry will never quite be the same, and nor should it be. Will there be huge changes such as Glass-Steagall? Should the bonus culture be killed? What are the right levels of liquidity and capital and leverage? How do we get banks to get back to what they should be doing, which is supporting small business? What is the future of trade credit insurance in Britain but also across Europe? How do we reduce the fees payable on M&A and other investment banking products which seem to be high by other benchmark industry standards? Is the model in part of investment banking of paying somewhere between 40% and 45% of revenues to all staff, is it sustainable and why is it sustainable?

There are literally hundreds of questions. My personal view is that there are three or four different types of banks. Firstly there are those true investment banks who do very little other than that type of business. Then there are the global banks who operate in over 70 countries, are very multicultural and they’re very different in their nature. Some of them don’t have a home market, some of them do. But thirdly, there are the regional banks who probably operate in between 20 and 70 counties, and finally there are the local banks who are largely dominant in one market and maybe have one or two international offshoots.

Surely a global solution to looking at these banks is the answer. The danger in the UK is that we look for a UK solution and the danger in Europe is that we look introspectively and not for a European solution. [Some applause]. No, it’s fine. As a politician I’ve been ten months, I’m not used to a round of applause, it’ll unnerve me. [Laughter].

What troubles me at the moment is that some people are out there, without mentioning names, unsettling the market with ill-thought through statements and what we have to acknowledge is that London is in competition, the UK is in competition with other financial centres.

London is a capital market of huge significance but it is part of a global marketplace. We need the US/China/India contingent to engage in the industry structure discussion, but we also need a greater voice from the institutional owners of the companies on these issues, and in particular on bonuses. The last twenty years has seen huge scientific progress in life sciences in general and genetics in particular. IT and computing has advanced at an extraordinary pace. But we’ve also seen growth in current account imbalances from the early 2000s compared to the previous decade.

The volume of trade has tripled, powered by imports of cheap Asian goods by credit-fuelled economies in the west. Now this has led to unsustainable savings in the east dependent on excessive debt in the west. Between 2002 and 2008 China saved US$1.4 trillion but the US borrowed US$3.9 trillion. But what also happened is that the world economy became interdependent. Two-thirds of Asia’s exports and commodities find final demand in the west. Most of China’s official reserves are held in US securities. And, as the late James Goldsmith observed, if you owe the bank $100 that’s your problem, but if you owe the bank $1 million that’s the bank’s problem.

But we now at this moment in history, this moment in time, when fundamentally the role of a bank is to support commerce, consumers and businesses, and assist in their economic development by facilitating business and trade. But in the interconnected world we must make sure that we don’t come up with a UK solution. Greed, lack of broad expertise, misunderstanding of risk were all contributing factors and banks have got in many cases out of touch – not all – out of touch with society.

But we should not jump to the conclusion that regulation is the answer or that London is dead. London has maintained its position as the number one financial centre in the world. It is a truly – as Giles said at our table – a truly great city. London and other financial centres in the UK, such as Liverpool, Manchester, Leeds, Glasgow, Edinburgh, etc, have a wonderful future. So much of the industry, as I said earlier, such as insurance, professional business and legal services, have been unaffected. And, as Stuart says, we must make sure that London stays competitive by investing in the infrastructure.

We must debate and sort out the future of banking, but the danger at the moment is that it is leading to pessimism. This is not a time for pessimism, it’s a time for playing to our strengths. There is a real danger of fiddling around whilst Rome is burning. India, China, Brazil, to name three, are on the move. And what I thought I’d do is give you very quickly two examples of why I say that.

Last week I met the Chief Executive of China Mobile, which has just celebrated 500 million mobile users. But I also me the CEO of ICBC, China’s largest bank, but also now the largest bank in the world by market capitalisation. Almost 40% of Indians are younger than 15. India sells more than 10 million handsets every month. Less than 40% of Indian households have a bank account, and only 2% of India’s population has any kind of insurance cover. India will produce somewhere between 800-900,000 engineers this year. Bangalore alone will produce – I was there in India for a week about three weeks ago – Bangalore alone will produce more engineers as a city than the whole of the US in its totality. So there are huge opportunities in these markets, but there are huge threats.

Now, the one observation I have – and I make no apology for saying this everywhere I go – in ten months as a Minister I’ve had the privilege of touring the world going to over 20 countries, but also going around the UK and the regions. We have a wonderful diversity in our economy. It is not all doom and gloom. Over £½ billion of loans have been made to 5,700 firms under the Enterprise Finance Guarantee Scheme. We’re the sixth largest manufacturer, we’re ahead of France. We’re the seventh largest economy. Manufacturing accounts for 50% of exports and we still have six of the top ten Formula 1 teams in the UK.

The UK claims 13% of world turnover in aerospace. The environment industry, which is very much the industry of the future, the turnover is £25 billion, it employs 400,000 people and is projected to be worth £46 billion in 2015. The UK has overtaken Denmark in having the world’s largest installed capacity of offshore wind power. The UK is a world leader in research and development. 9% of scientific papers are produced in the UK. 12% of citation is shared, basically we’re second only to the US. We rank sixth in the world by the World Bank for ease of doing business. The Economist ranks the UK top in having the strongest business environment of all European economies after 2012. There’s been an 11% increase in new foreign direct investment projects in the UK. The UK still is the number one destination in Europe for FDI, and by some distance.

One of Britain’s real success stories over the last few years has been one industry, and that’s the life sciences sector. Life science exports rose 19% last year. Biotechnology, healthcare, pharmaceutical industries in the UK together generate more than £23 billion a year in revenue, and also employ 400,000 people. All of the world’s leading pharmaceutical companies have R&D and/or manufacturing facilities in the UK. I was with the CEO of GE about two or three weeks ago; the UK is regarded by them as their natural centre outside of the States. Five of the world’s top 20 medicines were discovered in the UK, fifteen of the world’s top 75 top selling medicines were discovered and developed in the UK. Although the UK is just 3% of the global pharmaceutical market it attracts 10% of all R&D.

On Friday I was in Oxford. I visited the University but I also visited two fascinating companies: Oxitec, which is a company, a small company which is carrying out work to eradicate dengue fever, a disease that costs over £5 billion to tackle. It affects 500 million people every year. It’s a company that is literally at the cutting edge of its space. I also visited Glide Pharmaceuticals who have developed a technology which can deliver vaccinations without needles.

But let’s move on very quickly to the automotive sector. Despite what you might read in the press – and the press are here, they’re obviously always very optimistic about British industry – the automotive industry still plays a vital role in the UK economy. This diverse, vibrant and world class sector incorporates 5,000 companies and employs 800,000 people. Automotive manufacturing contributes £9.8 billion to the UK economy and accounts for about 11% of the UK’s total exports. But it also attracts significant FDI. There are more than 50 automotive design engineering companies based in the UK who collectively handle an estimated 20% of the global demand for independent vehicle design engineering services. Over 75% of the cars and commercial vehicles produced in the UK are exported, valued at around £24½ billion of product.

So in closing, let’s make sure that the debate about the banking industry does not colour the fact that Britain has excellence in advanced engineering, in mobile telephony, in life sciences, pharmaceuticals, in education, in business and financial services, in the Stock Exchange, in the maritime and creative industries. This is a country that has 4.8 million SMEs, and over 120 companies register with Companies House every hour. Manufacturing attracts more FDI to the UK than to any other country in Europe, and globally the UK is second only to the US.

And finally, let me highlight one fact for you. Life expectancy for men is 77 years and for women it’s 82. The average age of the UK is 39.6 years so I’d like to say ladies, you have obviously a huge number of years ahead of you. Gents – let’s move. [Laughter]

My message to you is basically the debate on financial services is a great one to have. It’s absolutely fundamental. But let’s make sure that that debate and discussion does not lead to talking Britain down and talking about Britain as if we have no economy, no future and that we have no industry, because factually that’s incorrect. Thank you. [Applause].

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Let us know what you think are the big issues in our poll, read and listen to summarised versions of the consultation document and leave your comments in our consultation area.

The report was launched today at Middlesex University by Minister for Students Lord Young, Minister for Higher Education David Lammy and Maeve Sherlock, Chair of the National Student Forum.

For the first time the report is fully interactive, with students and universities invited to get online and be heard by the National Student Forum.

Amongst its recommendations, the group particularly looked at the flexibility of universities in the courses they offer and how students can combine qualifications gained in one institution with those gained in another.

However, it emphasised that this flexibility must not come at the cost of excellence, which is as valuable in teaching as it is in research. Students must be confident in the system they are part of and feel confident that they will receive teaching of the highest quality as they embark on their studies.

Maeve Sherlock, Chair of the National Student Forum, said:

“We want to begin a dialogue with students, HE staff and HE sector bodies. This is why our second report is an interactive publication, inviting feedback from staff and students and asking them to provide their own examples of good practice. This is the best way to find out what is happening on the ground and to maintain high standards. ”

Lord Young, Minister for Students, said:

“We need to work together, Government, universities and students, to identify how we can maintain a system that provides the best possible experience for those who are studying. Teaching and learning are obviously central to this but we also want to make sure that students’ everyday concerns are heard and answered.”

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Speech by: Lord Drayson
Venue: Nikkei BP Climate Change Symposium, Tokyo

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Good afternoon. It’s an honour for me to speak to you today.

Climate change, I believe, is the defining issue of the twenty-first century. It concerns me as the government minister with responsibility for the UK’s low-carbon industrial strategy. It worries me as the father of five young children. But it also excites me as someone who has spent the bulk of his career as a science entrepreneur.

Let me begin with the scientific evidence. As most of you will know, atmospheric concentrations of carbon dioxide are higher than at any time in the last 600,000 years, and they are increasing at their fastest ever rate. Seventeen of the warmest years on record have all occurred in the past two decades. Looking forwards, the mid-range estimate from the Intergovernmental Panel on Climate Change – the IPCC – is for a two- to three-degree rise in average global temperature this century. That’s equivalent to the Earth experiencing more extreme climate change than for at least 10,000 years.

In other modelling work, UK scientists have shown that higher CO2 emissions in the short term will require greater per-annum reductions in future – in order to stabilise the global climate at two degrees over pre-industrial temperatures.

Put another way, we have to keep cumulative emissions below one trillion tons to maintain a livable atmosphere; as humans, we’ve already exhausted more than half of that since the onset of the industrial revolution.

From the statistical to the personal, the gravity of this situation was really brought home to me a few years ago, during a visit to a NASA facility in California. There I saw supercomputer models of the polar ice caps projected onto a massive screen, and watched the caps recede and expand with the seasons. The effect was startling; it looked as if the Earth was literally struggling to breathe.

And yet we’re not going to bring about a radical transformation in human behaviour – and that’s what we need – by issuing a steady stream of dire warnings and forecasts of greatly diminished lifestyles. That simply won’t work – neither in mature economies like the UK and Japan, nor in emerging economies who, quite understandably, have little time for such sermonising.

Guilt rarely serves as a motivating force, and certainly not for long. The same goes for bullying people into change, which will only generate hostility and resistance.

Instead, we have to offer people a practical, accessible, attractive low-carbon future – one which presents them with solutions built on sound science and creative engineering.

Change must feel exciting and straightforward. People need persuading that their quality of life can actually improve, not decline. Low-carbon is going to have to be cool.

I’m absolutely convinced of this. In my spare time, I’m a racing driver and team owner. When I entered that world, it was with the expressed desire to demonstrate how it’s possible to achieve high performance by going green. Drayson Racing, for example, uses a second-generation bio-ethanol fuel that consists of old grains, peelings and wood.

Let me tell you: there’s nothing quite like taking pole position in the first race of the season to dispel the scepticism of your competitors. And when a glamorous and high-profile sport like motor racing shows how green innovation delivers power, speed and efficiency, car manufacturers and the general public take note. It’s about making products that are as good as – if not better than – what’s already on the market.

And for all the challenges that global warming will pose to our planet, it also guarantees huge future markets for low-carbon technologies. It’s vital that business leaders around the world seize upon that certainty. There is no high-carbon alternative.

Climate change is with us. Science- and engineering-based solutions must be found. So companies that invest in this space know that there will be demand for their products and services.

Now, just a few years ago, many UK businesses regarded the climate change agenda as a serious threat. They associated it with higher costs and greater state interference.

Such concerns were not – are not – misplaced. Costs will always be incurred with radical shifts in technology, energy supply and usage. Despite every effort to keep them to a minimum, new forms of regulation are unavoidable when change takes place on this scale.

But the key point is this. The UK sector for low carbon, environmental goods and services is one of the few areas of our economy expected to maintain positive growth rates through this global downturn – with forecasts of more than 4 per cent per annum up to 2014/15.

Recent estimates valued our market at around £106 billion – employing 880,000 people, either directly or through the supply chain. We expect that more than one million people will have jobs in this sector – skilled jobs, with market value per employee well above our national average – by the middle of the next decade.

Low carbon, therefore, is not a threat to economic recovery; it’s the market that’s driving recovery. Not just in the service sector, but in heavy industry and engineering.

We now have a situation where UK business, led by the Confederation for British Industry, has called on government to adopt a more ambitious approach to low carbon – which I’ll come on to in a moment.

Moving away from a UK perspective, it’s well worth recognising that the global market for low-carbon, environmental goods and services was already worth £3 trillion in 2007/08 – and close to half of that was in emerging fields like carbon financing, alternative fuels and building technologies. By 2015, it could grow to an estimated £4.3 trillion.

Our estimates put Japan behind only the US and China in their share of this market – with prospects, like the UK, of four per cent year-on-year growth up to 2015.

At the same time, I’m very aware that your actions over the past three decades have made Japan’s primary energy consumption among the lowest in the world, relative to its GDP. This is the only country, for example, with fuel standards for heavy-duty vehicles. And it’s here that forward procurement standards – agreed with manufacturers – are challenging Japanese firms to improve the energy efficiency of their production methods over time.

Looking forward, and with your expertise in areas like photovoltaics, the opportunities are there to be taken. The next step is to achieve global scale with this technology: building more solar panel farms, generating more energy from smaller panels, bringing this technology to a mass consumer market.

A similar case can be made for wind power. In the UK, we’re leading the shift from onshore to offshore wind and creating the largest market in the world for this renewable. But as the turbines go up, who’s going to provide the reliable machinery to run them? At the moment, it looks like a direct drive approach will supersede gear box technology – presenting another huge opportunity for manufacturers.

Of course, making bold predictions about the size of future markets is the easy part. It’s infinitely harder to realise those opportunities.

The UK Government is absolutely clear that that task cannot be left to the private sector alone. The scale of R&D required, the underlying infrastructure needed, the importance of coordination at both the national and international level, the demand for market certainty, the mission to win over hearts and minds – these are all challenges beyond any industry operating alone.

Clean tech investors over in Silicon Valley made this point to me emphatically just a couple of weeks ago. Emerging fields like carbon capture and storage, for example, carry significant technological risk – with the huge capital needed to eliminate that risk beyond the capacity of existing markets.

Government will have to get involved to produce the solutions fast enough to tackle climate change.

We’re dealing with a scenario where public-private partnerships are the only viable answer. It’s the only way for the UK to build on its status as a pioneer in wave and tidal energy, to be the best place in Europe for advanced manufacturing, especially in low carbon.

So we’re not seeking to increase the role of the state on ideological grounds. We want to target government support where it can really count – by improving the regulatory environment, by using public procurement to send the right market signals, by helping the most innovative small businesses to become high-growth enterprises.

Our policies are focused on refurbishing the UK’s energy infrastructure, making sure that the British workforce has the skills necessary to exploit the low-carbon opportunities that will emerge, and on introducing incentives that encourage consumers to make low-carbon choices.

In that spirit of pragmatism, let me give you an example of how this works in practice. For, although I’ve been a politician for the past five years, I come to these issues with the mindset of a businessman.

You’ll forgive me – given my earlier confession about motor racing – for singling out the automotive industry.

In the UK, we have domestic legislation committing us to reduce overall emissions by 34 per cent by 2020, as against 1990 levels. If, as we hope, a comprehensive global agreement is reached in Copenhagen this December, this commitment may rise to 42 per cent.

Before going further, let me say that I strongly endorse Prime Minister Hatoyama’s pledge to cut Japan’s greenhouse gas emissions by 25 per cent within the same timeframe and against the same baseline.

The “Hatoyama Initiative” – with its emphasis on green innovation and a pledge to provide financing for developing economies – is precisely the sort of brave undertaking we need to meet the G8 target of achieving an 80 per cent emissions reduction by 2050.

Japan’s targets are not only achievable, but will bring tangible social and economic benefits – cementing your position as Asia’s leading nation for technology.

Now, at home, we’ve calculated that our surface transport will have to produce zero carbon by 2050 in a majority of sectors. But we’ve also recognised that phasing out car travel is not an option. Economic growth is fundamentally linked to individual accessibility and mobility.

In the short term, car makers will continue to reduce vehicle weight and drag, improve engine and transmission performance, and push ahead with hybrid technology. That will be enough to meet a series of tighter European restrictions on CO2 per kilometre emissions. But there’s a limit to the efficiency of internal combustion engines, which waste considerable amounts of energy through heat loss via the exhaust and cooling systems. It’s unavoidable whenever we burn fuel.

Electric vehicles – EVs – by contrast don’t burn fuel, and are over 90 per cent efficient in taking stored electrical energy and converting it into useful motive power and torque.

EVs and plug-in hybrids, therefore, represent the zero-carbon future – providing, of course, that their energy efficiency is matched by that of the power generating companies.

So the UK Government sat down with scientists and engineers from the automotive industry to define the limits of existing technologies, and the potential of new ones.

Following that process, we created the Office for Low Emission Vehicles, bringing together senior figures from our departments for business, transport, energy, local government and finance to work with the automotive industry, power generators and infrastructure companies; with experts on pricing and systems design; with academics and creative thinkers.

We’ve proposed financial incentives for private individuals and commercial buyers looking to purchase electric or plug-in hybrid cars when they hit the showrooms from around 2011 onwards.

At the same time, we’re already running the world’s largest EV and plug-in hybrid demonstrator competition in which the public will try out a range of vehicles across Britain.

I’ve test-driven some of the demonstration vehicles – as well as several more already on the market. These aren’t poor imitations of petrol cars but examples of high-quality design, engineering and manufacture – including two-seater city cars, SUVs, minivans and sports cars. These models deliver the high performance that consumers will expect in order to change their driving habits.

Though a UK-based initiative, this focus on ultra low carbon vehicles has international input. It’s no secret that the UK has a long tradition of working with Japanese companies, in the automotive sector especially.

We welcomed Nissan to Sunderland in 1984 and its plant there went on to become the most productive in Europe. Honda and Toyota soon followed thereafter – all three making substantial investment in their UK operations, and making full use of the UK’s outstanding research base.

More recently, Nissan Toyota and Calsonic Kansei made a valuable contribution to the review of the UK automotive sector that I mentioned earlier. And this year, we’ve seen Toyota announce its intention to build the Auris hybrid at Burnaston, while Nissan are planning a new battery factory in Sunderland.

In addition, Mitsubishi have joined Toyota and Nissan in supplying vehicles to our ultra low-carbon demonstrator programme.

I hope this positive relationship continues – in other sectors as well as automotive – and I think it points to broader truths.

Both the UK and Japan recognise the critical importance of science and technology in developing a low-carbon, high growth economy. Our two governments invest heavily in both basic and applied research, with an emphasis on their commercial application, and I’m only too aware that Japan accounts for a staggering 20 per cent of global R&D effort.

Indeed, this has to be a multi-national exercise: business leaders and scientists collaborating across borders to devise and deliver the technical answers to climate change – your leading-edge tech companies; our research base, the most productive in the G8.

But that exercise must be replicated among national governments too – which brings me back to the UN climate change conference in Copenhagen, due to start in little more than six weeks.

I cannot overstress the importance of reaching a bold agreement in Denmark. These talks aren’t only about safeguarding the environment we share. They will have far-reaching implications for the security and prosperity of every one of us.

According to the 2006 Stern Report, unchecked global warming could cause as much as a 20 per cent fall in global GDP. An international consensus is essential to economic recovery right now, because the push to decarbonise will be a major driver of growth over the next decade.

We must find common ground on a carbon price that stimulates investment and innovation in fully-functioning carbon markets.

We must secure commitment on limiting the average global temperature rise to two degrees Celsius.

We must provide help to developing countries – which will produce around 90 per cent of future emissions increases – through financing and sharing technologies.

The preliminary discussions have to proven to be a hard slog. But the new Japanese government’s pledge on climate change has certainly boosted the negotiating position of those countries determined to achieve the kind of fair and effective deal that can put us on the path to a low-carbon future.

In conclusion then, I’m delighted to see Japan in the vanguard of the green revolution. As the Hatoyama government continues to develop its new fiscal policies, a stable regulatory environment and mechanisms for emissions trading, the UK government is happy to assist in working out the practicalities, based on our own recent experience.

In the international arena, I’m optimistic that – with Japan and the UK joining forces – a better outcome can be realised in Denmark.

And in the vital mission of driving economic growth, I’m convinced that our scientists, engineers and entrepreneurs – by becoming first movers – will achieve great things inside the next decade: making the key technological breakthroughs, introducing them across the planet, and building world-beating companies on the back of them.

The race to be green is on. I urge you to be at the front of the grid; it’s all too easy to be left behind.

Thank you for listening.

Introduction

Good morning. It’s a pleasure to join you for the final day of your conference.

This year your theme is ‘Challenging behaviour’. I think it’s an excellent choice. Because over the past year, we have all had to face challenges that have been unprecedented in their scale and scope. Whether at national, regional or local level.

The seismic shocks in the world economy, and the freezing up of credit markets, have had far-reaching consequences on individuals, families, communities and businesses across Britain.

When I first took on this job, I travelled around all the English regions and I met many local authority chief executives. I saw for myself how hard councils have been working to protect their communities from the global economic storm.

And how they have made a very conscious choice. Not to stand back and simply let the recession take its course.

But a choice to play an active, interventionist role as champions and stewards of their economies.

You intervened to blunt the impact of the global downturn and invest in economic recovery. Marshalling resources and using them to make sure the downturn is as shallow and as painless as possible in local areas.

It’s about making the difference that allows a local employer to keep trading; and making a difference so individuals keep their jobs.

I passionately believe councils have made the right choice, and that was reinforced when I went around the country in the summer. But it does raise real questions about the future of local government.

And about the partnerships that councils must build – with local and regional partners, and with national government – to drive economic development in the future.

Local government transformed

I believe that the events of the past year should dispel, once and for all, any doubts over councils’ ability to make economic development part of their core business. And we should challenge those who say it can’t be done.

I am confident they are ready to take on that challenge – partly thanks to the big strides that we have made in reinvigorating local government over the past 12 years.

The well-being power has proved extremely valuable to councils as they have tackled the fall-out from the downturn. So every authority should consider how to exploit that power to the full, and challenge those who want to hold back on using it.

Local authorities have benefited from a decade of above-inflation funding increases, seeing their budgets rise in real terms by 39% over the period. The move to three-year budgets gives more certainty when planning finances, so that the best use can be made of the extra £8.9 billion received under the current three-year settlement.

We are also making progress on reducing the level of ring-fenced grants, to give you more control over budgets.

In 2003 we introduced new flexibilities on capital finance, including the Prudential Borrowing regime, and new powers to charge for discretionary services, and to trade in others.

The new performance framework cleared away the thicket of top-down targets and indicators, so councils can focus on local priorities instead of being directed by Whitehall.

Local Area Agreements are bolstering authorities’ role as local leaders and taking it in new directions. Comprehensive Area Assessments will improve accountability and make sure that the people who use services come first – not the people who provide them.

So over time, and working together, I think we have created a new environment that gives local government the freedom to innovate, to be more ambitious and to drive progress in creating thriving, cohesive communities.

This is world away from the mid-1990s, when authorities were demoralised, disempowered, and in too many cases performance was disappointing.

The dramatic improvement is down to investment, reform, but above all the dedication of local government staff right through the ranks.

Fighting back against recession

Because of the changes that have been made, when the global economy was struck by a storm of unprecedented ferocity last year, local government was far better equipped to be in the front line of Britain’s fight-back.

You know your local areas, you know your local businesses, so it is right that you lead your communities out of the downturn.

And you have risen to the challenge. You have acted quickly to get help to the people suffering in the recession the most. The families facing redundancy, worried about paying the bills. The small businesses whose cash flow has dried up.

You have also been working closely with the Regional Development Agencies to make sure resources and support are being targeted where they are needed most.

I am very proud of the way that Government at every level has chosen to intervene in this way, and invest heavily, to help those affected by the downturn.

We have not been prepared to repeat the mistakes of the past and allow the downturn to be more protracted and painful than it needed to be. And we are not prepared to cut off support prematurely – putting the recovery at risk.

And today, there are encouraging signs that the recovery is underway. What’s critical now is that we do the right things to drive that recovery on. And that we do not withdraw the investment and interventions, and risk choking off the recovery.

That includes councils carving out a strong role in intervening to drive local and regional economic development. The powers are there, so every authority should be ambitious in exploiting them.

Now many of you are already using Local Area Agreements to place regeneration and economic development at centre stage.

But there is certainly a big challenge here for councils and I don’t underestimate it. To play this role effectively, it’s absolutely clear that economic development must become the core business of councils, often working in partnership with the Regional Development Agencies.

The LDEDC Bill

The Local Democracy, Economic Development and Construction Bill cements these partnerships and gives more powers for the future.

The Bill paves the way for single regional strategies, which will produce a coherent blueprint for action in each region and locality. Crucially, they will be drawn up by councils and RDAs together, so local priorities and collective strength will be combined for maximum benefit. With Leaders’ Boards providing essential scrutiny and accountability.

This very ambitious approach is already working for the 15 Multi-Area Agreements, where councils can, over a wider geographical area, shape services around the needs of communities – in skills, in employment, in education and health.

We are also legislating to allow groups of councils to go further and create Economic Prosperity Boards. These are a further option for MAA partnerships that want stronger sub-regional governance, and I am keen to ensure serious economic development powers and flexibilities are placed on the table to give these new vehicles real impact.

Finally, the bill will clarify the legal position so that projects such as LAML can get off the ground. And I’d like to thank you all for responding to the consultation so quickly, allowing us to bring forward amendments to the Bill.

Efficiency

Now, it’s no secret that the fiscal environment is going to get tighter in the period ahead. So any discussion of local government’s future role has to include the need for greater efficiencies.

But there has already been excellent progress on efficiencies. More than £1.7 billion saved in the last financial year alone. That’s equivalent to £98 for the average Band D council tax payer.

Not only is that good for the public purse, releasing money to reinvest in services or hold down council tax, it also reassures the public their councils are using resources in the best way possible. In the current climate that is more important than ever.

The nine Regional Improvement and Efficiency Partnerships are essential to making this happen. Led by councillors, they are helping local partners to improve services and make savings, through service transformation or better procurement.

For every pound invested in the RIEPs, they report they are saving two pounds in return. So they are already delivering.

I can announce today that we are allocating £31 million this year from the Efficiency and Transformation Fund to the RIEPS. Giving real backing for innovative projects that will drive up standards and deliver savings.

Councils’ purchasing and procurement power to innovate and shape markets – worth something like £42billion annually – is another area that’s ripe for innovation.

Procurement is a powerful engine for the local economy, and authorities can use contracts to deliver broader economic and social benefits to their communities. Whether that is stipulating that contractors must offer apprenticeships, or calling on local suppliers wherever possible.

That is a powerful instrument that can be used to shape the local economy, and fuel the local recovery.

I want us all to think more about how to use procurement to nurture the economic recovery, and respond to strategic challenges, such as skills development, to ensure long-term economic growth.

There is a huge of amount of excellent work already going on. That’s why I recently launched the Local Innovation Awards, backed by £5 million funding.

Total place and Strengthening Local Democracy

The Total Place initiative, which we are piloting at the moment, will take all of this work on efficiency and innovation to an ambitious new level. Of course, many of you are exploring these areas already. And that’s just as it should be – obviously, you do not need permission from Whitehall to innovate.  

But what I want to do is find ways of collaborating with you to maximise this work. We share your ambition for better services and value for money, so we will look at how we can work together to improve the system.

Because this isn’t just a challenge for local government – it’s a challenge for town hall and Whitehall together.

Effective scrutiny is an essential part of this new approach. That’s why the Strengthening Local Democracy consultation is so important. Oversight not only improves services, and ensures better delivery on priorities. It also builds trust between the people who provide services and the people who use them.

Greater transparency and accountability has to be the bedrock of that trust. So today I am publishing the results of the consultation we have run on executive pay. We have had a lot of very positive contributions endorsing our proposals – including from SOLACE Enterprises – so I would like to thank all of you who responded.  

I can confirm that we will legislate to require councils to publish information on pay for their senior executives in their annual accounts. This brings local government into line with the civil service and private sector organisations.

It will very clearly show the taxpayer that Government at every level is acting fairly and responsibly in an era of constrained public expenditure.

Transparency has to be the right way forward for all of us.

[political content removed]

Conclusion

Transparency is also at the heart of the framework we are putting in place for local government.

It is about councils driving economic development; forging partnerships through LAAs and Total Place; greater efficiency and increased accountability occupying centre stage. But this is the floor, not the ceiling, of our ambitions. We certainly want to see how much further we can go.

I believe that to do that we have to take a partnership approach. So I want to have that dialogue with you on how we continue transforming the role of councils, equipping them to deal with the big challenges we face today and face tomorrow.

I want to know what further powers and responsibilities councils will need to live up to their evolving role as local economic guardians, and what more we in the centre should be doing. Because it’s vital we get this right.

Local authorities are engines of economic and social change, driving progress and delivering new opportunities for their citizens.

By harnessing the power of councils, and working together, we can generate prosperity for people in every part of the country – whoever they are, and wherever they live.  

Thank you.

Mr Lammy spoke at an event hosted by the Association of Colleges to launch the new Safe Colleges website:

“Colleges are at the coal face, not just supporting young people, but often very vulnerable young people. This is work that goes unsung and requires immense expertise, which is why you are at the forefront of the battle against guns, gangs and knives.

“It’s my hope and belief that the website we’re launching today, the resources and the practical experience that it will allow colleges to share, will play its part in taking that work to a new level.”

The website features guidance drawn up by colleges and the Learning and Skills Improvement Service (LSIS), working with the Department for Business, Innovation and Skills, the Department for Children, Schools and Families and the Home Office.

The guidance suggests:

• Promoting the college as a ‘safe haven’ for learners;
• Developing a closer working relationship with local police to raise awareness of gang-related issues;
• Having a strong pastoral network and including learners on all committees;
• Making employment and careers aspirational, so that young people see them as a positive alternative lifestyle to gangs and crime;
• Recruiting staff, both teaching and support staff, including security, from the local community and reflecting its diversity;
• As appropriate for the local situation, having some or all of: passes, ID cards, turnstiles, “hoods down” policy, knife arches, metal detector wands, random testing/searching; and
• Ensuring staff training includes knife awareness, incident handling and conflict resolution.

Video

Speech
Read David Lammy’s full speech here

Website
The new Safe Colleges website can be viewed here

Press notice
Read the BIS press notice here

The project was financed by the Building Colleges for the Future programme, which since 2001 has funded more than 700 projects at nearly 300 colleges.

The new Wandsworth campus building includes industry-standard hair and beauty salons, a gymnasium, forensic science labs and music technology studios.

Speaking at the official launch of the building, Mr Brennan said:

“New college facilities improve the lives of learners, regenerate communities and inspire local people to learn and develop. This new modern campus will equip those in the Wandsworth area with the skills they need to get work and get on at work.”

Video

Flickr

View all images at the BIS Flickr album here. They are available for re-use by media and bloggers under Crown Copyright.

Press notice
South Thames College press notice

PLEASE CHECK AGAINST DELIVERY

Good morning everyone.

I’d like to begin by thanking Kate Anderson for inviting me to talk to you today.

I must also thank Kim Clifford and the staff of George Monoux College for hosting this seminar.

This institution has, in one form or another, been serving the people of this part of London, including some of my constituents, for many hundreds of years.

I’m delighted that it continues to do so in its current role as a 6th-form college with a commitment to excellence that has been recognised by Ofsted among others.

I know very well how valuable the work colleges are already doing is.

You are at the coal face, not just supporting young people, but often very vulnerable young people; supporting their parents and making second life chances a reality for newly arrived ethnic minorities, ex-offenders and those with special needs.

This is work that goes unsung, and requires immense expertise, which is absolutely why you are at the forefront of the battle against gangs, guns and knives.

It’s my hope and belief that the website that we’re launching today, the resources and the practical experience that it will allow colleges to share, will play its part in taking that work to a new level.

However, I have also to admit that it’s not only these things that bring me here this morning.

I’m here because I am a black man who grew up in Tottenham during the 1980s.

The Tottenham of 25% Unemployment; the Tottenham of the Broadwater Farm riots; the Tottenham of the racially profiled stop and search.

And today, I am speaking as the MP of that Tottenham.

The Tottenham where, despite improvements, unemployment remains higher than the UK average.

The Tottenham where in some wards, life expectancy is 7 years lower than wards that are only 2 miles away.

I am also here because I’m a husband and a father, and one day, my two boys may be passing through colleges like this one.

After all, what parent doesn’t stay awake at night worrying about their youngsters?

What parent doesn’t fret about the safety of the local neighbourhood? Or worry about their children’s peers and friends?

So yes, when I see police outside the school gates, I feel safer.

When I hear that the Met’ are placing metal detectors at bus stops and at school gates, yes, I feel more secure.

But I know that stronger and more active policing isn’t enough.

The problem of gangs, guns and knives is solved by asking questions bigger than how many police are on the beat.

It’s a bigger question than whether to increase police powers to stop and search.

It’s a bigger question than how long should mandatory firearm sentences should be.

It’s bigger than a poster campaign.

Because many young men who carry knives or guns do so not because they hope to use them, or even because they fear they might need to. They carry them as symbols of status and power.

This is an age where youths are now transfixed by the increasingly seductive language of gang culture.

A language of get rich or die trying.

A language of fast cars and faster lives.

A language of impulse and the instantaneous, and “now” over sacrifice, delayed gratification and self-discipline.

A language which replaces the social values that once knitted communities together with a destructive law of the street.

These issues raise profound questions that we are now asking about our age.

The repercussion of living,

The repercussions of relentless consumerism,

The burden of over-commercialisation,

The reality of whether choice truly exists for the vulnerable in society.

The reason that language appeals so much, and why that resonates so deeply, is because of what it means to grow up in the 21st century.

Young adulthood is tumultuous at the best of times. My own was so because my father left us at 12.

But when he did, I had a rich network of support that provided me with the role models and father figures that would guide me and mentor me through that period regardless.

But some of the networks and people that helped me through the most – youth workers, teachers and my local priest for example – are those most pressured, or rapidly eroding away, in the 21st century.

We no longer go to church in the numbers that we used to.

Our families are smaller, and far more dispersed that they have ever been in the past.

In this world of declining kinship, decaying traditional social structures, and less deference a vacuum emerges in the lives of vulnerable young men.

And it is in this vacuum in which the gangs and gang culture flourish.

For the 59% of Black Caribbean children in this country who are growing up fatherless, their understanding of masculinity is at risk of being defined by the street and its warped notions of power, status and respect.

If the prevailing culture that our youths encounter is one where displays of wealth and the cultivation of fear are the sole indicators of respect, it is no surprise that gang culture is as widespread as we fear it to be.

Gangs and criminality becomes a short cut to symbols of wealth and power that will otherwise take years of hard work to achieve.

Yes, part of the solution to our problems must lie in effective enforcement and the police have had some success.

Gun and knife amnesties in London and other cities have worked well.

And lessons about how to organise policing in ways that draw on the support of vulnerable communities rather than alienating them have been learned from the mistakes of the past.

But the problem of gangs, guns and knives is clearly a cultural problem.

It is a question of parenting, in particular fatherhood.

How do we provide the networks of support to young adults where one or both parents are absent?

It is a question of the quality and presence of role models in the lives of young men.

How can we change the aspirations of our young people to value decent ordinary people as opposed to the superficial glamour of the drug dealer?

It is a question of neighbourhood.

We know it takes a village to raise a child.

And colleges, schools, churches and civic society are in loco parentis alongside the grass-roots movements that have brought ordinary people onto the street to say “no” to guns and knives, like Mothers Against Guns, the Haringey Peace Alliance and Value Life

They are a powerful force for good in society and we shouldn’t underestimate what they are doing to change attitudes, especially among the young.

For example, I’m proud to have been involved in setting-up the Government’s Tackling Gangs Action Programme when I was Skills Minister two years ago.

The programme aimed to reduce serious violence, particularly the use of firearms, perpetrated by young people as part of gang-related activity in London, Liverpool, Manchester and Birmingham.

And I pay tribute to the response from colleges the AoC and LSIS, who have helped steer the programme.

That’s why we are giving our full support to our partners in the further education sector and the voluntary sector, to help them find ways in which they can contribute to tackling gun and knife crime.

And it’s also why your involvement in this event is so important in shaping the next steps that we must take together.

The website that I am launching today will further contribute to the effort of tackling the culture of gangs, knives and guns.

It is a website that allows the colleges on the front line to share the crucial information about best practices and services that ensures we are all united in fighting the causes of this problem.

It is no longer the case that there are just a handful of organisations committed to fighting gangs, there now exists a coherent and co-ordinated movement across the public and private sector, which I am proud to say that Further Education colleges are at the centre of.

I’d therefore like to thank those colleges and other parts of the sector who have contributed to the work of the steering group, who have provided case studies or who have simply shared their views and experiences through their responses to the consultation.

And I’d particularly like to thank the steering group itself, which includes representatives from across the sector, for taking the lead in making sure this work has been developed by colleges for colleges.

It’s time for every college to take its full place alongside other local agencies in the urgent work that must be done to build communities that are free from fear, whether that’s in Walthamstow or Tottenham, Erdington or Toxteth.

I know the willingness to do that is there, because colleges, their staff and students alike, have the same vested interest in building a safer and more civilised society as the rest of the community.

Safer Colleges is an important step towards achieving that and I thank you all once again for your part in turning it into a reality.

No one is in doubt about the damage such industrial action will cause. But those who advocate strike action have not been clear about why it is being threatened.

My Lords, the dispute at the Royal Mail is about modernisation which has been the subject of localised strikes, particularly in London, for many months.

We know from the Hooper Review on postal services about the company’s need to change and reform in the face of a postal market being transformed as people switch to text, e-mail and direct debit, and as the growing area of mail, which is parcels, has a variety of alternative operators from which to choose.

Royal Mail has to respond to the fact that ten million fewer letters are being posted each day than three years ago and total mail volumes have fallen by a further eight per cent in the first half of this year.

In other words, if it stands still, this company faces terminal decline.

Following a previous national strike two years ago in 2007, the union – the CWU – and management reached a national agreement on pay and modernisation.

That agreement set a framework of four phases for bringing essential change to Royal Mail.

The first three have been introduced throughout the country but are being resisted in some places, as I will come to shortly. The changes have involved the introduction of more walk sorting machines and new working practices, including employees being expected to do the full number of hours they are paid to work.

Phase Four, the next phase of modernisation, is yet to be agreed in substance, rather than outline, and will be about a new framework for improving industrial relations. This will include introducing walk sequencing machines to sort the postal delivery round and developing new business opportunities, along with a new system for rewarding employees.

In the majority of Royal Mail’s workplaces Phases One to Three of the national agreement have been implemented without any local industrial action being mounted. Outdated working practices have been replaced. And efficiency is being improved.

But in other parts of the country, most notably in London, there has been repeated non-cooperation and industrial action to frustrate the agreement’s implementation.

It is claimed by union representatives that in London, management is unilaterally imposing change that goes beyond the 2007 agreement’s first three phases. Management contests this, pointing out that all London is being asked to accept is what everyone else in the country is delivering under the first three phases.

It is these local disputes that have now escalated into the threatened national strike.

My Lords, I very much regret what is happening. Candidly, I think it is totally self-defeating for our postal services and those who work to deliver them.

Taking industrial action will not resolve this dispute.

It will only serve to drive more customers away from Royal Mail:

In the delivery of parcels – where there would otherwise be a prospect of growth – Royal Mail’s reputation for reliability could be irrevocably damaged.

And in letters, it will lead to a further twist in the downward spiral of mail volumes.

Business will be quick to recognise that while you can picket a delivery office to stop the service or refuse to deliver letters, you cannot picket the ever present internet.

Royal Mail’s small business customers will look on with anger and exasperation. Just as there are signs of the economy recovering and the prospects for their businesses are improving, strikes now will set them back and put their businesses in jeopardy.

Royal Mail’s finances will be plunged into the red. Last year the company, out of a 6.7 billion pound mail business turnover, made less than 1 per cent profit. One thing this company cannot afford is strikes and industrial action.

My Lords, change in a big organisation is never easy, but for the Royal Mail it is unavoidable.

Let me make clear that contrary to what some may say, the dispute is also not about pensions. The Trustees are engaged in their periodic assessment of the pensions deficit and lest there be any doubt let me make it clear – the Government’s policy on the pensions deficit will not be dictated by strike action.

The Government was prepared to take on the pension deficit as part of a package of modernising measures set out in the Postal Services Bill. Sadly the CWU did not support those proposals.

But when it comes to financing, the Government and the taxpayer have not held back. We have made available 1.2 billion pounds to finance a modernisation and investment programme and that remains on the table.

My Lords, we are, of course, in frequent contact with both management and the union and they have continued talking today. We strongly welcome this.

Our message to them has been clear: put your customers first. Strikes are not the way to resolve differences or safeguard the future of our postal services. The Royal Mail needs management and unions to have a relentless focus on turning it into an efficient, modern postal company, protecting as many jobs as possible and providing customers with the services they need. They should put behind them, once and for all, the endless cycle of disputes.

I will, of course, continue to encourage a settlement. But I cannot impose good industrial relations on the company or disinvent the internet.

An independent third party may well be needed to help the two sides resolve their differences. ACAS is engaged, but we have to be realistic: it will be far easier for ACAS to play an effective role if the threat of a national strike is lifted.

The Government is ensuring that vital services to the public, especially those who are most vulnerable, are maintained.

The Department for Work and Pensions will, if necessary, implement plans to ensure that the small minority of pensioners and others on benefits who still receive their cheques in the post will be able to pick them up from their nearest post office.

If there were prolonged disruptions the Department for Health and NHS Trusts will, if necessary, use alternative arrangements to transport appointment notifications, blood samples and test results.

My Lords, I urge both sides to make every effort to avoid damaging industrial action and resolve this dispute. That is what is in the interests of the Royal Mail, its employees and its customers.

I commend this statement to the House.

The conference, taking place between 26-28 October this year, will be bringing together creative businesses and leaders from around the globe to look at a number of key themes such as access to finance and securing creative content, along with developing talent and new business models.

The event will be streamed live at www.cabinetforum.org where you can also access the latest up to date agenda. Keynote speakers across the three days include some of the most influential people at the heart of the sector who will be ready to share their experiences such as Jean Bernard Lévy, Chairman of Vivendi, the media and communications group.

The conference will feature keynote speeches from Jean-Bernard Lévy, Rt Hon Lord Mandelson and Rt Hon David Lammy MP, as well as sessions on the creative economy, copyright and advertising on digital platforms.

Via the c&binet website you’ll be able to comment on the sessions during the live streaming and feed in to the debate. You can also submit your comments and questions in advance and follow the ongoing debate through the blog and via the c&binet twitter feed.

Speaking at a CBI conference ahead of the publication of both the Higher Education Framework and the Government’s Skills Strategy he will argue that a system that is more targeted on delivering the specific and general skills that employers needed also came with a new responsibility for business to support it financially and strategically through greater collaboration with universities and colleges.

Read Lord Mandelson’s speech

Lord Mandelson will say: “Over the last decade or so our expectations of the HE system in delivering economic impact have risen sharply – and rightly. Universities have responded to that willingly and actively. But it is a partnership, in which business has to be central. After students themselves, employers are the key clients of the higher skills system…

“Business has to get better at communicating its needs, so that the system can respond and our universities are not left to make educated guesses about what business wants. Business can and should also contribute more financially for a system that will be more vocational and more targeted on generating economic impact than ever before.

“But that relationship should clearly be collaborative and mutually beneficial and preferably long term. It is not something for nothing. It’s greater business engagement and support in return for a system better equipped to produce the right skills at the right time”

Calling the huge expansion in UK apprenticeships “one of the great achievements of this government”, Lord Mandelson will also argue that the time has come to see higher and further education in Britain as a closely integrated single agenda: “For me, HE and FE are two systems, joined by one goal. There was a time – well within most of our lifetimes – when… universities provided elite education and a training in the mores of professional life and apprenticeships were for craftspeople – or rather craftsmen – who would go on to spend their lives in a particular trade.

“It was a division based on social prejudice as much as economic reality, and if it isn’t yet dead, it needs to be. Modern craftspeople…are the technicians, designers and engineers who are the foundation of the UK’s advanced manufacturing sector… Obviously universities and the further education system do not do the same job. But they have the same essential role which is building human capacity and higher skills”.

Lord Mandelson will defend the government’s target of 50% participation in Higher Education but say that the target “should never alone be the proxy for whether Britain has the high level skills needed to compete in a globalised world.

“We are right to insist on continuing to widen access to university education and we are right to invest heavily in making our university system and the research it does the best in the world. But we also need to see the alternative routes to higher skills provided by apprenticeships and further education as no less valuable”.

He will say that the new skill strategy will set out ways of ensuring “more apprenticeships at higher levels to help address shortages in areas like skilled technicians”.

Read Lord Mandelson’s speech

For UK plc, HE and FE are ‘capacity costs’ – they are the costs of being in business at all. The reality is that they are rising. Because we compete on people and skills, even in technology-intensive sectors like manufacturing. And the skills we need both at the generic and specialist ends of the spectrum are getting more and more complex.

It seems to me that in equipping the UK for a post-recession global economy, higher education and adult skills will be not just important but decisive. As you know, soon we are going to be setting out new frameworks for both areas.

I want to acknowledge and applaud the engagement of the CBI on this issue, including the taskforce behind the CBI’s recent report. Central to my remarks today is the argument that that engagement could not be more important.

I also want to acknowledge up front that I accept that employers have concerns about aspects of the education system in this country. I know that many of you believe that the key problems lie in early education.

I believe in a demand led system and hearing and responding to business expectations are of course critical to that. Is Terry Leahy here today? Perhaps I shouldn’t say this, but blunt contributions like that are an important part of driving this country to improve. Every little helps.

But I think it’s worth saying that education policy is a long game, and changes to the way we teach and train deliver benefits and improvements across a timeframe of many years. Often at a rate that is always going to seem slow in business terms.

And I want us to acknowledge progress over the last decade. Levels of attainment are rising. Huge investment in school infrastructure. We have an effective Academies system ready for expansion. Both HE and FE are more responsive to employer needs now than they have ever been.

We are investing £1billion a year in workplace training and Foundation degrees. We’ve helped nearly six million adults improve their literacy and numeracy skills, with over 2.8 million getting a first through the Skills for Life strategy over the last ten years.

We also have more joint business-HE and FE collaboration than we ever have. Including a large amount of business participation on Boards of Governors and in the Sector Skills Councils. It’s important that that continues to be seen not as a formality but as central to a working relationship.

I want to make three points today. 1) I want to argue that we need to see HE and FE as a closely integrated single agenda. 2) I want to sketch briefly what I see as the strategic ambitions and constraints in HE and FE policy for the next decade. 3) I want to set out why I think government and individuals can fairly expect business to be more engaged in delivering these strategic ambitions, and what business has to gain from doing so. If you like, I want to set out what I think the flipside for business of a more demand led system should be.

Two systems, one goal

For me, HE and FE are two systems, joined by one goal. There was a time – well within most of our lifetimes – when our university and vocational training systems were seen as having distinctly different functions. Universities provided elite education and a training in the mores of professional life for about one in twenty of the population. Apprenticeships were for craftspeople – or rather craftsmen – who would go on to spend their lives in a particular trade. These were regarded not as different ways of making a living, but as different universes.

It was a division based on social prejudice as much as economic reality, and if it isn’t yet dead, it needs to be. Obviously universities and the further education system do not do the same job, teach at the same level or specialize in the same ways. But they have the same essential role which is building human capacity and higher skills.

Modern craftspeople will play a critical role in our economic future and are increasingly doing some of the highest value-added jobs in the UK economy. They are the technicians, designers and engineers who are the foundation of the UK’s advanced manufacturing sector. Teaching the practical skills in process management, IT and numeracy that are increasingly needed at all levels of employment is something that the further education sector has pioneered.

The huge expansion in UK apprenticeships has been one of the great achievements of this government, even though we recognise that we need more apprenticeships at higher levels to help address shortages in areas like skilled technicians.

Although I disagree with the CBI on the suspension of the 50% target for HE, I agree that it should never alone be the proxy for whether Britain has the high level skills needed to compete in a globalised world. We are right to insist on continuing to widen access to university education and we are right to invest heavily in making our university system and the research it does the best in the world.

But we also need to see the alternative routes to higher skills provided by apprenticeships and further education as no less valuable. We need to work for that convergence between the wider goals of the two systems.

Strategic ambitions and constraints

Both systems face the same basic strategic landscape. They both have a central role in contributing to Britain’s economic recovery and equipping us for a global economy. That’s why higher and further education were merged into a single department with a range of key other growth policy levers to create BIS.

Obviously this is only one part of a university’s role. They are academic and cultural institutions as much as engines of the economy. But part of maintaining support for public investment in that role, is demonstrating their relevance to our economic life as well.

We want to address the single biggest concern for employers which is generic skills – employability, the skills everyone now needs at work, at almost all levels. Team working, business awareness, communication skills. Business demands of graduates here are pulling very rapidly ahead. The system needs to respond and we will address it directly in both the HE Framework and the Skills Strategy.

We will also put more emphasis on identifying the strategic skills that the British economy will need in the future and new incentives for universities and colleges to work with business and industry in filling these skills gaps.

It will create a system more capable of responding quickly with funding to fill niche gaps in the skills base in critical industries such as the civil nuclear supply chain or low carbon technologies.

That will mean clear incentives to increase and improve the provision of science, technology, engineering and mathematics courses, where UK employers continue to report shortages. We already do this implicitly through the HEFCE differential funding and vulnerable subjects systems. But we will go further.

Now of course the CBI is right that the target for more STEM graduates has implications for the whole UK education system, which is why we will ensure that the ablest young scientists have access to triple science GCSEs and why we have set the target of 80000 young people taking maths A level by 2014.

The challenge for manufacturing of course is also going to be making sure fewer of those graduates decide to take their advanced degrees into the City or elsewhere – which is why I can only encourage the kinds of graduate recruitment and sponsorship – and starting bonuses – that CBI taskforce members like Nissan, Centrica and Balfour Beatty now routinely offer.

Both HE and FE also have a critical role to play in increasing social mobility in Britain. There is no silver bullet on social mobility, but education and higher skills are as close as you get to one. That means keeping up the pressure to widen access to HE – both with respect to the time in your life when you can access HE, and with respect to your social background, which should be irrelevant. Access to all forms of training is a question of equity and social justice as well of competitiveness.

That’s why we are going to put a greater emphasis on routes to higher skills that can be built around work: flexible study, foundation degrees and apprenticeships. It’s also why, along with protecting excellence, the goal of widening participation for those from less privileged backgrounds will remain a leitmotif of UK HE policy.

As the CBI have argued, we do need a greater degree of competition between institutions that encourages them to improve and tailor courses. That can mean competing for collaboration with industry, but the key drivers of change should be students, and student expectations. The more information students have on courses and their outcomes the more their choices will drive universities to improve. This is something we will directly address in the new framework.

Finally of course both HE and FE will be subject to increasingly tight fiscal constraint for the foreseeable future. I don’t accept that that this must impact on quality – in fact it must not.

Expanding investment means universities will have to deepen and diversify their sources of non-public income through commercialization of their teaching or research expertise, through a more professional approach to endowments and through greater resource efficiency.

We will also have to look at the contribution that individuals make to the cost of HE, which we will do through the independent fees review that will be launched after the publication of the HE framework.

The role of business

Over the last decade or so our expectations of the HE system in delivering economic impact have risen sharply – and rightly. Universities have responded to that willingly and actively.

But it is a three way partnership, in which business has to be central. After students themselves, you are the key clients of the higher skills system. It has to be shaped by your demand, and that demand has to be expressed clearly, coherently and quickly, both for generic and specialist skills. Business has to get better at communicating its needs, so that the system can respond and our universities are not left to make educated guesses about what business wants.

Business can and should also contribute more financially for a system that will be more vocational and more targeted on generating economic impact than ever before. But that relationship should clearly be collaborative and mutually beneficial and preferably long term. It is not something for nothing. It’s greater business engagement and support in return for a system that produces the right skills at the right time and which supports product and concept development.

We already encourage this in a range of ways: R&D tax credits, innovation vouchers, the HE Innovation Fund, support for employer co-funding of training. Our support for the TSB also encourages these ties. But, we will do more to support it.

Conclusion

The knowledge economy may have become a cliché, but it expresses a genuine reality about Britain’s future. Skilled people are our basic asset. They command better wages, get more out of work and rise higher. They are more productive and create better businesses and organisations.

I was impressed by the frankness with which the CBI HE taskforce accepted that business had not done enough to reinforce the HE system – and by its commitment to doing a lot more. The higher skills system is probably your fundamental supplier, and there is no way that a supplier relationship that important would or should ever be left to chance. It needs nurturing, strengthening, caring for. And we need to do that together.

Introduction

Thank you very much for inviting me today to what looks like an excellent conference.

Having grown up on the other side of the Pennines in Doncaster, and being MP for Doncaster Central and Minister for Yorkshire and the Humber, the question of how to drive regeneration and economic growth and ensure that it spreads right across the North is one that is close to my heart.

Supporting regeneration and economic development in the Northern regions – as in every other region – has also been a top priority for Government. That’s why, since 1997, we have targeted investment to renew our communities and support job creation.

There have been huge changes in our traditional industries, but with our targeted approach we have tried to prevent a vacuum developing by ensuring that, if traditional industries have disappeared, new knowledge-led enterprises, based on innovation, entrepreneurship and international competitiveness come in their place.

Parts of the North are gaining competitive advantage in sectors from healthcare to life sciences, process industries to our low carbon future. These developments are contributing to the North’s wider renaissance.

But we all know that there is still a lot more to do.

That’s why in the current spending round we are investing heavily in regeneration activities across the north:

• Giving the three Regional Development Agencies a combined budget of £2.6 billion;
• allocating £1.9 billion through the Working Neighbourhood Funds;
• and a further £840 million for regeneration projects through the Homes and Communities Agency.

Fighting back against recession

This work has taken on a new urgency over the past 12 months, as the world economy has been battered by an unprecedented storm. While the origins of the recession were global, its effects have been local, felt across the North East, the North West, Yorkshire and the Humber, and around the country.

In my own constituency I, like everyone here, have seen the families who have been affected by redundancy; the businesses whose cash flow has dried up.   

That’s why I believe it is absolutely necessary for government at every level to intervene, and invested heavily, to help those affected by the downturn.

We have tried to do everything we can to minimise its impact and pave the way for economic recovery. The alternative, simply standing back and leaving the recession to run its course, was not an option for us.

And we are not prepared to cut off support prematurely – putting the recovery at risk.

Because we must never lose sight of the fact that the best antidote to public debt is growth – growth that’s generated by entrepreneurs, but supported by public investment to lay the foundations of economic success.

That’s why, working with the Regional Development Agencies and with Local Authorities, and our other local and regional partners, we have taken decisive action.

I believe the Northern RDAs – the Northwest Regional Development Agency; Yorkshire Forward; and One North East – have come into their own during our fight back against the global recession.

They have provided economic leadership; they have catalysed investment; and they have played a critical role in sustaining viable companies. All these are essential building blocks for economic recovery.

Whether it’s One North East’s funding for a £2.4million pilot scheme to boost research and development.

Or the Northwest Regional Development Agency’s £23 million of financing to the region’s small businesses so they can start up, invest and grow.

Or Yorkshire Forward’s backing for emerging low-carbon industries.

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This kind of support is vital to reinforce what local authorities are doing to support local industries and to develop a strong business environment.

Local authorities know local people, local authorities know local businesses, so local authorities are best placed to drive regeneration and economic renewal in local areas.

That’s why we have asked local authorities to focus on unemployment and lead our £1billion fund to create 150,000 new jobs.

Northern local authorities have acted quickly during the downturn. Giving debt advice to people worried about paying the bills; training to get people back in to work; and a lifeline for business.

And you are using Local Area Agreements to place regeneration and economic development centre stage.

In Tameside, here in Greater Manchester, the council has set up a £12 million fund to invest in local capital projects.

Over in Hull, the council has launched the ‘Ready to Go’ scheme to work with people recently made redundant in construction and other related fields, retraining them with new skills.

In Blackpool, local agencies have got together to help vulnerable young people, to provide advice, guidance and support.

Right across the North, councils are leading from the front, making sure their areas are ready to share the economic gains as the recovery begins.

That responsiveness to local circumstances, and understanding of local needs, is absolutely crucial to unlocking the economic potential that exists everywhere.

That’s why in every region, the regional minister meets regularly with their Economic Delivery Group, made up of key public sector and business leaders, to prepare for the future. 

A regional approach works

But that will require different types of interventions in different places, and to varying degrees. So our response must be region by region, area by area, so that we are supporting local economies in the most effective way.

That’s why I believe a regional approach to regeneration and economic development is so important.

In 1999 we set up the Regional Development Agencies, to promote enterprise and drive economic growth in every region. I believe the RDAs have been extremely successful.

The independent study by PricewaterhouseCoopers, released earlier this year, showed that, on average, every £1 spent by the RDAs generates an extra £4.50 for their regional economies.

And they are beginning to narrow the historic gap in economic performance between the north and the south. By the first half of this decade the gap between the growth rate of the greater South East and the Northern regions had started to close, defying the long-term trend.

So I think these facts speak for themselves. Active regional policies deliver real economic results. They will be more important than ever in the months and year ahead.

A springboard into the upturn

Today, there are some encouraging signs that economic recovery is underway.

What’s critical now is that we do the right things to drive that recovery on, here in the north and elsewhere.

Having the necessary infrastructure is vital. I will be meeting the Transport Secretary Lord Adonis to explore options for a high-speed rail line linking the great cities of the North – Manchester, Leeds, Newcastle – with London and the continent.

A line that will draw the North and South closer together physically and symbolise the closing of the structural economic divide between the two.

We are also looking at whether new financing mechanisms could be used to invest in local and city-region regeneration projects, as we said we would do in the Budget.

Building Britain’s Future

In all of these areas, effective partnerships – pooling resources, sharing knowledge – will be absolutely critical to achieving results. We need each other’s know-how as we embark on a more activist approach to the economy.

In the summer we published Building Britain’s Future. It outlines our approach to equipping our people and businesses to compete in the new global economy that emerges from this downturn.

On education and skills; high levels of productivity and growth; and Government investment in key growth areas such as advanced manufacturing, digital networks and low carbon technologies. 

Across the north there are examples of ambitious, long-term regeneration projects that will help achieve that vision:

• Mediacity UK, under construction in Salford, will be Europe’s first purpose-built creative and digital media centre. It is the 3rd biggest construction project in Europe, generating many new jobs and continuing Salford’s renaissance.
• In North Tyneside, the former Swan Hunter shipyard has been bought by the local council and One North East, and will be transformed into a hub for the off-shore and renewable energy industries. It’s estimated the offshore wind market alone could generate £3 billion for the regional economy and create between 15,000 and 30,000 jobs.
• At Hatfield near Doncaster, Yorkshire Forward and the Local Authorities around the Humber have helped get the green light for a massive project to build a commercial carbon capture and storage plant, next to a clean coal power station on the site of the Hatfield deep mine. There are still some remaining stages to go through, but funding will include £165 million from the European Energy Programme. This project will create 2,500 jobs in plant construction and 6,000 jobs in pipeline construction.

But to achieve our ambitions we all need to work together – central government, all of you from local authorities, and the RDAs – because our economic future is a shared endeavour. 

The Local Democracy, Economic Development and Construction Bill, which has nearly finished its passage through Parliament, paves the way for single regional strategies.

These strategies will cement the partnerships we need to forge, and draw up a coherent blueprint for action in each region and locality.

They are a powerful way of ensuring that communities share the spoils of economic success. Crucially, they will be developed jointly by all of you, in local authorities and RDAs.

The Leaders’ Boards, which the new legislation puts on a statutory footing, provide essential accountability and will ensure the priorities of your local communities are at the heart of the broader frameworks taking shape.

We can already see this approach working in the Multi-Area Agreements, where councils can, over a wider geographical area, shape services around the needs of communities – in skills, employment, education, and health.

Conclusion

This is absolutely vital if we to build on the successes that, working together, we have already achieved.

Regeneration and economic development are all about reversing social, economic and physical decline; building a new low carbon economy; enabling communities everywhere to share economic prosperity; and opening up new life chances for their residents.

All of you here today should be proud of your outstanding work in the North West, In the North East and in Yorkshire and the Humber. In the past 10 years these regions have been transformed beyond recognition, and a new confidence has blossomed.

Although the last year has been difficult as the old economic certainties have been swept away, I am still full of confidence for the future – and you should be too.

The Northern regions have firm foundations – skilled citizens, world-class businesses, and an enterprising, can-do spirit – on which to build economic prosperity for everyone, whoever they are, wherever they live. Colleagues, let’s work together to make it happen.

Thank you.

• the competitiveness of UK institutions
• the benefits of postgraduate study
• the needs of business and other employers for postgraduates
• the levels of participation and potential barriers

Comment on the postgraduate review

As agreed last year by the TUC and CBI, the changes will give agency workers the right to the same pay, holidays and basic conditions as permanent staff after 12 weeks on a given job.

Publishing a consultation on draft regulations to implement the EU Agency Workers Directive, Business Minister Pat McFadden said:

“As the Prime Minister has said, the Government is committed to getting this legislation on the Statute Book by the end of this Parliament. The law will come into force in the UK in October 2011, giving recruiters and their clients time to prepare and plan. We are also mindful of the need to avoid changing requirements on business until the economic recovery is more firmly established.”

Proposals include:

• Agency workers entitled to equal treatment on basic working and employment conditions, including pay and holidays, as if they had been recruited directly by the hirer after 12 weeks in a given job
• Information about vacancies in the hirer to give them the same opportunity as other workers to find permanent employment
• Equal access to on-site facilities such as child care and transport services
• Improved rights to protect the health and safety of new and expectant mothers including right to reasonable time off to attend ante-natal appointments and adjustments to working conditions and working hours.

View the consultation (runs until Friday, 11 December 2009)

View the press notice

“It will only serve to drive more customers away from Royal Mail. One thing this company cannot afford is strikes and industrial action.

“We are, of course, in frequent contact with both management and the union. Our message to them has been clear: put your customers first.

“The CWU should turn their backs on industrial action and sit down with the Royal Mail and resolve this dispute. That is what is in the interests of the Royal Mail, their members and the country.”

Publication of the Forward Programme is a key component of a series of reforms that the Government is introducing to strengthen the management of regulation.

It brings a new openness and clarity to the regulatory process and will enable decisions on new regulations to be taken in the context of the cumulative burden of the Government’s regulatory programme on business and the wider economy. This is more important than ever in the current economic environment.

Read The Government’s Forward Regulatory Programme (PDF, 651KB)

The Low Carbon Transition Plan sets out how the Government will meet the cut in emissions of 34% on 1990 levels by 2020.

The Low Carbon Industrial Strategy sets out how the Government will invest in areas such as tidal, wind and nuclear energy, as well as supporting electric vehicle infrastructure.

Low emission and electric vehicles offer new opportunities for UK manufacturers, but also new challenges for scientists and engineers. At the Low Carbon Vehicle 2009 event last month, Minister for Science and Innovation, Lord Drayson, said:

“What we have to do is use science and technology to offer cars with great performance but also great efficiency and low emissions.”

For more information on the Government’s low carbon policies, see the Low Carbon News hub, a resource for media, bloggers, stakeholders and the public.

Other Government departments are also participating in Blog Action Day. Read the Prime Minister’s blog on Number10.gov.uk here and Foreign Office Secretary of State David Miliband’s blog here.

For more information about what you can do to reduce your CO2 emissions and slow the effects of climate change, visit Directgov’s Act on CO2 website.

The event is being held at the BIS Conference Centre.

Further information on UK National Contact Point Event (PDF, 75KB)

Thank you all for coming. It’s great to see so many eminent faces. This is a conference that almost certainly wouldn’t have taken place two years ago. It is about questions that we weren’t really asking in government two years ago.

They are post-banking crisis questions about the roles of government and the market. About how we build a balanced recovery.

I think they are questions that the acceleration of globalization was starting to force us to take more seriously anyway – but the banking crisis has focused our minds. And that’s a good and necessary thing.

I wouldn’t go so far as to say that industrial policy is making a comeback – at least not in the way that some of us might remember it.

But the challenge of long term, low carbon recovery and growth have pushed us to look more carefully at the way in which government can drive growth. How government policy can equip our country and our companies and our people to compete in a global economy.

Our New Industry New Jobs paper removed a negative check on the subject that has been there for two decades or more. It sometimes seems as if there are only two positions in this debate – pro-market and interventionist. Especially in the financial media. Well, New Industry New Jobs was the first small step towards a synthesis.

In my view, building that synthesis could not be more important. It will shape how we see the recovery, how we respond to the challenge implied by the public deficit. It is fundamental to how we see Britain maintaining and developing comparative advantages in the global economy. That’s why we called it New Industry New Jobs. Because that’s what it is there to achieve.

I don’t think the arguments behind New Industry New Jobs are earth-shattering, but they do have some pretty big implications for government.

One is that the choices government makes and the actions it takes are a huge part of what actually defines the shape of the market, and the capabilities of our people and companies when they compete in it.

The more conscious we are of that, the better government will be at shaping the environment in which businesses are created and grow. In part this is about setting the right frameworks for the private sector to make its investment decisions. But it can also be more ‘activist’.

For example, it should be the strategic context of our approach to skills and higher education policy. Which is why we are publishing new frameworks in the next few weeks for higher education and adult skills policy in this country that explictly increase the focus of policy on producing the skills we need to maintain existing comparative advantages and build new ones in areas like low carbon.

We’ve also been piloting programmes that use our multi billion pound procurement budget as a way to incentivise innovation, by opening the tender process wider to smaller and more innovative companies and making government a lead user of innovative technologies. The successful pilots in the NHS in the East of England show that there is huge potential to expand this across government.

And it matters more than ever right now, because the better we are seeing the knock on effects of all policy in terms of growth, the better our return on any form of public investment or public spending is going to be.

The creation of the department of Business Innovation and Skills consciously puts a large number of these policy levers in a single department with a clear remit for investing in growth. And it’s the first time to my knowledge that that has been done.

But this is a challenge for all of government, at all levels, not just the department of business. That’s why we will be publishing a new framework later in the autumn which will set out more clearly than ever before how national, regional and local delivery partners should work together to deliver key national priorities.

So, my argument is that certain kinds of market interventions to shape our industrial capacities are a good and necessary thing. That doesn’t mean state direction of industry, it means strengthening our basic capacities. I know well from my time as EU Trade Commissioner, in development economics it is routine to assume a role for public policy in capacity building. Yet we rarely use that language for our own developed economies. I think that limits us as policymakers.

Capacity building simply means recognizing that while the market is irreplaceable as the ultimate arbiter of what is long-term viable in Britain, or anywhere else, industrial strength can be lost – or never built – for reasons that are totally avoidable and that have nothing to do with long term viability and competitiveness.

What might that mean? Well, it can be a lack of growth or start-up capital. It can be a lack of information about opportunities. It can be the lack of a workforce with niche skills. It can be a lack of the right partnership between researchers and industry.

A couple of examples from BIS’ work this year make the point.

We have a very strong biosciences sector in the UK, and most analysts agree that renewable chemicals is one of the key frontiers of this sector. Now, no small UK biotech firm can sensibly bear the cost of an industrial biotech demonstrator facility, but Britain will struggle to develop strengths in renewable chemicals without one. So in June we funded one, and will create a fund to help small companies use it.

We’ve committed to funding similar technology testing facilities for plastic electronics, low carbon wind and wave power. Just yesterday we committed to funding a pharmaceutical demonstrator facility at Stevenage alongside the Welcome Trust, the RDA and Glaxo Smith Klein.

We’ve also part-funded the world’s biggest demonstrator programme for ultra low carbon vehicles – which is an important step towards shifting consumer assumptions about what is viable in low carbon transport. We’re also going to support lead users of ultra low carbon cars from 2011 with a contribution to the cost of a vehicle. Because we can’t afford to cross our fingers and hope that these technologies get off the drawing board.

There are lots more examples in the report in your conference packs that sets out where we’re investing most of the £750million strategic investment fund created at the 2009 Budget.

We’ve also started to take a much more critical look at the way in which financial markets in the UK too often fail to provide long-term risk capital for innovative small firms – a structural problem that is going to be made worse by the banking crisis and the natural risk-aversion that will come with the first few years of recovery.

For this reason we are developing new solutions to address this – the Innovation Investment Fund and the National Investment Corporation. In both cases the aim is to use public seed capital to draw in private investment for investing in innovative small firms.

The goal of today’s conference is to continue a debate around the way we can take these ideas forward. It’s a chance to look at the way other developed economies have tackled these problems – where they have got it right and where they have gone wrong. To ask where and how the UK should be targeting limited resources to get the best outcomes in terms of sustainable strengths and growth. In what sectors and what markets? In what horizontal priorities?

Today’s unemployment figures are a reminder that a genuine recovery is marked not the return to growth alone, but by a return to sustained rising employment. While we don’t know exactly what those jobs are going to be, we do know that a disproportionate number of them are going to come from innovative firms. They are going to come from new market entrants pioneering new technologies and low carbon. They are going to come from new investment.

To argue that there is no role for active public policy in reinforcing this growth seems to me either dogmatic or complacent, or both. To argue that government is essentially the problem for competitiveness seems to me to make the same basic mistake.

We’ve started to make the counterargument, and we’ve put some serious resources behind it. The point of today’s conference is to widen and deepen our thinking and to ask where we might go from here to secure Britain’s economic success.

The IWF was founded by the internet industry in 1996 and works in partnership with the police, government, the wider online sector and the public to combat the availability of potentially illegal online content within its remit. As a result of this self-regulatory approach, less than 1% of online child sexual abuse content has apparently been hosted in the UK since 2003, down from 18% in 1997.

Through the ‘Hotline’ reporting system, the IWF helps the online industry combat abuse of its services through a ‘notice and take-down’ initiative by alerting them to potentially illegal content within IWF’s remit on their systems and enabling the police to investigate those responsible. This partnership approach is recognised internationally and the IWF is committed to sharing its good practice, expertise and experience around the world, contributing to dialogue beyond the UK and Europe, to ensure greater awareness of global issues and responsibilities.

For more information or to report a website visit www.iwf.org.uk.

Innovation, a bit like enterprise, is one of those things that trips very easily off a politician’s tongue. We all want it, we all support it, we all think it matters, but I can go one further. In my department it is, quite literally, our middle name.

When BIS was created we put innovation on the front of the tin very deliberately. Because we believe that innovation runs across the whole remit of the new department. It is at the heart of the knowledge economy and our response to globalization. It is at the heart of the recovery. It is key to our future success.

I want to do two things today. First, to say something about why innovation matters so much and why we have to see it as more than a niche policy issue. It’s a systemic challenge. That’s why it’s in the name of the department.

Second I want to make this more concrete by setting out what we are doing to turn good research and science into innovative development. To turn innovative ideas into innovative companies. To turn employees into innovators. And to turn the government’s procurement budget into a force for innovation.

Why innovation matters

Why does any of this matter? It matters because innovation is a whole approach to technology and practice. It’s the assumption that we could be doing this better, differently, whatever ‘this’ might be. ‘This’ can be a piece of technology. But it can also be a way of doing things. That’s an important point, because in an economy in which retail and business and financial services play such a huge part, some of the most important innovations are in processes: marketing, design, communications and administration.

I talk a lot about an investment-led recovery. Well, innovation is at the heart of that. Not just because it drives commercial invention, but more fundamentally. Because innovation is what pushes up productivity, and every pound we save by doing something better is a pound we can invest somewhere else. Innovation is at the heart of growth.

I talk a lot about the green jobs revolution. Well, innovation is at the heart of that too. In part because we’re in a race to get green technologies off the drawing board. In part because low carbon is an innovation in our whole mode of life. It will change almost everything – simply because it will change how we generate and use energy.

Britain has a strong track record here. We are the original innovation nation. We enter the twenty first century with a set of strong national resources built up carefully by the government over the last decade. A world class science base – second only to the US. A skilled workforce; an open approach to FDI; and tax credits for R&D. We also have an open competition policy that is a driver of innovation. This has helped us attract and retain some of the world’s biggest corporate investors in R&D.

The innovation infrastructure

The challenge is to see all these things not as isolated policies, but as an innovation infrastructure. That infrastructure stretches from competition policy through education and skills policy, through the intellectual property system, through risk and growth finance to the way in which we bring researchers and companies together to generate new ideas.

Globalization will put tougher demands than ever before on our innovation infrastructure. Because the knowledge that drives innovation can now spread around the world in an instant. Because skill levels and investments in science and technology are rising in the emerging economies. Britain and its companies still invest less in R&D than many EU countries – even if this is not a perfect proxy for innovation. And of course the banking crisis and the recession create their own problems for innovation – especially how we fund it.

Think of it this way: the average lifespan of an S&P 500 company now is just 11 years, which means that complacency is essentially fatal. My argument today is that complacency includes thinking that all British companies need to succeed in this innovation race is a free market and no favour. They need that but also a lot more. I want to say something quickly about four critical parts of this challenge.

Science into innovation

The first is in the recognition that we need to do more in Britain to translate our record investments in our world leading science base into commercial innovations. This was one of the key planks of the New Industry New Jobs strategy that we launched in April.

UK universities are increasingly partnering with business to do this, and our job is to reinforce that trend. I also want research councils and the Regional Development Agencies to help deliver this. And a core task of the Advanced Manufacturing Research Centres will be to horizon-scan for new technologies and act as a proactive channel between the research base, industry and potential financial backers to further development in advanced manufacturing.

And of course the TSB was created to do all of these things and more across the economy. Over the last two years it has proved its worth. Which is why we backed it with an additional £50 million in this year’s budget. This year our £750million strategic investment fund has invested in – among other things – low carbon aircraft engine technology; fuel cells, and industrial biotech by investing in the TSB. The core funding we provide for TSB is enabling it to announce investments worth over £80m today.

I’m also happy to announce today a joint £37million investment between my Department’s Strategic Investment Fund, the TSB, the East of England Development Agency, the Wellcome Trust and Glaxo Smith Kline to create a unique drug development bio-incubator in Stevenage.

It will provide access to specialist equipment and services and knowledge sharing on drug development. In its first phase it will be home to around 25 companies with plans to expand the available space five-fold.

It is looking to attract inward investments, spinouts and start ups. It will provide access to specialist equipment and services and knowledge sharing on drug development. It is a strong new platform for the work of our Office for Life Sciences. Most important it is a huge investment in our biosciences future in this country.

Ideas into companies

Our second challenge is to recognize and get to grips with the unique challenge of financing innovation. All investment is risk, but investing in innovation carries its own kinds of risks. UK financial markets have long under-delivered on finance for start-ups and expanding firms. It’s partly the steep capital costs, partly the long lead times on proof of concept and product development, partly the high costs of due diligence for relatively small investments. It’s striking that private equity over the last decade has raised more and more money, and invested less and less of it in small firm growth and innovation.

We would expect a level of risk-aversion in the early stages of recovery. But if that risk-aversion stalls the growth of a new generation of innovative British firms, then the recovery itself is at risk. It’s time to start treating this not as a market failure problem that needs tweaking, but as a structural problem that needs serious public policy solutions.

As a country we do have to start putting more money where our mouth is on innovation. And that means using more public funds as a catalyst to back up and attract the business angels and venture capitalists and even the pension fund managers who intuitively should be interested in backing long term growth.

That’s why we created the Innovation Investment Fund in July with £150million in public seed capital. Managed by venture capital specialists, it will look to leverage in funds from the private sector with the aim of creating a £1 billion fund over 10 years. The Growth Capital Review, led by Christopher Rowlands will report its conclusions at the Pre-Budget Report and to bring forward proposals for a new national investment corporation.

Like our approach to improving the links between universities and industry, this is a model that sees a critical role for public investment, but which goes out of its way to avoid turning politicians or civil servants into investment managers or technology pickers. Which is a good thing, because it took me months to get the hang of my iPod and I am still discovering new uses for my Blackberry.

Employees into innovators

The third challenge for us as a country is to embed innovation into our higher education and skills systems. When we launch our new higher education framework and skills strategy over the next few weeks, they will directly address our capacity to drive innovation by educating and training innovators.

This is not just about creating entrepreneurs, but about creating employees with the confidence to challenge the ways their companies do things. And the bosses with the confidence to listen to them.

We certainly need to get past the idea that innovation comes chiefly from some cappuccino-drinking ‘creative class’ in our societies – it has to be something that we all have a claim to. That includes the working class kids whose expectations and initiative and drive will often be the key ingredient to creating new jobs in areas struggling with economic change.

Procuring services into procuring innovation

Finally, I do believe that we can do more to drive innovation through public procurement – above all by widening the access of innovative small firms to the procurement process – the firms with new ideas who shake up existing providers.

The Technology Strategy Board has run successful Small Business Research Initiative pilot schemes in partnership with the Ministry of Defence and the Department of Health. The SBRI scheme has now been expanded to include other public sector bodies. For example, the East of England Strategic Health Authority and regional partners have recently completed a competition with TSB backing calling for innovative new approaches to home treatment and long-term patient health.

The level of interest is very high, with 11 SMEs awarded phase one contracts. The proposed solutions were in many cases new and genuinely innovative. And all the more important in the current environment is that the potential savings to the NHS run into the hundreds of millions.

The concept is very simple. The mechanism is commercial: demand and supply. It is about recognizing that the tens of billions of pounds that the government spends every year on goods and services is a major market-shaper.

By being a lead user government not only encourages innovation, it also indirectly finances it. If we demand innovation, and we make sure that innovative SMEs can compete for contracts, then we will get it. The benefits across government are clear enough. Innovation is how we get more for less. I will be pushing hard to see the SBRI concept extended and protected even through a period of fiscal constraint.

Conclusion: an innovation-led recovery

I started by saying that innovation would be decisive in Britain’s recovery. I don’t think that’s an overstatement. We are a knowledge economy. Innovation is how you actually turn knowledge into rising productivity, new solutions and new growth. Knowledge is the raw material. Innovation is the refinement process.

I’ve defined our challenge today not as pursuing a set of isolated innovation policies, but in building an innovation infrastructure for Britain today. My point in doing that was to remind us that what government does on skills, finance, science – these will decisively shape our capacity as an innovation nation. That is why we have put innovation in the name of the Department and innovation at the heart of the government’s plan for growth.

The TSB has done an exceptional job of building those capacities and my Department is committed to building on this. I want to finish by congratulating Graham, Iain and their team and their thousands of collaborators for playing such a vital part in building Britain’s future. The Government is right behind all that you are doing and helping to pioneer.

People attending an innovation event

The Strategic Investment Fund (SIF) was announced in Budget 2009.  It is a £750 million fund for the UK government to support a range of targeted investments across the UK economy to support growth.  Since the creation of the SIF, the Government has committed funding to a range of investments. 

The UK Strategic Investment Fund – Interim Report (PDF, 490KB) sets out the principles behind the SIF and the investment commitments that have been made so far.

The new facility allowed the client to acquire steel stock directly from a steel mill, which was previously not a viable source of supply due to cashflow constraints. In order for the client to secure the £800,000 required, Mark Grewer helped them show the potential lenders that cutting out the stockholders, and acquiring the steel stock directly from the steel mill, was a beneficial situation for all involved.

As insufficient security was available to meet the banks’ requirements, Mark assisted the client with making an application for half the necessary funds under the Enterprise Finance Guarantee Scheme, with the balance being provided by means of an overdraft. After negotiations with three lenders, Mark secured a deal with the client’s preferred option, Royal Bank of Scotland.

Project Butterfly was completed in August 2009, with the required funds successfully obtained. The client is delighted to be moving forward with the purchase of their new stock.