1 00:00:15,52 --> 00:00:20,69 With Matthew thank you very much indeed for that welcome. 2 00:00:22,25 --> 00:00:24,55 That selective says 3 00:00:24,56 --> 00:00:31,00 a summary of. What I've achieved don't complex or quite know just the nine hundred 4 00:00:31,01 --> 00:00:37,67 ninety seven general election. And of course. That 5 00:00:37,68 --> 00:00:44,38 campaign and much else I have done in achieved was done peripatetic Clee with you. 6 00:00:45,99 --> 00:00:46,93 I'm there for 7 00:00:47,41 --> 00:00:55,35 a great pleasure to be with you in your new opportunity. It 8 00:00:55,36 --> 00:01:00,37 is actually great to be back and it's great to be back in Britain Great to be back 9 00:01:00,38 --> 00:01:05,98 in the government. I was actually beginning to worry most likely since. 10 00:01:07,47 --> 00:01:13,64 I can Peter just wrong and then two months back in the cabinet I was asked to begin 11 00:01:13,65 --> 00:01:14,09 to write 12 00:01:14,10 --> 00:01:21,10 a good attorney ledged Clement. That his mission would be complete when 13 00:01:21,11 --> 00:01:27,33 the apostle Peter Mandelson might actually be starting to come through. 14 00:01:28,37 --> 00:01:34,25 To be honest icon is really rather disconcerting. So I decided to act quickly and 15 00:01:34,51 --> 00:01:38,74 my. My measures of broad proposals for the Royal Mail. 16 00:01:41,23 --> 00:01:45,86 And angry noises from the Parliamentary Labor Party would suggest that we 17 00:01:46,39 --> 00:01:52,85 thankfully back to business as usual but not as good as. Anyone but 18 00:01:53,27 --> 00:01:59,34 who stands up to deliver a lecture on the investor or policy it has 19 00:01:59,35 --> 00:02:05,88 a couple of problems and the first is one of definition. What those 20 00:02:06,13 --> 00:02:10,99 industry needs exactly back when the B.B.C. 21 00:02:11,00 --> 00:02:17,83 Still had an industry correspondent he in it was indeed usually 22 00:02:17,96 --> 00:02:24,71 he was typically reporting heavy industry. In parts because if there's 23 00:02:24,72 --> 00:02:27,32 a socio sions I briefly considered 24 00:02:27,65 --> 00:02:34,60 a bad meeting in the industry or together but on reflection I've decided to learn 25 00:02:34,87 --> 00:02:41,81 a personal campaign to reclaim the industry from the from the minerals and from the 26 00:02:41,82 --> 00:02:48,68 smoke stacks and when I talk about industry I mean the smartest high tech 27 00:02:49,05 --> 00:02:49,94 startup 28 00:02:50,94 --> 00:02:57,34 a man with the largest companies making Carls jet engines all airplane wings I mean 29 00:02:57,34 --> 00:03:04,32 . Manufacturing and none of the industries droning on and rooted 30 00:03:04,69 --> 00:03:04,86 in 31 00:03:04,87 --> 00:03:12,34 a world class services sector. Now the second much more serious culprit is 32 00:03:12,35 --> 00:03:19,19 the summer trip through history of industrial policy itself. Mimosa 33 00:03:19,20 --> 00:03:24,95 learned off to a crate any mention of industrial policy with 34 00:03:24,96 --> 00:03:31,10 a nineteen sixty's or nineteen seventy's style approach where the government 35 00:03:31,39 --> 00:03:37,24 attempted to pick Windows or rather where losers picked the government. 36 00:03:38,55 --> 00:03:43,54 Where government supported and valuable industries and had 37 00:03:43,55 --> 00:03:49,48 a very hands on approach to almost everything whether it be setting prices or 38 00:03:49,49 --> 00:03:55,86 fixing wages now for the good intentions of those policies they 39 00:03:55,87 --> 00:04:01,90 failed because they worked against the grain of markets and against 40 00:04:02,56 --> 00:04:09,40 economic change they searched to fess allies the status quo or rather than to 41 00:04:09,41 --> 00:04:15,93 facilitate change or confused protecting industries with pretty good 42 00:04:15,94 --> 00:04:22,00 promoting their development were substituted the calculus of politics for 43 00:04:22,01 --> 00:04:28,54 commercial or economic reality so the burden of proof is on anyone 44 00:04:28,55 --> 00:04:29,28 proposing 45 00:04:29,29 --> 00:04:35,98 a new industrial activism to show that they have fully understood and come to 46 00:04:35,99 --> 00:04:41,30 terms with the failures of the past the dynamism of 47 00:04:41,31 --> 00:04:48,27 a market economy is something that we should value and protect. Indeed 48 00:04:48,28 --> 00:04:53,48 one of the failings comparable to that of the seventy's of some of the touring 49 00:04:53,54 --> 00:05:00,13 industrial privatisations of the eighties was precisely that they did not make 50 00:05:00,17 --> 00:05:07,03 enough allowance for the necessary competition but first says large market players 51 00:05:07,58 --> 00:05:14,30 to lower prices and to provide better services nothing I have to say tonight 52 00:05:14,75 --> 00:05:20,82 will suggest that I think we help business by trying to block or reduce 53 00:05:21,09 --> 00:05:28,04 competitive pressures I do not however I also believe strongly that the idea 54 00:05:28,84 --> 00:05:35,46 that the best industrial policy is no industrial policy is both 55 00:05:35,51 --> 00:05:42,45 complacent and naive I think it must produce the potential of both 56 00:05:42,49 --> 00:05:49,28 markets and government to shape long term industrial outcomes government 57 00:05:49,29 --> 00:05:56,18 policies will always impact on industry the question is will they impact 58 00:05:56,25 --> 00:06:03,21 positively or negatively here would really incoherent and as 59 00:06:03,22 --> 00:06:10,20 one of nature's. Optimists I am more confident about the role of 60 00:06:10,21 --> 00:06:15,55 the state two weeks ago in my Hugo Young lecture I set out 61 00:06:15,56 --> 00:06:17,64 a case for what I call 62 00:06:17,65 --> 00:06:24,50 a capable strategic state when what works with markets and enables us 63 00:06:24,60 --> 00:06:29,67 to get the most out of globalization part of that is about building 64 00:06:29,68 --> 00:06:36,32 a fairer society social equipped to create murder winners from globalization. 65 00:06:37,29 --> 00:06:43,24 Part of it is about putting in place the conditions that will help British business 66 00:06:43,25 --> 00:06:49,98 succeed it will blow below Common me and. Market based industrial 67 00:06:50,10 --> 00:06:56,93 activism what I want to do tonight is to explore further this activist role for 68 00:06:56,94 --> 00:07:03,49 government. Busybody mode but in getting it right mattered 69 00:07:04,37 --> 00:07:10,27 I would expand on the basic idea of industrial activism that is rooted in my view 70 00:07:10,31 --> 00:07:17,15 in five core principles first industrial activism does not mean 71 00:07:17,44 --> 00:07:24,44 wrapping up failed companies or running industries from Whitehall no protection of 72 00:07:24,44 --> 00:07:30,94 industry from international competition because we believe that competition is in 73 00:07:30,94 --> 00:07:37,32 our long term interests second industrial activism means being 74 00:07:37,33 --> 00:07:44,06 pragmatic about the ability of markets to enable companies and people to 75 00:07:44,07 --> 00:07:45,23 succeed in 76 00:07:45,24 --> 00:07:52,05 a rapidly changing global economy Pelosi should be activist in the sense that it 77 00:07:52,06 --> 00:07:58,100 recognizes that government can and must compliment bucket dynamics to get the 78 00:07:59,01 --> 00:08:05,73 best outcomes for our society and our economy. Third Industrial 79 00:08:05,74 --> 00:08:12,15 activism is show not just progress we conventionally label industrial policy 80 00:08:12,72 --> 00:08:19,16 but by government policies regulation planning policy migration 81 00:08:19,17 --> 00:08:21,75 policy transport policy and 82 00:08:21,76 --> 00:08:27,16 a range of dollars as well as the rate government spends money and encourages 83 00:08:27,20 --> 00:08:34,08 innovation and entrepreneurship the central point about industrial policy is 84 00:08:34,09 --> 00:08:40,77 how successfully it aligns all these different policies to target and 85 00:08:40,78 --> 00:08:47,62 deliver industrial outcomes furth industrial activism means 86 00:08:47,63 --> 00:08:54,23 looking strategically at each sector in the economy let you know how to apply top 87 00:08:54,24 --> 00:09:00,00 down political patronage to companies in the sectors but to assess how 88 00:09:00,01 --> 00:09:03,11 a horizontal policy can secure 89 00:09:03,12 --> 00:09:09,80 a maximum Ben benefits across sectors and reinforce their particular 90 00:09:09,93 --> 00:09:16,63 strengths and third industrial activism means engaging in 91 00:09:16,64 --> 00:09:23,46 Europe and globally to shape the institutions and policies that manage 92 00:09:23,47 --> 00:09:29,71 globalization and global regulation and making sure British compounds are 93 00:09:29,72 --> 00:09:36,68 exploiting open markets around the world now these are not abstract 94 00:09:36,85 --> 00:09:43,48 points they have real practical implications for the well good government acts and 95 00:09:43,49 --> 00:09:49,74 complements the work of the private sector. They have real implications for how we 96 00:09:49,75 --> 00:09:52,06 care about ensuring that the U.K. 97 00:09:52,07 --> 00:09:58,53 Encourages entrepreneurship and creates. High value jobs in 98 00:09:58,54 --> 00:10:05,11 sectors that will be at the center of the big global and technological trends in 99 00:10:05,12 --> 00:10:10,67 this twenty first century they shape the way we think about Britain's industrial 100 00:10:10,68 --> 00:10:14,97 future it is precisely now in my view in 101 00:10:14,98 --> 00:10:21,30 a downturn that it is most important to be reflecting on our long term strengths 102 00:10:21,70 --> 00:10:26,98 and to put in place the conditions for future success now there's 103 00:10:26,99 --> 00:10:33,77 a huge amount of good work being done across government that reflects one. Of these 104 00:10:33,78 --> 00:10:40,27 principles the stern the leech the same sprit the Edington 105 00:10:40,40 --> 00:10:46,57 basket and Kilian pretty early reviews for example who've made important 106 00:10:46,58 --> 00:10:53,43 contributions on skills innovation transport planning what we need to do now 107 00:10:53,47 --> 00:10:56,60 is to bring all of that work together into 108 00:10:56,61 --> 00:11:01,74 a single clear only vision of Britain's industrial future in 109 00:11:01,75 --> 00:11:07,51 a globalized economy so why do we need new industrial activism 110 00:11:09,01 --> 00:11:13,41 I think it's important to stress that this activists in is in many cases 111 00:11:13,74 --> 00:11:20,23 a question of amplifying past success rather than compensating for past 112 00:11:20,27 --> 00:11:26,61 failure for nine hundred ninety seven under the economic stewardship of 113 00:11:27,02 --> 00:11:30,45 brown and Allister darling you can't G.D.P. 114 00:11:30,46 --> 00:11:35,48 Growth has been good. Underpinning this growth was 115 00:11:35,49 --> 00:11:39,91 a step change in productivity two filaments with the U.K. 116 00:11:39,92 --> 00:11:46,17 Narrowing the output gap with France disappearing with Germany and keeping pace 117 00:11:46,18 --> 00:11:52,69 with the US is impressive productivity prefer its driving that improved 118 00:11:52,70 --> 00:11:53,99 performance of the U.K. 119 00:11:54,00 --> 00:12:00,64 Economy has been an effective market based economic policy and 120 00:12:00,65 --> 00:12:06,81 practical reforms to promote Farah unearth flexible markets we have 121 00:12:06,82 --> 00:12:09,67 a strong enterprise culture in the U.K. 122 00:12:10,09 --> 00:12:17,09 And competitive markets that deliver efficiency and benefits for businesses and for 123 00:12:17,10 --> 00:12:19,50 consumers we have 124 00:12:19,51 --> 00:12:25,91 a good record on regulation goodish. And 125 00:12:26,60 --> 00:12:32,89 impact on an ambitious program further to reduce the administrative burden of 126 00:12:32,89 --> 00:12:39,16 regulation over the last decade the government has tackled the historic 127 00:12:39,17 --> 00:12:45,49 backlog of under investment in the U.K.'s infrastructure and its 128 00:12:45,50 --> 00:12:51,58 clearance and its Science Space and openness to both trade and foreign investment 129 00:12:51,100 --> 00:12:58,96 has delivered huge benefits despite the short term pressures to change tack both in 130 00:12:58,97 --> 00:13:05,50 Britain and in the European Union we need to ensure that the open competition and 131 00:13:05,51 --> 00:13:09,34 labor market policies that drive growth in the U.K. 132 00:13:09,35 --> 00:13:15,89 And Europe are properly protected for the long term. However there will be merger 133 00:13:15,90 --> 00:13:22,26 consequences in mind for you from the current economic slowdown for the structure 134 00:13:22,69 --> 00:13:23,42 of the U.K. 135 00:13:23,43 --> 00:13:30,16 Economy lead after growth has resumed. The economy will emerge with 136 00:13:30,17 --> 00:13:36,78 a consolidated financial services sector household consumption 137 00:13:37,37 --> 00:13:43,77 is likely to grow more slowly than the rest of the economy as British consumers cut 138 00:13:43,78 --> 00:13:50,71 back on debt public sector job creation will add far fewer jobs to 139 00:13:50,72 --> 00:13:57,55 the economy in the future and it has in the last ten years we need to widen 140 00:13:58,18 --> 00:14:02,96 and down versified the specialist bases over the U.K. 141 00:14:03,00 --> 00:14:09,86 Economy and to focus on how we further commercialize and internationalize these 142 00:14:09,87 --> 00:14:16,64 bases this will matter because the global economic order will continue to be 143 00:14:16,65 --> 00:14:23,29 reshaped especially by the continuing real emergence of China and India 144 00:14:24,26 --> 00:14:30,27 these economies are radically changing the global division of labor and first 145 00:14:30,28 --> 00:14:36,99 seeing us to consider our own comparative advantages and emerging strategic 146 00:14:37,48 --> 00:14:44,15 Malkin's what we know for certain is that our specializations must be 147 00:14:44,16 --> 00:14:50,75 Bert or marriage and value added. They will be in business and 148 00:14:50,76 --> 00:14:56,89 financial services where smart regulation combined with the depth of commercial and 149 00:14:56,90 --> 00:15:02,49 legal experience in the city for example have the potential to make Britain 150 00:15:02,72 --> 00:15:08,97 a clear market leader even if it's not fashionable to say it right now. 151 00:15:10,04 --> 00:15:15,87 But there really will be in the Managing knowledge and creative industries of the 152 00:15:15,88 --> 00:15:22,11 technological the manufacturing process revolutions that will define the current 153 00:15:22,12 --> 00:15:29,01 century for example the barrier sciences the global shift to cleaner 154 00:15:29,59 --> 00:15:36,43 and more efficient energy usage we're so thrilled open right open the market 155 00:15:36,44 --> 00:15:39,88 for new firms of energy generation and 156 00:15:39,89 --> 00:15:46,82 a host of other low carbon where Post Carbon goods and services now 157 00:15:46,83 --> 00:15:53,74 our success in Greece and other areas will be absolutely fundamental to Britain's 158 00:15:53,78 --> 00:16:00,41 economic future but it will mean murthered simply not standing in the way 159 00:16:00,68 --> 00:16:02,42 of British engineer a T. 160 00:16:02,46 --> 00:16:03,35 An entrepreneur 161 00:16:03,36 --> 00:16:09,86 a listen but of course these things will be key drivers but our success will 162 00:16:09,93 --> 00:16:16,79 also be defined ballet high levels of research the commercialisation of 163 00:16:16,80 --> 00:16:19,72 innovation and the creation of 164 00:16:19,73 --> 00:16:26,13 a world class workforce and infrastructure here in the real world for strategic 165 00:16:26,14 --> 00:16:32,39 government becomes vital because these are not things that the market will 166 00:16:32,82 --> 00:16:39,55 Matic Lee deliver on its own that is not an entirely uncontroversial 167 00:16:39,56 --> 00:16:46,09 thing to say but the same pragmatically that markets may fail 168 00:16:47,09 --> 00:16:53,40 may not produce the outcomes we need it is not to question their 169 00:16:53,41 --> 00:16:55,87 fundamental role in 170 00:16:56,03 --> 00:17:02,72 a Martin economy it is simply to say that we need to understand better how 171 00:17:02,73 --> 00:17:08,90 markets work and should government policy accordingly. The market 172 00:17:08,91 --> 00:17:15,88 failures that literally affect all modern term economic capacity are often complex 173 00:17:15,94 --> 00:17:22,61 and concerned the basic allocation of resources in the economy for 174 00:17:22,62 --> 00:17:27,16 example spending on skills is vital for 175 00:17:27,17 --> 00:17:33,88 a dynamic economy but for individual businesses the spillover from that spending 176 00:17:34,40 --> 00:17:41,24 often makes it unattractive companies well apprentices but the moment when to 177 00:17:41,25 --> 00:17:47,95 pay to train apprentices who may one day work for their competition we're taking 178 00:17:47,96 --> 00:17:50,97 a vacation this is dry cloth for 179 00:17:50,98 --> 00:17:57,46 a cutting edge economy but immigration can be too. Risky 180 00:17:57,68 --> 00:18:04,29 expensive and difficult for markets Martin economists were certainly high levels of 181 00:18:04,30 --> 00:18:10,63 general scientific and technical education but the bucket will not produce these 182 00:18:11,23 --> 00:18:11,92 on its own 183 00:18:12,88 --> 00:18:19,74 a Madden economy needs intensive digital and transport infrastructure but we cannot 184 00:18:19,75 --> 00:18:26,02 necessarily rely solely on markets to produce these things now these are cases 185 00:18:26,03 --> 00:18:32,88 where markets may fail us that interim back to crisis as we've seen recently but 186 00:18:32,89 --> 00:18:34,49 quietly and in 187 00:18:34,50 --> 00:18:41,30 a way that can see easily escape notice but they fail nevertheless to 188 00:18:41,32 --> 00:18:46,83 produce the best outcome for our economy and our society as 189 00:18:46,85 --> 00:18:51,79 a whole that's why government must be willing to compliment the market when the 190 00:18:51,80 --> 00:18:54,46 evidence suggests it is able to make 191 00:18:54,47 --> 00:19:01,38 a positive difference in promoting long term growth and prosperity. Now I want to 192 00:19:01,39 --> 00:19:07,55 spend the rest of this lecture expanding on this idea asking what it might mean for 193 00:19:07,56 --> 00:19:13,35 government and business in particular for the structure and decision making process 194 00:19:13,48 --> 00:19:18,43 of government Firstly I think it implies that we need to take what we might call 195 00:19:18,81 --> 00:19:19,47 a token 196 00:19:19,48 --> 00:19:25,89 a business environment approach the government has to be aware that business is 197 00:19:25,90 --> 00:19:27,97 affected by a farmer or 198 00:19:28,80 --> 00:19:34,75 a rebel government dogs then just the spending or policy is explicitly not 199 00:19:35,05 --> 00:19:41,38 industrial policy skills policy transport policy planning policy energy policy 200 00:19:41,64 --> 00:19:46,92 infrastructure policy public procurement environment policy migration policy 201 00:19:46,93 --> 00:19:52,60 education policy social welfare policy consumer policy intellectual property 202 00:19:52,75 --> 00:19:59,39 frameworks regulation and taxation only shape the enterprise involved in the 203 00:19:59,40 --> 00:20:00,02 U.K. 204 00:20:00,81 --> 00:20:06,39 Encouraging domestic business growth. And attracting foreign business investment to 205 00:20:06,40 --> 00:20:07,22 the U.K. 206 00:20:07,42 --> 00:20:14,38 Where both depend on the balances we strike across these areas that we do in 207 00:20:14,39 --> 00:20:20,11 each of them but essentially how we join them up to a whole 208 00:20:20,16 --> 00:20:26,95 a coherent whole so government even more than it currently does needs to 209 00:20:26,96 --> 00:20:31,83 reflect on how it pulls on these leaders with 210 00:20:31,83 --> 00:20:37,11 a clear idea of the proud of the priority outcomes it is seeking 211 00:20:38,88 --> 00:20:41,86 the challenge is aligning these policies in 212 00:20:41,87 --> 00:20:48,35 a way that serves business needs in general something we do well I think on the 213 00:20:48,36 --> 00:20:54,100 whole but specific industrial objectives as well which in my 214 00:20:55,01 --> 00:21:01,76 view is something in Britain we do rather less effectively. Other European 215 00:21:01,77 --> 00:21:08,09 governments do not achieve this seamlessly but my recent Continental 216 00:21:08,10 --> 00:21:14,94 succumbed. Suggested to me that we may just have something just too little 217 00:21:15,21 --> 00:21:17,29 to learn when it comes to creating 218 00:21:17,30 --> 00:21:24,24 a strategic focus across government on our industrial future in 219 00:21:24,25 --> 00:21:30,74 this it is absolutely essential that we engage fully with business at every step 220 00:21:31,36 --> 00:21:37,75 remember. Everything business needed we would probably not be in government 221 00:21:38,64 --> 00:21:45,53 and when I say business I mean those involved in delivering business success owners 222 00:21:45,83 --> 00:21:52,13 managers employees and consumers who are the ultimate arbiters of business 223 00:21:52,14 --> 00:21:59,02 success obviously atemporal business environment approach can be as fundamental 224 00:21:59,75 --> 00:22:06,44 as ensuring that regulation or business taxation do not cancel out pro 225 00:22:06,45 --> 00:22:12,76 enterprise policy in other parts of government this is why it is so important to 226 00:22:12,77 --> 00:22:15,04 see government dollars as 227 00:22:15,05 --> 00:22:22,01 a regulator as critical to the environment in which enterprise operates but it 228 00:22:22,02 --> 00:22:26,43 does not simply mean making sure we are not putting unnecessary obstacles in the 229 00:22:26,44 --> 00:22:33,14 way of business growth important as that is it means recognizing that government 230 00:22:33,36 --> 00:22:40,33 can actually use the way. The total business environment positively proactive 231 00:22:40,34 --> 00:22:47,09 play to enhance business potential and growth the good example is clusters 232 00:22:47,91 --> 00:22:53,23 where groups of firms and talented people for business ecosystems. 233 00:22:54,27 --> 00:23:01,22 Comparative advantages are greater than the sum of their plots. Not government 234 00:23:01,23 --> 00:23:06,87 policy cannot create clusters from scratch but we can use 235 00:23:06,88 --> 00:23:13,31 a whole range of government interventions in order to encourage their success 236 00:23:14,24 --> 00:23:19,26 an incomplete list would include the search policy that reinforces university 237 00:23:19,27 --> 00:23:25,52 centers of excellence and encourages toils between universities and companies 238 00:23:25,53 --> 00:23:32,24 commercializing cutting edge technology world class transport and digital and 239 00:23:32,25 --> 00:23:38,53 communications infrastructure planning rules that encourage small startup companies 240 00:23:38,74 --> 00:23:45,06 to build local factories where production sites for new products rather than being 241 00:23:45,10 --> 00:23:50,02 implicitly or explicitly encouraged to move production away from 242 00:23:50,03 --> 00:23:53,63 a company's are in deep pain base or out of the U.K. 243 00:23:53,64 --> 00:23:58,74 Altogether the plant is that our industrial economy is merely 244 00:23:58,75 --> 00:24:05,72 a drop of sensitive ecosystems and supply chains and like any 245 00:24:05,73 --> 00:24:12,01 other ecosystem they are shaped by hundreds of factors and individual 246 00:24:12,02 --> 00:24:17,88 decisions our government has to understand this this probably Gratian to see the 247 00:24:17,89 --> 00:24:24,88 big picture is worse so crucially important but the level of policy delivery if 248 00:24:24,89 --> 00:24:28,92 those run message I have heard repeatedly from business since I returned to 249 00:24:28,93 --> 00:24:34,49 government it is that while the government has transferred to the Enterprise in 250 00:24:34,51 --> 00:24:40,82 Bharat over the last decade. Well major decisions affecting 251 00:24:40,83 --> 00:24:47,71 a company or a sector's future government still struggles to speak with 252 00:24:47,72 --> 00:24:54,23 a single force to government and you have to have at least fifteen different 253 00:24:54,38 --> 00:25:01,08 conversations I was told by one senior industrial NIDA recently and that stressed 254 00:25:01,12 --> 00:25:08,11 central government. Delegation and devolution over the last decade 255 00:25:08,55 --> 00:25:15,05 have had the consequence that there are now dozens of agencies and partnerships 256 00:25:15,24 --> 00:25:21,74 charged with aspects of industrial policy delivery M A A S. 257 00:25:23,58 --> 00:25:29,62 A S R D A's and each C A 258 00:25:30,46 --> 00:25:36,68 P T. L S C S J C piece I mean I have 259 00:25:36,69 --> 00:25:42,14 a long list here and I'm going to spend a year not nobody disputes for 260 00:25:42,15 --> 00:25:48,93 a moment the employer so particular individual bird and I'm certainly not arguing 261 00:25:48,94 --> 00:25:54,74 that everything should be done from land you know because it's simply regional 262 00:25:54,75 --> 00:26:01,32 expertise is vital absolutely vital for ensuring that industrial 263 00:26:01,33 --> 00:26:08,28 policy is driven by well Age of what works on the ground but business is absolutely 264 00:26:08,29 --> 00:26:14,79 clear and I agree. That imap ing out our industrial future we ensure that 265 00:26:14,80 --> 00:26:21,18 policy delivery is drawing down and consistent and straight forward for business 266 00:26:21,33 --> 00:26:22,74 this is something I want to make 267 00:26:22,75 --> 00:26:29,24 a priority I will start with the regional development agencies for which I am 268 00:26:29,25 --> 00:26:35,74 responsible they are very nice have an important front flying role in ensuring 269 00:26:36,11 --> 00:26:41,81 that we weather the downturn and prepare imaginatively for the upturn I want to 270 00:26:41,82 --> 00:26:47,25 work more closely with them in delivering national priorities and need to work with 271 00:26:47,26 --> 00:26:53,86 each other to shape areas of common interest I also will to continue to focus on 272 00:26:53,87 --> 00:27:00,33 the coherence and accessibility of the services the government delivers we are 273 00:27:00,34 --> 00:27:06,35 already working with the R T A's and local government to streamline existing 274 00:27:06,36 --> 00:27:12,96 regional plans into ran coherent vision focused on promoting level 275 00:27:13,58 --> 00:27:18,40 economic growth you would have thought that they were already charged with doing 276 00:27:18,41 --> 00:27:25,27 that and had considerable experience of doing so in achievement under their belts I 277 00:27:25,28 --> 00:27:30,89 don't believe that is the case certainly not enough now that mass combine 278 00:27:30,93 --> 00:27:37,28 infrastructure planning with support for business skills enterprise and innovation 279 00:27:37,58 --> 00:27:42,79 the onus is on government to ensure the stability and delivers in the right way at 280 00:27:42,80 --> 00:27:49,34 the right level we also need to look at science technology innovation in the way we 281 00:27:49,35 --> 00:27:55,95 encourage it and finance the innovation that produces new technology and 282 00:27:55,95 --> 00:28:01,84 improvements in productivity will define economic success. 283 00:28:03,15 --> 00:28:08,60 As it were the way that we capitalize on and apply innovations developed elsewhere 284 00:28:09,29 --> 00:28:14,80 especially some of the process innovations that now drive success in the services 285 00:28:15,00 --> 00:28:21,31 and retail sectors we need to consider the ways in which government supports new 286 00:28:21,32 --> 00:28:26,08 forms of innovation this is particularly important during 287 00:28:26,09 --> 00:28:32,88 a downturn where firms may be tempted to cut down on investment in innovation and 288 00:28:32,89 --> 00:28:39,04 value clearly intangibles like skills development marketing the innovation nation 289 00:28:39,31 --> 00:28:43,92 right people set out how government can send signals were set policy in 290 00:28:43,93 --> 00:28:50,80 a way that encourages innovation for example government spends billions of pounds 291 00:28:50,96 --> 00:28:57,00 every year procuring public services and building vital infrastructure 292 00:28:57,83 --> 00:29:03,89 John Boehner has argued rightly that this money should be spent with long term 293 00:29:04,37 --> 00:29:10,62 strategic outcomes in mind this means helping small businesses grow 294 00:29:11,15 --> 00:29:17,46 by bidding for government contracts no idea that both Alan Johnson and John hot at 295 00:29:17,47 --> 00:29:23,36 health and defense the currently developing we also need to use regulation and 296 00:29:23,37 --> 00:29:29,98 procurement to give certainty so that sectors could make investment decisions for 297 00:29:29,99 --> 00:29:36,55 the long term and grow for example by making clear long term commitments to 298 00:29:36,56 --> 00:29:43,31 reducing our carbon footprint government can change the risk calculus for companies 299 00:29:43,32 --> 00:29:48,31 considering investments in low carbon technology. The U.K. 300 00:29:48,32 --> 00:29:49,09 Already has 301 00:29:49,10 --> 00:29:56,03 a strong environmental goods and services sector providing regular tree clarity and 302 00:29:56,04 --> 00:30:02,75 policy certainly we're in encourage the world class 303 00:30:02,76 --> 00:30:09,11 research and computer science that drives these businesses and the growth industry 304 00:30:09,24 --> 00:30:15,17 in helping firms become more energy efficient it will help ensure that the U.K. 305 00:30:15,18 --> 00:30:21,13 Continues to lead European venture capital investment in low carbon technologies 306 00:30:21,48 --> 00:30:23,32 and strengthen the U.K. 307 00:30:23,33 --> 00:30:29,79 Companies that were then compete internationally in this growing market now there 308 00:30:29,80 --> 00:30:36,40 is also the question of money it is very clear that we I'm sure the U.K. 309 00:30:36,41 --> 00:30:42,79 Firms have access to finance for innovation especially risk capital 310 00:30:43,32 --> 00:30:49,85 for small pathbreaking firms the government is to what it can to ensure that credit 311 00:30:49,86 --> 00:30:56,01 remains available for viable firms during the downturn but it is important first 312 00:30:56,02 --> 00:31:02,79 say to think long term we need to make sure that Britain's financial system 313 00:31:03,31 --> 00:31:09,43 is able to provide the kind of start up and development capital that the U.K. 314 00:31:09,47 --> 00:31:15,35 Economy will need especially given that risk aversion in markets is likely to be 315 00:31:15,36 --> 00:31:22,29 high for some time now huge amounts of money are presently channeled through 316 00:31:22,30 --> 00:31:29,14 the U.K.'s financial markets especially through pension funds. Government action 317 00:31:29,71 --> 00:31:36,68 both directly and indirectly affects rare and how these billions of pounds are say 318 00:31:37,03 --> 00:31:43,79 and then invested I think government could understand better what overall impact 319 00:31:43,83 --> 00:31:50,41 government policy may be having on how savings like pensions are allocated to learn 320 00:31:50,42 --> 00:31:56,82 term productive investment in our industrial future we need to ask if there are 321 00:31:56,83 --> 00:32:02,82 other ways in which the government could work closely with the private sector to 322 00:32:02,83 --> 00:32:09,25 encourage risk capital both of the initial business stages and in the crucial 323 00:32:09,55 --> 00:32:15,05 expansion phase some for example who suggested that we now need 324 00:32:15,06 --> 00:32:20,04 a twenty first century version of the original one thousand nine hundred forty five 325 00:32:20,27 --> 00:32:26,93 industrial and commercial finance corporation or three well as it was originally 326 00:32:27,12 --> 00:32:33,32 can see now are decade where on investment in fundamental 327 00:32:33,33 --> 00:32:39,58 research the U.K.'s sound space and the creation of the technology strategy 328 00:32:40,41 --> 00:32:40,83 give us 329 00:32:40,84 --> 00:32:47,78 a power first set of tools for promoting innovative research there are truths 330 00:32:47,79 --> 00:32:54,72 we need to use to maximum effect but even with the doubling of research funding 331 00:32:54,76 --> 00:33:01,47 over the last decade we need birth to ask if the scale of spending is enough 332 00:33:02,17 --> 00:33:08,91 and make sure that we are adequately investing in both academic research and the 333 00:33:08,92 --> 00:33:15,21 companies that commercialize that research. These questions have been highlighted 334 00:33:15,22 --> 00:33:21,29 in the debate about Britain's manufacturing future inevitably they are now being 335 00:33:21,30 --> 00:33:25,43 killed being a good win heightened importance as 336 00:33:25,44 --> 00:33:31,54 a result of the credit crunch in an increasingly number of children economy it is 337 00:33:31,55 --> 00:33:37,48 also important to look closely at the Wellness we protect and promote innovation 338 00:33:38,06 --> 00:33:44,11 through the flexibility cost and efficiency of our intellectual property frameworks 339 00:33:44,24 --> 00:33:50,93 especially for small companies now as developing countries 340 00:33:51,46 --> 00:33:57,63 move up the value chain their own worst so be an increasing premium on skilled 341 00:33:57,98 --> 00:34:04,36 workers we will have to compete globally to return to retain 342 00:34:04,85 --> 00:34:11,40 workers and jobs improving British product equity will often depend on the 343 00:34:11,41 --> 00:34:15,53 scales of our workers John Denham is already setting out 344 00:34:15,54 --> 00:34:22,36 a strategic vision of how we need to go forward on skills we will need to continue 345 00:34:22,37 --> 00:34:28,91 to invest in world class general education to provide zero sound platform of 346 00:34:28,92 --> 00:34:35,84 skills on which to build but lifelong learning will be an inherent part of life 347 00:34:36,32 --> 00:34:38,44 for everyone in the U.K. 348 00:34:39,47 --> 00:34:40,45 This will require 349 00:34:40,50 --> 00:34:47,13 a cultural shift in thinking about the jobs we're going to have over our lifetimes 350 00:34:47,69 --> 00:34:54,68 and the schools we're going to need to develop certainty five percent of those who 351 00:34:54,69 --> 00:35:01,13 were make up the U.K.'s workforce in twenty twenty ready out of 352 00:35:01,14 --> 00:35:08,11 compulsory education. Now because industries will change fast adapt 353 00:35:08,12 --> 00:35:14,97 to Berlin portable skills matter more as Will employers with the capacity to learn 354 00:35:15,01 --> 00:35:17,61 on the job especially the I.C.T. 355 00:35:17,62 --> 00:35:23,89 Skills that drive productivity gains in particular we need to make sure 356 00:35:24,55 --> 00:35:30,27 that employers are actively engaged so that the system is delivering the skills 357 00:35:30,28 --> 00:35:36,87 they need to grow their businesses but the flexibility for employees that 358 00:35:36,88 --> 00:35:43,83 ensures that training and job ability go together now with these issues we need to 359 00:35:43,84 --> 00:35:48,60 be ready to tailor our horizontal approaches 360 00:35:48,61 --> 00:35:54,70 a horizontal promises to the needs of individual sectors where this is appropriate 361 00:35:55,43 --> 00:36:01,45 we already do this kind of tailoring through National Skills academies and for 362 00:36:01,46 --> 00:36:07,52 example our export promotion work we need to recognise that needs 363 00:36:07,53 --> 00:36:14,02 a different from one sector to another and that the impact of government policy may 364 00:36:14,03 --> 00:36:20,43 differ from one sector to another we need to know what makes each individual 365 00:36:20,84 --> 00:36:27,29 sector works especially those individual sectors that relate 366 00:36:27,57 --> 00:36:34,03 to the strategic markets in which we want to produce and 367 00:36:34,04 --> 00:36:40,47 supply. Sectoral approaches should not politically privilege some industries over 368 00:36:40,48 --> 00:36:46,94 others we need to let the dynamics of competition operate within sectors so that 369 00:36:46,95 --> 00:36:53,27 even though I'm strong sectors weak companies can and do fail it is 370 00:36:53,28 --> 00:36:59,45 a simple reality that we need strong companies in sectors in the U.K. 371 00:37:00,13 --> 00:37:06,91 Now it's important to be clear that government cannot predict the future but we 372 00:37:06,92 --> 00:37:12,82 do know good Rober Yukos future strengths need to model in 373 00:37:12,83 --> 00:37:18,65 a hollow ballyhoo added moment intensive areas where the combination of school and 374 00:37:18,66 --> 00:37:22,36 workforce the majority of companies and 375 00:37:22,37 --> 00:37:28,95 a world class research base have maximum effect we also know that these are 376 00:37:28,99 --> 00:37:33,92 earliest where developing global markets will present us with the biggest 377 00:37:33,93 --> 00:37:40,13 opportunities so the Yukos comparative advantages and strategic 378 00:37:40,17 --> 00:37:46,67 opportunities in the knowledge and creative industries financial good business 379 00:37:46,68 --> 00:37:53,67 services and advanced manufacturing need to be at the front of our minds when we 380 00:37:53,68 --> 00:38:00,56 design horizontal policies one example of good value of strategic approaches is 381 00:38:00,57 --> 00:38:05,86 Stephen Carter's digital work which is looking at the world in which 382 00:38:05,86 --> 00:38:10,20 a strong digital and communications industry in the U.K. 383 00:38:10,68 --> 00:38:12,39 Can be supported by 384 00:38:12,39 --> 00:38:19,28 a clear regulatory framework and environment and continued support for public 385 00:38:19,30 --> 00:38:24,35 service content he will not feel his initial thinking on this in January. 386 00:38:26,00 --> 00:38:30,19 Bandz office of nuclear development is working with the U.K. 387 00:38:30,20 --> 00:38:36,65 Industry to signal the opportunities ahead and to use maximum clarity 388 00:38:37,11 --> 00:38:42,46 on regulator intentions to give business the confidence to make the SARS of Berlin 389 00:38:42,47 --> 00:38:49,28 necessary investments in super nuclear technologies. The same kind of approach 390 00:38:49,29 --> 00:38:55,25 should be taken by Arabs first coming officer renewable energy development ensuring 391 00:38:55,26 --> 00:39:01,96 the public procurement and infrastructure choices explicit incentives 392 00:39:02,23 --> 00:39:08,03 for the development of world beating green industries and therefore jobs in the 393 00:39:08,04 --> 00:39:08,67 U.K. 394 00:39:09,51 --> 00:39:16,41 We have to back this with an innovation policy focused on that say outcome 395 00:39:17,06 --> 00:39:22,60 again the government spurred the thinking on this green industrial revolution and 396 00:39:22,61 --> 00:39:29,56 the tribes associated with it will be additionally presented in January they're 397 00:39:29,57 --> 00:39:30,24 finally 398 00:39:30,56 --> 00:39:37,54 a crucial focus for our industrial activism involves not looking inwards but 399 00:39:37,58 --> 00:39:43,69 out. It involves making sure all the U.K.'s drink earlier can 400 00:39:43,70 --> 00:39:49,68 nationally and through the European Union to shape the openness of global markets 401 00:39:49,69 --> 00:39:54,87 for both trade and investment we need to continue to make the case for 402 00:39:54,89 --> 00:40:01,69 a free and fair trade and for the progress of integration of the developing 403 00:40:01,69 --> 00:40:07,16 world into the world trading system especially in the face of the protectionist 404 00:40:07,16 --> 00:40:12,76 pressures that will come with global downturn pressures that I had to feel 405 00:40:12,77 --> 00:40:19,66 millionaire after four years as the e use trade commissioner. Now as chair of the G. 406 00:40:19,67 --> 00:40:22,39 Twenty next year the U.K. 407 00:40:22,40 --> 00:40:28,91 Is well positioned to shape emerging bottles of financial governance and to ensure 408 00:40:28,92 --> 00:40:31,81 that they balance effective regulation with 409 00:40:31,82 --> 00:40:38,34 a strong commitment to economic openness we should be doing the same in the U.K. 410 00:40:38,71 --> 00:40:45,06 Reinforcing the essentially liberal instincts of the European Commission how we 411 00:40:45,07 --> 00:40:50,53 need to ensure that we're doing we can to attract inward investment to the U.K. 412 00:40:50,94 --> 00:40:55,74 And to ensure that the US Burleigh firms in particular have the necessary support 413 00:40:55,75 --> 00:41:02,17 they need to access growing overseas markets this means actively positioning 414 00:41:02,18 --> 00:41:06,04 ourselves through trade promotion and the E.U. 415 00:41:06,05 --> 00:41:12,47 Trade policy agenda to succeed in strategic markets like India or China and the 416 00:41:12,48 --> 00:41:18,81 growing economies of Latin America our trade and investment promotion work through 417 00:41:18,82 --> 00:41:19,98 U.K. T.I. 418 00:41:20,28 --> 00:41:26,62 Will only become more and more important so in conclusion 419 00:41:27,76 --> 00:41:32,77 let me if I may try and sum up what I've been trying to get across to you this 420 00:41:32,78 --> 00:41:39,52 evening. We are country are going to emerge from the 421 00:41:39,53 --> 00:41:46,42 current downturn and we are going to emerge but. You can have confidence that 422 00:41:47,73 --> 00:41:48,10 into 423 00:41:48,11 --> 00:41:55,53 a world that will confront us with both immense opportunities and immense 424 00:41:55,68 --> 00:42:02,13 pressures and challenges it is only going to get harder from here on in 425 00:42:03,61 --> 00:42:09,17 the pressure from globalization to continue to improve our productivity and focus 426 00:42:09,18 --> 00:42:15,96 on the specialist bases of the British economy will be absolutely relentless. 427 00:42:17,19 --> 00:42:24,12 We have to get better at growing smaller companies into bigger ones what 428 00:42:24,13 --> 00:42:27,38 I've done to mind is to set out the case for 429 00:42:27,39 --> 00:42:32,44 a new British Industrial activism in government that complements markets to produce 430 00:42:32,45 --> 00:42:36,79 better term economic outcomes for the U.K. 431 00:42:37,71 --> 00:42:44,15 Especially in ensuring that we continue to develop the skills innovation and 432 00:42:44,17 --> 00:42:50,12 infrastructure that were superb a world class manufacturing sector as part of 433 00:42:50,14 --> 00:42:56,48 a Martin mixed economy but over the short term decisions we've made on 434 00:42:56,48 --> 00:43:03,18 transitional assistance for businesses faced with the extraordinary strains of the 435 00:43:03,20 --> 00:43:10,00 downturn in the long term there is no propping up on viable companies running 436 00:43:10,02 --> 00:43:16,81 businesses from Whitehall no heavy handed state no backing or wealth from 437 00:43:16,82 --> 00:43:23,12 free trade or open markets where from the discipline of competition on the contrary 438 00:43:23,13 --> 00:43:29,41 I believe these things more than anything in the long term for strong industry what 439 00:43:29,42 --> 00:43:34,99 I want to do now there is to use the occasion of this lecture tonight to launch 440 00:43:34,100 --> 00:43:41,98 a debate on how we take this work from here this process cannot 441 00:43:41,99 --> 00:43:46,97 take place in a vacuum we must look closely at how other O.E.C.D. 442 00:43:46,98 --> 00:43:52,24 Countries are addressing the same challenges and recognise that many of these 443 00:43:52,25 --> 00:43:58,07 countries of the world develop strategies already in this area but we've got to 444 00:43:58,08 --> 00:44:04,92 respond I also think we would do well to reflect on some of the conclusions that 445 00:44:04,97 --> 00:44:10,58 Asian economies have drawn about how to equip their societies for rapid 446 00:44:10,59 --> 00:44:17,59 industrialization especially in technical and education. Well words 447 00:44:17,60 --> 00:44:24,20 recognizing of course but what works elsewhere may not work in precisely the same 448 00:44:24,21 --> 00:44:27,17 way here this is to throw down 449 00:44:27,22 --> 00:44:33,70 a real challenge to ministers and to the civil service whilst we manage the 450 00:44:33,71 --> 00:44:40,45 present we need to think strategically and coherently about the jobs and 451 00:44:40,46 --> 00:44:42,23 economy that the U.K. 452 00:44:42,27 --> 00:44:47,95 Will need and will be seeking in the twenty first century we need to think in terms 453 00:44:47,96 --> 00:44:54,95 of outcomes but in terms of the dividing lines between departments we need 454 00:44:54,96 --> 00:45:01,16 ministers who join even the prioritise business ministers and 455 00:45:01,16 --> 00:45:08,14 officials seem less territorial in their approach to their decisions her back she 456 00:45:08,15 --> 00:45:14,90 says Treasury taking the long term view even more than it does at the moment. 457 00:45:16,86 --> 00:45:21,59 And we're so sometimes saying us. And the government as 458 00:45:21,60 --> 00:45:28,40 a whole aligning its policies with number ten and the cabinet office making 459 00:45:28,41 --> 00:45:34,80 sure that it does so we need a stronger center of government not 460 00:45:34,81 --> 00:45:41,18 a weaker one if we're going to be strategically more capable. We need to go further 461 00:45:41,19 --> 00:45:44,93 in mapping out a successful industrial future for the U.K. 462 00:45:45,37 --> 00:45:52,10 With some simple questions at the front of our minds how can the intervention of 463 00:45:52,11 --> 00:45:57,94 a smart strategic government better complement the market in allocating resources 464 00:45:57,95 --> 00:45:58,73 in the U.K. 465 00:45:58,74 --> 00:46:04,82 Economy to ensure you Clay companies have the best possible chances to compete in 466 00:46:04,83 --> 00:46:10,72 the globalized world how can we see the total business environment better when we 467 00:46:10,73 --> 00:46:16,67 legislate and invest public money realizing how much of what government does to 468 00:46:16,68 --> 00:46:22,15 shape business outcomes are we using government's role not just as 469 00:46:22,16 --> 00:46:23,99 a legislator and regulator but is 470 00:46:24,00 --> 00:46:30,77 a network and facilitator to maximum effect are we really drawing out the 471 00:46:30,78 --> 00:46:37,41 delivery of policy nationally regionally and locally for the businesses it is 472 00:46:37,42 --> 00:46:44,36 designed to benefit I we focusing on emerging strategic markets and 473 00:46:44,37 --> 00:46:49,72 relating to these the U.K.'s productivity and comparative advantages and specialist 474 00:46:49,73 --> 00:46:55,95 spaces it knowledge industries in advanced manufacturing every recognise the 475 00:46:55,96 --> 00:47:00,26 individual needs of individual sectors in the U.K. 476 00:47:00,86 --> 00:47:06,47 Are we fully networked into the institutions that shape and regulate 477 00:47:06,70 --> 00:47:09,19 globalisation including the E.U. 478 00:47:09,49 --> 00:47:15,73 And whatever structures emerge in response to the current financial crisis to 479 00:47:15,74 --> 00:47:21,65 drones and employment figures I suggest a reminder that there are 480 00:47:21,66 --> 00:47:27,20 a few more important ways of standing up for people and their families them by 481 00:47:27,21 --> 00:47:32,43 looking out for the long term interests of the businesses that they build and work 482 00:47:32,44 --> 00:47:38,83 for we have to come out of the economic downturn better equipped to prosper in the 483 00:47:38,84 --> 00:47:45,12 upturn. That's why we have to ask ourselves in government some searching questions 484 00:47:45,36 --> 00:47:52,28 about our own preferred moods rather than rest on past success and yes it does mean 485 00:47:52,29 --> 00:47:58,34 being honest with ourselves about birth our job and our country's performance 486 00:47:59,07 --> 00:48:05,09 because there is so much at stake and our confidence is key. To getting the best 487 00:48:05,10 --> 00:48:05,40 out of 488 00:48:05,41 --> 00:48:12,89 a market economy contretemps to invest contradicts to innovate confidence 489 00:48:12,90 --> 00:48:18,77 in the stable frameworks in which the market operates through its own actions 490 00:48:19,14 --> 00:48:23,53 government can and must help durable maintain that confidence and the 491 00:48:23,54 --> 00:48:30,48 entrepreneurship that capitalizes on it Britain's Lem term economic success will be 492 00:48:30,49 --> 00:48:37,11 defined and determined by its innovators and entrepreneurs and their workers 493 00:48:37,43 --> 00:48:42,71 but government to step up its own role in equipping people and companies to 494 00:48:42,72 --> 00:48:48,26 maximize their potential coherently and strategically that is the essence of 495 00:48:48,27 --> 00:48:54,21 industrial activism and this will require not bigger government incidentally but 496 00:48:54,22 --> 00:48:57,76 a smarter strategic government that is 497 00:48:57,77 --> 00:49:03,60 a was and is an informed analyst of British and global markets and technological 498 00:49:03,61 --> 00:49:04,84 change and 499 00:49:04,85 --> 00:49:11,54 a trusted partner of business now to my mind. We do this but just because we want 500 00:49:11,90 --> 00:49:15,89 particular companies to succeed but because we have 501 00:49:15,90 --> 00:49:22,41 a duty to ensure that Britain as a whole is equipped to get the most out of 502 00:49:22,42 --> 00:49:28,82 a rapidly changing economic world now that was in my view the 503 00:49:28,83 --> 00:49:34,73 government's first duty never Murcer the now in the critical conditions that we 504 00:49:34,74 --> 00:49:41,19 face and we have got to be determined to live up to that first duty so that our 505 00:49:41,20 --> 00:49:46,18 country can and does succeed in this century thank you very much indeed 506 00:49:46,37 --> 00:49:48,78 one.