Lord Mandelson speech to New Industry New Jobs Conference
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Issued 14 October 2009
Secretary Lord Mandelson Driving forward industrial activism in a global
economy speech to New Industry New Jobs Conference, Wednesday 14 October
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 stratgeic 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
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 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
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
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
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 Wellcome 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
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Article Published/Sorted/Amended on Scopulus 2009-10-15 13:56:05 in Business Articles