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Address in Reply to Her Majesty's Most Gracious Speech

My Lords, I am delighted to be speaking at the start of this third term Labour Government—an achievement for which for many of us have worked, of which many of us have dreamt and which many of us thought would never happen. Congratulations to Labour on this achievement. I congratulate my noble friend Lord McKenzie on his debut at the Dispatch Box. I am sure that he will be an important and effective member of the Government and I wish him every success. I also congratulate my noble friend Lord Sainsbury on his reappointment. Over the years, he has demonstrated the importance of continuity and it is about continuity that I wish to speak. Like other noble Lords, I particularly welcome in the gracious Speech the promise of continuing the prudent and careful management of our economy. As my noble friend Lord McKenzie reminded us, the stability created through these policies enables us to build a business strategy for the future. In our previous two terms, we started to put that strategy in place—a strategy of encouraging enterprise, innovation and technology to enable us to compete in a world of expanding high technology; a strategy much identified with my noble friend Lord Sainsbury. We have started to make the necessary investment in our science base. We are improving our skills. We are encouraging innovation and enterprise in academia and business. We are speeding up the flow of information between them. There are tax incentives. As my noble friend Lord McKenzie told us, we have opened up our markets to new ideas and businesses and made it easier for them to flourish. Through competition, we have encouraged a willingness to modernise and adapt. My wish is that we use this third period of government to continue with this strategy and establish it as a permanent fixture in our economy so that, to coin a phrase, there is no turning back. What stands in our way of achieving this? What stops it becoming part of the progressive consensus? I would like to point out three hazards, all of our own making. None of them is new, but all of them have subtly changed and are all the more dangerous because of that. The first hazard is society itself—the attitude of society towards technology and technological progress. This was first brought your Lordships' attention five years ago when the Science and Technology Select Committee produced a paper called Science and Society. I had the honour of being a member of the committee that wrote that paper and in it we drew your Lordships' attention to a paradox. On the one hand society was happy to enjoy the benefits of new technology but, on the other hand, society was deeply suspicious of it and of its risk. We proposed that instead of science trying to make society understand science, science should also try to understand the fears and concerns of society and discuss them openly. The reaction was instantaneous and extraordinary and we were all surprised by it. The Royal Society, the Royal Institution of Great Britain, the British Association for the Advancement of Science, the RSA and many others set about engaging the public in science. University chairs were established to study the subject and business and academia were anxious to learn best practice. In his excellent Reith lectures last month, the noble Lord, Lord Broers, spoke about the need for this in order to ensure the triumph of technology, as he put it. But how effective has all this activity been? There has certainly been a lot of talking about new technologies related to global warming, nuclear power and health, but how effective has that talking been in winning the acceptance of new technologies? I think it has been disappointing. Indeed, it may have created confusion. Nobody has been more diligent in engaging the public than the Food Standards Agency, yet a recent survey indicated that most adults did not know which foods were healthy because of the confusion over the wealth of information. My concern is that the dialogue has become the purpose. The real purpose is to win the hearts and minds of society. Talking may make people feel good, but if we do not move the dialogue on to positive, consistent targeting of people to persuade them to accept technological change I fear that a reluctant and sceptical society will stand in the way of our industrial strategy. The second hindrance to our strategy is regulation. As I said, none of these hazards is new. Like the noble Lord, Lord Newby, I am delighted that there is to be a Bill further to cut regulation inside and outside government by targeting costs. Last night the Chancellor promised us further reforms, and in his speech today my noble friend Lord McKenzie spoke about other reforms. All that continues a very welcome trend. In our two previous parliaments, we made a big effort to remove prescriptive regulations, we stopped telling firms how to run their businesses, we considerably simplified VAT for small and medium-sized enterprises and we moved to reduce the role of business as a tax collector. In fact, we have become the least regulated business environment in the OECD. But nobody believes that, and grumbling about regulation has increased—we have had it today. During the election campaign, small business owners complained to me about red tape, in a way that convinced me that complaining about regulation has become a kind of mantra or fixation. People complain about it, irrespective of its content. Because of that subtle change in thinking on the matter, it has also become an excuse for avoiding or postponing some of the difficult decisions in business relating to change and technology. For example, I believe that the pharmaceutical companies have used it as such. I believe that we have to respond to the situation, not only by action to reduce regulation but by being more robust in putting the other side of the argument. When I was in business, I used to think that what was good for business was good for the economy, so less regulation was good—but that is a narrow point of view. As the right reverend Prelates the Bishop of Worcester and the Bishop of Liverpool told us, the citizen has an interest in the economy too. So the quest is to find the right balance between market efficiency and the public interest. Few will argue with that, as business is making a real effort to become, and to be seen to become, more ethical and responsible. Instead of just apologising for and regretting regulation and doing all we can to cut it, we must also justify it; instead of apologising we must argue that it is the task of the Government to use regulation to promote competition, to deal with conflicts of interest, and to provide a level playing field and predictability, all in the interests of the fair society which my noble friend Lord McKenzie described in his opening speech. That is all in the interests of the citizen; it is a matter of matching "rights and responsibilities", to quote from the gracious Speech. If that is not done, the issue of regulation will be used to divert us from our strategy. In passing, I appeal to my noble friend to stop including some bus timetabling and digging holes in the road in regulations. All that does is to help our critics to bump up the numbers. My third concern is that we are not addressing our policy of innovation through science and technology to all sectors of business. While great effort has gone into persuading manufacturing and academia of the advantages of the strategy and the support provided by government, little effort has been made in persuading the financial or general services sectors of that. Yet these are some of the highest value-added parts of our economy; they spend a lot of money on acquiring knowledge and using it to develop businesses, on innovation and acquiring new skills. Yet the business strategy hardly addresses them. Perhaps that is because we still think of the economy in old-fashioned terms, but the services sector also benefits from the skills training, the technology strategy funds, the business support programmes, from the university challenge enterprise—even from the UK's stem cell initiative, the large facilities fund and many others. These schemes reduce their risk, which otherwise they would have to bear. They benefit from the faster commercialisation of innovation; in fact, the schemes mean more opportunities of commercialisation for them. There are some 25,000 students taking courses dealing with enterprise, and many of them are going to need the services sector. In order to address those sectors, we need to redefine what is meant by research and innovation in terms that mean a lot more to them and which they find attractive. Unless we do that, we shall limit the benefits of our strategy to those sectors and omit the important sectors that remain outside its scope. I understand that the Council for Science and Technology shares my concern and intends to develop some proposals for policy and action. I congratulate it on that. We are not the only country looking to this strategy to compete in world markets; there are others in Europe, Asia and North and South America, so it is important that we identify and deal with all the hazards that could impede the strategy, to ensure its maximum impact. I have outlined three: the need to win hearts and minds as well as talking the talk; the need to justify regulation as well as reduce it; and the need to embrace the services sector as well as manufacturing. All those are matters under our control. I hope that my noble friend can tell me that the Government recognise that and that they will take action.