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Secretary of State for Business, Innovation and Skills Order 2009

My Lords, I congratulate the noble Lord, Lord Hunt of Wirral, on securing the debate. I also congratulate myself on being here three days in a row. I do not think that shows any lack of accountability to Parliament. Of course, it is a great pleasure to be at the Dispatch Box. I listened very carefully to what the noble Lord said. His remarks do not quite tally with what my shadow, Ken Clarke, has been saying recently. He has praised the Department for Business, Innovation and Skills for developing workable policies which he says he would try to match if elected. True, he damned the rest of the Government with faint praise, as he cheered my department to the echo. Perhaps they need to speak to each other and try to tie up what the Opposition’s views are. Having followed the noble Lord very carefully, I am none the clearer about whether he supports the merger of the two departments and the creation of DBIS and I do not know whether the Conservatives would reverse the situation if they were in power. I do not know which one of our growth measures they would take an axe to. I am not even sure he knows the answer. None the less, it is good to have this opportunity to set out again the purpose of the new department and, more importantly, its progress. I am glad to say and to confirm at the outset that the merging of the two departments was remarkably inexpensive. It surprised me that it was the modern equivalent of two and sixpence. I would not draw any satisfaction from bandying around charges that this has cost taxpayers an excessive amount of money. I start with the challenge which goes to the very heart of why the Prime Minister created this new department. We must recognise that we need to prepare this country for something more than just a cyclical economic recovery because the changes in the global economy are structural and they are not going away. They present dangers and opportunities for us in Britain. The pace and intensity of global competition will increase, not slacken. In due course, we will be challenged, even in the areas such as advanced manufacturing, financial services and the creative industries, which we rightly think of as our greatest strengths. Innovation, above all, will need to be the lifeblood of the British economy as we take on these challenges. Without that, there will be fewer new jobs and no rising standard of living. Whatever some on the Opposition Benches believe—or, at least, say—there will be no balanced budget without the economic growth that we now need to organise and commit ourselves to. Economic growth is the biggest antidote to debt, which is why we should emphatically reject the Conservative policies of sweeping retrenchment that would simply derail the current recovery that is under way. That does not mean that all growth is the same. The growth that we need must be resilient, durable and widely shared—diversified both across the sectors of the economy and the regions of the country. It must be environmentally sustainable, it must be built on something more than turning a quick profit, because that is not the basis of a national business model. However important are the services that we supply in our economy and the invisibles we trade in, a huge part of our self-identity and creativity rests, and should rest, in what we make: the goods that our product and component manufacturers make. I am glad that a commitment to invest in and cultivate our modern manufacturing capabilities in Britain is becoming the hallmark of my department. In Britain, we pay high wages and we believe in quality public services. These things are not, in my view, negotiable, but both of them depend on our ability to pay our way in a global economy. In a global supply-chain economy, Britain cannot and should not ever aspire to be a country that competes by undercutting on wage costs or employment standards. We must compete by adding value, not reducing it. That puts a premium on what we do in knowledge, specialisation and sophisticated skills. It puts a premium on making this country one of the world's great repositories of scientific and technical knowledge and the ability to commercialise that knowledge. It puts a premium on thinking about the interests of business—not just the businesses that already exist, but those that do not yet, but are out there in every entrepreneur’s head. The question is: how do we help to create those future businesses? We need to view industrial competitiveness not just as the end result of the discipline of the market but as the result of the right combination of private initiative and dynamism and public investment. Of course, private enterprise will always be the engine of the economy. We must encourage it, nurture it and reward it, but, at the same time, we need to recognise that our comparative advantages in this country are built on a complex network of essential capabilities, such as sophisticated skills, access to growth finance on the right terms, modern infrastructure and a strong science and research base. That is where government enters the picture, and where my department, in particular, finds its role. Unfortunately, the backdrop of industrial policy in the 1970s and the anti-manufacturing prejudices of the 1980s have not served us well. That is why I tried to turn the argument around in the government policy framework, New Industry, New Jobs, this year. That is the policy challenge that BIS reflects—a modern industrial policy fit for the 21st century—and the agenda that it has driven forward effectively this year. Our remit is simple: to maintain the UK’s position as a dynamic, open-knowledge economy. I do not know whether the noble Lord, Lord Hunt, who introduced the debate, wants to hear my response to his very interesting remarks, but if he wants me to pause for a moment while I regain his attention, I will of course be happy to do so. We have to use the influence of government to drive innovation and competitiveness and invest in the capabilities and resources that our people, businesses and society need in order to prosper in a global economy and drive this agenda in Europe, our biggest market, with an amplifier for our economic policy around the world. The logic for bringing the parts of government that do this work into a single team is compelling. Why should it be distributed or fractured among a number of different departments? Why not bring it together under one roof? As a way of making what I am trying to describe a little more concrete, I shall refer to my visit to Rotherham this morning and describe our policies in action. I think that will assist your Lordships’ understanding of what the department is doing. Rotherham is one of the UK’s great manufacturing cities, along with Sheffield. Over the past 30 years, we have seen them reinvent themselves from metal-bashers to modern manufacturers. Fifteen years ago, too much of the talk in Sheffield was about what had been lost. These days it is increasingly about what is being built and renewed: new jobs, new industries and new ties to the global and European economies. Now, Sheffield has the potential to be a hub for the UK’s civil nuclear supply chain. However, that will require a number of things to happen. First, it requires a clear commitment from government to nuclear in Britain’s energy mix so that private investors can move forward with confidence. With our planning statements for nuclear new build and clear strategies from the utility companies, they now have that confidence to invest to move forward. More than 300 companies have registered in the past nine months to be certified suppliers to EDF, Westinghouse and Areva. We are building up quite a supply chain to support and supply this nascent industry, for which we are seeing some renaissance. This activity will need major private investors and the depth of experience to handle nuclear technologies. That is why the Government agreed to partner Rolls-Royce with £45 million of government investment in a range of advanced manufacturing plants, including a civil nuclear factory proposed for the South Yorkshire region. It will need a strong network of research strengths behind it, the strengths we committed to protecting and leveraging in my department’s new higher education framework, which is why, this morning, I announced that we will support the universities of Sheffield and Manchester in leading a new nuclear advanced manufacturing research centre in partnership with industry. I was pleased to visit it and speak there during my visit earlier today. It will need a growing pool of British technicians and scientists with the skills to handle civil nuclear technology. That is why we have created a nuclear skills academy and why we have just invested £8 million to upgrade the training facilities at the Dalton Cumbria facility. That is also why the ambition of my department’s new skills strategy last month was the creation of a new class of modern technicians in Britain through a big expansion of advanced apprenticeship numbers. Many of them will, for the first time, be able to move from apprenticeships to universities, where they will be able to train to the highest level in handling these new technologies. The point is that unless we understand the multiple capabilities and interconnected policies that produce these industrial outcomes, we will simply fail to achieve them. The levers here are university and science policy, business and innovation support, skills policy and strategic investment. BIS puts those levers in one place, under one roof, for the first time.