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Address in Reply to Her Majesty's Most Gracious Speech

Part of the debate – in the House of Lords at 11:35 am on 25th November 2004.

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Photo of Lord Drayson Lord Drayson Labour 11:35 am, 25th November 2004

My Lords, the fact that the very first sentence of the gracious Speech states that the,

"Government will continue to pursue policies which entrench economic stability and promote growth and prosperity".—[Hansard, 23/11/04; col. 1.], reflects the pivotal importance that successful businesses and a prosperous economy have in enabling our country to afford the quality of life that we all wish.

Unless Britain succeeds as a dynamic, competitive economy, all our plans to create a happy, stable society, from whatever end of the political spectrum we come from, will be for nothing. Therefore, it was heartening to hear about the robust state of our economy as described by my noble friend the Minister.

This success is reflected in the mood of British business. In 2004 British industry is in great shape. We are competitive. It brings a smile to my face to say—we do not say this often enough, so it is worth emphasising—that British business is doing well. The confidence that British business has today comes in part from an acceptance that competition, from whatever quarter it may come, is healthy and brings out the best in us, and that we can now rise to the challenge. That is why I believe we have not heard much support for the protectionist viewpoint on the issue of offshoring.

That is not to say that there are no problems, and that business has no issues of concern—it does, and I want to deal with them in a moment—but just that we must place them in context. Now that Britain is doing well our focus must be on how we can build on that success and not reprise the arguments of the past.

I believe that the policies of the present Government demonstrate a grip on the issues that will determine whether Britain's industrial and commercial renaissance continues, or whether the gains of the past 10 years will melt in the heat of 21st century global competition. Therefore, I welcome the Government's policies that maintain a stable economic platform, provide funds for investment in skills, education and science and shift the emphasis from competing on the basis of lowest cost to competing on added value and unique design—the domains where UK enterprise will succeed or fail in the future.

However, there is a question in the minds of many business people, not just here in the UK but abroad as well; namely, can government or, indeed, the political process itself, respond effectively to the astonishing pace and complexity of change that characterises global business today? Europe is a key example. The Lisbon Agenda set out in 2000 had as its objective to,

"make Europe the world's most dynamic and competitive economy by 2010".

Yet here we are, almost at 2005, and as Wim Kok recently reported, with very little progress to show. Business people question whether politicians have the will and expertise to grasp the barriers to innovation in Europe, to liberalise markets and to provide an efficient home base so that European companies can become truly global players.

The concept of creating added value—of using knowledge and innovation to get the most effect from limited resources—is as relevant to government as it is to business, and will become more so in future years.

We are seeing an increasing convergence of approach across the industrialised world as more and more countries enter the race to occupy the high ground of knowledge-based enterprise. I believe that the debate around industrial policy is moving on. There is wide agreement across the developed world on the policies needed for a country to compete in the 21st century. The question now is: which countries, having set out to implement those policies, will actually get them done? Many factors will affect this here in the UK, but a central issue, I believe, will be the effectiveness of the DTI—how well the DTI helps the nation to make the right investments in science, education and skills. How effective will be its regulatory touch? Too heavy and enterprise and innovation become stifled; too light and it allows bad practices to develop.

It is because I believe that the effectiveness of the DTI is so central to Britain's continued success that I am so astonished by the policy of the Liberal Democrats to abolish it. While this may seem a beguiling prospect to create a windfall saving, to do so would fatally undermine this country's competitive position. Business needs a voice in government, making the case on its behalf, fighting its corner over planned regulation—both at home and in the EU. The saving of 10 billion euros achieved by the DTI under the chemicals directive is a case in point.

Having a clear national technology and manufacturing strategy and understanding the relationship between the two is vital, as is having the expertise to be able to determine what is and is not a strategic R&D investment in a new industry such as nanotechnology. Arguing the case for a single European patent at a cost to business that is competitive with the US system is also important; so are incentivising industry to invest in R&D and simplifying the process of new company formation to facilitate the creation of new businesses.

Those and many other issues need championing within a coherent strategic framework. There must be a clear vision of what British business needs to succeed against global competition, within a ministry that is itself globally competitive at getting those vital things done. That is not to say that the DTI is perfect. There is much being done and needing to be done to simplify the DTI's activities and focus on those that add most value to the pursuit of enterprise in this country. But, in my 25 years in business, I have seen the vital role that the DTI plays in sponsoring business and enterprise in the country.

A recent excellent example of the DTI's role has been the work of its bioscience unit with the biotech industry, addressing issues ranging from animal-rights extremism through to shareholder pre-emption rights in its quest to develop an environment where that vital new industry can thrive. The result is an industry in the UK that is second only to the US in the world.

I am optimistic about the future for British industry. Having witnessed the remarkable turnaround that has been achieved over the past 10 years, I am sure that we can rise to the challenge of the next decade. I am encouraged by the Government's commitment to the importance of economic stability and prosperity, and convinced that the DTI will play a vital role in delivering those goals.