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Enterprise is not just a label for a government department or a buzz word for a policy to hand down from government but a mainspring of human endeavour. So is innovation. It was man not government who invented the wheel and every other invention that has formed our civilisation. Too often that is forgotten. Government's role is to enable those human talents to grow and to create wealth, not to corral them into the
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Now, while other countries are emerging from recession, we must labour in the shadow of mountainous deficits and debts built up over not just the past two years but the past decade. We all know that unemployment is high and going higher, with more than 1 million redundancies announced in the past year alone, but the jobless figures disguise the extent of economic inactivity among the British workforce. The employment rate is only just above 70 per cent of the working age population, and if we take into account the shorter hours being worked, longer holidays, sabbaticals, the surge in part-time employment-100,000 in the past three months-not to mention the "bad back" count, it almost feels that we are back to the three-day week. That is a human tragedy.
The Government have brought in a raft of new schemes and measures to try to help business, but they do not help much when regulations introduced in the past year alone are alleged to have cost business £13 billion, according to the Government's own figures. It seems that the new schemes introduced to help business through the recession have been a flop-they clearly do not respond to what business needs. The Government's flagship package, Real help for business now, introduced in January last year by the Department for Business, Innovation and Skills, promised £18.7 billion in help. One year later, only £2.4 billion has been delivered. Clearly, these schemes are not working and, as a measure of the problem, exports have fallen by 25 per cent in the past year.
Let us look at some of the schemes. The Capital for Enterprise scheme, designed to bring real help for high-technology firms, was launched by the Prime Minister last January with £50 million to help small firms convert debt to equity. Nine months later, only five firms had benefitted. The £5 billion Trade Credit Insurance scheme, announced in April last year, was designed to give, in the Prime Minister's immortal words, "real help with credit insurance". Six months later, only just over £10 million has been committed. The Automotive Assistance Programme, launched in January last year with £2.3 billion in guarantees, was said by the noble Lord, Lord Mandelson, to provide real help for the car industry-so real that at the official end of the recession last September no loans had been made at all under the scheme.
Clearly, these schemes are not working, but the problems are even more acute. Manufacturing output has fallen by 12 per cent over the past decade. We must rebuild that manufacturing base as part of our diverse economy. It is the spirit of enterprise and innovation that is the key to that. We need a workforce that is well
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However, we find that the biggest failure of all in this field has been the failure to motivate and train our young people. One in five is jobless and demoralised at the present time. Why, I wonder, do the Government pick this time to cut university funding by £950 million, saying that universities can survive on their own resources but threatening to fine them £3,700 for every student they take on over the government-imposed limit.
India and China are churning out hundreds of thousands of engineers and scientists from their universities every year. Like America, they have spotted that that is where future growth will come. But we find that across the United Kingdom in recent years degrees in science, technology, engineering and maths have fallen in number. In China, one third of all graduates are engineers, while in the United Kingdom it is 8 per cent and falling. The number of physics degrees is down 30 per cent in the past 15 years. Chemistry departments are closing at about one a year. By 2014, the Royal Society of Chemistry predicts that only six chemistry departments will be left in the country. I am told that there is a government department entitled Innovation, Universities and Skills. One has to wonder what it has been doing. It claims a science budget allocation that is up by 13.6 per cent, but one has to ask: why then did the newly formed Science and Technology Facilities Council enter its first full year of operations with a budget shortfall of around £80 million?
The root of the problem is of course the present calamitous state of the public finances, but that is not just a recent problem. The Government cannot hide behind a credit crunch of a global nature. The large and often unproductive increases in public expenditure of recent years, funded by tax increases, deficits and debt, have created hundreds of thousands of public sector jobs. But as my noble friend Lord Sanderson pointed out, in doing so they have squeezed out enterprise in the private sector.
The failure to stimulate investment and ease credit to companies means that business investment has fallen 20 per cent over the past year. Does the Minister believe that the answer to that kind of problem is to load business with national insurance increases and to bring in six-month paternity leave? Does he agree that it is profoundly serious that our GDP share of research and development is as low as 1.8 per cent below the European average and half the rate of countries such as Sweden and Finland?
The past 10 years have been years of the locust. Only in wartime have our national circumstances been so severely jeopardised and our wealth so consumed. It will need a massive effort and an entirely new attitude to turn the tide, but I truly believe that as a nation we can make that new start only with a new Government.
Lord Lyell: My Lords, today is almost the day of the Scots because there are a high proportion of us in your Lordships' House. Let the noble Lord, Lord
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I declare a particular interest-I am a member of the Institute of Chartered Accountants of Scotland. The noble Lord, Lord Sugar, will be interested to hear that I am perhaps the only Member of your Lordships' House who signed an apprenticeship. I was an apprentice, and every member of the firm I joined in Glasgow on 1 October 1962 had to sign my deed of apprenticeship. With that in mind, my noble friend Lord Sanderson will be quite startled, perhaps shocked and surprised, to learn that in 1977 a relatively young accountant from the boondocks of Scotland-the county of Angus-sitting on the Bench where my noble friend Lord Hunt of Wirral is now, was landed with the Patents Bill. I was second under my noble friend Lord Belstead and we had to study the law of patents. I am only a chartered accountant, but to be a patent expert you have to be a scientist and a lawyer. I am neither. Fear not, as a young Scot, you get stuck in straightaway and I did.
The first major industry I was asked to study was the pharmaceutical industry. It is a long word, and perhaps one now calls it the bioscience or the drugs industry. Throughout the years, I have consistently tried to make an O-level study of that industry. I have looked at some figures. In 2008, the industry had a surplus of £6 billion. Its exports were £17 billion. Of the top 20 most effective medicines in the world, 20 per cent were discovered and produced in the United Kingdom. My noble friend Lord Lang referred to research and development. He will be interested to learn that 28 per cent of the commercial research and development in the UK is carried out by the pharmaceutical industry. It employs 67,000 people. That does not take into account the massive number of tiny, spin-off firms-are they called clusters?-all around the UK.
Looking at medicines globally, we will see that 54 per cent of the top 100 products were discovered and produced in the United States. Who is in second place? It is the United Kingdom, with 19 per cent. Even that great nation known so well to my noble friend Lord Selsdon and me, Switzerland, with two massive companies in Basle, has only 11 per cent in turnover and output of those top 100 medicines. How is that carried out? I took gentle advice from a paper entitled Life Sciences in 2010. The skills not just of those 67,000 but of many others in academic institutions around the United Kingdom, the encouragement given in schools and elsewhere, and perhaps even the advice and example of the noble Lord, Lord Sugar, show that if you want to you can do it. It is a matter not just of taking the first step but of taking the second and subsequent steps. That is when you need two qualities-perhaps we shall find out about that at three o'clock on Sunday afternoon-which are courage and persistence, so endemic in the Scots.
That makes me think of Robert Bruce and the spider, which kept falling as he watched it. After, I think, its 18th attempt, he saw the spider make it. That
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I mentioned that I was an impudent young Scot from Angus. I know that the University of Dundee is one of the world leaders in oncology, but I had been unaware that a very small company-I have had very minor dealings with it-CXR Biosciences in Dundee, is pushing forward in blood, plasma and other areas, tied in with the much greater example and help given by the University of Dundee.
I have one minute of my time left, which I will use to talk about innovation. In 1959, my military career was interrupted by a triple fracture of the leg while skiing, about a mile away from where my noble friend Lord Selsdon and I go. Complications were suffered, and I was sentenced to three summers in plaster and on crutches, undergoing a process then known as bone graft. It was carried out by Sir Archibald McIndoe and a particularly excellent and kind friend and surgeon, Sir Henry Osmond Clarke, who used the process of innovation to give me something called a bone graft. I am no scientist; I have not got one O-level, so I will not go on about that, but that innovation process enabled me to go on skiing until last year. I am particularly grateful for that. Innovation is not just in industry; it is not just in knowledge and skills; it is also in biosciences.
Baroness Wall of New Barnet: My Lords, I, too, thank the noble Lord, Lord Sanderson, for initiating this interesting debate. It is a pleasure to speak in this important debate, during which many contributions will surely provide food for thought as the UK comes out of its current economic difficulties.
It is time for Britain to look not only at the inventions and research which get major headlines across the world-as important as those are-but at the potential millions of smaller innovations which can happen every day in companies across the country, and which provide a stimulus to economic growth.
I am talking about those workplaces where the whole workforce is engaged in continuous improvements and where everyone has a contribution to make. Once a company embeds that culture, everyone is not only empowered to make improvements but to start thinking in a different way-the kind of workforce mentioned by the noble Lord, Lord Lang of Monkton. It raises the consciousness of every employee, and gets them to think about what they are doing and how it may be done better. That might mean taking steps to reduce waste, to speed up processes or to increase productivity. All those activities are key to the significant and, more importantly, sustainable growth which the UK needs.
I have particular examples of that from my involvement with Semta, the Sector Skills Council for Science, Engineering and Manufacturing Technologies. I am sure that many noble Lords will agree that those sectors will be key to the economic recovery and will lead the way to the headline-making inventions I mentioned. However, Semta has not only been working with those companies on the cutting edge of technological
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My noble friend Lord Giddens posed the question: where will future innovators come from? I suggest that they will come from many places. Through its compact activity in England and wider employer engagement across the UK, Semta has encouraged companies to embed qualifications such as the NVQ in business improvement techniques across the whole workforce. That qualification, which is an innovation in itself, helps an individual to understand and take responsibility for improvements in the way that they work. Our Government have supported that initiative by investing millions of pounds to ensure that businesses succeed.
Businesses succeed by having people who are trained and an innovative workforce to support their success. That enables someone to put those improvements into practice and measure their effectiveness, which is crucial. The ultimate outcome is to create a mindset where an individual is constantly thinking about their methods of working, initiatives that they can take and ideas that they have which will improve the outcome of their activity and, importantly, the company's bottom line. By investigating techniques such as visual management systems, set-up reduction and six sigma process mapping, people who take that qualification can use them to improve their own efficiency and that of their colleagues in the company.
Some firms have put literally hundreds of their employees forward for that technique. Others have nominated key individuals who can then cascade that learning through teams. By making a large number of small improvements to a system, companies are seeing a big impact on their productivity and profitability. By freeing all their employees to exploit opportunities and making innovation part of everyone's role, those companies are creating whole workforces full of people who think like entrepreneurs.
Within those companies, every employee knows the value of their contribution, and every person involved in a process is committed to making it a success. Although that hive of activity may not get the headlines of the new iPod or the latest drug, it contributes to the sustainability of the UK's science and engineering processes, for instance. It means that those big breakthroughs have fewer unforeseen consequences and costs, and ensures that they are sustainable in the long term. Business improvement activity makes our companies exciting and rewarding places to work and the UK an attractive place to invest.
What I am sharing with your Lordships today is the possibility, the desirability and, importantly, the opportunity for the vast majority of the workforce to illustrate through their contribution the enterprise and innovation that they bring, and how that supports our objective of achieving company improvement, which in turn, stimulates economic growth.
Lord Selsdon: My Lords, it is with a sudden feeling of horror, having consulted my noble friend Lord Lyell, that I realised that I will have been in your
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The problem in those days was that you had a duty to do, and you were required to do it if you were young, but you had to have a job because you had not got any money to live on. That was very difficult. Occasionally your Chief Whip and others would say, "Could you consider being an Under-Secretary?". I did not even know that an Under-Secretary was a Minister. In fact, when I sat here first, this was the Barons' Bench. When the Government changed, I did not know that you changed with them, so there were certain difficulties. From all that, you realised that if you wanted to be here, you had to change your job. Therefore, you had to do something yourself that earned you some money, which was extremely difficult when you were totally unqualified.
Over the years, I have spoken on economic affairs and this sort of activity in the 1960s, 1970s, 1980s, 1990s and now the 2010s. It has always been the same thing: we British have declining industry, manufacturing has gone out of the window. When I chaired various trade boards, I would argue that we could not live without manufacturing. The noble Lord, Lord Desai, who always seemed to speak after me, would say, "No, no", that as long as we could fund our balance of payments deficits, there would be no problem, and that we can do that through financial services.
My philosophy is the creation of added value and of trade, which is effectively buying and selling-something that the noble Lord, Lord Sugar, was very good at. I remember that I wrote to him at one time when I was a director of an Italian washing machine company and suggested, when he was going into white goods, that he consider working with us. He brushed me off, I was cast aside. We then went and bought a company called Colston, which made fantastic dishwashers-desktop machines. They could heat the water hotter, so they could clean the plates better. How did they heat the water hotter? Charles Colston played squash, and he worked out that the rubber of squash balls had a certain quality: it got hot when you beat it about. If you put that as a seal in the washing machine or dishwasher, you could heat the water hotter.
Over time, these things began to interest me, and I wondered how and where we could lead this country forward. Being a Scot, I was naturally brought up on the philosophy that if no one else would do something, you should do it yourself. You always have to begin with the philosophy of conceptualisation-concept-and you end with the two words: relation and réclamation-being paid. Between the two, there is a fantastic word. It is called Walt Disney; it is called animation. It is about bringing the project alive. Then you turn round and say, "Who does that?".
I hate the terms "private sector" and "public sector". I loathe all the government names for ministries that have changed. Could the Minister tell me how much the rebranding of the good old Department of Trade has cost since his Government have been in power? It
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The first thing is how we convert the bulk of the public sector into productive areas because it has some great people. I worked on international projects, even with Taylor Woodrow. My noble friend Lord Sanderson was very kind to promote my great bank. Frank Taylor came to Midland Bank, and it gave him his first loan for the four houses. One day, I got a letter from him. "My Lord", he wrote, "I would like to call to see you because your great bank assisted me many years ago, and I would be grateful for assistance now". The amount had moved from £400 million to £1.4 billion, and I am afraid it was not possible.
I go to the basic principles of added value and buying and selling. That is what it is about. First, are you a buyer or a seller? I always used to say to my banking colleagues, "Can you tell me whether we are buying or selling money this year?", because that is what it is about. Then you ask how you create that entrepreneur. You have to look back and say that we are in the worst mess since I started to speak on economic affairs. That means that we have the greatest opportunity for the young, but we may have a five-year problem. So let us start to look at those who are 14 years old now. What can they do? What would catch their enthusiasm? They will want to think of jobs, and they want to earn money. That may be the paperboy who offers to deliver something else.
When I got involved in the East End of London-I had to be a well known Labour Peer in order to get on down there-I used to drive an old car. There was a car wash that said, "Hand Wash". I said, "I'd like to give you some business. Can I look at your kit?". They said that they had an old bucket and got water out of the lock and did hand washing. I said, "What? With your hands?", and they said yes. The human skin is better than anything else for washing and polishing cars. It is better than any chamois leather. I went and bought them a few buckets, and they became friends over the years. It was about the initiative of some of the young.
Those of us who were brought up at the end of the war remember when we did not have enough clothing coupons and when you could not go to school if you did not have a proper jacket. These are the things that I remember. In the country, you learnt to be a scrounger. You learnt that it was wonderful if you could swap two eggs for a bottle of whisky with the American forces. They were enjoyable times.
When I worked in the East End, I was chairman of Hackney Quest. We had more GBH per square metre than anywhere else in the world. Some of the young people knew how to fiddle. There was a young boy who could cut a £5 note in half with a Gillette Blue razorblade and double his money overnight. He used
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My suggestion is that we do not look at ourselves. I know I have to go on trying to earn some money somewhere, but we should look at that age group and try to encourage them to think at an early age because some of those young children are switched on.
Baroness Verma: My Lords, this debate is timely and crucial, and I join noble Lords in congratulating my noble friend Lord Sanderson of Bowden. I declare an interest as a small business owner. The economic downturn has, of course, brought great misery to many in Great Britain but, in particular, to small and medium-sized businesses. It has been a time of great distress to see good, long-standing businesses that have served local communities go under because of cash flow, credit and regulatory burdens. Against this backdrop, we ask people to take a risk to be at the heart of innovation and enterprise, but we also say to them that assistance is complicated, hard to access and very bureaucratic.
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