It's a Huge Pleasure to Be Back at the IPPR to Make My First Keynote
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It’s a huge pleasure to be back at the IPPR to make my first keynote speech as Shadow Minister for Universities, Science and Skills. There isn’t a better place to speak than here. Over the last few months, your report from Commission on the Future of Higher Education was a milestone in critical thinking about the future of our colleges and universities. It sets the benchmark for forensic analysis and creative policymaking. And in the months to come, you’ll become the home of debate about the economic reform we need to build a progressive economy. It’ll be an important theme for you and I’m grateful for the chance to make an early intervention. I wanted to mark too, before the year was out, a very special anniversary in Labour’s history. The 50th anniversary of Harold Wilson’s remarkable speech to the Labour party conference in Scarborough. The speech, famous for the phrase ‘the white heat’ of the technological revolution, where he asked the country to cast out the privileged old boy’s club running Britain, and put in its place a government prepared to drive through the reforms Britain needed to win a race to the top. The speech where he captured not merely the spirit of the moment, but the spirit of the future. Not merely 1963 but the 1960s. Not the world that was passing. But the world that was coming. Wilson said bluntly: nostalgia won’t pay the bills; the world doesn’t owe us a living; and we must harness the scientific revolution to win in the years to come. “This scientific revolution” he said “is making it physically possible, for the first time in human history, to conquer poverty and disease, to move towards universal literacy, and to achieve for the whole people better living standards than those enjoyed by tiny privileged classes in previous epochs”. His agenda was bold; A new ministry of science; A university of the air; A revolution in education and apprenticeships; Radical expansion of FE and HE; Action to stop the brain drain; the appointment of the first Government Chief Scientist Sir Solly Zuckerman. And in the years that followed the Robbins Report, Wilson delivered this and much more. It was a revolution that helped people like parents go to college. The spirit that inspired Harold Wilson in 1963 is the spirit the Royal Society calls for today. That we put science and innovation at the heart of a long-term strategy for growth. I’m here today to say: The Royal Society is right. Wilson’s speech speaks to us today, because just like 1963, we too have a Conservative party locked in the past, trapped in old ideology, oblivious to the realities of family life around them and the cost of living crisis that defines their every day. This is the crisis that Ed Miliband has put at the centre of British politics. It is the crisis to which we offer urgent answers A crisis from which, we propose, we earn our way out. And we can do it: but only if we change course. Our economy is still £10 billion smaller than before the crash – yet our competitors, like the US and Germany – are bigger The growth we have doesn’t look bubble-free to me. It looks like a good old-fashioned debt driven consumer boom; We’re saving £3.6 billion less than we were a year ago. We’ve got more on the on the credit card in August 2013 [at £238 million] than at any time since July 2011 – and that was a long way ahead of Christmas. Meanwhile, our economy is refusing to rebalance : Did you know, in over the past year the OBR halved its forecasts for export growth in 2013 from 3.1% to 1.2%? Did you know national Investment is still [£10 billion] 27% below its pre-crisis peak, in real terms? Did you know venture capital investment is still falling: Venture finance was €731.6m in 2012, a fall of 20% in real terms on the year. Yet cash balances are still rising: companies hold £500bn in cash, up 25% since the financial crisis So: we have high unemployment; poor investment and anaemic exports. No wonder we’re becoming less competitive. In fact, because our productivity is 4% lower than before the crisis, we need to work 1.5 hours more than we used to to produce the same amount of GDP as in 2008. In the US, they are working 3 hours less. In short, despite our science base, we are not building an economy that is on track to win a race to the top. And what that means for families struggling with the cost of living crisis today is that we’re simply not creating the good supply of high paid, high skilled, high valued added jobs that we need if they are earn their way out of today’s crisis. Yet, 80% of the jobs created since the crash are in low skill and low paid sectors. I ask you: how do we break out of the cost of living crisis with jobs like that? We can’t go on like this. We need a different way forward. We need to learn the lessons from the crash – not ignore them and pretend it never happened And we need that now. 2. The type of economy we’re creating What is striking is how many people now agree. Ed Miliband and many others on the modernising wing of my own party have led the reflection on the lessons from the crash, the orthodoxy that preceded it, and the realities of a globalization that gave great prizes to some, and left others to pay the price. Peter Mandelson was amongst the first to re-think. In a recent speech, he put it like this; ‘We…largely relied on the assumption that markets will work their magic and that, with a little help from the tax and benefits system, the general rising economic tide will somehow trickle down to the population as a whole. But this has not produced the fair rewards expected.’ The best analysis though is not a speech. It’s a book. It’s David Sainsbury’s hugely influential Progressive Capitalism. Once upon a time, people like me took Philip Gould’s great book, The Unfinished Revolution as our bible. We still do. But alongside it, we’re all reading Progressive Capitalism. You’ve probably read it too. You’ve probably read like me, how between its pages, Lord Sainsbury describes the journey which convinced him that the neo-liberal political economy which has held sway for 35 years: ‘needed to be challenged and a new Progressive political economy put in its place’ My own study of how Britain is going to pay its way in the Asian century has taken me on a similar path – to a similar conclusion. There is simply no way neo-liberalism is going to equip us to compete with the state capitalism of the East, nor help us change to a low carbon economy, nor concede a better balance between the price and prize of globalisation. As the facts of life have changed, I have changed my mind. This tradition of Progressive political economy has of course been growing for some time. Many academics have made this argument for some time. Next year is the 25th anniversary of Will Hutton’s book The Stakeholder Society, a early introduction to the theme. My old teacher Michael Porter at the Harvard Business School has made the argument about a new approach to shared value for several years now. More recently, Sir George Cox, in his report for the Labour Party on Long Termism, argued that our institutions in Britain today ‘militates against the development of the internationally competitive businesses and industries that are essential to the UK’s future economic prosperity’. Yet the consensus stretches wider than academia and former ministers. Amongst faith communities, the debate has a new profile. In the Catholic church, Archbishop Nichols has tasked business leaders to develop a Blueprint for Better Business. At this year’s conference, his Grace said this; ‘Our society is looking for a new narrative for the place of business…A fresh examination of the social purpose of business – alongside profitability’. This works connects to a much older and wider theory of Catholic social teaching, applied anew to today’s economic challenges in the encyclical Caritas et Vertiate which concluded with a call for a: ‘profoundly new way of understanding business enterprise’ ‘Business management’ it said ‘cannot concern itself only with interests of the proprietors, but also assume responsibility for all the other stakeholders’. But the debate is even wider than former ministers, academics, and faith leaders. It includes business leaders too. Dominic Barton, MD of McKinsey, recently spoke for many when he said: How many in business under huge short term pressure, now confront the corrosive challenge of the ‘divided self’; the way they feel forced to act, and the way they believe they should act. Can I suggest that when former ministers, academics, faith leaders and business leaders all advance a similar argument, then something is changing. Sea-changes, said Jim Callaghan in 1981, only come about every 30 or so years in politics. They are famously, not fast. Indeed the last great sea-change, the arrival of neo-liberalism, in British politics back in the 1970s, arguably took four decades to arrive. You can trace its roots to the famous exchanges between Keynes and Hayek, which started back in 1931, but were perhaps best crystallised in the Road to Serfdom in 1944.