Where is the growth coming from? Civil Society to the Rescue?

1. Where is the growth coming from?Civil Society to the Rescue? Will Hutton

2. Banking sector assets (per cent of GDP) 600 500 400 300 200 100 0 1880 1904 1928 1952 1976 2000 The rise of “ bad capitalism”Size of UK banking sector

3. Per cent 30 United States 25 20 15 10 United Kingdom 5 0 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Long-run equity capital ratios Source: US – Berger, A., Herring, R. and Szegö, G. (1995). UK – Sheppard, D.K. (1971), British Bankers’ Association, published accounts and Bank calculations.

4. A BRAVE NEW WORLD: Recessions comparedNote: In the past it has taken between 36 and 48 months to return the level of output to where it was at the start of the recession. Source: NIESR

5. Where have the jobs been coming from over the last 30 years? • Manufacturing – minus3.8 million • Health and Social care – 1.9 million • Professional, Scientific and Technical – 1.5 million • Administration and Business Services – 1.3 million • Education – 1.1 million

6. Knowledge based industries defined by the OECDNote: manufacturing classified by R&D intensity; services classified by ICT use and employment of graduates. Recreational and cultural industries recognised as knowledge based by EU but not OECD, and includes libraries and museums.

7. 1.6 1.4 1.2 1 0.8 index 1980 =100 0.6 0.4 KE market based KE public based Manufacturing Other Services 0.2 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 Knowledge economy and the 1980s recession and recovery

8. 1.4 1.2 1 0.8 index 1990=100 0.6 0.4 KE market based KE public based Manufacturing Other Services 0.2 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Knowledge economy and the 1990s recession and recovery

9. Market based knowledge services leading the current jobs recoveryAll figures UK workforce jobs, March 2010 to March 2011. Eurostat 2010 definitions of KE industries. KE market based services include information and communication, financial, professional, technical and scientific services, and arts, recreational and entertainment services. Other market services include distribution, transport, hospitality, real estate, other services. Production is manufacturing, construction, energy and water supply. KE public based includes education, health, and public administration. Total also includes agriculture and mining.

10. Knowledge based sectors leading the entrepreneurial revivalNote: all figures employees, excluding health employment. Knowledge service industries are OECD definition and include business, high tech, and financial services. Other sectors include transport, retailing, hospitality and other services delivered by non-public organisations. SMEs defined as all with less than 250 employees.

11. A short history of general purpose technologies (GPTs)…

12. The Innovation Ecosystem Openness Access to finance Skills Competition Public research Demand

13. Twenty-first century prospects ? Grand Challenges • The mobile phone • Nanotechnologies • Energy from fusion • Advanced materials • Carbon sequestration • Space • Manage the nitrogen cycle • Water • Health informatics • Durable customised infrastructure • Customised medicine • The brain • Cyberspace security • Enhance virtual reality • Personalised learning

14. The rise of the experiential – authors of our own lives • Air travel • Customised cars – Formula One forerunner for all of us • The adventure holiday • The shopping mall • The live gig • Virtual reality • The SIPP • The Sarkozy Index • etc etc

15. Some 21st century jobs – UK Dept of Business • Body parts manufacturing and storing • Pharming – cultivation of genetically modified crops • High rise farming – cultivation in skyscrapers • Personal brand consultants for social networking • Customised avatars as teaching aids • Space guides • Miniaturisation doctors • Old age well being advisers • Care assistants

16. Potential sectors….. • Average life expectancy of S and P 500 company 45 yrs in 1955 – 11 years today • “ Manuservices” in aerospace, pharmaceuticals, defence, high tech engineering( cars, chemicals) • Low carbon economy – energy production, energy efficiency, green manufacturing plus associated services • Life sciences • Creative and cultural industries – design, electronic/digital media and publishing, games • High tech and business services – computer, business to business services • Caring and servicing the newly young old

17. New Flexibilities • 5/6 transformational GPTs likely during 50 year working life of a 2012 graduate • Open innovation business models new template – joint ventures, openness, porousness ( Unilever and “ open innovation orchestrators”) • Average expectancy of firms around 10 years • All skills and professions likely to become obsolescent • Need to commit to constant reinvention • Responsibility for own health, pension and transitional support between jobs • Vibrant civil society key platform for future growth

18. Some places are more innovative than others 160% London Milton Keynes 140% Cambridge Aldershot Reading 120% Derby Edinburgh Total GVA growth 1995-2008 Mansfield Swindon 100% Barnsley 80% R2 = 0.402 Birkenhead 60% 40% Blackpool Stoke-on-Trent 20% 10% 15% 20% 25% 30% 35% 40% Proportion of employment in Private Sector Knowledge Intensive Industries (2008)

19. THE ENTERPRISING STATE AND GOOD CAPITALISM

20. Good capitalism • Embrace the new and recognise change is the new normal • Good ownership – stewardship and performance • Innovate, innovate, innovate • Human capital • Finance to grow • Flexicurity • Public and private co-create wealth

21. The Enterprising State: A plan for public action and incentives for private action • Action is needed to strengthen innovation policy for the future in order to turn the UK into a global innovation hub: • Analyze where system failures occur: What kind of failures and what is the role of the actors and institutions in causing these failures? • Evaluate current policies: do they address the right failures in the right way? Do they cause inefficiencies in the innovation system? • Justify a plan for innovation policies for the growth of the UK economy

22. The Enterprising State: A plan for public action and incentives for private action Innovation policy for short and long run growth is about: • Eliminating system failure • Increase economic value pie and productivity, by • Facilitate ‘technological timely’ and ‘matching/complementary’ formal and informal institutions which are able to shape productive interactive processes in which • innovative agents (firms and individuals, research institutions, customers/demand, authorities, financial institutions/banks) can interact and create value in an open innovation process.

23. THE ROLE OF CIVIL SOCIETY

24. Flexicurity – a new social contract to support good capitalism • From jobs as property to jobs as career building blocks in a fast changing environment • An end to No compulsory redundancy – mutual worker co-operatives hire labour tto SMEs with no redundancy costs but quid pro quo is high investment in skills • Mutual provides a wage even when worker not formally employed but worker agrees commitment to skills acquisition • Radical overhaul of education and skills curriculum • Northern Ireland Office is Employer of last resort • The Mutual co-operative issues bonds and may invest or lend to SMEs

25. But how much can Northern Ireland do alone? • Crucial juncture in Northern Ireland history – an end to the Irish tiger, possible Scottish independence. Where is the growth model? What does identity mean in a context of wrecked south and a fractured union? • The public sector is constrained for a decade. • The only option is private sector dynamism • But most of the tools and cash to create institutions and spend run out of Westminster • The Civil Society offer is the only potential unique selling point