Chloe Smith – 2017 Speech in Newry

Below is the text of the speech made by Chloe Smith, the Parliamentary Under Secretary of State for Northern Ireland, at the Northern Ireland Commissioner for Children and Young People’s ‘Our Brexit Too’ event in Newry on 10 November 2017.

Thank you very much for inviting me to attend this excellent event today.

You’ve made it clear to me that there are worries about Brexit, about what it will mean for your families and for your future, and I want you to just take a moment to hear a different perspective.

I want to tell you about the opportunity of Brexit, about what it can mean for the economy, for jobs, for your university experience and for your future as the next leaders and involved citizens of Northern Ireland.

Before turning to the subject of Brexit I want to provide a short update on the politics because as those attending will be all too aware it is essential that we see the return of an NI Executive as soon as possible to allow Northern Ireland’s issues to be fully represented at all levels in the negotiation process.

Despite intensive efforts it has not yet been possible for the parties to reach agreement and as a result the Secretary of State has not been able to bring forward legislation to enable an Executive to form. Crucially, a budget for the current financial year has yet to be set. The consequence of this is that the UK Government and the Northern Ireland Civil Service have assessed that Northern Ireland will begin to run out of resources soon.

The Government therefore intends for a Budget Bill to be introduced into Parliament on Monday in order to protect the delivery of public services in Northern Ireland.

The UK Government’s strong preference would be for a restored Executive here in Northern Ireland to take forward its own Budget. So this step is one that the UK Government is taking with the utmost reluctance.

The UK Government’s priority will continue to be the restoration of devolved government in Northern Ireland. The Secretary of State will continue to work with political parties to encourage them towards an agreement to form an Executive.

The issue you have spent the day analysing – the decision by the people of the UK to leave the European Union – presents a range of challenges and opportunities.

I want to stress that in discussions about the future of the relationship between Northern Ireland and Ireland, we have agreed that the Belfast Agreement should be protected in full. That means that if the people here want Northern Ireland want to remain within the United Kingdom, that will continue to be the case.

The money in your and your family’s pocket will be at the heart of our discussions on Brexit. We are leaving the EU but that does not mean we are turning our backs on our friends and partners in Europe.

What is also clear is that we are committed to securing a deal with the EU that works for the whole of the United Kingdom, including Northern Ireland. That was clear from the Prime Minister’s speech in Florence recently, and we have made our intentions clear specifically about what we Northern Ireland to the EU in a paper we gave them over the summer.

At the moment, you can travel from the UK to Ireland without a visa and without a passport. For many decades we’ve had a system called the Common Travel Area. We want this to continue after Brexit, and the EU agrees with us on this.

We want to uphold the Belfast Agreement in all its parts; avoiding what some people call a ‘hard border’ when goods cross from one country to another. We want to work north-south with Ireland and we want Ireland to work with the UK east-west too. It’s a great relationship at the moment and we want that to continue.

We have also made excellent progress discussing the citizenship and identity rights provided for in the Belfast Agreement and scoping the North-South cooperation that currently takes place under the Agreement.

We want there to be free movement of goods, and we want to ensure local businesses that your families may work in here in Newry and across Northern Ireland can continue to trade freely across the border.

The Government also recognises investors, businesses and citizens in the UK, Ireland, the rest of the EU, and beyond, need to be able to plan ahead. What would be most helpful to people and businesses on both sides, is for us to agree detailed arrangements for what’s called an implementation period, so that people can get used to the changes and things only change once.

The Prime Minister said in Florence, and again recently in Parliament in Westminster that we want this period of implementation to give businesses and people certainty and time to prepare for the change; and a guarantee that this implementation period will only be for a certain time – two years.

No-one pretends that leaving the EU is easy, it is not. It will require a period of adjustment for both the UK and the EU, for our businesses and our citizens.

But the Government respects what people across the UK told them in the referendum on 23rd June last year. We will leave the political institutions of the European Union on 29 March 2019.

This momentous decision presents challenges, as you will all have seen from the media reports and briefings around issues like citizens’ rights, financial obligations and the land border here in Ireland. But it presents the UK, including Northern Ireland, with opportunities too.

We have always been an open trading nation, forging alliances across the globe to trade with other people. Since we joined the then-EEC in 1973, we have been part of the trade agreements negotiated on our behalf by the Commission.

While these have benefited the UK and the EU, they have not always been in the best interests of each and every nation to which they apply. Some will gain more and some will lose more – that is the nature of world trade.

Leaving the EU provides the UK, for the first time in a generation, the freedom to negotiate trade deals across the globe with any nation we wish to do so.

Soon, the UK will decide what it is prepared to do to secure the deals it wants.

There are those who say the UK will lose the benefits it currently has, through the trade deals it is part of now, through the EU. But this overlooks the fact that the UK will have freedom to negotiate new terms with these nations which could be better than the ones we have at the moment within the EU.

Trade and immigration are two issues that are often seen to go hand in hand. The UK has benefited from immigration, bringing new cultures, skills and ideas to the UK economy. You only need to see here in Newry, which has a high level of immigration, the benefits this has brought to this area.

We will continue to welcome people to the UK. We need skilled migrants to work across our industries to ensure we have the right people in the right jobs to provide maximum benefit to our economy.

This is what EU exit allows us to do. To have our own immigration policy. One tailored to the different needs of the economy. One that is flexible and can react when we need more people, and equally when we need fewer.

Our trading relationship with the EU is also of crucial importance. We have said that we want to see an excellent free trade agreement with the EU. We believe the EU wants the same thing.

I’m an MP, and along with 649 others I have a vote on laws, one of which at the moment in front of us is called the EU Withdrawal Bill. When that law goes through it means we will have the same rules and regulations governing all of our trade now. Some EU laws will become UK laws.

This means that both our country and our neighbouring countries will be in the same regulatory position when we leave the EU, providing both the UK and the EU with an excellent opportunity to forge a great trading agreement.

Put simply, we buy more stuff from the EU than they do from us. So it’s within the EU’s interests to have a great agreement with us that doesn’t punish the UK.

Obviously, the border down the road from here in Newry is the only actual land border the UK has with an EU country, in this case Ireland.

This does present some challenges, but there’s also an opportunity, in that Northern Ireland can act as a bridge between the UK and the EU.

I was about your age when the Belfast Agreement was signed in Belfast between the UK Government and the Irish Government. So much has been done politically, in the economy and in relationships between people of all ages in the past 20 years. We don’t want to lose any of that progress.

Northern Ireland’s position will mean a slightly different set of rules will apply, to ensure the open border continues as it does now. Is anyone’s dad or mum a farmer? You will know that animal health is really important, and it’s important standards are kept right across the UK and Ireland to make sure our food is safe and our farms are safe. We’re working to make that happen.

So it’s clear we need specific solutions to the unique circumstances of Northern Ireland and Ireland and that is what we are working towards every day.

I’m really encouraged by what I’ve heard today. It’s clear everyone here really cares about Northern Ireland, about the EU and about the future. It’s clear many of you wouldn’t have voted for Brexit, but what I want to assure you is that there are hundreds of people in the UK government working really hard every day to make sure we get the best possible Brexit, so when we leave, when you’re a bit older and when you hopefully go to university or into training or a job you will know we have done our very best for you, for your families, and for everyone in this country.

And maybe one day someone in this room will be giving a speech like this. Maybe you’ll be reflecting on Brexit and what it has meant for Northern Ireland and Ireland. I want to assure you that you will have positive things to say, that there are opportunities ahead and if we all work together, we will make a success of Brexit.

Chloe Smith – 2013 Speech at Infosec

chloesmith

Below is the text of the speech made by Chloe Smith, the then Economic Secretary to the Treasury, at Earl’s Court in London on 23 April 2013.

Introduction

Many thanks to the organisers for inviting me to give the keynote address. I know that this is a well-respected event by the sheer numbers of exhibitors and the investment you’ve made to be here.

It is heartening to see that this sector is thriving and that there is so much innovation and vitality in this field. With so many global and UK companies represented it is clear that the UK has an important role in this growing sector. Today, I would like to share with you some of the steps we are taking to raise the profile of cyber threats and generate demand for more and better cyber security products and services.

Firstly though I would like to give you a brief overview of our UK Cyber Security Strategy and objectives.

The threat

In 2010, when this government first came into power, the Strategic Defence and Security Review determined that cyber attacks were one of the top four threats to our national security. This is still the case today.

Cyber threats come from a variety of sources but we broadly categorise them as emanating from state-sponsored actors, hacktivists or cyber criminals. The motivations for attacks vary from ideological, political or fanatical, to financial.

I don’t need to tell this audience that almost every day there is a news story about an organisation being ‘hacked’ or individuals being defrauded by online criminals in new and ever more sinister ways.

And government is faced with these threats on a daily basis. On average over 33,000 malicious emails are blocked at the Gateway to the Government Secure Intranet every month. These are likely to contain – or link to – sophisticated malware, often sent by highly capable cyber criminals and state sponsored groups. A far greater number of malicious emails and spam, but less sophisticated emails and spam are blocked each month.

Strategy and objectives

So what is government doing to help protect UK interests in cyberspace? In 2011, we produced our UK Cyber Security Strategy, setting out 4 clear objectives:

We must make the UK one of the most secure places in the world to do business in cyberspace

We must make the UK more resilient to cyber attack and better able to protect our interests in cyberspace

We must help shape an open, vibrant and stable cyberspace that supports open societies

We must build the UK’s cyber security knowledge, skills and capability.

£650 million of investment over 4 years has been put in place; in of course one of the tightest fiscal environments government has ever seen. This underlines the importance we place on cyber security.

In December last year we reported on progress against the strategy and the work being carried out under the National Cyber Security Programme as well as our forward plans. This covers all the objectives I’ve outlined in terms of enhancing skills, research and education, policing and tackling cyber crime, international engagement and capacity building, new measures to help protect the UK industry as well as the Critical National Infrastructure. Information on all these efforts can be found on GOV.UK and we will be reporting back again to parliament again at the end of this year.

Making the UK a safer place to do business

Objective 1 of the strategy relates to the need to protect and fuel UK business interests and is what I would like to focus attention on today.

Industry is by far the biggest victim of cyber threats. We have stated before that cyber crime, ranging from IP theft to cyber espionage to online fraud, is costing the UK economy billions of pounds a year. And as businesses and government move more of their operations online, the scope of potential targets will continue to grow.

Later today David Willetts, the BIS Minister, will be releasing the 2013 Cyber Security Breach survey results. The statistics are very revealing and provide us with the insight we need to determine how and where we direct resources to support UK industry.

In particular response to this, we are launching today new guidance for SMEs on how to protect themselves from cyber threats. In addition, we are announcing a new Innovation Voucher Scheme for small businesses through the Technology Strategy Board. An Innovation Voucher provides companies with a grant to work with a supplier for the first time and should be invested in an idea or problem that is a challenge for the business and for which specialist support is required. The cyber security element of this scheme will fund 100 companies with Innovation Vouchers of up to £5000 each.

Across government then we are working hard to raise awareness of cyber security throughout industry and ensuring that the right incentives are in place for industry to take responsibility for securing their own interests. But where government can help, we will.

For example, at the end of March, Francis Maude launched a ground-breaking partnership between government and industry – the CISP (Cyber Security Information Sharing Partnership). The scheme currently involves 160 companies allied with government to share information and intelligence in ‘real-time’ on cyber threats to UK companies and how to mitigate them. As part of this we have set up a ‘Fusion cell’, funded by the National Cyber Security Programme, which brings together experts from the security services, law enforcement and industry to work together to address cyber threats in a trusted environment. The ultimate aim is to extend this scheme beyond CNI (Critical National Infrastructure) companies and eventually to include SMEs.

Raising awareness in industry

We are working to create better awareness of the threat throughout both the public and private sectors; this is to help drive informed demand at the very highest levels within organisations to ensure that their key information assets are well-protected.

To this end we have been giving advice and guidance to businesses. Last September, for the first time amalgamated advice from the Cabinet Office, the Security Services and BIS was delivered to an audience of 200 Board-level directors of FTSE companies. The “Ten Steps to Cyber Security” booklet has been well-received to such an extent that in January this year at Davos, the World Economic Forum cited it as an example of best practice. Copies of the booklet are available on the CESG stand here today andit is also available on .gov.uk

The Cyber Security Sector

As we are successful in raising cyber security standards across the private sector, growth in demand for products and services to support this should follow.

So we are putting in place the right environment for a vibrant and self-sustaining cyber security market-place of good UK based cyber security providers.

We are determined to help seize the business opportunities in cyber, promoting the UK cyber security industry both domestically and across the globe.

Cyber security represents an opportunity for the UK – both for companies where cyber is core to their business and for companies across all areas of the economy who need to develop a competitive edge through demonstrating that they handle information responsibly and protect the details of those they do business with. We have every reason to believe that UK firms are well placed to capitalise on this growing market.

The UK has history of being innovators in technology and in technical areas such as cryptography which is maintained to this day in our universities. We know how to implement this as our ongoing strengths here underpin our cutting edge position in areas such as online commerce and banking. Undeniably, there is a massive growth potential for UK businesses and innovators to do very well in the cyber security sector.

SMEs

Making a difference often relies on the forging of new partnerships – not necessarily between government and industry but business to business. A good example of this is an SME in Malvern, called IASME, a small business that has developed a cyber security standard specifically for SMEs. IASME has partnered with a local insurance provider (Sutcliffe and Co) underwritten by AIG to offer reduced premiums to those companies that are assured against the IASME standard. This approach is helping to grow these two small businesses, offering an innovative approach to cyber risk management, as well as growing the cyber security market in the local area. Linked to this is a series of awareness-raising events that IASME are holding around the UK for SMEs to introduce them to cyber risk and promote this insurance offering: quite impressive stuff for a micro-business. We applaud this approach and BIS is also contributing to these ‘roadshows’ to offer the government view and present on HMG is doing to stimulate supply and demand for cyber security.

Standards

And to help more companies demonstrate that they are cyber savvy we are also bringing clarity to the broader standards landscape helping companies identify the best of the standards that exist in the marketplace and to protect organisations against cyber attacks.

GCHQ and BIS have drawn up, in partnership with industry, a series of requirements for what a good organisational standard for cyber security would look like. We are relying here on market support and industry telling us what their preferred standard is and how it aligns with the requirements.

Sector growth

At the last count, there are around 2380 UK companies in the cyber security sector which equates to 21 % of all UK security companies. In total, these companies support well over 26,000 jobs – currently 16% of all UK security employment. According to a UK Security Sector Report, UK Cyber Security sales amounted to £3.8bn with UK exports of £800m. Cyber security global growth is forecast over the next four years to be over twice that of the security sector as a whole as economic constraints bite in traditional defence and security markets. So it is clear that this is a growth sector and one which we should encourage and nurture.

The Cyber Growth Partnership

To this end, we have launched a new Cyber Growth Partnership, led by BIS and Intellect, the ICT representative organisation, representing over 850 large and small technology organisations. Central to this will be a high level group which will identify how to support the growth of the UK Cyber security industry, with an emphasis on exports. It will also help identify what currently stops the cyber security sector from growing, with a particular emphasis on SMEs and boosting their market potential.

The first meeting of this group took place last month. The main outcome of the meeting was an agreement with industry on the practical steps they needed the government to take to support export growth. For example we are looking at ways in which those businesses which government has procured cyber security products from can promote the fact that they are an HMG supplier to their prospective customers overseas.

We also discussed how industry and government can work together to ensure that the right inputs such as skills, R&D and funding are available to support growth.

It is early in the life of the group and we are keen that we don’t lose momentum – however the indications are that this group can play an important role in addressing issues that impact on sector growth.

Skills and research

The ideas for skills and research we discussed as part of the cyber growth partnership are focussed on what we can and have to do in the future.

Through the National Cyber Security Programme we are investing in skills research and training. Last week two new Centres for Doctoral Training in Cyber Security were established within UK universities to bring people with the right skills and knowledge into the cyber security field. The CDTs will provide broad training focused exclusively on cyber security and engage with industry to ensure that this training reflects the complex and dynamic nature of cyber threats. This is in addition to funding for Academic Centres of Excellence in Cyber Security status to 11 UK universities and 3 new Research Institutes.

We are also taking steps to improve cyber security skills among young people and to widen the pipeline of talent coming into this field. e-Skills UK is developing interactive learning materials on cyber security for GCSE and A-level students. We expect these materials to be available to schools from September 2013.

At the end of last year, GCHQ and the other Intelligence Agencies launched a new technical apprenticeship scheme which aims to identify and develop talent in school and university age students. They aim to recruit up to 100 apprentices who will be enrolled on a tailored two-year Foundation Degree course. We also sponsor the Cyber Security Challenge UK in its work providing advice, support and guidance for anyone interested in a career in cyber security, and we want to create opportunities for employers and previously unidentified talent to come together. Since its launch in 2010, over 10,000 people have registered with the initiative.

GCHQ has also established a set of certification schemes to improve the skills and availability of cyber security professionals. The Certification for Information Assurance Professionals scheme will help Government and Industry to recruit cyber security professionals with the right skills at the right level, and into the right jobs. It will also assist participants to build a career path and to have the opportunity to progress through re-assessment as skills and experience grow.

All this will take time to filter through but we are putting in place the right processes to achieve increase the numbers of skilled people needed to help protect UK business.

Conclusion

In conclusion, cyber threats are an increasing challenge for UK businesses but they also present many exciting opportunities as well. We are making every effort to address the threats through improving our ability to detect and defend UK interests in cyberspace. We have to work with you, with UK businesses to help this growing sector to thrive. We want to work with industry through real and meaningful partnerships to ensure that UK businesses capitalise from this growing demand for the benefit of the UK as a whole.

Chloe Smith – 2012 Speech to ResPublica

chloesmith

Below is the text of the speech made by Chloe Smith, the Economic Secretary to the Treasury, to ResPublica on 17 January 2012.

Good morning and thank you for inviting me to speak here today about Charities and Philanthropy.

It’s a subject of deep interest to me in my role in the Treasury and one that is vital to realising the Government’s vision of a Big Society.

And I’m pleased to be speaking about this issue here at ResPublica, as it is you that have led and shaped that debate in recent years.

It’s your innovative insights on public service delivery, emphasising the virtue and the potential of an associative society, that have set the agenda for ambitious reform across public services.

When we came to Government we knew that we were at a watershed for how we provide public goods and meet public need. Over the previous decade, under the previous Government, power was continuously hoarded to the centre, to Whitehall.

It became all about central levers and targets.

But over that decade, the very nature of society itself was changing, becoming less hierarchical in every sector.

The internet has been the great leveller and across every sphere it gave individuals the tools to take action for themselves, to produce their own solutions, to share their ideas with a wider community.

And across the board, businesses, pressure groups, social entrepreneurs, and charities seized the opportunity to grow with renewed vigour. And at the same time, or perhaps as a result of this change, there has been a profound shift in attitudes across society.

Whilst there are still those who point to Government and say “You do it”, there is an ever growing tide of people who are saying “We’ll do it.”

A wave of people who have the knowledge, tools, and support to take on responsibility not only for their own needs and their family, but the community that they live in.

A wave of change that brings irresistible pressure to reform at the very heart of Whitehall.

Big society

At its heart, the Big Society is about putting more power in people’s hands – a massive transfer of power from Whitehall to local communities.

Giving local councils and neighbourhoods more power to take decisions and shape their area.

Encouraging and enabling people to play a more active part in society

And opening up public services to enable charities, social enterprises, private companies and employee-owned co-operatives to compete to offer high quality services

We have made some excellent progress towards realising these ambitions. Not least in supporting the charities that drive volunteering and social action across the UK.

Steps taken to support charities

We have already taken steps to reduce the administrative burdens which can be a great weight on charities and distract them from their primary purpose and their primary love.

At Budget we committed to an online filing system for charities to claim Gift Aid, to be introduced during 2012/13. I know from feedback to the announcement that this will make a big difference across the sector.

And we have already delivered a significant first step with the introduction in April of intelligent forms for charities to apply for and claim Gift Aid.

These forms contain automatic checks so will considerably reduce the number of mistakes made, the need for manual checking and so speed up the claiming process.

HMRC will also be working with the sector to develop a Gift Aid database for charities. We have also taken steps to develop new fundraising opportunities for charities.

We opened a £100m Transition Fund to help charities, voluntary groups and social enterprises affected by reductions as part of the Government’s Spending Review.

This was part of a £470 million support for the sector, demonstrating the Government’s commitment to building the resilience of voluntary sector organisations.

We are developing new funding streams like the Big Society Bank, which will draw on money in dormant bank accounts to provide wholesale finance for charities and other groups.

But we are also working with charities to develop ways and means to galvanise greater giving across society.

Creating incentives for people to donate more to charities like those represented here so that they can continue and expand their programmes. It’s about identifying what Government can do to incentivise people in to giving more.

Budget and Autumn Statement 2011

We want to make it easier for people to give in a range of ways and at different life stages.

Tax reliefs for charities and charitable giving are an important way to do that, and though they cost over £3bn a year, they are a vital source of support for charities.

And over the last year we have taken important steps to improve the effectiveness of reliefs, and also expand opportunities for giving.

We are reducing the rate of inheritance tax from 40% to 36% for those individuals who leave 10% or more of their estate to charity. This will reduce the cost of giving to charity through bequests. We consulted on the detail of this proposal last summer, and will put legislation into place through Finance Bill 2012.

We have also made changes to encourage greater lifetime giving of pre-eminent works of art to the nation in return for a tax reduction.

At the Autumn Statement we announced an increase in the annual limit for both tax reductions under the Gifts of Pre-eminent Object scheme and taxes offset under the existing Acceptance in Lieu Scheme, from £20m to £30m.

And more than that, companies as well as individuals will be able to access the new scheme.

We have also announced an increase in the Gift Aid benefit limit from £500 to £2,500 to enable charities to better recognise the generosity of their significant donors.

We have not forgotten smaller charities or donations from those less well off. We are introducing a new Gift Aid Small Donations Scheme from April 2013.

This will be a big help for those charities collecting so called ‘bucket donations’, allowing them to claim a Gift Aid style payment on small donations up to £10 without collecting Gift Aid declarations.

Qualifying charities will be able to claim up to £1,250 in repayments on total donations capped at £5,000 per year.

These measures add up to a significant pack to support charities and charitable giving. But at the same time, there is no cause for complacency.

Payroll Giving

Last year’s Government White Paper on Giving demonstrated our commitment to encouraging more people to donate.

It included a commitment to raise support for Payroll Giving – a tax effective method for employees to make regular donations to charity.

Payroll giving provides a sustainable and predictable income stream for charities, and I have asked my officials to work with Cabinet Office to seek out ways to improve take-up.

We know that we have to do much more to raise awareness of the scheme, and ensure that awareness leads to action. Together with the charity sector and with employers we need to change behavioural attitudes to embed giving, in this case payroll giving, as the social norm.

Conclusion

At a time when we are having to cope with the worst fiscal deficit in our history, I hope you will agree that the Government has made an excellent start at supporting the charitable sector.

That said I believe that we are merely at the outset of a period of huge innovation and change for the charitable and wider third sector.

Not only in terms of finance and philanthropic support, but also for how charities and third sector will be increasingly intertwined with how we deliver public services for the future.

It is vital that we continue to engage with policy makers, the charities, and service users to ensure that we get these reforms right, and meet public need and efficient and effective way.

I look forward to our discussion and learning what more we can do working together in the years to come.

Thank you.

Chloe Smith – 2012 Speech to the Oil and Gas Fabricators Conference

chloesmith

Below is the text of the speech made by Chloe Smith, the then Economic Secretary to the Treasury, to the Oil and Gas Fabricators Conference on 27 July 2012.

Introduction

Good evening, and thank you for inviting me to speak to you today.

Even as we move towards a lower carbon economy, no one should be in any doubt as to the continued importance of oil and gas, which still provide nearly three quarters of the UK’s primary energy needs.

Oil and gas is one of the UK’s greatest industrial success stories, supporting a third of a million jobs, and successfully extracting the equivalent of 41 billion barrels of oil to date.

The supply chain – and fabricators such as yourselves in particular – plays an especially crucial role in making the oil and gas industry what it is today.

Highly skilled supply companies have developed a global reputation of excellence – which I was pleased to see recognised in an Economist article only last week.

I myself have seen this work in Aberdeen.

And I am particularly pleased to be in Norwich to discuss how we can help the sector continue to flourish, as the Southern North Sea and this region play a considerable part in that success as a centre of excellence for offshore activity and expertise.

In conversations with companies operating in the North Sea, it always strikes me that this is a truly global market – not only in terms of the commodities that are sold, but also in terms of competition for capital and jobs.

Companies can choose to invest in the UK or in Canada, Brazil or Nigeria.

A trained engineering graduate can begin their career in the Southern North Sea or in Norway, the Gulf of Mexico or Australia.

We recognise that, as the UK Continental Shelf matures, and other basins compete for the skills and investment it needs, Government and industry need to work together to adapt accordingly.

Let’s be frank – we need to ensure we extract the full benefit from the oil and gas that remain under the shelf.

The UKCS has many advantages:

– a superb hydrocarbon system;

– a wealth of seismic and production data;

– superb infrastructure; and

– oil companies that lead the world in skills and capability.

It is important that we play to these strengths and exploit them fully.

So I want to take a few moments today to talk to you about how we do that – working with industry to ensure that, through investment, innovation and the tax system, we can secure the greatest benefit for the UK that our rich natural resources can offer.

State of the sector

I am pleased to see that 2012 is already shaping up to be a successful year.

DECC expects a substantial increase in offshore field approvals over last year, on top of the many other discoveries already being worked on; and applications for the 27th licensing round are the largest since offshore licensing began almost 50 years ago – 35 more than the previous record.

And I was very pleased to see Oil & Gas UK’s most recent Business Confidence Index show a significant rise in confidence in the first quarter of 2012.

I am keen for the industry to maintain this momentum, by making the most of the many opportunities still available.

Fiscal measures

We recognise that the Government has a crucial role to play in ensuring that the regulatory and fiscal regimes help to deliver the best possible future for the UKCS.

And today I want to focus on some of the recent decisions we have taken that highlight the Government’s commitment to delivering a fiscal regime that encourages investment and innovation – as well as ensuring a fair return for UK taxpayers.

We have been engaging constructively with companies at an individual and industry-wide level on tax issues that could promote confidence and facilitate further investment in the basin.

And at this year’s Budget we announced a package of measures to secure billions of pounds of additional investment in the UKCS.

… Adopting a contractual approach to offer long term certainty on decommissioning relief, delivering billions of pounds of extra investment;

… A new £3 billion allowance for deep fields with sizeable reserves, targeted at the west of Shetland

… A significant expansion of the value and size threshold for the small field allowance

… As a signal of our intent, we brought in legislation giving Government the power to introduce a brown field allowance.

… And only yesterday the Chancellor announced further support for the gas industry alongside wider measures on the UK’s energy market as a whole.

This included a new allowance aimed at securing investment in large shallow water gas fields in the North Sea. This is likely to benefit investment in this area – the Southern North Sea – in particular, and I am pleased that this has been welcomed by the industry.

Taken together, the changes we have made to the field allowance regime aim to encourage investment in commercially marginal fields – ensuring that, as a country and for you as an industry, we continue to make the most of the rich resources available to us.

The positive effects of these changes will be felt across the industry, including throughout the supply chain.

These changes also follow from excellent engagement between Government and industry.

Earlier this month I chaired the second meeting of the Fiscal Forum in Aberdeen – a Forum we established to provide a regular, structured basis for the ongoing discussions on the key tax issues facing the industry, complementing the excellent work done by DECC’s PILOT group.

I warmly welcome the constructive engagement we have seen from all sections of the industry attending.

And I know that there is important work still to be done. Earlier this month, I was pleased to launch our consultation on Decommissioning Relief Deeds, and I look forward to hearing industry’s views on the issues we raise there.

Following the introduction of the necessary legislation, and in recognition of the importance of ongoing investment in older fields, discussions are also ongoing between Government and companies on a potential brown field allowance.

It is through this kind of co-operation that we can ensure that Government and Industry can deliver together for the UK – not just on the fiscal regime, although that is clearly a key part of our thinking, but also through ensuring the sector has the access to the skills and technology it needs to reach its full potential.

Technological challenges

The best overall outcome from the basin will require innovation and advances to existing technologies.

We have made changes to the tax regime to encourage innovation, including improving the viability and generosity of R&D tax credits, and we need to continue to look beyond fiscal policy at the support Government can offer.

My Ministerial colleagues in DECC are tackling the challenges of maintaining our infrastructure through PILOT, and I know the workgroup is due to report back to them in the Autumn.

And DECC are also working to deliver an “Innovation Demand Chain” event at the beginning of November to share challenges and connect operators with developers.

Skills

But the success of the sector is reliant not just on the best technology, but also on the best people.

The strong supply chain we have brings quality, highly paid jobs in an exciting industry – whether in the UKCS, or any other hydrocarbon-producing country, where our expertise is highly prized.

The subsea sector in particular has been very successful in recent years and is forecast to continue growing at around 8 per cent this year.

With the potential to create an additional 10,000 jobs in the next two years in that part of the industry alone, it is imperative we have the training to get the right people with the right skills in the right place.

In recognition of this, the Government – particularly my colleagues at BIS and at DECC – has established close working relationships with OPITO, Cogent and Skills Development Scotland to address the skills challenge.

Together, we are ensuring the opportunities and rewarding prospects of the industry are promoted to young people, as well as the jobs for highly skilled and qualified individuals looking for employment or changing career from other industries.

Summary

I have set out today what we are doing to help the industry continue to benefit the whole of the UK through making the most of the energy resources we enjoy.

Without the fabrication industry, we would never have experienced the energy revolution we did, alongside the wealth and economic stimulus that oil and gas has given us.

We need to continue to work in partnership – government and industry – to ensure that that continues: getting regulation right; getting the tax regime right; and developing and applying the right skills and technology.

From what I can see of the programme of papers, it is clear that you are continuing that tradition, and long may it continue.

Thank you.

Chloe Smith – 2013 Speech at the Government Construction Summit

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Below is the text made by the Cabinet Office Minister, Chloe Smith, on 2nd July 2013.

Since coming into office we have made it a key priority to reform public sector construction so we can build the schools, hospitals, prisons and roads this country deserves – and at the same time help develop a more efficient, more innovative and more competitive construction industry.

This is a hugely important agenda for us. Britain remains in a global race for the jobs and opportunities of the future.

And our construction industry is critical to this country’s growth – both in creating jobs and in providing the crucial infrastructure this country needs to compete globally.

So we are reforming to ensure we invest in the right places to achieve growth and support UK suppliers to grow here and abroad.

We are also reforming to achieve greater efficiency. The public sector is under unprecedented pressure to produce more for less today. As we address the huge deficit we inherited – budgets are tighter across the sector, but the demand and expectations for public services are rising.

We owe it to the taxpayer to deliver public services that don’t just cost less but are better, more innovative and more catered to the individual’s needs.

Today I want to talk about how the Government has and will continue to promote efficiency and reform in public sector construction, alongside innovation and growth in the construction industry. I will focus on the key areas of efficiency, cost benchmarking, procurement reform, fair payment and new digital models of procurement.

But first I’ll highlight the context for reform. As you know, two years ago, this Government published a cross-Government Construction Strategy with clear objectives to promote efficiency and reform in Government construction, alongside innovation and growth in the construction sector.

How would this work?

On one hand Government would be a tough negotiator – hunting for the best prices and deals on behalf of the taxpayer. We set out a target to make public sector construction 15 to 20 per cent more efficient by 2015.

But at the same time we would build long-term strategic relationships with suppliers; making it easier and simpler to do business with Government.

Today as you’ve heard – a new Industrial Strategy for construction (IS) has been launched – a fine example of how industry and government has worked together to give the sector a long term vision. This builds on foundations of the Government Construction Strategy and gives it a broader momentum to spearhead lasting change through reform.

The themes of the Government Construction Strategy are peppered throughout the drivers of change highlighted in the Industrial Strategy.

The first of these themes I want to discuss is efficiency.

In the past there was a shocking productivity gap between the public and private sectors. And the more money that’s been pumped into public services – the less efficient we’ve become.

This wasn’t good enough at any time – today facing the twin challenges of less money and rising public expectations – there needs to be reform.

The Cabinet Office’s Efficiency and Reform Group has led an ambitious programme of reform, transforming the way Government works – acting as an effective operations centre at the heart of Government, driving efficiency and clamping down on waste.

This work supported Departments to deliver £3.75 billion of savings in our first year in office, £5.5 billion in 2011-12 and we recently announced £10billion of savings for 2012-13.

Construction is playing its part in this. We reduced costs to contribute £447 million savings in 2012/13.

One of our key efficiency reforms has been the publication of benchmarks of Government construction costs establishing what a project should cost.

Before the launch of the Strategy, few government clients had compiled their benchmarks and made them widely available.

This is no longer the case. We have now published department cost reduction trajectories and construction cost benchmarks, which help inform central government and wider public sector clients as to what they currently pay for construction and what their construction should therefore cost, moving forward.

This is important for spurring on efficiency. For example since 2010 the Education Funding Agency has reduced the average cost of a new secondary school from £2450/m2 to £1460/m2 and is currently out to tender with the Priority Schools Building Programme at this lower cost. This represents a 40 per cent reduction.

The cost data will not reduce the overall amount to be invested in construction but will mean that taxpayers will get more for this money.

So successfully delivering projects at 15 to 20 per cent less than the historic benchmark will mean that the public sector will be building £1.2 billion worth more in projects by 2015.

The equivalent to approximately 60 new secondary schools.

The latest publication of cost benchmarks is published today with, for the first time, more granular department cost benchmarks, and data direct from local authorities. It shows that costs are coming down and sets the pace at which further reductions will be achieved. As we move forward we would like to include private sector comparison data – this exercise is now underway and I would appreciate your help to build up this overarching sector view.

A Government hunting for the best deals is not just good news for the taxpayer and for the service user – it’s good for British businesses too. Efficiency and growth will go hand in hand as we open up to all kinds of businesses and business models.

We’re changing the way we engage with the industry over upcoming contracting opportunities. In the past, constrained by fears about picking winners, cosiness with incumbents and breaching theories of efficient markets, we have left business to flounder in the dark about what’s coming up – meaning we were also blind as to what the industry could offer.

But over the last two years, Government has been publishing a pipeline of upcoming opportunities that gives suppliers a clear picture of the contracting landscape across Government construction.

The latest iteration includes £19.2 billion worth of investment over the next two years. Now that the spending round has been announced a refresh of projects will be completed shortly. So keep an eye open for updates.

I hope you’ve taken the time to visit the New Models of Delivery knowledge hub today and view our new microsite that will make pipeline data more accessible to search.

The pipeline is seen as a key enabler for growth and investment in the Industrial Strategy. It calls for further development to bring a regional emphasis and ownership of local pipeline data and to encourage new partners to contribute.

As well as engaging better with the market before procurement – we are also reforming the way we procure. Historically businesses have found bidding for public sector work excessively bureaucratic, time-consuming and expensive. This often meant the best, most cost-effective ideas were shut out from the start – particularly those coming from small, innovative firms.

SMEs are a crucial engine for growth – 99.9 per cent of the UK’s businesses are SMEs, they are responsible for almost half of our private sector output and create two thirds of new jobs.

Yet when we came into office only 6.5 per cent of Government business was going to SMEs.

This Government set out an aspiration to ensure that 25 per cent of our business in Central Government should go – directly or indirectly – to SMEs by 2015.

To achieve this we have made our procurement processes much simpler, more open and less bureaucratic – so all businesses, no matter what their size, have a chance of success. For example, using PAS91 (2013) to standardise PQQs in the construction industry; and advertising contract opportunities centrally.

There is also much greater visibility of opportunities. In the past businesses often simply didn’t know what was out there. Now the Contracts Finder website gives businesses a single place to survey everything on offer from Government.

We are using technology to enable quicker procurements such as e-Auctions.

And we have introduced more accountability. Our Mystery Shopper allows suppliers to report instances of poor procurements across the public sector for Cabinet Office to investigate.

These reforms are starting to pay off. Overall Government has increased its direct spend with SMEs from 6.5 per cent in 2009-10 to 10 per cent in 2011-12, and in 2011-12 figures from Government’s top suppliers shows that SMES had benefitted from a further 6.6 per cent of spend in the supply chain. We hope to publish information on spend in 2012-13 later this year.

Another key priority for us is to ensure there is prompt payment to the supply chain. Timely access to cash is of course critical to the survival of many SMEs.

There is now a contractual obligation which took effect for all central Government contracts placed to pay down to tier three within 30 days.

We are also working with key central government departments to roll out Project Bank Accounts across government construction projects. This will improve the speed and security of payment to members of construction supply chains down to tier 3 within a matter of days.

This is already working well. The Highways Agency now uses Project Bank Accounts on all contracts awarded post October 2011.

Through electronic bank accounts they pay prime suppliers at the same time as subcontractors down to tier 3 and already this has had a great impact in preventing cash from being held up in supply chains.

Last year alone £1.1 billion worth of projects signed up to use Project Bank Accounts and I’m pleased to announce today that in 2012/13 we exceeded our target of £2 billion, with nearly £2.2 billion of spend having been committed via Project Bank Accounts since their introduction.

The Industrial Strategy re-emphasises this Government’s commitment to fair payment. PBAs, along with supply chain finance and enterprise credit guarantee scheme will continue to support liquidity to the supply chain.

The reforms I have outlined so far are making a difference – but they are not the end of the story.

We are determined to keep piloting new innovative ways of working with the industry – and ultimately embed these across Government and other public bodies. And we are committed to driving efficiencies through harnessing the latest digital technologies.

This is a key theme in the Industrial Strategy – the aim is that new models of procurement once proven, become business as usual across the public sector.

We are currently trialling three new models of procurement which call for the early involvement of the supply chain, and more integration around the design, the construction and the manufacture of products.

These are: Integrated Procurement Insurance; Two Stage Open Book and Cost Led Procurement. Building Information Modelling (BIM) is also becoming successfully embedded in Departments along with Government Soft Landings.

I hope you’ve all taken the opportunity to meet the experts spearheading these new ways of working at the New Models of Delivery and BIM knowledge hubs here today.

We are starting to see how effective these new methods can be. For example using Two Stage Open Book, Surrey County Council has reduced the cost of maintaining the county’s roads by 15 per cent [in addition to 16 per cent achieved in procuring long-term contract]. Project Horizon has demonstrated clearly the benefits of contract-led, properly structured early contractor involvement and supply chain improvement processes.

Then the Ministry of Justice has secured £800,000 of savings through the implementation of BIM at Cookham Wood prison in Kent where a 180-cell extension is now on site. Through BIM’s innovative 3D modelling, MoJ was able to visualise exactly what was being built before the process started and identify any potential issues, leading to savings being made right at the outset.

BIM is the enabler of a better future; a more collaborative built environment that liberates added value at all stages of the asset lifecycle. It allows SMEs to compete with bigger companies. And the savviest, smartest firms are already maximising the potential that BIM can unlock.

Take Bryden Wood, a British-based multi-disciplinary design and technology company, who in February won a competitive tender for a landmark construction project in St Petersburg, Russia. They beat much larger, international practices and it was their experience of working on complex projects where BIM is essential to coordinate the vast range of design, construction and handover activities that secured the contract.

The Government has established a requirement for centrally procured public projects to be level 2 BIM-enabled by 2016. Through this, we want to encourage innovation and collaborative working across all tiers of the supply chain right from the start of procurement process.

In March this year, Fiatech recognised the UK government and industry for their leadership in advancing technology and productivity improvement in capital projects by presenting us with the James B. Porter, Jr. Award for Technology Leadership. This award will be officially presented to us in a few moments.

This is a real achievement – the UK is now seen as a world leader in the use of BIM in the public sector.

Public sector construction in this country is entering a new era – where design excellence, effective procurement, efficient delivery and competitive pricing is becoming the norm. This is good news for the taxpayer, for services users, the industry – and the economy.

We are producing world class iconic public sector buildings such as the London Olympics Velodrome, Tate Modern and UCH Macmillan Cancer Centre. All winners of the Prime Minister’s Better Public Building Award at the BCI annual awards.

But we are not about to start resting on our laurels.

To continue to achieve success the Government and industry needs to keep working together – as we have on the Industrial Strategy.

It’s vital we continue to join up and share our resources, ideas and best practise. Tell us where barriers remain, report incidences of bad practise to Mystery Shopper – and if you have an innovative idea that will save money and improve public services – we want to hear it.

This Government is open for business – together we can create better public services and a better future for construction in the UK.

Chloe Smith – 2013 Speech to the Federation of Master Builders Conference

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Below is the text of the speech made by the Cabinet Office Minister, Chloe Smith, to the Federation of Master Builders made on 18th June 2013.

Thank you for inviting me to give this keynote speech today celebrating the launch of the report Improving the public procurement process for construction SMEs (pdf).

Federation of Master Builders (FMB) has done a great job of getting together key influencers to this event, including my MP colleagues and LGA representatives and I am delighted to be invited to address such an influential audience.

This report raises important issues that I recognise – SMEs find the Pre-Qualification Questionnaires (PQQs) complex and cumbersome, framework agreements to be bureaucratic, and that future business opportunities from local authorities are not always visible.

These are much the same issues this government has been addressing in central government reforms:

– we are driving through real transformational reforms in procurement

– we have radically improved the visibility of investment opportunities through pipelines

– we are absolutely committed to fair payment

– we are significantly improving engagement, ensuring that we listen to SMEs, and that they have their say in our policy process

Already we are seeing significant positive results. Things are changing for the better.

But, this report has reiterated to me the real value of widening the action we have taken in central government. In particular, sharing best practice we have implemented in central government processes with the wider public sector including local government. The recommendations of this report all chime in with the key themes of these reforms.

So today, I feel is a good opportunity to share with you the experiences of those reforms and to explore how we can work together to take this experience and best practice to the wider public sector.

But first, let me set the background to the action we have taken.

Creating the right conditions for small businesses to grow

More than 95% of the UK’s 4.8 million businesses are micro firms that employ less than 10 people. Together they account for a third of private sector employment (7.8 million) and a fifth of private sector turnover. So SMEs such as the builders’ industry are a crucial engine for growth in our economy.

The public sector spends £230 billion on goods and services a year – that’s roughly 15% of the UK economy and £1 for every £7 spent in Britain.

Businesses have consistently found bidding for public sector work excessively bureaucratic, time-consuming and expensive. This has often meant the best, most cost-effective ideas were shut out from the start – particularly those coming from small, innovative firms.

This government very quickly recognised that for a healthy market place to operate it needs to open and expand access to opportunities, especially for SMEs, and make the conditions right for small businesses to grow.

When we came into office we found SMEs were winning only around 6.5% of the value of central government’s procurement. This wasn’t good enough.

So one of our first priorities was to transform the way we did business so that the smaller businesses would have better opportunities to do business with the public sector.

Many of you will be aware of this government’s aspiration to ensure that 25% of our business in central government should go – directly or indirectly – to SMEs by 2015.

So we have worked hard on that journey. Spend with SMEs has increased across government from 6.5% in 2009 to 2010 to 10% in 2011 to 2012 at a time when overall procurement spend has declined.

SMEs have in fact benefitted from a further 6% in indirect spend through the supply chain for 2011 to 2012. We hope to publish information on spend in 2012 to 2013 later this year.

There are a number of things we have done to get us to this place. Let me share with you our experience of the reforms we have made to set us on this transformation.

Positive action taken

We are nurturing relationships.

We believe it makes commercial sense to nurture our relationships with suppliers – to discuss what’s coming up on pipelines and investment plans, and to ensure early engagement with supply chains prior to procurement.

We have made sure that now SMEs have a Crown Representative pushing for them at the top. Their voice is heard in the high level discussions, influencing the policies we design.

We are reforming procurement.

As you demand, we have made our procurement processes much simpler, more open and less bureaucratic – so all businesses, no matter what their size, have a chance of success. For example, using PAS91 to standardise PQQs in the construction industry; and advertising contract opportunities centrally.

We are using technology to enable quicker procurements such as e-Auctions. And Cloud Store, an online appstore for ICT services, allows public sector organisations to purchase off the shelf IT services on a pay as you go basis.

In construction we are committed to drive efficiencies through harnessing digital technologies. We have established a requirement for projects to be BIM-enabled from 2016. Through this, we want to encourage innovation and collaborative working across all tiers of the supply chain from the start of procurements.

We are now seen as a world leader in the use of BIM in the public sector. We have established the BIM4SME group to assist those making the journey, to share experiences and learn from others.

We have improved the visibility of contracting opportunities.

The Contracts Finder website was launched to give businesses a single place to survey everything on offer from government. Over 15,000 contracts have been published to date and nearly 5,000 have been awarded to an SME.

In July 2011, government construction was the first sector to publish pipelines to help the industry have the confidence to invest and to gear up for future public sector contracts. We have now published pipelines across 18 sectors via the Contracts Finder portal. These provide visibility of government business opportunities worth £79 billion spanning the next 5 years.

We will continue to publish pipelines every 6 months to help suppliers to spot opportunities at an early stage so they can compete and win work. I want to encourage SMEs to use these pipelines as a tool to engage with their suppliers and key markets.

We have increased the accountability of public procurement.

Our Mystery Shopper scheme allows suppliers to report instances of poor procurement for Cabinet Office to investigate. For those of you who are not familiar with Mystery Shopper service – it allows suppliers, including all those within governments supply chains, to report bad/mad procurement practice.

So if a supplier encounters poor procurement practice, such as an overly bureaucratic pre-qualification requirement or unreasonable or inappropriate selection criteria they can refer it to our Mystery Shopper Service, who will raise it with the contracting authority on their behalf.

At the end of last month, Mystery Shopper had received 425 cases and closed 336 with a positive outcome in over 80% of cases.

We are seeking and then responding to feedback.

As you discussed, we are listening to and acting on the feedback we get from SMEs. For example, based on Mystery Shopper feedback, we recently wrote to procurement practitioners reiterating the need not to set burdensome financial conditions when awarding contracts. To ensure transparency, we regularly publish the outcomes of Mystery Shopper cases on the GOV.UK website.

We continue to encourage better use of PQQs that follow the industry-standard wording set out in PAS 91. This has also been a ‘hot topic’ for our Mystery Shopper scheme. We worked with the British Standards Institute, and others from across industry, to further simplify that and the resultant PAS 91(2013) was published by BSI earlier this year.

And our interventions have real life consequences. At the end of last year Mystery Shopper intervened on a late payment case to recover the money owed to an SME and helped prevent the firm from having to make a number of staff redundant.

We are championing prompt payment and integration of the supply chain.

As you ask, prompt payment to the supply chain is a key priority for us. We have pursued fair payment through the use of Project Bank Accounts or a contractual requirement for 30 day terms to be passed to sub-contractors.

We are well on our way to exceeding our target of £2 billion of committed spend being contracted via Project Bank Accounts since their launch.

We have actively supported closer integration of the supply chain. We have set up trial projects on adopting new models of procurement. These new models encourage Tier 1 contractors to build strategic partnerships down integrated supply chains. Innovation and value are important in that partnership.

For example, the Integrated Project Insurance model by the MoD – this was originally proposed by the SME trade organisations Specialist Engineering Contractors’ Group and Specialist Engineering Alliance and embraces early contractor involvement and collaborative supply chain integration.

All of this has made a real difference. Now, more SMEs are winning business with government. Direct SME spend has increased from £3.1 billion in 2009 to 2010 to £4.4 billion in 2011 to 2012, an increase of £1.3 billion over 2 years.

But, the job isn’t over. We agree there’s more to be done.

The government is already working on exploring the recommendations set out in Lord Young’s recent report on growing micro businesses. As part of this work, at the Number 10 SME event on 5 June, we announced that we intend to introduce reforms on procurement.

What next?

I feel there is real value to explore the transformation we have implemented in central government, in a wider public sector platform. Across the public sector, we all have a shared interest in spending money in a way that gets value for the taxpayer and supports business and growth. So there is merit in sharing our experience.

I am particularly keen to work more closely with local government and partners to broaden the progress we have made, to drive forward substantial improvements in procurement practice across the public sector.

Here’s how I see some of that happening:

You talk about publication of data. We are currently looking at ways to make our central government pipelines more accessible and searchable, enabling companies to search for specific opportunities which are relevant to their expertise or region. We want to promote best practice in the publication and use of such pipelines to ensure new opportunities are transparent to SMEs working with local authorities. We are keen for local government and private sector clients to follow our example and publish their own pipelines, enabling a comprehensive picture of regional investment opportunities for SMEs.

We are forging ahead with our transparency agenda with commitments to transparency of data and access to the right information for the right audience, including for procurement and performance related data. We would like to see more of this happening in the wider public sector.

I want to strongly encourage SMEs to seek feedback from the procurement process they have undertaken and if they are having difficulty they should be encouraged to use the Mystery Shopper so we can follow up.

We want to ensure that the opportunities to bid for new procurement frameworks are open to all, and we will continue to actively encourage consortia to bid in the procurement process.

Lasting and sustainable transformation

We will only achieve growth if we in government and the wider public sector really transform our approach to buying – placing more emphasis on early market engagement, and discovering the value for money and innovation that SMEs can offer.

You are key influencers that can make this change happen.

Over lunch, I want to hear from you what you are doing in your local authority/constituency to address the issues highlighted in this report. I want to listen to the problems you face and how you are working to solve them. I want to know what we can do further to make things better.

Let’s build a momentum for collective progress. No one of us can achieve this alone, but with each of us playing our part, pulling in the same direction, we will succeed.

Chloe Smith – 2013 Speech at BIM4SME launch

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Below is the text of the speech made by the Minister for Constitutional and Political Reform, Chloe Smith, in London at the BIM4SME Launch on 15th April 2013. (BIM is Building Information Modelling).

I am delighted to be here today to support the formal launch of the BIM4SME working group.

Let me start by painting a picture in words – not digitally or in 3D as many of you seated here could do – to show how digital technologies, or you may call them Building Information Modelling or BIM, are already helping SMEs to make an impact in the construction industry.

Firstly, at a local level, the London-based practice of David Miller Architects has shown how BIM has unlocked better productivity and allowed them to grow from a practice of 4 to 14, moving them into new and bigger markets.

Secondly, nationally, London-based Wagstaffs Design with 22 staff has created bespoke real-time 3D applications for Crossrail incorporating, for example, pedestrian flow simulation data so Crossrail has new ways of interrogating and presenting infrastructure and building information. These very visual and results-orientated communication tools are accessible through mobiles and online.

And thirdly, internationally, Bryden Wood, a British-based multi-disciplinary design and technology company, who in February 2013 won a competitive tender for a landmark construction project in St Petersburg, Russia. They beat much larger, international practices and it was their experience of working on complex projects where BIM is essential to coordinate the vast range of design, construction and handover activities that secured the contract. And this is not a BIM one-off. In the last year, Bryden Wood has seen their workload in high-value BIM-driven projects increase dramatically and has been able to expand from 45 people to 70.

I’m sure you will agree these are inspiring pen portraits and we want more for the BIM gallery!

The case for BIM

Let’s now move on to the even bigger picture.

The Government Construction strategy challenges industry to modernise and innovate – with efficient low carbon solutions and digital technologies to strip out waste and deliver real savings to the tax-payer.

So you can see this puts BIM squarely at the heart of the shift to reform the industry and deliver greater efficiencies.

The Government’s plans to deliver better value for money in the construction industry and get the supply chain working more collaboratively is ambitious but achievable. Indeed, we are on track to achieve savings of £350m in 2012/3 to reinvest in new Government projects.

By 2016 all Government construction projects will be using BIM level 2 – a goal we believe is very much achievable over the next three years.

To safeguard against creating a two tier construction community, the BIM mandate will be irrespective of project size or the capital expenditure cost of a project.

Our strategy is about driving collaboration and bringing together communities, sharing data in a common environment to make smarter decisions both in the capital and operational phases.

Collaboration between Government and industry is fundamental to develop and roll-out BIM successfully.

This means continued input and involvement from all players in the supply chain, especially the SME community who form the back-bone of the construction industry. The BIM4SME group is just one way SMEs can engage with Government on the roll-out of BIM.

With this in mind, the Government’s BIM requirements have been built both as an open format and technology agnostic.

This is crucial, as it allows SMEs to feed in to a single data set from the outset of the design process and to drive innovation through early engagement.

The BIM way of collaborative working and the efficiencies it will drive, stripping out waste and duplication, is also scaleable whether it be:

– a kitchen block replacement or a new-build school

– prison refurbishment or road repairs.

And there are early successes. The Ministry of Justice, an early adopter, has secured £800,000 of savings through the use of BIM at Cookham Wood prison in Kent where a 180-cell extension is now on site. Through BIM’s innovative 3D modeling data, MoJ was able to see exactly what is being built and identify any potential issues, leading to savings being made right at the outset.

Crossrail is committed to BIM and has set up an Information Academy, with their technology partner Bentley Systems, to capture, develop and share BIM best practices with the Crossrail supply chain and provide training to their contractors. Since November 2012, over 225 individuals from 28 suppliers have been through the Academy awareness sessions and now have access to supporting online training.

It’s great to see clients also stepping up to the challenge and realising the benefits.

Importance of SMEs

It is true that SMEs often take on and offer more innovative solutions.

Construction is no different and with the majority of the construction supply chain referring to themselves as SMEs, ensuring SME whole-sector adoption of BIM is central to future success.

As an SME, no matter what your role in the built environment is, it is highly likely your business will or should be involved in the BIM process whether through supplying or managing data. You may be involved directly working with a government department or indirectly with a supply chain partner who needs data as part of their contractual requirements.

It is clear that BIM does offer the SME community many benefits, irrespective of their position in the construction landscape and construction supply chain – it helps to improve their working processes and remove waste at all stages of the lifecycle.

BIM is becoming a catalyst for growth for the SME community.

For example – Kykloud, a British company set up in 2010, provides BIM ready building surveying and asset management apps so data can be collected onsite in real time and then reports compiled automatically on future long term maintenance costs. Their software is being used by some of the UK’s leading surveying practices across 23 million square metres of infrastructure including HMRC estates, MoJ and 6,000 schools – one third of English schools. This is impressive and the company has gone from 2 to 15 staff in a year with a ten-fold growth in revenue.

So it’s great when you hear SMEs say that BIM helps them compete with much bigger organisations. BIM is a great leveller.

SMEs are agile and innovative and will be amongst the trailblazers in a BIM enabled industry stimulating growth, especially in the international market place where the UK is already seen as a pioneer of BIM enabled solutions.

And it is not just the Government who believes this.

This was validated last month at the Fiatech international awards ceremony in Texas where the James B. Porter Jr. Technology Leadership Award recognised the HM Government and UK industry for their leadership in advancing technology and productivity improvement in capital projects and, in particular, as a world-wide leader for digital technologies in construction.

Giving SMEs a voice

It is crucial to give SMEs a voice and sense of community.

The BIM4SME group is keen to be inclusive and reach out to other SMEs. Their vision is to bring together a BIM SME community and, as a particularly IT-literate group, already have a virtual presence through social media.

The BIM SME regional hubs, set up by the Construction Industry Council hosting the launch today, will develop a community of like-minded SMEs. The hubs will be two-way – sharing guidance and updates on the UK Government BIM programme and allowing feedback from SMEs on the reality of using digital technologies.

These are great examples of Government and industry working together to ensure that the UK remains at the forefront of BIM adoption.

BIM is here to stay

BIM is not a fad.

BIM is now becoming more mainstream and new guidance and standards, like the BSI BIM standard recognised here and internationally, will help to give companies working in the UK a competitive edge in the global race. This includes SMEs.

It is so important to create communities that will push the industry along – groups like the BIM2050 group – a voice for young professionals – and now the BIM4SME group who can provide support and encouragement to other SMEs using or developing BIM solutions.

BIM is fast becoming a master-piece for industry reform and better outcomes.

Chloe Smith – 2012 Speech at the Westminster Forum

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The below speech was made by Chloe Smith, the then Economic Secretary, on 16th July 2012.

Good afternoon, and thank you all for joining me here today, it’s good to see so many people from across government, regulators, and industry joining us to discuss the important issue of energy and taxation.

A journalist, Gro Brudtland, in Time Magazine, once said ‘I do not know of any environmental group in any country that does not view its government as an adversary’.

Often the same is said of business.

The world of energy policy is often portrayed as a pitched battle – between corporations and environmental campaigners, with Government trying desperately to broker a compromise between the two, only to be accused by each of kowtowing to the other.

I don’t believe it has to be this way. Before we came to office, we pledged to be the Greenest Government ever.

And we will stick by this commitment.

But I believe we need to do so by working both with environmental campaigners, and with businesses to find an energy policy that is at once kind to the environment, affordable to households, and acceptable to businesses.

As fossil fuel supplies dwindle, sustainable, affordable energy is in the interests of all – of the firms that produce it, of the businesses that use it, and of the households that consume it.

And it is imperative that the critical decisions that need to be taken today are not put off until tomorrow.

But equally, at a time when incomes are being squeezed, the cost of living is rising, and many businesses are struggling, a sustainable energy policy will not be one that causes unaffordable increases to customers Bills.

Nor, as some of you may have noticed, is there plenty of money sloshing around from the public purse….

It is striking this balance that is the challenge of the Government, of the Energy companies and of the country.

It is the challenge of business since time immemorial – how to do more, with less. That is the challenge of ‘greening the economy: the whole economy, not just a special, separate sector.

And it is the very definition of sustainability.

It is only by working together that we will achieve it, and through the steps we are taking, we are making excellent progress.

Green taxes definition

One way that we as Government are holding ourselves to account on this agenda is through the commitment in the Coalition agreement to increase, over the course of this Parliament, the proportion of taxes coming from environmental taxes.

Today I have published the Government’s definition of environmental taxation, which will provide us with the baseline for meeting this commitment.

What we have done is take a hard look at the taxes paid by businesses and households and asked some pretty fundamental questions

Are these taxes that aim to achieve a genuine environmental benefit?

Are they designed in a way to properly incentivise positive environmental outcomes?

And do they fit with the Government’s wider environmental objectives?

Taken together, using these principles, we have established a core list of taxes: the Climate Change Levy, the Aggregates Levy, Landfill Tax, the EU Emissions Trading System (EU ETS), the Carbon Reduction Commitment Energy Efficiency Scheme , and the Carbon Price Support, which I shall come back to shortly.

But we also acknowledge that a range of other taxes, while being primarily focused on raising revenue – quite important at the moment – also have positive impacts.

Vehicle excise duty and company car tax, for example, are based on vehicles’ CO2 emissions.

Fiscal instruments such as these help play a part, alongside increasing emissions standards, in encouraging manufacturers to make cleaner vehicles and for consumers to make choices with the impact on the environment in mind.

We are also not resting on our laurels.

We have said that we will continue to look closely at opportunities to reform taxes to make them genuinely green, or greener.

And there are opportunities to introduce new environmental taxes.

Let me be clear though, all of this is being done in a balanced way.

The previous Government used the green agenda as justification for increasing taxes when the environmental impact was questionable.

What we are doing is seeking a harmonised approach that gives a positive environmental impact but not at the cost of adding unnecessary burdens onto business or households.

We do not want simply to load on more green taxes on top of those already in place.

That is why, for example, we have recognised the complexities in the Carbon Reduction Commitment, and sought to simplify it.

And we have said that if significant savings to business cannot be found we will consider options for a replacement tax.

This is the approach I want us to continue with.

I want to talk for a few minutes in a bit more detail about what we are doing to meet our commitments.

About the progress we are making on climate change and environmental agenda – particularly the Green Investment Bank and implementation of the carbon price floor – and the work we are doing to ensure that costs to businesses are kept to a minimum.

Carbon price floor

It is clear we need significant new investment in low-carbon electricity generation over the coming decades if we are to meet our legal commitments on CO2 emissions – an 80 per cent reduction from 1990 levels by 2050.

A challenge that is made all the greater by the rises in electricity demand over the coming decades.

It is only through working with the private sector that we will deliver the step-change in investment required in the most efficient way possible.

But it falls to government to give private firms the incentives and long term assurance they need to make the significant investment necessary to secure this goal. So at Budget 2011 we announced that the UK will be the first country in the world to introduce a minimum carbon price: £16 per tonne in 2013, rising gradually to £30 per tonne in 2020.

The is the first important step in reforming the UK’s electricity market, providing a strong and stable incentive for billions of pounds of new, low carbon investment in our electricity infrastructure – an early and credible long-term signal to investors that the Government is serious about encouraging investment in low-carbon electricity generation now.

And this announcement is accompanied by a substantial wider package of reforms that will allow the UK to benefit from cheaper, more secure supplies of electricity, facilitating a shift to a sustainable low-carbon economy.

  • Introducing the Renewable Heat Incentive – £864m over this SR to increase the proportion of heat generated from renewable sources.
  • Supporting the commercialisation of Carbon Capture and Storage  £1 billion of funding available for CCS demonstration.
  • Supporting renewable electricity generation – publishing the levels of support for new renewable electricity to bring forward capacity and ensure policies remain affordable.

The next stage will be to ensure that, as we implement this suite of low-carbon policies, we do so in a cost-effective way – promoting clean, secure supplies of electricity to support growth, and tackling the complex web of low-carbon support mechanisms we inherited.

We will continue to review and amend those existing fiscal instruments to ensure they remain focused on achieving both economic and environmental objectives.

GIB

Incentives through tax and government spending are an important part of our approach to encourage green investment – but only one part.

We need to ensure the sector has access to sufficient long-term finance to provide that change.

The transition to a green economy will require unprecedented investment in key green sectors – an estimated £200 billion for the energy system alone over the period to 2020.

To address this we are introducing the Green Investment Bank – due to be fully operational this year, subject to State Aid clearance.

The bank is being allocated an initial capitalisation of £3bn and will be able to borrow from 2015/16 and when debt is falling as a percentage of GDP.

The bank’s precursor, UK Green Investments, made its first investments in April, and already has over 20 individual projects under active consideration – including ventures in renewable energy, waste management and energy efficiency.

Some have said that the initial capitalisation of £3bn is too little and the borrowing powers should be provided sooner.

However green growth needs to be built on the back of fiscal responsibility. As business people you will appreciate the value of a stable economy and action to tackle the deficit.

I believe the UKGIB’s initial capitalisation of £3bn and a further commitment to allow the bank to borrow in the future strikes the right balance between encouraging green growth and managing the national debt.

Amidst action to reduce spending across the Government £3bn is a clear signal of our intent.

By 2014-15, we expect around £18bn of additional investment in green infrastructure.

Attracting investment in energy; ensuring energy security; meeting our carbon targets; and fully employing the nation’s natural resources.

The Bank will become a key component of the transition to a green economy, complementing other green policies to help accelerate investment in green projects, while providing employment and strengthening the UK’s competitiveness in the rapidly expanding renewable energy sector.

Supporting growth as well as the environment.

Green deal

The dual growth-environment goal is one major perceived trade-off that we need to address in the energy debate.

The impact on bills is the other, something of relevance today given the Ofgem announcement this morning on investment in the National Grid.

A key challenge for all of us – Government and industry – is to make sure we meet our green commitments while keeping energy affordable.

Here, energy efficiency is key. Since 2010, over 1 million more homes have cavity wall insulation – and we are working to raise this further.

Just as our policies promoting large scale energy investment will promote both growth and low-carbon energy, so our Green Deal will help us lessen both carbon emissions and the impact on consumer bills, through supporting households and firms to invest in energy efficiency.

At the last Autumn Statement we announced £200 million of additional capital to encourage early uptake of this innovative scheme.

Business costs and competitiveness

This is just some of what the Government is doing to support a greener approach to energy.

But at a time when UK businesses need to grow, matching our goals for environmental improvement, with our need to support growth and affordability means striking a fair balance between supporting low carbon investment and letting UK industry compete.

This is particularly true given the recent global escalation in energy costs and the impact these have had on energy-intensive users.

So we are taking action to ensure that our Green agenda is supported by the £250 million targeted package we announced at the Autumn Statement that addresses the needs of those whose competitiveness is most affected by Government policies.

Increasing the climate change levy discount on electricity from the current level of 65 to 90 per cent from April next year;

Compensating for indirect impacts of the EU emissions trading system on electricity costs from January next year;

Mitigating the indirect costs of the carbon price floor to the most electricity-intensive businesses in internationally competitive markets; and

Investigating how to reduce the impact of electricity costs from Electricity Market Reform.

And at Budget we announced a package of measures that will lower headline tax rates to support enterprise, aspiration, and growth.

Working with business

And working with business means more than just keeping burdens low – though that is undoubtedly important.

It means being pragmatic in recognising that as we transition to renewables, the more environmentally acceptable fossil fuels will still have their role to play – so we have published the call for evidence for our gas strategy, and continue to implement electricity market reform – recognising that gas fired electricity generation will continue to play a major role in UK energy supplies over the next decade and beyond.

It means taking account of the ways different ways in which companies and their investments contribute towards the environmental agenda.

So we have exempted input fuels used to produce heat in combined heat and power stations from the carbon price floor, subject to state aid approval.

And it also means that businesses do their bit, and that consumers can do theirs.

That is why we are requiring all businesses listed on the main market of the London Stock Exchange to report transparently on their greenhouse gas emissions from April next year.

Conclusion

The need to take action on the environment, while keeping costs to businesses, households, and government low, is often portrayed as an irreconcilable trade-off.

We are showing that with the right policies, these objectives can complement each other. Supporting growth through green investment; reducing bills through energy efficiency, and maintaining business competitiveness by keeping burdens low, and providing support where necessary.

I hope that by doing so we are able to bring environmentalists and businesses with us as we take on one of the greatest challenges we all face – to deliver sustainable, affordable energy as we transition to a greener economy

Thank you.