Tag: Stephen Timms

The speech made by Stephen Timms, the then Financial Secretary to the Treasury, on 19 October 2000.

I am very pleased to be here today at the launch of the watermark project. Watermark is a valuable step in many areas of Government policy, and demonstrates very well our approach to projects. The system will be a valuable tool to departments and agencies in monitoring their water use, the first step towards using water more efficiently. But this does not just mean Government will spend less on water, it will also bring environmental benefits.

And the way in which we are achieving this is also a step forward. The project is being taken forward as a partnership with the private sector, after a tough tendering process where the Office of Government Commerce and The Buying Agency have demonstrated the value they can add by joining-up procurement across Government departments. So the Watermark project represents a step forwards for both evidence-based policymaking and for joined-up Government.

I would like to talk today about how Watermark affects both the environment and value for money, and about the benefits it will bring for both the Government and the Water industry.

Environment

This Government is rightly very concerned about the environment. The accelerating pace of social and economic change puts more pressure on both global and local environment than ever before, and minimising the adverse impact we make is a huge challenge for all of us: Government, companies, and individuals.

So this Government has put the environment at the heart of its’ policymaking, and at the heart of our operations. Governments’ role is not just to set the framework within which companies and individuals can work to reduce their impact on the environment, it is also for Government to lead from the front in our own operations, and to set an example of how it is possible to reduce our environmental impact in the way we do our business.

And our commitment to the environment is not just within Britain. The UK has signed up to integrated environmental protection policy in Europe, and we have signed up to the Rio declaration on Environment and Development, which requires us to reduce or eliminate unsustainable patterns of production and consumption. And we have not only signed up to the Kyoto agreement to reduce climate-changing emissions, but have set ourselves the target of exceeding the Kyoto requirements.

So to meet both these commitments, and to meet our objective of  identifying significant environmental impacts of their departments, and develop strategies to reduce them, we have introduced the Greening Government campaign. We want Government to operate sustainably, and to make sure this happens, we have put in place a system of targets for Government departments. Every department has a ‘Green Minister’, and as the green minister for the Treasury, I am  responsible for sustainability within the department. Through the Green Ministers, every Government department has been set challenging targets to deliver sustainability in key policy areas. There are a large number of work programmes underway across Government to deliver on these priorities, and Reducing water consumption is a particular priority within those programmes. To monitor our performance against these targets, we are developing integrated systems and appraisal tools.

Value for Money

The Government is one of the largest water users in Britain, with over 5 million public sector workers, and 33,000 schools in UK. There are also Over 4,700 properties the government estate of varying size and age, which makes managing the use of water in them a very complex exercise.

The public sector spends in the region of £600m on water and effluent services each year, so managing the Governments? use of water is a concern for the taxpayer as well as an important issue for the environment. And we believe Government can make significant savings in the amount of water it uses.  Assessment has shown we have inefficiency in our management and performance, by maybe as much as 10%. If this is true, we could save £60 million a year throughout Government, and significantly reduce pressure on the environment.

An added bonus to the enormous water saving potential is the reduction in the energy required to process and deliver water to the end user, reducing both the energy costs of the public sector, and carbon emissions into the atmosphere.

So we are considering the feasibility of Government- wide, or even public sector- wide targets for water consumption. But there is currently a huge knowledge gap across the public sector in how it uses water. The public sector needs to have a better insight into such usage to understand how better to manage consumption. And so before we can set any target, or even assess the scale of what we could achieve, we need a reliable measure of our water consumption across the Government, and detailed benchmarking and management information for the whole of the public sector.

Invest to Save

So because of the benefits which could come from better management of public sector water consumption, both for the environment and for the taxpayer, Government has awarded The Buying Agency, now a part of the Office of Government Commerce, funds from the Invest to Save budget, to develop and introduce a centralised electronic monitoring system for water services. The pilot project, named Watermark, is now up and running and will produce its first benchmarks by end of January 2001. This contract is the first step towards providing a computerised database which will allow quick and easy data analysis of the water consumption.  This will provide departments with meaningful management information to allow better control and planning of expenditure.

Once target performance indicators have been set using the data from the Watermark scheme, participating departments and agencies will be able to validate their water bills and consumption rates against the best in their class and then take action if variances are found. Watermark will be a powerful tool for identifying and spreading best practise in water management across Government.

It is already a good example of joined-up government, with many different departments and agencies participating.

And in the longer-term, once deregulation of the water industry takes place,  OGC will be in a much stronger position with this information to hand to enter into strategic partnerships with suppliers to reduce costs for the public sector and bring a better deal for the taxpayer.

The Water Industry

The data gathered by Watermark will not only be valuable to Government, it will also be very useful to the water companies. The system will capture a large amount of data, and this data will be available to water companies through the website.

While it is true that Watermark will help the public sector to reduce consumption, it will still be a valuable tool for water companies. It will help reduce water waste in the public sector, and that will reduce pressure on our water resources, though given the weather of the past few weeks, we seem to have more than we can use.

The data Watermark produces will allow better management of water at both ends of the pipe, it will allow the industry to identify high-consumption users and develop better customer profiles, so as to better plan for demand, and it will make it easier to identify leaks.

Over the last few years, Government has been working closely with the water industry to help it to be more efficient, and to develop assessment of the environmental consequences of its activities. And as a result of this work, OFWAT have set targets to reduce leakage in 2001-2002 by a further 4% from their 2000-2001 levels.

And effective management of water will become more important to water companies as the industry becomes more competitive, so the Watermark project has a great deal to offer both sides, and I hope water companies will support and participate in the scheme, so we are all able to use the data it gathers more effectively.

Conclusion

We all have a lot to gain from the success of the Watermark project: Government, taxpayers, and water companies alike, and it is important that we work in partnership to make the project a success.

The speech made by Stephen Timms, the then Financial Secretary to the Treasury, on 12 January 2000.

Introduction

I am delighted to be here at the launch of ART’s Key Loan Fund. As one of the leading local organisations in the country spearheading community re-investment, ART’s progress is a shining example of just how valuable and effective community funding can be.

Modern and decent

Let me first set out our hopes for social enterprises in the context of what this Government is trying to do.

Over the past two and a half years the Government has embarked on the task of building a new Britain which we want to be modern and decent – both of those things at the same time. The key economic priority has been to secure a new stability after decades of boom and bust, and that has been achieved now in a quite remarkable way. That is what enables us to articulate a new optimism about the future.

The Chancellor set out in the November Pre-Budget Report four new ambitions for Britain in the new decade:

• that productivity should rise faster than our major competitors so that we can start to close at last the productivity gap;
• that we should have a greater proportion of the working population in a job than we’ve have ever had before and that we should keep it like that;
• that for the first time over half of school leavers should go on to study for a degree; and
• that over the decade we should halve the number of children living in poverty, on the way to the Prime Minister’s goal of eliminating child poverty altogether in 20 years.

Building on the new stability these are attainable ambitions, consistent with the vision we’ve spelt out. Modern as well as decent. Enterprise and fairness – a creative partnership.

These are great tasks that we want to enlist support for on the way to this modern and decent Britain of the future.

We are determined that Britain should break the closed circle which in the past has too often restricted enterprise only to the fortunate few. We won’t succeed if we waste the potential of a vast swathe of our communities, as tragically has been done far too often over the past 20 years.

Phoenix Fund

As ART’s work demonstrates, locally-rooted partnerships can play a key role in creating an enterprise-for-all culture and tackling the exclusion facing people in disadvantaged areas. The skills of the private sector at its best being applied to some of the problems of our disadvantaged areas at their worst.

That is why, following the Policy Action Team report on social exclusion and enterprise which ART contributed to, Gordon Brown announced a £30 million programme – the Phoenix Fund – to boost enterprise in disadvantaged areas and amongst disadvantaged groups. As he rightly said, our poor communities do not need more benefit offices – they need more businesses creating more jobs.

ART only exists because businesses in deprived communities in Birmingham often find it difficult to assemble all the skills and raise all the capital they need to grow. But its not just a problem in Birmingham. Small businesses, community and voluntary enterprises across the country, often cannot raise the critical amounts of capital they need to start or grow towards achieving their potential.

The Phoenix fund will go some way to addressing this. Work on the fund is at an early stage, but it is likely to include three key elements.

First, support for business. Part of the Phoenix fund will be an enterprise development fund to promote innovative ways of providing support in deprived areas. For example, by looking at how to extend the techniques of business incubation – with managed workspaces and high quality advice on how to run a business located on the same site as others.

There are very few incubators in the UK aimed specifically at supporting disadvantaged communities. This compares to the US where 5 per cent of all incubators are classed as ’empowerment’ incubators to support disadvantaged groups, and many more are used as an integral part of strategies to re-develop communities hit by economic hardship.

Second, the Phoenix Fund will promote Community Finance Initiatives such as ART which can act as a bridge between mainstream institutions and entrepreneurs in deprived communities, through:

• a new national challenge fund for community finance initiatives; and
• access to the Government’s loan guarantee scheme to help them obtain commercial lending.

Third the DTI is putting in place a national mentoring scheme for people looking to start up in business. An experienced business mentor can play a key role in steering a new business to success. By April 2001 DTI aims to have 1,000 business mentors helping around 25,000 existing businesses and business start-ups each year.

Business support

This follows the Policy Action Team conclusion that small businesses in deprived areas often do not have sufficient access to high quality business support, such as advice on business planning, and managing cashflow.

There are lots of agencies and initiatives providing business support to disadvantaged communities. And in many cases they are doing a lot of good work. But we need more sense of a strategic framework into which all this fits. There’s too little sharing of experience at national level, too little sense of what’s important, of what works and what doesn’t. And that means too little scope to deliver a step-change in impact. It’s part of Government’s role to help provide a strategic lead, matched by strong links with local and regional organisations.

That is one reason why the new Small Business Service will be so important  a national agency providing the focal point for small business issues in Government. Within its wider role to promote small business, it will have an explicit remit to promote enterprise in disadvantaged communities.

A more competitive banking sector

Finally, to help promote a competitive and innovative banking sector, the Bank of England has agreed to report regularly on finance for business in deprived groups and communities.

This will build on the work that the Bank has been doing over the past seven years on finance for small firms in general.

Conclusion

As the Prime Minister stated in his New Year message, our goal is to create a nation where fairness and enterprise go together. The choice posed in 20th Century politics between economic competence on the one hand and social justice on the other needs to be consigned to the history books of the last Century, not carried over into this new one.

That is why, building on the measures in the Pre-Budget Report, the Government will be supporting the National Campaign for Enterprise in Spring this year. The campaign will help to create a more entrepreneurial culture across the UK by transforming attitudes, developing skills and encouraging the formation of new and successful enterprises.

Enterprise is vital force against social exclusion. It provides jobs and services in places that lack both – that alone is very important. But it also helps to build self-confidence, independence and pride in the lives of local communities and the individuals who live there.

I’ve seen this from close quarters in my own constituency in East London.

ART’s Key Loan Fund has the potential to achieve a great deal, not only for businesses across Birmingham that obtain funding through it, but also for the individuals and communities touched by the businesses.

I wish ART every success with the Fund. Thank you for the opportunity to join you today.

The speech made by Stephen Timms, the then Financial Secretary to the Treasury, on 29 February 2000.

Introduction

Thank you for inviting me to speak, and for organising this conference, on what is an extremely important issue for our economy.

Let me just first set this in the context of the government’s wider aims.

My favourite way to explain what this Government is trying to do is that we are building a new Britain which will be modern and decent – fair and enterprising – both of those things at the same time.

The first economic priority after the election was to achieve a new stability in the UK economy after decades of boom and bust. That has been achieved in a remarkable way, so our focus now is on locking in that hard won stability, and building on it for the future. It gives us the chance to express a new optimism about the future, and so the Chancellor set out at the Pre-Budget Report in November four new ambitions for Britain in the coming decade which encapsulate what we are trying to do:

• That we should be closing the gap with our competitors on productivity after years of slipping behind;
• That we should have a higher proportion of the workforce in employment than in the past, and keep it like that. Actually, we already have more people in work than ever in our history, but we want to achieve the highest proportion and on a durable basis;
• That for the first time over half of our school leavers should go on to study for a degree;
• That we should halve the number of children living in poverty, on the way to the Prime Minister’s target of eradicating poverty altogether within 20 years.

The Chancellor this morning, speaking in my area in East London, set out more of his thinking along those lines as he prepares for the budget in three weeks time.

Institutional investors have a key role to play in making all this happen, providing the finance so that our high-growth businesses can become world-class businesses.

I want to speak briefly about the key building blocks we are putting in place, building on this new foundation of stability, to create a new culture of enterprise and entrepreneurship; where institutional investors can flourish and contribute – with private equity and in other ways – to the changes we are working to achieve.

Competition

The first building block is the most pro-competition policy in the world. Greater competition at home is the key to greater competitiveness abroad. So we are asking in every area what we can do to enhance competition and opportunity. We are building on the decision to create a new independent competition authority with our new Competition Act which contains new powers to prohibit anti-competitive practices.

For cartels and anti-competitive behaviour, the Office of Fair Trading will be given new investigative resources and trust-busting weapons, including the power to impose fines of up to 30 per cent of turnover.

For banking and financial services, the Financial Services Authority will now, for the first time, be required to facilitate competition – with a new scrutiny role for the competition authorities.

For the regulatory system, the government will consider how to scrutinise regulatory bodies and review existing and proposed regulations to ensure that they are promoting – not impeding – new entrants and new investment, and the joint work by BVCA, ABI and NAPF will feed into this process.

In sum, Britain is open to competition, and at the leading edge of change. And nothing should stand in the way of greater competition in every sector of every industry.

A more favourable tax environment

A higher degree of enterprise calls for higher levels of investment and entrepreneurship. So our second building block is the best tax environment for investors in start-ups and high tech businesses, with improved rewards from enterprise and wealth creation. On tax a great deal is being done:

• On business tax, we have already cut small business tax from 23p to 20p and introduced a new starting rate of tax for small companies of 10p in the pound. Every company making profits of up to 50,000 pounds will benefit.
• Corporation tax has been cut from 33 to 30 per cent. To encourage and reward new business investment, we have cut the long-term rate of capital gains tax from 40p to 10p. We have proposed a cut in the taper so that those investing for five years will pay only 10p and for three years only 22p. Final decisions – following our public consultation – will be announced in the Budget.
• A new R&D tax credit will, from this April, also mean that nearly a quarter of new investment in small and medium-sized business research and development is under-written even before a penny profit is made.
• The Budget will introduce a new tax incentive to promote corporate venturing too. Large companies investing in growing companies for a specified period will receive a tax relief of 20 per cent, underwriting one fifth of their investment. This 100 million pounds incentive can bring Britain additional investment of 500 million pounds every year.
• We need to encourage those who already have a successful track record to play a key role in building up small high-risk companies. We recognise the significant role stock-options have to play here and we are currently looking at the role of employer NICs charges which we know is causing concern particularly in the entrepreneurial community.
• We are introducing a new targeted tax cut for people with skills and talent who are prepared to move from safe, secure jobs to risk time, effort and savings to create wealth in a more challenging environment. From next year, a third approved option scheme, the Enterprise Management Incentive, will enable growing enterprises to offer their key employees tax-advantaged options over shares up to £100,000.

That measure reflects our recognition that nearly a quarter of all UK business failures are thought to be directly attributable to poor management practice. For Britain to succeed in the knowledge driven economy we need to raise our game. We want to take steps to ensure that our smaller firms can recruit and nurture the best talent, rewarding the real risk takers who are creating wealth and jobs.

Venture Capital

Turning to private equity and venture capital – the particular interest of this conference – we want new encouragement from the venture capital industry and from institutional investors for investment in start up and early stage ventures. The problem here is not so much access to finance but finance on the right terms.

We have already the best developed venture capital market in the Europe, and we are the focal point for US investors looking for access to Europe’s growth companies.

Our venture-backed growth companies are proven job-creators. Between 1993 and 1997, employment in VC-backed companies rose by 24 per cent compared with one per cent for the economy as a whole.

BVCA’s own survey of the economic impact of venture capital showed that VC-backed companies now account for 2 million jobs in the UK, or 10 per cent of the private sector workforce.

Venture-backed growth companies are also proven sound investments, as the record of overseas investment demonstrates. The last speaker (Anne Glover) also showed that returns to early-stage investments are increasing.

In 1998, overseas sources provide three times as much finance for VC-backed companies as UK sources. Overseas pension funds are now the largest single source of funding for our VC-backed firms, and overseas banks are the second largest source. I was in Cambridge a few weeks ago and the venture capital specialists I met there made the point that there was a very high level of interest from elsewhere in Europe in venture investment in start up firms there.

UK pension funds invest less than one percent of their money in venture capital. In the US, the comparable figure is closer to six per cent. And in 1998, UK insurance companies represented only 3 per cent – £152 million – of money raised by the UK venture capital industry.

We cannot – neither would we want to – make UK insurance funds invest more, but I would encourage them to look very carefully at all their options and make sure they are alive to the opportunities around.

Last year, following a speech by the Prime Minister, three leading consulting actuaries and benefits consultants (Bacon and Woodrow, William M Mercer and Watson Wyatt Partners) welcomed the Government’s call for a more enterprising approach to the investment of institutional assets. They considered that the time had come for some institutional investors to put more emphasis on other opportunities, particularly unquoted securities. We will shortly be discussing with the actuaries concerned what the response has been.

To help institutional investors take the leap to invest in early-stage venture capital, we are taking forward a UK High-Technology Fund and nine Regional Venture Capital Funds to invest in early-stage high growth businesses which have historically found it difficult to raise finance. The funds will be run by experienced fund managers and will complement existing market provision, using public resources in partnership with private sector funds to address recognised gaps in the market. And all the funds will invest on a wholly commercial basis, expecting robust commercial returns.

Making Britain the knowledge capital of the world

The third building block for our enterprise Britain open to all is to make Britain the knowledge capital of the world.

Knowledge is the key to future business success. Our future competitiveness and prosperity will be directly related to our creativity, our imagination and our knowledge base. That puts a great premium on education and skills. I have visited a number of our universities in recent weeks ­ Cambridge, Oxford, Warwick, Newcastle, Durham, Sheffield ­ to have a look at what they are doing to commercialise the superb research which is being undertaken by them and I have been heartened by what I have seen.

That premium on education and skills in the modern economy is exactly why we are pushing through huge educational reform, investing an extra 19 billion pounds in education – so that everyone has the opportunity to master the skills and technologies of the new information age.

In 1997, barely one in ten schools was connected to the Internet. Now, two thirds are – the most in any G7 country. The number of primary schools connected has gone up four fold in the last year. By 2002, every school will be connected.

And this year, we are working to raise education levels amongst adults: a whole network of adult learning centres is being created; incentives are being provided to upgrade skills; and a new University for Industry which uses internet and digital TV technology will be bringing education into the home and workplace.

These reforms will help in the next stage of the technological revolution which we are determined to lead.

Our target is that within three years we want to become the world’s best environment for e-commerce. This is a huge challenge for everyone: Government needs to put in place the right framework and lead by example; individuals need to get skilled; and business needs to be confident and sufficiently ambitious to grasp the new opportunities.

Conclusion

There is a great deal at stake in getting all of this right. But we are optimistic.

We have started with a foundation of a new stability which we are determined to lock in. The building blocks we are putting in place now for an enterprise Britain open for all – in competition, in investment and enterprise and in the knowledge economy – those building blocks will help British investors and entrepreneurs make the most of the challenges ahead.

Thank you for the contribution you are making, and let’s work together to make this a success for all our people.