Digital skills will secure a brighter future for next generation

Growing and strengthening the economy hasn’t really featured in the General Election debate. In part this may be because on the surface the economy seems be doing fine. But if you dig a little deeper it quickly reveals a serious problem.

The problem is jobs and living standards related. Put simply, the economy is at its core unbalanced. It doesn’t create anywhere near enough of the exciting, high tech, well paid jobs the next generation needs. As a country, we simply don’t innovate or create and make enough things that we can sell around the world. This has left most regions outside of the south east poorer and unable to generate opportunities and wealth.

And this place we find ourselves in is not an accident. It is the result of several decades promoting a national strategy of unbridled and a largely unrestrained markets. It served us well, when digging us out of the 1970’s industrial crisis, but eventually the associated short-term thinking and chronic under-investment in industry, skills and infrastructure has led to an equally unsatisfactory situation of not enough high-end, high tech industries and jobs.

I remember how this focus away from manufacturing and industry impacted my education when I attended to my local comprehensive in Leeds in the 70’s. I was actively discouraged from studying practical subjects – the likes of woodwork and  technical drawing, yet engineering was clearly my passion. I was part of an engineering generation that largely saw the automation driven third industrial revolution pass us by.

A nightmare situation for me would be to see this next generation not be encouraged and given the chance to work with the technology that will define this fourth digital industrial revolution we are currently living through.

There is however a way to change this and rebuild our jobs and skills base. That is to use this fourth industrial revolution to create new industries and with that many more new high tech and well paid jobs. Through that we can again become a nation of creators and makers that sell many more goods and services around the world, bringing significant wealth into our country.

To achieve this, we need to take a very different approach. One where industry working in partnership with Government creates long term support mechanisms and policies that encourage investment in these new industries.

A fundamental part of this is to look at the skills and training of our people through a different lens.

We need to create a vision and a sense of excitement about the possibilities that exist for young people in this new digital economy. And we need up-skill workforces up and down the country so that we embrace new technologies like artificial intelligence and collaborative robots (or ‘co-bots’ machines that assist and work alongside humans). Positively embracing new technology rather than being afraid of it will be vital if we are to unlock the wealth the next generation needs.

This is going to take a massive re-think and a radical shift in economic and education policy. It requires much more investment, much better coordination and a different way of measuring the outcome of schools, colleges and universities. The future is much more about the employability of students and teaching the practical and team orientated skills needed to work in this rapidly developing new economy.

When I talk to teachers, parents and young people there is a vast void in the information available about the exciting jobs available in this new industrial revolution. So it’s not surprising that the teaching
curriculum falls well short of what is required to prepare young people for this new world of opportunities. This is so badly needed because these new exciting tech jobs will help younger people secure a home, secure a pension and improved lifestyles.

It is because of these opportunities that I am delighted to be working with a team of business leaders on an Industrial Digitalisation Review (#IDR), that aims to help bring about a positive change in how we better master the opportunities arising from this industrial revolution. A key part of that work is radically influencing education, employment and skills policy. It’s something the next Government, whoever that will be, will need to grasp as quickly as possible after June 8th.

We’d love to hear your views, whether you are involved with education, business or policy making. What can we do to embrace this technology revolution we are witnessing, harnessing it so that it becomes a generator of future opportunities and better living standards for the next generation?

To find out more about the review and give us your views please visit:

http://industrialdigitalisation.org.uk/your-voice/

A positive post-Brexit future for the UK

It was an honour, and good fun to participate on BBC Question Time recently.  I watch the programme regularly and we are living through a truly momentous period in our political and economic history, so I was keen to contribute to the national debate during this time.

On Brexit, I do not think there is any point looking back.  The decision has been made and right now, we have to do our best to make it work.

But after the recent rows between EU and British politicians, I think that everybody needs to calm down.

Arguing about who said what, to whom or bickering about whether the EU needs us more than we need them or vice versa, isn’t going to get us anywhere.  The truth is we both need each other after Brexit and we will both  be stronger if we can find a sensible way to trade and work together in the future. I would like to hear much more about the vision and ambition of Britain post Brexit; in which areas we will continue to collaborate with the EU and how we intend to make more of other global relationships, and I don’t mean soundbites, but long term strategic economic options.

On the other hand, I don’t think that the UK should just roll over to the EU on our future relationship – from my own experience in business I know that sometimes you do have to be ‘bloody difficult’ and hold your ground in negotiations, but you also need to think of the bigger picture, and that means understanding where the other side is coming from and making compromises. That in my experience is the more difficult and important part in any negotiation, than being ‘bloody difficult.’

The big issue facing our economy, is that it hasn’t supported a growth in living standards since the economic crash in 2008.  It is therefore no surprise that many people are struggling to cope and we do not have enough money to invest in public services.   Also the world of work has changed; a career for life is far less common these days and a new industrial revolution is taking place, which means that because of technology there simply will not be the need for some types of jobs in the future.

I believe that the only way that we will adapt to this and prosper as a country is if we take a new approach to our economy.  We need to invest much more in skills and infrastructure and we finally need that plan – an industrial strategy – to make Britain the best place in the world for creating and adopting new technologies and businesses, especially digital ones. This will begin to re-balance our economy towards more high value and knowledge rich new industries, like additive manufacturing , or artificial intelligence.

If we can get this right, then instead of worrying whether our jobs are going to be replaced by robots, we can make sure that our young people are training to be the designers, software developers or engineers that will drive these new industries. In other words that we have a clear strategy that makes sure through these new digital technologies we create more opportunities and jobs that we end up displacing through their introduction.

Brexit makes all this even more important, as I am very clear, and there is no point pretending differently, there will be some new costs to trading and business after Brexit, and that means even more so that only high technology and high innovation industries will be the ones that can thrive and create prosperity here. So, we need a cross party approach to supporting this much more strategic approach to industry and give our economy the best chance to prosper, create many more well paid jobs and export more to the world

I also attach a short video which builds on another one of my points on Question Time, that we need to stop seeing business as the bad guys.  There is a very important society aspect of business, and regarding the Brexit negotiations, it is certainly not all about money and trade deals – as important as they are. You can watch it here.

Industrial Digitalisation – A cure for the British Economy

I am delighted and honoured to have been asked to lead a Review on Industrial Digitalisation as part of the Government’s recently published Green Paper on Industrial Strategy. Today, we held our first launch meeting with top companies from across the country, including IBM, Rolls Royce, GKN, Cisco and Accenture, along with many other business leaders. Nick Hurd, Minister for Climate Change and Industrial Strategy joined us and we are hoping that this initiative will turn into a very strong partnership between Government and Business and create significant value for the UK economy.

You will probably  have heard about the new modern Industrial Strategy, launched by the Prime Minister recently, and in this blog, I wanted to talk about this and explain what we will be doing with our review – and why it is especially important for our economic future.

The first obvious question is what is Industrial Digitalisation? It has sometimes been described as Industry 4.0 or the 4th Industrial Revolution.  And you will hear jargon such as the Internet of Things, Connected Devices and Big Data.  But at its most basic, Industrial Digitalisation, and the purpose of this Review, is to work out how UK manufacturing can increase its use of digital technology and automation to become more productive and competitive.

Of course, there is nothing new in this – the essence of manufacturing has always been about using new technologies and finding new ways of working.  But this latest technological trend –connected, smart products that collect data and communicate it to users – is sure to create new business models, service offerings and very importantly, brand new industries.

But as always there is a global race to get ahead.  So the Industrial Digitalisation review is about identifying policy interventions and support mechanisms that will encourage advanced manufacturing and broader industry in the UK to invest more in digital technologies and drive faster innovation, and automation of industrial processes.

At the same time there is a wider economic and societal imperative for doing this. It isn’t just about numbers, processes and investment strategies.

If we get  this right, there is a massive prize – creating a key lever and a cure for the British economy. Creating opportunities for many new and highly skilled and well paid jobs, and giving more people in our economy the chance to feel less like they are being left behind. This is of course a message we have been hearing loudly from many of our communities, especially outside of the South East.

Get it wrong and we will de-industrialise more, losing out on high-value, well paid jobs and relying on imports even more than we currently do.  If this happens, it is sure to be harder for the UK to balance its books and living standards would inevitably drop.

A lot of what we do, will be about assessing what sectors would benefit most from this approach and the technologies where the UK has the opportunity to be world class in the future. We’re ambitious but we are realistic too – we can be at the forefront of the industrial digital age, but we think it is a long term job with no quick solutions to such a complex set of issues.

We will also learn from the approaches of some of our international competitors, such as the USA and Germany. We will report in the summer and the intention is that its recommendations could form the basis of Industrial Digital Sector Deal, and create a very strong partnership between business and government. 

Regular readers of this blog or those who have heard me speak will know that I am incredibly passionate and optimistic about the UK’s ability to benefit and become world leaders in this area.  I would really welcome your feedback and ideas in the comments section below.

On U-turns and the way forward after Brexit vote

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Three weeks on from the Brexit referendum a few thoughts from myself to also help explain Siemens’ relatively high media appearance since the vote. At two points we were trending high on the BBC news website.

In a visit to the UK last week, our global CEO, Joe Kaeser, reiterated our commitment to doing business in the UK and his hope that we can grow our business here, regardless of the outcome of the vote.

Some people have expressed surprise about this, given how vocal we were during the EU referendum campaign.  But we were always clear that we were committed to the UK and while there will definitely be uncertainty ahead, my view is that there is no point looking back with regret.  Instead, I think the right and responsible thing to do is be positive and work doubly hard to make the best possible success of the new situation.

I liken it to the tough times of 2008/2009, where  businesses broke with the past and retained skilled employees to ensure they were better placed for the upturn when it came.  Significantly that period also saw a new partnership emerge between business and government, with the latter recognizing that it could, and should, use the policy levers at its disposal to improve the business environment for sectors where the UK has or could have a comparative advantage.

This new style of ‘Industrial Strategy’ again becomes massively important during this post Brexit period of uncertainty. I  therefore welcome last week’s announcement that BIS and DECC are to merge into a new government Department with an explicit remit to extend Industrial Strategy, under the leadership of Greg Clark MP. And this is one area where Siemens is keen to get involved and support the outcome.

In short, Brexit creates an even stronger imperative to get to grips with some of the issues that have been undermining the UK’s competitiveness and business environment for years. As part of this Industrial Strategy, I would like to see measures to boost productivity, as per some of the suggestions made by Sir Charlie Mayfield in his recent report on this subject. You can read more about this here

To support this, Investment in innovation and research is absolutely crucial as is creating a skills system that puts equal emphasis on high achievement in academic and vocational technical skills and through that drives a higher level of national ambition to be amongst the best in the world in our focus areas of the Industrial Strategy.

Finally, we have to end the chronic under investment and delays to infrastructure investment which have long bedeviled the UK.  It was welcome and significant that the Chancellor has recently indicated that the government may be willing to take advantage of the current low cost of borrowing to invest more in infrastructure.

So productivity, innovation and infrastructure are key.  It is my strong view that the length and depth of any Brexit fallout, will depend on how successful we are in tackling these three issues.

Dragging against these positive drivers will be the speed at which we can negotiate a new deal with the EU. At Siemens we hope a strong relationship will emerge, but we accept that it will take time. In my view, many remain far too optimistic about the speed at which this new relationship can be forged and indeed about the trading relationships with the rest of the world also. The negative and often inflammatory rhetoric against our neighbours during the campaign will take some time to heal and now requires massive diplomatic skill.

To summarise, we have to recognise and adjust to the new situation we find ourselves in, that there will be uncertainty probably for longer than many think, but we need to be optimistic that a good solution can be found, and whilst that is being worked on, we need much higher focus on driving productivity, innovation and infrastructure to help keep business confidence high. This isn’t a u-turn, it is responsible and common sense.

 

Was the 2016 Budget enough to boost productivity and exports?


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Clearly, with predictions of a slowdown in UK growth and potential headwinds in the international economy, this was always going to be a difficult Budget for the Chancellor. It appears that he has avoided loading significant costs or policy burdens on business and the reduction in Corporation Tax is going to get a broad welcome from business, although in practice it’s more of a headline grabber, than a significant boost to the economy.

There was some good news on infrastructure investment, particularly in the North of England (£300 million for improving transportation links there and the green light for HS3) and on Crossrail 2, which is all very positive.

And tucked in amongst the big announcements on education and academies was the launch of a welcome review of how to improve the study of maths for 16-18 year olds. Siemens has a major programme to promote STEM education, the Curiosity Project, which we are passionate about in supporting this important topic area.

Overall, however, I would have liked to have seen some more ideas on productivity and for boosting exports.

The OBR has identified our relative poor productivity performance as one of the largest drags on UK’s economy.

A single budget will of course never find a ‘silver bullet’ for such a complex issue, but an obvious opportunity missed was on business rates. Companies like Siemens had argued that in their review the government should have taken steps to exempt productivity boosting plant and machinery from rateable values, so I am disappointed not to see this happen. There were also no further steps to enhance either the UK’s capital allowance regime or R&D tax credits.

I guess we’ll have to work closer with Government to help deliver more support for innovation in its forthcoming National Innovation Plan.

And there is the work of the Productivity Leadership Group, led by Sir Charlie Mayfield, which I participate in, and will make proposals to government in the Summer

So, we still have opportunities to influence and develop policy and support mechanisms that brings all of the elements together into a more coherent Industrial Strategy. This budget alone hasn’t provided very much more concrete action in that direction.