Wadcast
Wadcast
BONUS: Is British Politics Ready for the Economic Challenges we face? | with Peter Mandelson
Peter Mandelson is former European Trade Commissioner and Secretary of State. Prior to this, he held a number of Cabinet posts under Tony Blair and Gordon Brown and was one of the architects of New Labour. Peter spoke to Wadham College on Tuesday 28 February on the topic 'Is British Politics Ready for the Economic Challenges we Face?' This talk was hosted by Robert Hannigan, Warden of Wadham College and is now released in podcast format.
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Transcript of Peter Mandelson’s address:
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Robert,
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very dangerously when we were talking
about our approach to this event,
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said to me that I should speak
for as long as I want, which is,
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I must say, a very dangerous thing to say
to a politician, even a sort of slightly
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dated politician like me.
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If I become an ex-politician now or not,
I don't know what
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I am really. But
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it's very nice to be back here in Oxford.
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I was at St Catherine's
a long, long time ago.
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Funnily enough, I was talking about
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- being openly gay -
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when I went back to my college,
I was doing an event
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a bit like this,
but with not quite so many people,
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and I was asked what it was like
to be at Oxford in the 1970s.
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Sort of socially,
did I enjoy the university socially?
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And I said, to be perfectly honest,
I found university social life
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very public schooly and very straight.
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And as I was neither of those things,
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I found it a bit
challenging on occasions,
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but it's
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otherwise I did enjoy my time,
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particularly at my own college.
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And so it's nice to be back here.
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Nice to be back in Wadham.
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The last time I was in Wadham
was in about 2019, and I came to talk
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to a meeting of the Labour Club. Now.
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So you
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said I can talk for as long as I want
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Robert, in fact,
what I'm what I've prepared myself to do
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is to talk to you really about
and to make three broad points to you
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about the sort of economic situation
we’re in and politics
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just to kick off our discussion
and then you can take the discussion
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literally in any direction that you want.
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But the first point
I think I would make to you
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and it's connected with Brexit
inevitably,
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is that
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Britain's economic options
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now are fairly limited.
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But this doesn't in my view,
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mean that there are no political choices
to be made.
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I mean, we have very serious
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long standing chronic economic weaknesses
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in this country,
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but at the heart of the economic dilemma
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that we face, making everything else
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much worse than it would
otherwise have been,
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is the reality that getting on for nearly
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7 years following the Brexit referendum
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we are no closer now
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to answering the very basic question
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of what
Britain's economic model should be
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now that we are no longer members
of the European Union
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of a single giant
market of its customs union
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in which we have enjoyed so much trade
and so much investment
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and so much prosperity
for getting on for nearly half a century.
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I mean, we were as members of the European
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Union, a European hub
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economy of a very major
and significant kind
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that decided basically to
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rip itself away from its spokes.
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That's what we did
in leaving the European Union.
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And that membership of the EU
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and the single market,
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has been a crucial component
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of Britain's economic model,
basically the foundation of it
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since the 1970s,
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because what it did was to expose us
to competition both at home and abroad
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in our largest market,
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basically Europe was our home
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market
exposed us to greater market competition,
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which boosted our dynamism as an economy,
our productivity,
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as well as our performance
in so many other different ways.
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And we've lost that motor.
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And it also, of course, made us home
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for very many foreign investors
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who came, brought their production
here to our country
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in order to get frictionless access
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to the European single Market.
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Like all those Japanese car manufacturers
who came here in the late seventies
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and the eighties, well,
many of them have packed up and left
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already, and others are wondering whether
now they have any alternative to doing so
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in the future.
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And basically out of the European Union,
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our trade and businesses
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are faced with very costly red
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tape at record levels.
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we've become short of workers
in Britain
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following both our leaving
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the European Union
and of course 5 or 6 million
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adult workers in the country
have decided since COVID that they
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no longer want to be part of the labour
market.
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Investment levels in our country
are now 30,
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30% lower than they were.
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Prices are higher.
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The freedom to make trade deals
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in with countries
in other parts of the world
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has made no difference, discernible
difference to our trade performance
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as a country and the dividends
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promised from regulatory autonomy,
which we were promised,
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if you remember, during the referendum,
have so far proved
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extremely elusive.
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So
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we are in a real pickle economically.
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And it's true
that our economy is being hit by
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the forces of the pandemic
and of course the Ukraine
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war and
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disentangling the effects,
the impact of both
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those sets of forces from Brexit
is not straightforward.
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I accept that.
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But the truth is that we were struggling
before COVID, and we were struggling
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before Ukraine in the aftermath
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of the Brexit referendum,
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we went to the bottom of the G7 league
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table where we still are
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today,
and the Bank of England has revised down
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to 1%
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our economy's trend rate of growth.
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This means, amongst other things,
that we will be unable
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to finance public services
at an acceptable level in our country.
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It means that we will be asking
our public services to do more and more,
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but for less financing because our economy
and its revenues will be smaller
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as a result of the decision
we took to leave the European Union.
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Now we can, and in my view, I think should
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acknowledge more
openly the pain that Brexit is causing us.
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And I think we should seek as ambitiously
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as possible
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to improve
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the trade and cooperation agreement,
the Brexit deal
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that Boris Johnson,
remember that oven ready deal
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that he negotiated
with the European Union,
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we should do everything we can
to negotiate
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improvements of it at the margin
wherever we can.
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And I'm glad that Keir Starmer has said
that a future Labour Government
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will do precisely that.
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But the truth is this,
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and it's something
that we have to face up to
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if we build up
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sufficient trust between ourselves
and the European Union,
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we can try and negotiate
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certain adjustments to the deal
that we negotiated
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originally, certain adjustments
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to our European market access.
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But the truth is that without actually
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re-entering Europe's single market,
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the legal entity of the single
market and the customs union,
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any adjustments
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that we're able to negotiate
with the European Union
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will not make any fundamental difference
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to our economic position.
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And I have to just share with you,
but it's something
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that we might discuss
during the course of of this event.
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I don't see any likelihood
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politically of either a cross-party
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or a public consensus emerging
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which favours single market re-entry,
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by Britain in the foreseeable future.
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And here's the point:
If we can't reach a consensus
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as a country
that we might want to reconsider
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re-entering the single market,
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I don’t mean rejoining the European Union,
I mean going back into the single market
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and the customs union,
if we can't as a country find a consensus
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in favor of doing that, I can tell you
the member states of the European Union
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are not going to entertain the idea
for one minute.
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The last thing they want to do is to start
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having to reengage with Britain,
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which is operating
like a sort of seesaw up and down.
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One minute
we want this, the next minute we don't.
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Unless there is a fixed,
settled consensus in this country,
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across governments, across parties,
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the European Union is simply not going
to start renegotiating with us
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whether or not we're going to be
in the single market in the future.
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So we are stuck
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and we're going to have to make our bed
and we're going to have to lie on it.
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But and this is the second observation
I want to make to you.
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I don't believe that
we have to lie on our bed
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in a sort of
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semi comatose or paralyzed state.
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I mean, at some stage
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we have got to push the reset button
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economically in this country.
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We can't sort of stay in this sort of glum
state
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forever, sort of not knowing what to do
and how to come to terms with the fact
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that basically we need to create
a new economic model in our country.
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Now, obviously, as I have explained,
we start with a sort of self-inflicted
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disadvantage economically.
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But here's the point: there are
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new markets,
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new technologies emerging.
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from very exciting advances
that are taking place
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all around
us, advantages, advances in clean
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growth technology,
for example, in life sciences
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and medical and health technologies,
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in AI, in quantum computing.
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And the point is that whole new
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markets are opening up
around these new technologies,
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and whole new industries can be built
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within those markets.
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And these are the markets
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and these are the industries
that we've got to find as a country,
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fresh, new competitive advantages
in the future
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in order to make our living
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in the world in different ways.
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And our task is to create new UK
businesses
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and supply chains
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in those industries, in those markets,
along with our world class
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services and creative industries
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that we have in this country,
and by these means
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pursue new routes back
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to economic growth.
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And the UK has multiple world
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leading science and innovation sectors
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rooted in
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major research based universities
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like here in Oxford.
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And we need to keep our
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tall poppies, tall
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in Oxford
and other research based universities
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and not cut them down,
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our great universities
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have now become our principal source
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of future innovation and prosperity
00:15:13:18 - 00:15:16:21
in our country.
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And that means a university like Oxford -
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but there are many others around
the country - are going to have to play
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a much bigger role in driving growth
and creating prosperity, which governments
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have then got to distribute more fairly
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in the future.
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The truth, though,
is that at the moment
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these strengths that we have
are not being fully realized.
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Take the vaccine discovery
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that took place here in Oxford
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and the manufacture of it, which showed
what can be done.
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you know, when we take the research
base of a university like Oxford
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proper coordination in and investment
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by the government, the private sector,
and then manufacturers very, very quickly
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on a great scale
and a great public service
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like the National Health Service
distributing that vaccine around the country.
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The fact is that since the great success
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of the vaccine discovery here in Oxford,
in many ways we've gone backwards
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since. I mean, the great sort of regulatory
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push and intensity
that was devoted to making sure
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that the approval, the clinical trials
took place and the approvals were made
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and moving that then right off
into the private sector for manufacturing,
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it's all sort of become much slower
and slower. Now,
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our future prosperity
as a country is going to depend on that
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sort of invention, that sort of innovation
in very many other sectors taking place
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and government's got a very important role
in championing that,
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in helping to plan and coordinate it,
to invest in it,
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and also to procure it
in the case of public services
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so that markets get the right signals
and production takes off.
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In my view, the UK's universities
need much greater collaboration
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with industry and public services
00:17:28:21 - 00:17:31:17
focused on economic progress.
00:17:31:17 - 00:17:34:11
We might even become standard setters
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in the world in many of the innovations
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that are coming from our science base.
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But we've got to concentrate on that
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and we've got to be very,
very serious and focused as a country
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and therefore as a government
in making sure this happens.
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Which brings me to my third
and last point,
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and that is in all these matters,
politics,
00:18:04:15 - 00:18:07:00
politics matters.
00:18:07:15 - 00:18:10:11
You know, we've got to see an end
to sort of wishful
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thinking in this country, you know, this
dreaming of magical solutions
00:18:14:11 - 00:18:17:14
that are suddenly going to sort of pop up
and enable us
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to earn our living
and be successful once again.
00:18:21:08 - 00:18:26:10
No, we've got to really get our brains
in gear
00:18:26:18 - 00:18:32:06
and really start thinking through
and working out how we can take advantage
00:18:33:12 - 00:18:34:19
of the
00:18:35:04 - 00:18:38:17
resources we have, the people
we have, the science base
00:18:38:17 - 00:18:43:10
we have, the technological developments
that are at our disposal
00:18:43:16 - 00:18:47:04
and how we can commercialize those
and to convert them
00:18:47:21 - 00:18:51:14
into both private sector and public sector
00:18:52:04 - 00:18:53:21
success.
00:18:54:16 - 00:18:58:08
We are simply not going to succeed in
00:19:00:00 - 00:19:03:08
building our future prosperity
on the shoulders
00:19:03:14 - 00:19:06:15
of our great universities in this country
00:19:07:02 - 00:19:10:01
without a fully supportive, consistent,
00:19:10:12 - 00:19:13:07
joined up set of policies,
00:19:13:20 - 00:19:17:17
of investment, of regulatory change,
00:19:17:17 - 00:19:21:20
of planning system changes, of reskilling
00:19:21:20 - 00:19:23:24
our population
00:19:24:16 - 00:19:27:12
brought together in a framework
00:19:27:12 - 00:19:29:04
by the government.
00:19:29:04 - 00:19:33:19
And at the moment
the domestic and international investor
00:19:34:06 - 00:19:37:19
community is put off
00:19:37:19 - 00:19:39:23
bluntly by the sort of
00:19:42:00 - 00:19:45:17
political uncertainty,
the regulatory uncertainty
00:19:46:14 - 00:19:49:21
that we have demonstrated
to the rest of the world, I'm afraid
00:19:50:01 - 00:19:55:04
abysmally
for what has now been years of dysfunction
00:19:56:03 - 00:19:58:18
since the referendum took place.
00:19:59:03 - 00:20:04:07
You know, of course, the government's
immediate priority is to focus on macro
00:20:04:07 - 00:20:08:11
economic management
and stabilizing our economy, given,
00:20:08:16 - 00:20:11:20
you know, the great success of Liz Truss
00:20:12:10 - 00:20:14:23
and her great chancellor.
00:20:15:20 - 00:20:18:22
But the point I want to make to you
is that the political leaders
00:20:18:22 - 00:20:21:22
need to understand that the condition
00:20:22:13 - 00:20:28:21
for driving future UK
growth is generating that investor
00:20:28:24 - 00:20:32:24
confidence and belief in Britain
once again
00:20:34:01 - 00:20:36:06
in Europe, in Asia
00:20:36:14 - 00:20:38:24
and other parts of the world.
00:20:39:08 - 00:20:41:15
And this requires a much bigger plan
00:20:42:05 - 00:20:45:13
from the government than halving inflation
00:20:45:13 - 00:20:49:16
and getting public debt
on a declining path,
00:20:49:16 - 00:20:51:19
as the Prime Minister
00:20:54:20 - 00:20:57:21
Now, it will not surprise
any of you to hear that
00:20:58:16 - 00:21:02:00
I believe that this sort of catharsis
00:21:02:18 - 00:21:05:01
that we require in this country
00:21:05:01 - 00:21:07:06
it's got to come
from a change of government.
00:21:08:09 - 00:21:09:10
The good news is
00:21:09:10 - 00:21:12:17
that there is an alternative
government on its way.
00:21:13:04 - 00:21:16:21
The bad news, I'm afraid, is that
there won't actually be a general election
00:21:16:21 - 00:21:20:05
until sometime in the middle
or back end of
00:21:21:02 - 00:21:23:06
of next year.
00:21:24:02 - 00:21:25:21
But I want to make
00:21:26:02 - 00:21:29:00
one other point to you, if I may,
00:21:29:00 - 00:21:32:11
about governments
and how they succeed,
00:21:32:20 - 00:21:36:11
whether they be Labour governments
or Conservative governments.
00:21:37:16 - 00:21:40:14
If you look at our post-war history
00:21:41:11 - 00:21:43:07
as a country,
00:21:43:21 - 00:21:46:04
there is, I'm afraid, a very
00:21:46:04 - 00:21:48:08
unfortunate theme
00:21:48:08 - 00:21:51:14
running through our politics.
00:21:51:14 - 00:21:55:17
Our political system sort of thrives on
00:21:55:22 - 00:21:57:23
zig zag policy-making
00:21:59:05 - 00:22:02:06
it thrives on sort of stop
00:22:02:06 - 00:22:05:00
go economic management,
00:22:05:13 - 00:22:11:11
constant reinvention of the wheel,
creating constant policy
00:22:12:01 - 00:22:15:09
uncertainty and rapid swings of the policy
00:22:16:11 - 00:22:18:18
cycle which undermine
00:22:18:18 - 00:22:25:04
any attempt, you know, to put in place,
you know, a sustained set of policies
00:22:25:04 - 00:22:29:06
that will bring the reform
and the modernization of our economy
00:22:29:22 - 00:22:33:02
and the realization of our economic
00:22:33:02 - 00:22:36:13
competitive advantages that we need to do.
00:22:36:22 - 00:22:41:08
The truth is that two conditions
seem to be endemic in our approach
00:22:41:08 - 00:22:46:21
to government in this country,
and both of them have got to be addressed.
00:22:47:03 - 00:22:49:22
One is chronic, short termism
00:22:50:15 - 00:22:53:14
and the other is hyper innovation.
00:22:54:08 - 00:22:56:19
I mean, a not invented here syndrome,
00:22:57:10 - 00:22:59:21
not only between successive governments,
00:23:00:06 - 00:23:04:23
but indeed between successive ministers
in the same department
00:23:05:07 - 00:23:09:20
constantly having to reinvent the wheel
and to do things differently,
00:23:10:13 - 00:23:14:03
which prevents policies
having any chance of a success,
00:23:14:17 - 00:23:16:23
of being rolled out and implemented
00:23:17:12 - 00:23:20:06
in a consistent long term way.
00:23:20:22 - 00:23:25:05
And these two sort of pathologies
that have afflicted our country
00:23:25:05 - 00:23:29:12
short termism
and lack of continuity, i.e.
00:23:29:12 - 00:23:32:10
giving policies a chance to work
00:23:33:05 - 00:23:39:15
I think they've deeply afflicted
our country's political economy since
00:23:40:19 - 00:23:42:13
throughout the post-war
00:23:42:13 - 00:23:47:12
era, and it's given significant advantages
to other countries
00:23:47:22 - 00:23:51:20
who think in a very much more long
term way.
00:23:52:05 - 00:23:58:00
You don't have this sort of sense of
constant sort of turmoil and reinvention.
00:23:58:00 - 00:24:03:11
And, you know, and as I say,
when I think of the industrial policies
00:24:04:08 - 00:24:05:10
that I introduced
00:24:05:10 - 00:24:10:04
when I had to come back to the government
after the financial crisis in 2008,
00:24:10:04 - 00:24:13:10
the industrial activism that I brought in.
00:24:14:03 - 00:24:18:14
But it's the same it's
been the same over very many decades,
00:24:19:01 - 00:24:21:12
constant chopping and changing
00:24:22:06 - 00:24:24:17
in the last ten years
00:24:24:17 - 00:24:28:24
when what the policies
I was pursuing in 2008,
00:24:29:03 - 00:24:34:10
2009, and 2010 needed at least a decade
of consistent application
00:24:34:17 - 00:24:38:07
to have any chance of realizing a success
00:24:38:21 - 00:24:43:21
that we we needed
actually the possibly the two postwar
00:24:43:21 - 00:24:48:18
examples of two prime ministers
who were exceptions to what I have said.
00:24:48:19 - 00:24:51:04
One was probably Thatcher,
00:24:51:04 - 00:24:53:20
who did actually drive
00:24:53:20 - 00:24:59:12
through three terms,
a sort of mission to, as she put it,
00:24:59:16 - 00:25:04:00
to free up the economy
and to introduce market forces
00:25:04:00 - 00:25:07:13
and free up the private sector,
the businesses in this country,
00:25:07:21 - 00:25:11:15
at the expense,
I might say, of a much less equal society,
00:25:12:11 - 00:25:14:17
and at great social cost,
00:25:14:17 - 00:25:18:18
but nonetheless,
she thought the priority was freeing up
00:25:18:18 - 00:25:22:04
the economy and she went for it
over a quite a period of time.
00:25:22:04 - 00:25:23:15
That was not short termism.
00:25:23:15 - 00:25:27:20
And the other exception I'd say was Blair, who wanted
00:25:27:20 - 00:25:32:09
a shake up in the sense the supply side
of public service.
00:25:32:09 - 00:25:35:20
He wanted to bring the same sort of reform
and modernisation
00:25:35:21 - 00:25:40:07
to our public sector
that Thatcher had brought to the private.
00:25:40:16 - 00:25:44:03
And he too had a
chance to do that in a fairly
00:25:45:05 - 00:25:46:07
long term way.
00:25:46:07 - 00:25:48:05
Anyway, last point.
00:25:48:05 - 00:25:51:12
Therefore we need a new prime minister,
a new government
00:25:51:12 - 00:25:55:01
who's going to serve
for at least three terms
00:25:55:01 - 00:25:58:19
if we're going to stand any chance
at all
00:25:59:02 - 00:26:02:11
of seeing through the really in my view,
00:26:02:11 - 00:26:05:09
quite radical, quite deep seated changes
00:26:05:18 - 00:26:09:17
that we need in our country
if we're going to reinvent ourselves.
00:26:10:01 - 00:26:12:24
for our success and prosperity,
00:26:13:09 - 00:26:15:23
during the course of this century.
00:26:16:04 - 00:26:17:23
Thank you very much.