Press Release

Speech to Sainsbury Management Fellows at by Lord Sainsbury

For me the most important goal of the Sainsbury Management Fellows Scheme has always been that it produces outstanding businessmen and women who provide the leadership which British industry needs. It is, therefore, a matter of great pride to me that of the 260 members who have graduated from business school, 89% are employed in industry or services to industry, 60 Fellows own, have started up, or run their own business, and that 100 Fellows are working in senior positions in FTSE Companies such as Shell, Corus, Shlumberger, Microsoft, Invensys and Centrica. It is vital that we continue to move our manufacturing and service industries into higher-value areas, and I am delighted that so many Fellows are playing their part in helping the UK win in the 'Race To The Top'.

In this connection I am very pleased to see that Sainsbury Management Fellows' Main Board Executive Mentoring Programme has made a promising start, and that we now have 6 SMFs being mentored by captains of British industry such as Alan Cook and Paul Dreschler who are with us this evening. Can I thank them for the support they are giving us, and also Peter Lever of Heidrick and Struggles for his help in getting this programme off the ground.

At the same time I am delighted that Sainsbury Management Fellows are playing an increasingly important role in promoting engineering as an exciting career for young people and making a valuable input into government

policy-making. The Engineering profession in the past has firmly believed that more young people can be encouraged to take up careers in science and technology if government confers more status on scientists and engineers. I have always had doubts about this view. Governments can't confer status on professions, and young people will take up careers in science or technology because scientists and engineers convince them that a career in science or technology can be exciting and rewarding. So the work you do in this area is very important.

At this point can I also say a word about your recently formed manufacturing round table. One of the things that I learnt over the years about policy-making is that it is better to focus on opportunities and success stories rather than spending a lot of time analysing failure. So please not another study of why manufacturing in the U.K. is declining or why young people don't want to go into manufacturing. What is exciting and interesting today is what are the opportunities for the U.K. in high-tech manufacturing. We are not going to be able to compete in labour-intensive areas of manufacturing with low-wage countries like China, but there are opportunities for us in knowledge-intensive areas such as biopharmaceuticals or regenerative medicine. We ought to be looking at what we need to do to be successful in these areas, and you don't have to look very far as this evening we have with us Mike Gregory, who is the Head of the Institute of Manufacturing in Cambridge, and who is doing a lot of brilliant work in this area.

I would also like this evening to mention two other projects with which I am involved and which I think might be of interest to you. The first of these is the education and training of technicians. This is an area where we have failed miserably in the past as a country and our lack of good technicians has had a very negative impact on our manufacturing productivity. I managed, however, to persuade Peter Mandelson, when he was Secretary of State for BIS that this was an area where something should be done and as a result the government in its most recent Skills White Paper agreed that a Technicians Council should be set up to promote the registration of technicians by Engineering U.K., that the University Technical College Scheme which have been promoted by Kenneth Baker and the late Roy Dearing should be supported, and that the funding of F.E. Colleges should put more emphasis on the training and education of technicians. All this should lead in time, I hope, to a high-prestige technical stream in our schools.

This is an area where all engineers should be very interested because it will help to improve engineering in this country and raise its status, and any help you can give would be very valuable.

Secondly, I would like to mention 'The Institute For Government' which I have helped to set up over the last two years and which will work with politicians and the Civil Service to improve the machinery of government. I did this for two reasons. Firstly, it seemed to me that for historic reasons we have a system of government which is seriously dysfunctional and, therefore, a source of great frustration for both politicians and civil servants, and, secondly, because it seemed to me that the management education and training we give our politicians and civil servants is totally inadequate. In particular, policy-making in Whitehall which is supposed to be outstanding is, in my opinion, nothing of the kind.

I decided to mention the Institute For Government this evening for two reasons. Firstly, because I want to urge you to continue the good work you are doing in areas such as energy policy. When I was in Government energy policy was, in my opinion, an area of policy-making which was particularly bad. Targets for carbon emissions were set without any plans for how they would be achieved, there were no authoritative figures about the costs of different energy sources, and no one seemed to appreciate the scale of the changes which needed to take place. Politicians of all political parties also treated energy technologies like football clubs. Everyone had their favourite one and regarded all the others as rubbish.

The second reason I wanted to mention the Institute for Government is that I think there might be some synergy between the Sainsbury Management Fellowship Scheme and the Institute. The Institute has got off to a quite extraordinarily good start. There is widespread understanding that reform of Whitehall is urgently needed and we have already done some excellent work on minority Governments, transitions between Governments, and the relationship between central Government and departments. Yesterday we produced an excellent report on the costs and disruption caused by the endless restructuring of government departments, and we will shortly produce one on how quangos can be better managed.

We have also managed to recruit an outstandingly good team of young researches but most of these come from academic or "think tank" backgrounds and I am very keen that we should have on the staff a few more people who have had real experience of running large, complex organisations because many of the problems in Whitehall are basically management problems. So if any of you at any time are interested please let me know because there may be some opportunities for you in the Institute for Government.

Finally, let me say a brief word about the political scene as Cathy Breeze asked me to say something about it. I should perhaps say at this point that while I am a committed member of the Labour Party, I am not a very tribal politician and I am as concerned to get Lib-Dem and Conservative politicians to understand the importance of science and engineering to our economic future as I am to persuade Labour Party politicians.

In the last twelve years Gordon Brown has as both Chancellor and Prime Minister been a huge supporter of science and technology, believing strongly that science, technology and innovation are the only way we will be able to compete in global markets against low wage economies such as India and China.

And, as a result, the funding of basic science has been very significantly increased, the knowledge transfer record of our universities has dramatically improved so that they are now in the same league as American Universities, the Technology Strategy Board has been set up and is working well, and I think we have turned the corner in terms of young people going into science and engineering. It would be catastrophic for British industry if these reforms were put into reverse.

While I have talked to a number of Conservatives about the contribution that science and technology makes to the economy I am still not certain how well they understand this point, and it is, therefore, essential that the scientific and engineering industry keeps hammering away at this.

I am, therefore, very supportive of the Engineering In the Future initiative that brings together the seven leading engineering bodies, most of which are represented here this evening. This collaboration has produced the first ever joint manifesto between the engineering professions, and new MPs will be introduced to it next month at an event in Parliament. I think this initiative is enormously important and anything you as SMF's can do to support it will be extremely valuable.

I would, however, want to make one critical comment. The Joint Manifesto is a much better document in this area than I have seen for a long time, but even it fails to recognise the strengths and successes of British Science and engineering. It says:

"Further along the innovation cycle, the UK has a poor track record in nurturing and retaining growing companies. It is a stated aim of the government to grow a

£1 billion science-based company, but to date the UK has not come close to achieving this goal".

However, a quick check will show you that we have in this country at least two companies in this category: ARM which this morning had a market capitalisation of £3.3bn and Autonomy which this morning has a market capitalisation of £4.3bn. And there are a number of other companies like Cambridge Silicon Radio which this morning had a market capitalisation of nearly £800 million.

Because of the credit crunch this is a very difficult time for the British economy but as outstanding young businessmen and women you are uniquely well placed to provide the leadership both in your companies and in key national policy debates, and if we make the right decision at this time I believe we can come out of this recession stronger and better placed to grow and prosper in the rapidly changing global economy in which we live.