John Denham - Public Sector Innovation - Civil Service Live
London - 2 April 2008
Check against delivery
Good afternoon, everyone.
Since Gordon Brown created the Department for Innovation, Universities and Skills on his first full day as prime minister, I have spoken many times about the importance of our work - to business leaders, the science community, people in the further and higher education sectors, and to the public at large.
But I'm particularly pleased to have this opportunity to explain the role of DIUS to a broad civil service audience - and so soon after the publication of our Innovation White Paper, which goes to the heart of the issues being explored at this conference.
DIUS story
DIUS brings together for the first time three strands of activity which were previously spread across government, and which are going to be crucial to the economic success of Britain in the 21st century.
Those three strands are all about developing the skills of our people - everything from basic literacy to the techniques used in nanotechnology. It's about strengthening this country's world-class research base and its reputation for pioneering scholarship. And it's about combining those skills and that research to create the conditions whereby this country becomes the best place to run an innovative business and deliver high-quality public services.
Our challenge at DIUS is to make sure that these different policy strands intersect at every level. And our success will be measured by the extent to which we have a competitive economy and a prosperous society in which all people get to participate through the unlocking of their talent.
Why innovation matters
We called the recent White Paper "Innovation Nation" because our ambition is for this country to excel at exploiting new ideas - which is perhaps the most useful definition of innovation. New ideas for high value-added businesses generated by companies, universities and research parks. Ideas that translate into improvements in schools and hospitals. That tackle some of the most pressing global challenges like climate change and increasing longevity.
At this point, it's worth remembering our existing strengths as providers and producers of innovative services and products. Last year, the UK exported £75 billion worth of knowledge services - that's an increase of 170% on a decade before and testament to our prominence in financial services and the creative industries. At the same time, we remain the world's sixth largest manufacturer - worth £150 billion a year and comprising half of all exports.
What we need is a coherent approach to innovation which ensures that every sector of the economy can grow. An approach that's increasingly open, demand-led and supported by government.
The White Paper
The White Paper includes a range of proposals to support the complex process of innovation. The introduction of vouchers that fund small and medium-sized businesses to engage with universities, FE colleges or research organisations and pursue commercial propositions. Doubling the number of Knowledge Transfer Partnerships between businesses, universities and colleges, to boost competitiveness and productivity. Creating new "innovation platforms" to co-ordinate government support for companies designing solutions to global challenges - along the lines of the work already being done to develop low-carbon cars.
The Government's capacity to support innovation is undeniable. It is the UK economy's biggest customer, spending some £150 billion a year on procurement. That's 55 per cent of all UK spending on IT, and roughly a third of all spending on construction. The purchasing power involved is enormous, which is why every government department will have a procurement plan as part of their commercial strategies - to apply that power for innovative ends.
Through regulation, government can create markets for new products. It can set targets for the use of efficient technologies. Both types of intervention offer huge opportunities for cutting-edge firms and skilled workers, whether in renewable energy or to support the switchover to digital television.
DIUS as champion of innovation
So where does DIUS figure in all of this - and here I'm referring to the broad family of organisations linked to my department, including the Technology Strategy Board, the Intellectual Property Office, the Design Council and the Regional Development Agencies.
Just last week, to give a practical example, we announced a £2.3 billion plan to develop new low-carbon buildings for further education colleges. In this programme, set to benefit over 150 colleges around England, construction companies will be required to arrange on-site apprenticeships and work-based learning for their staff. Government investment of this scale will massively boost the market in energy-efficient buildings. And the conditions we're setting will be to the advantage of firms that train their staff to the highest standards.
More broadly, it's our responsibility at DIUS to act as the leader and champion for innovation in both the public and private sectors. Identifying and promoting innovation wherever it is found - and wherever it is found to be useful.
That starts with making DIUS itself an innovative department, in terms of our values and working practices. Ian Watmore, the Permanent Secretary at DIUS, spoke here yesterday about how we're building innovation into the Department's DNA.
It means pressing on with our support for the UK research base, which will benefit from an annual spend of almost £6 billion by 2010/11. We're working hard to improve access for businesses and directing funds to key issues, such as the environment and global security.
It involves a relentless effort to improve this country's skills base - to unlock talent and drive local regeneration by expanding university provision, helping businesses address their training needs, dramatically increasing apprenticeship numbers.
We're also committed to new initiatives, and DIUS will be compiling an annual innovation report to evaluate progress in strengthening our national innovation capability.
This report takes forward a recommendation from the Sainsbury review, and both the PM and the Chancellor have agreed that it should include an assessment of how effective each department has been in using procurement, regulation, and policy development to drive innovation.
Each department's Innovation Procurement Plan is key here. The purpose of the plans is not to be prescriptive - a theme to which I'll return - but to build capacity among departments and their agencies. To make existing programmes like the Small Business Research Initiative instrumental in getting innovative commercial products off the ground and devising ground-breaking public services.
Innovation in the public sector
Indeed, it's on public sector innovation more broadly that I want to concentrate today. For innovation is as important to transport, welfare and defence as it is to banking, manufacturing and retail. The bottom line is that these services account for a major chunk of our economy.
More than that, the very history of innovation cannot be properly understood without considering the role of the public sector. It was at CERN, the European organisation for nuclear research, that British scientist Tim Berners-Lee invented the World Wide Web. In 1969, the collective might of the US federal government put a man on the moon - just eight years after President Kennedy challenged them to achieve that stellar ambition.
And in terms of creating essential public services from scratch, which have become the model for provision elsewhere, it's this country that has so often led the way. Not only through establishing the BBC, the NHS and the Open University, but instigating the first free libraries, postal services and public parks.
More recently, there are plenty of innovative policies for which we can rightfully be proud - and for which I'm sure some of you today can claim credit: NHS direct, congestion charging, drugs courts, community support officers, Sure Start, tax credits, online pension forecasts, Directgov, Train to Gain.
Much has been achieved that deserves the label of innovation, but we need to go further. The public sector expects weekend GP services, one-to-one tuition for school children, better quality information about public services.
The challenge
Now, a common thread among the policies I've just listed is design at the centre followed by implementation on the front line. It is much harder to innovate in reverse - capturing and copying smart ideas that emerge from staff interacting every day with our customers.
And yet, there is a clear trend towards bottom-up innovation in the private sector. Big pharmaceutical companies farming out their research to small laboratories. New IT applications emerging from experimentation with open source software. Mountain biking and snowboarding starting with people tinkering in the garage; both are now multi-million pound industries involving precision engineering and hi-tech materials.
How can we replicate this experience in the public sector? First, I think we need to be realistic about some of the main challenges.
There is no doubt that targets have driven much of the improvement in schools, hospitals and other services over the past ten years. But if we want innovation to flow from providers and users across the public service, then targets can be a mixed blessing.
Properly designed - with a focus on the outcomes we want for service users - targets create an incentive to do things better and in new ways. But badly designed - with too much emphasis on how a service should be run, or statistical targets that are, at best, surrogates for what people really want - they can actually prevent innovation.
The same is true of commissioning services. The point of involving the third sector - or the private sector - is to find new ways of doing the job. By being overly prescriptive about how a service should be provided, or by making cost the dominant factor, we will certainly squeeze out innovation - and, in the longer term, kill off ideas that could lead to a better service at a lower cost.
By appreciating such occupational hazards around innovation, we can create the right conditions for doing things differently.
For example, the purpose of the new Adult Advancement and Careers Service is to help people get into work and then get themselves a better job. It's about not only about improving skills, but sorting out childcare, tax credits, housing and other issues. To get this joined-up service right, we've created 10 pilots in different parts of the country, each adopting a different approach to achieving the same broad outcomes. In this way, we can understand what works best and apply that insight when this programme rolls out nationally.
We also need to foster a public sector culture where people are prepared to try things that don't work out in order to identify the things that do. A basic truth about innovation is that there's no success without failure - or without taking risks. For those of you old enough to remember, a single company was responsible for both the ZX Spectrum and the Sinclair C5. To help here, the National Audit Office will be conducting a review of innovation and risk management in central government to see how we can do things better.
Over the three years of the current spending period, the Government has put aside over £2.5 billion to drive innovation in public services: £1.2 billion for the National Police Improvement Agency; £600 million for the Transport Innovation Fund; £518 million in the Social Care Reform grant for use by local authorities.
This investment will be put to good use in developing new approaches, ensuring that services are environmentally and demographically sustainable, and in rewarding people who pursue fresh ideas, especially frontline staff.
Innovation underway
Of course, we're already implementing intelligent solutions to immediate problems and analysing long-term challenges in innovative ways. Let me give you a couple of examples.
The Department for Work and Pensions found that 20 per cent of people claiming disability benefit failed to show up to medical interviews because they did not know how to get to the specified clinic. Project Lauren, launched in 2006, links the journey planning service created by Department for Transport - and used by the likes of the BBC and National Rail - to DWP’s appointment service. Now, one million appointment letters with personalised journey plans on public transport are sent out automatically each year. This makes things much easier for claimants, so many of whom do not have a car or internet access.
My second example illustrates the way we are now approaching the longer-term challenges facing our society. The Foresight Programme, run by the Government Office for Science - itself part of DIUS - examines issues which cut across departmental boundaries and where solutions may hinge on advances in science and technology.
The recent Foresight report on tackling obesity was a multi-disciplinary investigation, involving not just geneticists and physiologists, but psychologists and sociologists, economists and architects. Participants came from government and medicine, the food and health insurance industries, the research community and charitable sector. Their insights are currently helping policy makers to think afresh about obesity: to address the circumstances and behaviours causing the fundamental imbalance between energy intake and energy expenditure in people's daily lives.
DIUS and public service innovation
This is genuinely exciting work, and I am determined that DIUS should support much more of it. As we set out in the White Paper, it's important to promote an open model of innovation that breaches departmental boundaries, like Project Lauren, and which recognises that different challenges require different approaches. Some are short-term, some require a long-range view. Some require incremental improvement to existing services, some demand radical solutions.
That's why a new Whitehall Hub is being established to capture and disseminate learning on innovation. A Public Services Innovation Laboratory will be investigating radical ideas for the design and delivery of services. DIUS will be convening a network for innovation among senior civil servants, so that leaders across government can share insights arising from the most successful innovations.
For frontline staff, I want to explore how we can best enable them to test out promising alternatives to existing practice, by potentially extending the "power to innovate" currently available in the Department for Children, Schools and Families to trial interesting ideas for improving pupil outcomes. And there will be a new civil service award for innovation, which celebrates the imagination and determination of people working across government.
Government skills strategy
I hope that I've managed to convey the rationale behind this more consistent approach to innovation, and its significance for our country's long-term success.
Before I finish, I'd like to highlight one factor that will determine our ability to make Britain an innovation nation, one which brings me back to the abiding purpose of DIUS. The modern, creative country that we aspire to is predicated on unlocking talent and ensuring we have a workforce with skills in every area. Government is no exception.
The Cabinet Secretary, Gus O'Donnell, spoke yesterday about the new strategy for professional skills in government. I simply want to emphasise how essential it is that we raise the bar - so employees in all departments understand the importance of professional skills standards and realise the career advantages of meeting them.
I would only add - given my other priorities for DIUS - how pleased I am that the strategy includes an apprenticeships pathfinder for 500 staff across government beginning this September.
The public sector employs around 24 per cent of this country's workforce, but provides less than 10 per cent of apprenticeship places. We are committed to rectifying this situation, and Ian Watmore has taken on the role of champion for civil service apprenticeships. In particular, the apprenticeships pathfinder, which will be aimed at both new and existing staff of all ages, will help to improve a range of critical skills, including customer service and line management.
But our efforts cannot stop there. If we want to drive up performance, hit targets, and - most importantly - improve people's lives, we need to work with our supply chains in government to boost skills levels. Indeed, "open" - or collaborative - innovation - only works when your suppliers are as skilled and creative as the people you employ directly.
The Skills Pledge is a major initiative whereby companies and organisations publicly declare their commitment to support all employees in developing basic skills and working towards relevant qualifications.
Well over three million people in England currently work for organisations who have signed up to the pledge. I want to see that figure continue to grow rapidly, and we must play our part.
All central government departments have signed the Skills Pledge. But it isn’t enough.
Private companies with good training records look beyond their own workforce. They understand that their suppliers - their supply chain - are as important to their success as their own staff.
That's why some companies that have signed the pledge, like BAE systems, also insist that their suppliers sign up. Some make their in-house training schemes available to the SMEs they work with. Some, like FlyBe, have designed Foundation Degrees which, again, others in that industry can access.
So government departments signing the Skills Pledge is just the start. What about the organisations to whom we have outsourced services - is it acceptable that they employ staff who are less well-trained than ours? We need to engage with the institutions and agencies that we fund - colleges and universities, in my case - to confirm their support. And then their suppliers as well.
As I've said, the public sector already employs one quarter of this country's workforce. Add those who supply the public sector, and we're talking about a real opportunity to build the skills base. With momentum on the Skills Pledge growing, and by following it up with high-quality training, we can create a huge ripple effect throughout the economy.
Conclusion
All of which brings me back to my starting point. An innovative society is inextricably linked to the skills capacity of its people. And a society which succeeds in unlocking talent and enabling all people to prosper is that much more vibrant and cohesive.
In closing, I'd like to record my appreciation for the commitment of civil servants and public sector workers to helping the people of this country lead safe, healthy and fulfilling lives. I applaud your efforts and I'm determined to support you in building an innovation nation. A Britain that's recognised around the world for the value of our scientific discoveries and for the quality of our public provision.
Thank you for listening, and I'd be happy to answer questions.
