Ian Pearson - Urban Innovation and Public Services
Work Foundation, London - 16 July 2008

Check against delivery

Good morning everyone.

It's a pleasure for me to be involved in today's colloquium on the prospects for our nation's cities.

Let me first welcome publication of Ideopolis II - a timely piece of research that tracks the development of our knowledge economy and recognises the challenges posed by the current global credit squeeze.

The report makes some substantial recommendations: on cities ensuring that they're not overly reliant on their prowess in just one or two sectors; on exploiting the benefits of hospitals and universities in their midst; on the importance of investing in skills.

Urban development is, of course, an area of debate where input from people in my line of work has not always been welcome. It has been suggested, for example, that instead of giving any politician the keys to the city, it might be better to change the locks.

At the same time, politicians have not always demonstrated foresight in anticipating the ways in which cities could or should develop. According to legend, one American mayor reacted to news of the invention of the telephone by declaring prophetically, "I can see the time when every city will have one."

Yet, with those caveats in mind, what I would like to do this morning is offer some thoughts on innovation in an urban context, with particular reference to public services.

These are two inter-related agendas which have moved on substantially over the past 12 months.

We've seen the creation of a new Whitehall department, DIUS, with innovation an explicit part of its brief; and the publication, in March, of the Innovation Nation white paper - with the stated ambition to make the UK the best place to run an innovative business or public service.

The white paper reflects a broader understanding of the nature and importance of innovation to government, our economy and society. Not simply supporting fundamental research and R&D, but a multiplicity of new ideas. In the public as well as the private sector. On the demand and the supply side. Users driving innovation. Companies and organisations looking outside their own walls for new ideas

In health, we're currently digesting Lord Darzi's comprehensive report on the future of the NHS, with its emphasis on driving innovation through dedicated funding streams, regional centres and formal metrics.

More broadly, the Prime Minister has only recently presented a clear statement of what world-class public services should look like. Again, the Excellence and Fairness paper stresses the importance of innovation in achieving the kind of personalised provision the public now expects - provision which reflects the ideas generated by social enterprise, frontline staff and customers themselves.

The role of cities

Before focusing on public services, I would like to say a few words about the wider significance of cities. Some of this material has no doubt been covered in the first session on Britain's knowledge economy, but it has relevance and resonance across sectors.

For whether you specialise in superconductors or secondary education, in polymer science or public transport, location matters. The speed and simplicity of modern communication may have transformed the practicalities of doing business and reaching customers. But the value of cities as major hubs of activity - as magnets for migration, as marketplaces for accessing resources - continues to mean that they provide essential economies of scale, concentrations of skilled workers, and networks for effective knowledge transfer.

Just last month, I visited Biopolis and Fusionopolis in Singapore which are close to the National University and several science parks. These two new campuses co-locate public research facilities, private companies, shops and - in the case of Biopolis - a third of a million fish.

Both sites have involved investment on a huge scale and epitomise the undiminished faith in the importance of proximity - for scientific discovery and commercial growth, through attracting talented people with a desire to be based somewhere that they can live, work, spark creative ideas, learn and enjoy.

White Paper

Innovation Nation recognises this dynamic - the ways in which innovation clusters breed trust, generate new markets and serve as the building blocks for international collaboration.

The City of London is a truly world-class finance and insurance cluster. The growth of biotechnology and ICT companies in and around Cambridge, advanced engineering for Formula 1 in the Thames Valley, shows how innovation can concentrate in particular places.

We now have six Science Cities - Birmingham, Nottingham and Newcastle among them - where public-private consortia of RDAs, local authorities, universities and companies are driving regeneration and supporting innovative business.

In Newcastle, for example, the former old Tyne Brewery is being developed in a similar way to Biopolis and Fusionopolis - with research facilities, new businesses, apartments and restaurants.

DIUS will also be sponsoring several New Partnerships for Innovation to bring together universities, business, public sector bodies and venture capital in places where there is clear potential for new clusters to take root and grow the knowledge economy. Like Science Cities, the goal is to encourage partnerships of sufficient scale to address economic, social, or environmental challenges.

Beyond the White Paper, yet entirely consistent with its aims, we are developing 20 new university campuses to unlock individual talent in areas currently lacking provision, and deliver the wider benefits such institutions bring - job creation, social cohesion, high-level skills.

Over the past five years, places like Hastings, Peterborough and Darlington have benefited in these ways, and there has been a tremendous response since the announcement in March of the New University Challenge. The Higher Education Funding Council will soon be issuing a consultation document for prospective towns and cities able to demonstrate both public and private sector support for HE provision.

With each of these initiatives, we recognise - like the authors of Ideopolis II - that the city can never be understood in isolation. Cities have hinterlands and commuter belts; local, regional and international links. Innovation policy must take full account of this connectivity.

The public sector and innovation

Similarly, public services are a necessary part of urban innovation and thriving cities.

London is as much defined by the Tube as the Square Mile, by Great Ormond Street as much as New Bond Street. Transport networks and hospitals, schools and museums are the fabric of our cities and fundamental to their very identity.

Which is why innovation is just as important to transport, welfare and defence as it is to banking, manufacturing and retail.

Now, there's no question that Britain has been a trailblazer in public service innovation - 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 have been many innovative policies, like Sure Start and personal care budgets - some with a significant impact on urban life, like community support policing and congestion charging.

For 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.

For just as there is a clear trend towards user-driven innovation in the private sector, we must get better at capturing and copying smart ideas that emerge from staff, customers, and suppliers in health, welfare and education.

This is often much harder than delivering new policies designed at the centre, but it's also the case that top-down implementation can act as a disincentive to frontline innovation. Through the National Audit Office's forthcoming review of risk and innovation in government and by establishing a Public Services Innovation Laboratory with NESTA, we'll be examining how to foster, test and share more ideas from below.

DIUS, meanwhile, is leading the effort to get more innovative services up and running through better procurement practices across government. As the single biggest customer in the UK economy - to the tune of £150 billion annually - the purchasing power involved is considerable, and every government department will have a procurement plan to apply that power for innovative ends.

Local Area Agreements, Multi Area Agreements

Perhaps the best illustration of cross-Government work to support urban innovation and the trend towards devolving power away from Whitehall is through Local and Multi Area Agreements.

This is the first year that LAAs are covering local authorities and their key partners on a statutory basis across England. They're addressing a range of issues - from child poverty to the welfare of older people, from crime reduction to improving public transport. And crucially, citizens are involved in agreeing priorities for their own communities.

The first Multi Area Agreements were announced by Hazel Blears on Monday this week. Covering Greater Manchester, Leeds, Tees Valley and four other areas, these voluntary groupings of local authorities and their partners represent the latest method for delivering innovative services.

I'm sure that Sir Richard Leese will be talking about the Greater Manchester MAA this afternoon, but as a minister at DIUS, I'm obviously delighted that skills feature prominently in that agreement. Indeed, Manchester is serving as the test-bed for national innovations in employment and skills - by trialling Skills Accounts, a system for checking the skills of Jobcentre Plus customers, and the new Adult Advancement and Careers Service.

The Department for Communities and Local Government is involved in discussions for about 20 further MAA partnerships. They have the potential to become a major vehicle for economic development at scale, and for strengthening urban infrastructure.

Conclusion

To conclude, I'm confident that we're moving in the right direction towards achieving a genuine "innovation nation".

I just want us to go faster. Cities are already key drivers of innovation - embracing businesses and services, people and places, the domestic and the global. As major hubs of our economy and society they have an absolutely crucial role to play.

It's our responsibility at DIUS to set the right strategy for innovation - directing funds to priority areas like global security and renewable energy; investing in our world-class research base through a record science budget settlement; monitoring our national capacity for innovation through annual reporting.

But we must all embark on this journey together, and make innovation habitual rather than exceptional - in central and local government, among senior management and frontline staff, bridging business and public services, involving customers and citizens. And we must do it both in our cities and beyond.

It only remains for me to thank you for listening and to invite your feedback.