Ian Pearson - Society of British Aerospace Companies Annual Conference
Savoy Place, London - 27 March 2008

I'm delighted to be here given the theme of this year's Annual Conference - ‘Meeting the Global Challenge' – and my ministerial responsibility for science and innovation, which includes co-chairing the National Aerospace Technology Strategy Group with Shriti Vadera, my ministerial colleague at the department for Business Enterprise and Regulatory Reform (BERR).

The creation of my department – the Department for Innovation, Universities and Skills is the first time that any department or minister has been formally responsible for leading on innovation across all sectors.

Two weeks ago, we published a White Paper: ‘Innovation Nation' which sets out how essential Innovation is to the UK's future economic prosperity and social well being and a bold ambition to make the UK the best place in the world to be an innovative business. We want to see innovation flourish across every area of the economy – and in particular, high value added businesses.

The White Paper also highlights the need to innovate in our public services and highlights opportunities for Government to drive and become a better customer for innovative products and services.

Of course, I am preaching to the converted on the values of innovation. The business sectors represented in this room: aerospace, defence, homeland security and space - are some of our nation's most innovative.

Aerospace

The aerospace industry is an important strength of the UK economy with 11 of the world's top 100 aerospace companies are based here second only to the United States.

And I am told that aerospace order books have never looked better. Recently, the UK has done particularly well on major programmes such as the Airbus A380 on which some 400 UK based companies supply up to 40% of the content. I was privileged to go to Toulouse as Trade Minister to see the first one being built and how fantastic it was to see, Singapore Airlines' A380 flying into Heathrow on its first scheduled flight.

Space

And our civil space strategy, published last month, set out how society can benefit from innovation from space-related technologies. Satellite communications and space technology helping us with examining climate change and global weather conditions, making our roads safer with mapping and global positioning systems and even telling us whether European farmers are adhering to EU agricultural law.

Applications from space underpin today's major business sectors in the UK. We have the world's most profitable global mobile communications provider, Europe's most successful satellite based TV broadcaster, and the world's leading capital market for satellite and application financing through the City of London .

So, there's a lot to celebrate, but as you have heard earlier today, there are many challenges ahead if we want to remain successful in the global market place.

Since 2004, Government funding for aerospace Research & Technology has more than doubled compared to levels seen prior to that. Support has totalled nearly £¼ billion to date. But I recognise the pressures you face and Government will continue to have a dialogue with you about meeting future needs.

We have heard some interesting insights today on how the different markets represented by SBAC are meeting the global challenges. And of course, as a Government we face global challenges too. Let me offer a few thoughts on what we are doing to respond to them.

Defence and Security

As the Prime Minister said in his statement to Parliament on the new security strategy, last week, the nature of our place in the world has changed beyond all recognition over the past few decades.

Regional instability, mass population and climate change are just a few of the areas in which consequences can reverberate quickly around the globe. The national register of risks we have committed to producing includes what the Government sees as the big threats to our nation from global pandemics to nuclear proliferation. That will be published later this year. It may not make for light reading but I think it will be crucial in developing a greater transparency regarding the issue and challenges we all face.

On defence, we have worked collaboratively on the Defence Industrial Strategy and the Defence Technology Strategy. We will continue to work closely with MOD and with the new UKTI Defence & Security Organisation. I want to take this opportunity to assure you that the transfer of responsibility from DESO in no way marks a lessening of the importance that the Government places on defence exports. We are determined that the new organisation will provide both you and, most importantly, overseas customer governments with a high quality service and we are absolutely committed to that.

We remain committed to ensuring that our Armed Forces have the right equipment, at the right time, and at the right price and we are still committed to the DIS and the principles that underpin it. I know too that Baroness Taylor regards delivering DIS v2.0 as a real priority.

Innovation

As well as global risks there are global opportunities. With that in mind the Ministry of Defence has published an Innovation Strategy and built on this with a Centre for Defence Enterprise, announced last week. The Centre for Defence Enterprise aims to stimulate innovation in defence-related technology, helping UK-based companies tap into the £16bn a year business of supplying the UK armed forces.
The Ministry of Defence is also running a ‘Grand Challenge' competition to make the defence sector more accessible to the broad UK science and technology base. And their Competition of Ideas sought to find new innovations and inventions that could help counter the threats faced by our Armed Forces. I'm pleased that of the 66 contracts awarded to applicants, a third went to universities, around a third to SMEs and the rest to large businesses.

In SBAC sectors, as in the rest of the country, it seems to me that we have no shortage of good ideas and new designs coming out of our universities and research bases, but the journey from mind to marketplace can be fraught with obstacles.

Here, I believe the Government can have a broader role in supporting UK business innovation, for example through greater Research Council focus on economic impact and strengthened links with the DIUS sponsored Technology Strategy Board.

The TSB is working hard to address many of your needs and concerns within its funding envelope and as you know it has already helped deliver significant programmes like the Rolls-Royce-led Environmentally Friendly Engine and Airbus-led Next Generation Composite Wing programmes.

You know its Chief Executive Iain Gray well. They will be publishing their new strategy shortly and I know that they are keen to continue the close working relationship they have established with you.

I am also aware of the good work that has already taken place, between industry and government, to refresh the National Aerospace Technology Strategy. We will continue to collaborate with you on this as we did on delivering the original National Aerospace Technology Strategy.

The Government can also use regulation and public procurement to stimulate innovation and public services. A key theme of the DIUS White Paper was shaking up public procurement.

With an annual procurement budget of £150bn, the Government has a lot of purchase power. We can use this to drive increased demand for innovative products and services that keep our country in the lead of the game and help to meet global challenges.

To that end, each Government department will publish an Innovation Procurement Plan during 2008 as part of their commercial strategy, setting out how it will make innovation central to its procurement practices.

Government is also refocusing our funding in an unprecedented effort to tackle global challenges. ‘living with environmental change', ‘energy' and ‘global threats to security'.

I was very interested on hearing what Clay Jones had to say on working with NASA on space exploration. Moonlite is an exciting programme and the next generation of space exploration is tremendously exciting and has to be internationally collaborative.

I think that there is a general feeling of excitement that we are on the cusp of some very exciting breakthroughs and some of those will be in the sectors you work in. Some of these challenges have direct relevance to your work and they are areas which you can help us to address.

Conclusion

I would like to end by paying tribute to our hosts, SBAC.
We have a constructive working relationship and we need to continue to work together on issues such as technology, skills, business excellence, defence and security, sustainable aviation and our vision for space, and look at how we take that forward.

I strongly believe that by building stronger links with you, we will be best placed to tackle the global challenges that we all face, and that if we can tackle those together we can all enjoy success together in the future.

It is important that we have those discussions about how to take more of the carbon out of aerospace. But let me make it clear, we recognise the value of aerospace to the economy, and we are committed to working together to help you in the global marketplace.