I would like to begin by welcoming everybody but particularly the e-envoys from the many different countries who have been kind enough to join us today. You are very welcome to the UK and I hope that you find your trip worthwhile - we are certainly grateful for your contributions to this debate.
I consider the question of how we harness the potential of technological change - alongside the related question of science, to be the fundamental economic and social challenge of our future. Long after the cloud of day to day events has dispersed, what we do with information technology and how we use it, will determine our success industrially and as a society for years to come.
My message is blunt and simple: we are doing well, but not well enough. Over the next few years we will invest, as a Government, ??6bn in IT. We will radically alter access to IT facilities. But, we have yet to grasp the full scale of the opportunities that the information revolution presents. Business needs to see its application as a core management challenge. Public services need to see it as crucial to implementing public service reform. Government and people should make it the basis of forming relations between citizen and state. For all of that to happen, access needs to be universal not partial.
In particular, we must recognise that the greater economic stability we have achieved - lower inflation, low interest rates, low unemployment - is only a foundation. It is a necessary but insufficient condition for success. The key is to build on this - an economy based on knowledge, on the alliance between technology and human capital, so that we are continually developing more high value-added goods and services.
I see a very clear link here between British science, the development of British universities and the technological revolution. A couple of weeks ago, I had a presentation at Downing Street from some of our leading scientists. It covered fields such as nano-technology, brain transmitters and the latest in IT. The potential in all cases was immense, for industrial production, medicine and communications. The connection between top quality scientific research and business spin-offs and development was obvious. But I also reflected on how any young person at school receiving such a presentation would have been fascinated by the sheer scale of the possibilities of science and the excitement of it. And in the end, of course, it is business managers or public service reformers that will apply the technology in new ways.
The point I am making is this. Part of winning this IT battle for the future is to create a culture in which the worlds of education, academia, science, technology and business are engaged in a perpetual conversation and exchange of views. A conversation in which we are breaking new ground in scientific and technological advance, in which our schools and universities feel comfortable with its potential; in which business and society are naturally looking for ways of applying the advances made.
This is the modern industrial policy for any Government of the developed world. It is miles away from planning and picking winners. It has moved beyond the 1980s notion of "get Government out of it". It is a Government role that is enabling, creating the infrastructure of learning in our schools, universities, and in the wider community helping business access the technology, creating the environment in which new businesses can grow.
So how does this translate to practical policy?
In reaction to an unsustainable boom in stock market valuations, too many people wrote off the potential of new technology in the UK economy. We must take on the techno-sceptics but we must also recognise that technology alone is not the answer. Putting a PC on a desk does not itself boost efficiency. Establishing a broadband connection will not, alone, solve the productivity paradox. As economic research has shown, it is only when investment is combined with the right skills, with imaginative organisational change and rigorous managerial delivery that productivity gains come through.
Despite the dramatic fall in share prices the influence of technology has continued to rise steadily. In society, digital technologies are changing the way we live, from the way we communicate through email and text messaging to how we access information. One million people from all over the world accessed the Government's dossier on Iraq within hours of its release on the No10 website, just one simple example of the democratisation of information that was unimaginable until very recently.
There are now 600 million people online. Worldwide 140,000 more people connect to the net everyday. In the last three decades the price of a transatlantic phone call has fallen to a small fraction of its original level. In the same period, just as Intel's Gordon Moore predicted, computing power has doubled every eighteen months to two years. A 3G handset, soon to be on sale in every high street in the UK, has around 20,000 times more computing power than the Apollo 11 spacecraft.
Recently, we witnessed an incredible moment when scientists at MIT in the US and UCL in London teamed up to pull off the first transatlantic virtual handshake. Using second generation Internet technology, they recreated the sense of touch over a 3000 mile distance - a remarkable development that could have applications for areas as diverse as medicine and design.
Many companies are already taking advantage. One example is sheet metal suppliers Allsops in Huddersfield who invested in technology to enhance their production process and improve customer service. Enquiries from customers can now be instantly answered from any of the company's networked computers. Customers in a hurry for a quotation can send detailed and complex computer aided design drawings by e-mail, enabling Allsops to respond quickly and effectively. It's given them competitive edge - and saved them time and money.
The consequence of all this is enormous. For economies the potential prize is wealth creation. For governments a new relationship between citizen and state. For people, greater prosperity more widely shared.
The fundamental challenge is to create a knowledge-driven economy that serves our long-term goals of first-class public services and economic prosperity for all. To do so we need to innovate. We need to use ideas and intelligence in new ways that create higher value added products and better quality services. The opportunity to develop the knowledge driven economy is vastly increased by the digital age. Our ability to find and use information, to share ideas across geographic boundaries, is enhanced immensely by the revolution in communications and computing.
Advances in ICT will represent a major shift in the way we work. Many people have drawn parallels between the technological breakthroughs of the past; steam, electricity, the internal combustion engine. But electricity began as a source of power for the telegraph, it took years to revolutionise industry by powering machines on the production line. The opportunity for an ICT revolution is there, but only if we apply the technology in the same radical way in which electricity was applied some eighty to a hundred years ago.
And we must extend the opportunities of the information age to all. The networks of the digital age will be more powerful and more productive as the number of people and businesses connected increases. Digital transformation cannot be restricted to the few. Our success depends on extending it to the many.
In 1998, I set a target to make the UK 'the best environment in the world for e-commerce by 2002'. I want to thank David Jordan and the Information Age Partnership for their work in this area and for sponsoring the report released today.
The report makes clear that the UK has made a great deal of progress since 1997 - but we haven't quite made it. The benchmarking places us in second place behind the USA but we are the best in Europe and ahead of Japan. We have achieved more than many expected and laid the foundations for further improvement. We have made real progress in some key areas; a growing ICT sector, a strong venture capital market, among the world's lowest prices for internet access and the highest penetration of digital TV in the world.
But we need to do more to convert progress into a real and positive impact on our economy. We plan to learn from around the world, whether it is the progress Canada has made in creating attractive online government services or the effectiveness with which Sweden has encouraged take up of PCs.
I want to highlight five issues.
First, we must promote effective competition. Competition drives innovation and competitiveness. It underpins improved business performance. Without it companies will be weaker and consumers will face higher prices and poorer service.
Take broadband as a specific example. It is high speed and always-on. It makes using the Internet just like turning on a light. It enhances our ability to communicate, to exchange information and ideas. Some countries have chosen the planning route to drive up broadband numbers. We have deliberately chosen the competitive route. If we want broadband to work for businesses and consumers it has to be available at the right price on the basis of a world class service.
Prices are now falling to among the lowest in the world, spurred by the many different products in the market. Take up is now rising towards 30,000 a week, a rate of growth among the best of the world's major economies.
Second, we need to create the right incentives and support for businesses to seize the opportunities of new technology. That means investing in skills at every level, and raising the proportion of R&D spend in UK firms - precisely why we introduced the R&D tax credit. It means offering incentives for firms and individuals to invest in ICT. We have introduced capital allowances for small and medium sized enterprises investing in ICT equipment. And a PC leasing scheme through which employees in the UK can now claim a personal tax exemption against the cost of leasing PC's from their employers.
But incentives need to be matched by support. We have created UK Online for Business. 100,000 businesses have sought and received advice from UK Online during the last year.
Third, we must make the opportunities and benefits of the knowledge economy inclusive. Today, we have reached a milestone in ensuring 'access to the Internet for everyone who wants it by 2005'. In September 2000, I set the government a target of having six thousand UK online centres by the end of this year. We have now opened our six thousandth centre, meeting the target and providing a crucial entry point for those unable to afford PCs and connections. At least 126,000 new users have already come through the doors - a quarter of them unemployed or on benefits. To build on this we will launch an 'Online Nation' campaign next spring.
My fourth theme is skills. Imagine the enormous benefits to our economy and society if not just a fraction, but all our young people can master 21st century skills. The productivity gap between the UK and other major competitors is more closely related to skills than any other single factor. We know that around 7 million adults in Britain lack functional literacy and numeracy skills. The number of adults with poorly developed ICT skills exceeds this. We are addressing this through the University for Industry, the Union Learning Fund and a range of workforce development measures. We now have 1,800 ICT learning centres with training in basic ICT skills available free to the unemployed and people with few skills. Since we launched 'learndirect' some 600,000 people have taken 1.5 million courses, of which 950,000 have been ICT courses.
For improving skills and for tackling the digital divide our schools are fundamental. I want to thank the Broadband Stakeholders Group, led by Keith Todd, for highlighting this issue and for the constructive contribution they are making on the future of broadband.
We agree with the BSG that schools are key to taking advantage of the broadband revolution. We plan to build on the progress we have made in providing thousands more PCs and achieving the highest level of Internet connection for schools in the G7. As part of our next steps, I can announce today that the Government will provide funding to deliver broadband connections to every school by 2006.
Because education is the number one priority, and because we believe in opportunity for all, every Primary and every Secondary in the country will have high speed, always on access to the vast resources of the Internet. Every school will be able to benefit from the experience of Ashcombe School in Surrey where whole classes of students now use broadband video streaming to support their foreign language GCSE work. Audio and video are combined with an interactive quiz which can be paused and replayed to cater for individual learning speeds - an exciting and effective way of improving the quality of education in our schools. Broadband access will be backed by new interactive content and support material that will be made available through the digital curriculum.
Fifth, as part of the spending review settlement, a total of more than ??1billion will be invested in networking our public services. Not only for every primary and secondary school, but broadband connectivity for every GP surgery, every hospital and every Primary Care Trust in the country. It will mean higher bandwidth across the entire criminal justice system and across our network of offices that form the Department for Work and Pensions.
This will create significant public sector demand. That is why Stephen Timms will be establishing a new UK Broadband Taskforce to ensure that procurement has the maximum impact on the availability of broadband across the UK. Over the coming years we expect broadband to reach a wider and wider population, reaching further into rural areas and becoming more and more inclusive.
But for the public services, the real opportunity is to use information technology to help create fundamental improvement in the efficiency, convenience and quality of our services.
That is why we aim to have all government services on-line by 2005, building on best practice such as NHS Direct On-line and the university admissions service. 54% of government services are already online and we expect that figure to rise to around 75% by the end of this year. But we recognise that British businesses and citizens are not yet using government services online in the numbers that match the best in the world.
So our new strategy will focus on driving up access in key categories in the NHS, education, transport, benefits, tax and criminal justice. It will include, for example, services to enable drivers to conduct all their dealings with Governments online including tax discs, vehicle registration and driving licence applications. Transport Direct will provide travel information linking trains, buses and taxi connections to improve public transport as an integrated system. Andrew Pinder will work with departments to agree a strategy for reform, designed to improve the development, delivery and communication of our online services.
Our plan is not only to offer more convenient access to services but also to transform how we organise mainstream delivery. Too many services live in the technological 'dark ages': too few teachers with their own e-mail, an NHS without a single electronic network, no two parts of the criminal justice system operating with the same computer packages.
In July the Government made the largest investment in public services since 1945, but with it promised radical reform in the public sector. Our task is to use the investment to shape public services that meet modern expectations.
Within the spending review settlements, a total of ??6bn will be invested in ICT over the coming years.
In the NHS we will be investing to create a national integrated care records service, an electronic prescriptions service, an electronic appointment booking service.
We know what can be achieved. In a Stockport GP practice, the electronic transfer of pathology messages has reduced the average time taken between requesting tests and receiving results from twelve working days to three, with the results automatically incorporated into patient records. In an X-ray clinic in Northampton the introduction of electronic appointment booking has reduced missed appointments from around 9% to zero, saving staff time and reducing waiting times for other patients.
This not only replaces the cumbersome and inefficient paper based approach, but will make it possible for an ambulance crew arriving at the scene of an accident to check a patients electronic health record through a handheld mobile device. It will be possible for a GP to email a prescription directly to a pharmacist who in turn will email the patient to let them know its ready to pick up. And we could eliminate up to 600 million pieces of paper a year and make a GP's handwriting legible for the first time in history!
And we will be investing in ICT infrastructure throughout the criminal justice system. We are building a future where victims of violent crime can participate in a trial remotely through videoconferencing. Where witnesses and police officers will not have to wait around in court for days at a time until they are called to give evidence, but are called by text message or pager. This will free up thousands of police days which are currently wasted waiting to give evidence, saving millions by reducing the need to reconvene trials which are abandoned because witnesses have simply given up waiting and gone home.
Here today we have a gathering of experts. But this issue is for everyone. This is not just about transforming our IT base, it is central to our project to modernise our public services and our economy, to deliver the jobs, the better schools and hospitals that we promised.
The commitment I have described puts the UK at the forefront of ICT investment in public services.
We are taking steps to improve project management within Departments and we are recruiting the best people to run the most challenging projects. I have also asked Peter Gershon to bring forward immediate proposals for further strengthening the successful delivery of IT in Government.
The new technologies redraw the possible: it is up to individuals, businesses and governments to make the possible real and to build a dynamic knowledge economy and society.
We have real competitive advantages: 80% of the world's information is stored in the English language. We have some of the world's leading IT companies. British consumers are among the fastest adopters of new technology in Europe.
Our mission is to unleash this wealth-creating potential throughout the economy. Governments do not create wealth: workers, companies and entrepreneurs do. Our task is to work with businesses to turn our potential competitive advantages into truly competitive products and services.
So these are the challenges for the public sector and business in the UK if we are to become a global knowledge economy leader:
* To create an ICT literate workforce through schools, colleges, universities and our adult skills strategy.
* To apply ICT systematically and effectively to spur productivity and innovation in businesses and public services.
* To tackle the digital divide to ensure that all can contribute to, and benefit from, rising prosperity.
Britain, I believe, has the potential to become a great technological powerhouse, matching the great achievements of the 19th century industrial revolution with a 21st century information revolution. Economic modernisation is the key to social renewal, widely shared prosperity and first class public services.
I end where I began. This is the transforming technology of our age. Its potential is still hugely under-exploited. Its capability to transform our businesses, public services and societies immense. It is the key long-term economic and social challenge. My purpose in addressing you today is to say this Government is absolutely determined to meet the challenge and set our nation on a course to succeed. I ask for your help in doing so.