Woodbury Park Hotel, Exeter, EX5 1JJ

Thank you Peaches [Golding, Regional Director, BITC].

Global Crisis

I don’t think that today’s discussion could have come at a more appropriate or a more dramatic time.

The Chinese have a proverb, “may you live in interesting times.” It is not meant as a compliment.

We have seen some extraordinary things happen in the last few weeks. Failing banks and falling house prices. Bail-outs on a scale that is hard to comprehend.

We have seen the collapse of some of the world’s most famous and august financial institutions. America’s Lehman Brothers, Germany’s Hypo Real Estate and our own Northern Rock. Stock markets around the world have tumbled further and faster than they have for over 20 years.

During such difficult times it is natural that people are confused as to what it means for them. They wonder how safe their saving are. Whether they’ll be able to pay their mortgage. If their own job is at risk. And it’s natural that people look to government for reassurance.

Government Response

The Prime Minister, the Chancellor, the whole of the government is absolutely committed to doing every thing in our power to maintain stability, to protect savers and to protect the interests of tax payers.

These extraordinary times call for bold and far reaching solutions.

We took Northern Rock into public ownership. Transferred savings from Bradford and Bingley to Abbey and took the rest of that business into public ownership.

We amended our competition policy to allow the merger of Lloyds TSB and HBOS. We have increased the compensation limit for bank deposits from 35 to £50,000, protecting 98% of accounts.

We have this week taken the unprecedented step of directly investing £50 billion in our banks, and extending the Special Liquidity Scheme from £100 billion to £200 billion.

This brings a much needed stability to the financial system. But it goes further that that. Perhaps the least reported aspect of this package is the guarantee for medium-term lending.

This is what will help the small business looking for investment, the small firm needing an overdraft, the home owner looking to move, or the first time buyer trying to get a foot on the ladder.

Immediately, the impact of this filtering through. Recent cuts in interest rates have had little, if any, impact on mortgage rates.

But within hours of the Bank of England’s half point cut on Wednesday most of the major lenders had passed it on in full.

And the government is doing all it can to help small businesses with their cash flow. With late payment problems intensifying, we aim to make all payments to SMEs not within 30 days, but within 10. Helping the small and medium sized firms that hold contracts with the government worth over £8 billion.

Global, but also local

If nothing else, the current crisis has brought into sharp focus just how connected we all are.

The American sub-prime mortgage crisis quickly grew into the credit-crunch and then the turmoil we see on the news every evening.

To solve the problems we face we need to act globally to restore confidence and trust. This week the Chancellor has met with European Finance Ministers, with the G7 and with the IMF in Washington to do whatever is necessary to reduce uncertainty and improve confidence in financial markets.

But we also need to act locally to try to mitigate the negative impact of the current downturn and ensure we are well placed to make the most of the upturn when it comes. And this is where skills come in.

The recent Government reshuffle was focussed on the economy. The return of Peter Mandelson and the establishment of the national economic council grabbed most of the attention.

But the Prime Minister also announced the establishment of Regional Economic Councils for each region of England.

Ours will be explicitly focussed on ensuring that the particular experience of the South West is fed into national considerations to help households and businesses get through this.

At times like this, there is a danger that we concentrate on constant fire fighting and take our eyes off the medium and long term. That has certainly happened in previous downturns. We must not make that mistake this time.

We must ensure that once we come through this storm, which we will, we are properly equipped to compete at the highest level.

The talent of our people

The long-term prosperity of Britain and of the South West depends on unlocking the talent of our people.

No matter how much we automate, mechanise or computerise, every business and every organisation is built upon the ingenuity, the dedication of its people. People like you and the people you work with.

One of the principle ways that we can nurture the talents of our men and women is by giving them the skills they need to succeed.

No one thing lifts a person – a family – from poverty more than having a decent job. And nothing helps a person to get, keep and progress in a job more than having the right skills.

Strengths and weaknesses of the South West

The economy in the South West has many strengths and over the last 10 years we have grown faster than the English average. But we also have too many weaknesses.

There are too many who enter the workforce without the skills they need.

Fewer than two thirds of young people in the South West leave school with 5 good GCSEs. That number falls to fewer than half when you include English and Maths.

There are too few staying on in education or training after 16.

A quarter of 17 year olds in the region are neither in education nor training. Risking a lifetime of under-achievement.

Too much talent wasted. Too much potential unfulfilled.

This undermines our economy and perpetuates inequality.

Government action on skills

So what are we doing about it?

Well, the Skills for Life programme is helping over 40,000 people a year in the South West to get their first ever literacy or numeracy qualification.

One of the country’s best kept secrets is the quarter of a million young people currently doing an apprenticeship. In the last year over 9,000 school leavers in the South West began their careers through an apprenticeship.

I saw this for myself when I visited South Devon College in Paignton. Their new £28 million Vantage Point campus has allowed them help around 600 new apprentices.

And nationally we are putting funding in place to guarantee an apprenticeship to every qualified young person who wants one.

We are encouraging more people to get intermediate and higher level skills.

We are moving responsibility for skills development to local authorities to make skills planning more responsive and better coordinated.

We have radically changed skills training so that it provides what the market wants. What you want. Not what some Whitehall planner thinks you should have.

The new Diplomas, the billion pound Train to Gain service, new Learner Accounts – all examples of how we have become more responsive and demand-led.

And that is why the Prime Minister wanted today’s conference to happen. To hear from you what you what your concerns are. To learn directly what you want from government.

I ‘m sorry I haven’t been able to spend the whole day with you today. But everything said today has been recorded so I can take your ideas back to my colleagues in government.

New skills and qualification are more than just pieces of paper. They are a young man able to get his first job. They are a mother able to read bedtime stories to her kids. They are the long-serving junior finally given the confidence to go for that promotion. They are lives changed for the better. They are also businesses changed for the better, better able to weather the current storm and exploit the opportunities that the upturn will bring.

Thank you for taking time out of your busy lives to attend today. Thank you for your contributions, which will be fed back to the centre and thank you for what you do for the success and well being of the South West.