Excerpt from PMs CBI Speech on transformation of Job Centre Plus, joined up Government departments,

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Up against the competition of over two billion people in China and India – with 5 million graduates a year – Britain, a small country, cannot compete on low skills but only on high skills. Our imperative – and our opportunity – is to compete in high value added services and manufacturing; and because that requires the best trained workforce in the world, our challenge is to unlock all the talents of all of the people of our country.

And the nation that shows it can bring out the best in all its people will be the great success story of the global age.

Richard Lambert has spoken powerfully of this imperative and the CBI is doing important work to help the cause.

And we must lead the world in mastering the most far-reaching change in our occupational industrial and employment structures for more than a century.

Let us face facts: as a result of changes in the global economy many of the jobs British workers do now are becoming redundant.

Of todays 6 million unskilled workers in Britain we will soon need only half a million – over 5 million fewer.

We have 9 million highly qualified workers in Britain – but the challenge of the next ten years is that we will need 14 million – five million more. Higher standards of living will depend on higher standards of learning.

For most of the past half century we have had a Keynesian paradigm – either you are in work or you are on welfare. And in the old days it was the economy that had to create work – what prevented full employment was lack of jobs.

Now we need a new and very different paradigm. If in the old days the problem as unemployment, in the new world it is employability.

If in the old days lack of jobs demanded priority action, in the new world it is lack of skills.

So as we prepare and equip ourselves for the future, many of the policies of the past are out of date, with no answers to be found in old dogmas – and long term reforms changing the role of education and welfare – the responsibilities of the individual and government will have to intensify and be stepped up.

While in the old days we could assume that if a teenager left education with no qualifications they could get unskilled work, in the new world the unqualified and unskilled teenager will, in future, have to acquire a skill to be easily employable.

While in the old days only a limited number of apprenticeships were available for a far larger number of highly qualified teenagers, in the new world it makes economic sense to expand apprenticeships to make use of all the skills of all who have them.

While in the old days it was seen as the duty of government to create work for the inactive, in the new world there has to be both a duty on the government to help the inactive become employable and a duty on the inactive to take up those opportunities.

Indeed while in the old days the obligation was on the unemployed to find a job, in the new world the obligation on the unemployed should be not just to seek work but to train for work.

In the old days we could leave lone parents on benefit until their children left school. Now if they are to go to work sooner, they must train earlier and be ready for work when they can take it up.

In the old days when incapacity benefit was introduced the focus was on disabilities preventing work. Today in the interests of claimants and in the economy the focus must be on their capabilities and the opportunities for new skills for work.

In the old world you had colleges for everything that happened after school. Now we need a new focus on 16-19 year olds in sixth form centres —- and a similar focus on community colleges with state of the art training facilities that increasingly specialise in adult vocational excellence.

So making education for skilled work our first priority we need to provide new incentives and new obligations to train; we need to transfer resources from welfare to education and move claimants from passive recipients of welfare benefit to active job and skill seekers; —– far-reaching reforms of our welfare state and education system to put us right in the forefront of the higher paying, highly skilled economy of the future. Quite simply the old system does not fit the aspirational society the Britain of the future needs to be. The new idea is the development of all the talents of all our people.

Since June we have stepped up reforms in our schools and in the coming weeks we will publish our Childrens Plan, founded on an historic change in the span of schooling and the range and quality of learning – in the classroom and beyond it. Our aim that every teenager goes on to college, university or an apprenticeship or is preparing for this.

And today, as we come to terms with the far reaching nature of the global challenge, I have asked John Denham, who is responsible for skills, and Peter Hain, responsible for welfare, to bring together businesses, colleges, the whole of education and the voluntary sector to forge a new partnership to push through the scale of changes needed to equip people for the future.

In the old days the government ran the whole welfare system through separate jobcentres and benefit offices. In the new world Jobcentre Plus – which since its establishment in 2001 has built up a genuinely world class track record in getting people off welfare into work – will ask private sector agencies and charities to play a central role. As Peter Hain will set out tomorrow, we will contract with new providers – and incentivise providers – to find innovative ways of helping the long term unemployed and those outside the labour market altogether to move into work.

Already 200 of our best companies are leading the way in local employment partnerships. And while in the old world employers felt that the training system was unresponsive to their needs, in the new world you will increasingly be able to direct training budgets and we are inviting employers to play a more central role in the development of further education colleges.

Let me explain the new principles for welfare that will guide our new approach across the whole of government — on both what is being announced this week and what we will set out in the coming months.

First, if the best welfare is no longer the benefits you have today but the skills you gain for tomorrow then the inactive should, wherever possible, be preparing and training to get back into work.

So when someone signs on as unemployed, they sign up for a skills review, be given access to skills advice and training if that is what is needed, and this could be taken into account in their benefit entitlement. In the same vein, we should not deny people who are looking for work the chance to better their skills. So today Peter Hain is announcing we must reform the so-called 16 hour rule.

And we will help people not just get work but get on at work – helping them move up the jobs ladder. So we propose a seamless transition from out-of-work training to in-work skills development and – as John Denham will set out later today – a new adult careers and advancement service will be created to help people in work improve their skills or change their career: a commitment not just to one-off learning but to life-long learning.

Second, rights and responsibilities will be at the heart of our approach so we will intensify compulsion while at the same time offering new incentives.

In return for new rights to training and help to get into work, we will demand more responsibility.

We want lone parents on benefit to be training in preparation for going back to work when their child goes to school. And there will be a more modern regime for new IB claimants which, for the first time, will mean work for those who can, education or training for those with no skills, and treatment for those who need medical help including for mental health problems. Peter Hain is announcing today that in the future we will look to apply this more active approach to existing IB claimants as well as new ones, starting with those under 25.

And whilst in the old world, with no minimum wage or tax credits, 740,000 households faced marginal deduction rates of over 70 per cent, from April next year that figure will have fallen by three quarters and we will now do more to ensure that the long term unemployed, lone parents and those on IB are better off in work, even after reasonable transport costs.

And we believe that the flexibility you want as employers can be matched over time by more rights to request flexible working.

And we will focus on those areas where worklessness is concentrated and later this week Hazel Blears will announce details of new plans to help communities act together to get more people back into work.

Everybody in this room is well aware of the pressures this country faces and the need to rise to the challenge.

So just as we are modernising transport, planning, science policy, we are redefining the Britain welfare state for a wholly new world — to give people skills through transferring resources from welfare to education, not leaving them dependent, reliant on benefit without the opportunity to improve their skills and prospects.

All over the world – and this is what lies behind protectionist sentiment – peoples and countries are worried that they will not be globalisations winners but its losers, its victims not beneficiaries.

To help British people win from globalisation, I have outlined a new framework for British business based on firm fundamentals – open markets, free trade and flexibility – and action plans for equipping us in infrastructure, science, education and employment that we can now progress.

Working together we can move forward the long-term investments in education and skills we need.

Working together we can prepare, equip, and make Britain ready for a stronger future.

And working together we can make Britain a model – indeed a beacon – to the world for stability and progress.

Gordon Brown, Prime Minister’s speech at the CBI Annual Conference 2007

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