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Support for service industries outlined by Government report

28 August 2008

The Government-sponsored 'Innovation in Services' report published today outlines measures to improve the capacity of businesses to innovate across a range of industries covering retail, construction, logistics, internet services and environmental services.

Government is taking a fresh look at the changing global services industry and how it can support innovation by British businesses. Business Minister Shriti Vadera said: "The UK service economy is now worth £1 trillion.* We are world leaders in many service sectors including design engineering,architecture and environmental consultancy. It is important to support innovation by British businesses and that's why Government is working with the Technology Strategy Board and the British Standards Institute to take forward the report's recommendations."

Innovation Minister Ian Pearson said: "The Innovation White Paper we published in March set out a number of practical measures to make the UK the best place in the world to run an innovative business, public service or third-sector organisation. We are helping to create the conditions for innovation to flourish throughout the economy, including the services sector. Innovation is critical to the UK's future prosperity, our quality of life and future job prospects."

Jonathan Kestenbaum, CEO of NESTA said: "NESTA has highlighted the potential for innovation across all sectors of the UK economy. We therefore welcome the Government's commitment to helping the service sectors increase their competitive edge in the global arena, and reach their full economic potential."

The 'Supporting Innovation in Services' report is based on a series of industry-led reviews of the retail, construction, logistics, internet services and environmental service sectors. It identifies service sector themes, barriers to growth - as well as what the Government can do to support a thriving, competitive service sector.

The report's key findings include:
+Finding: Where Government is a key player in markets, business would like to see a stronger role in championing innovation. Examples given by industry include exploiting opportunities in waste minimisation; the pricing of re-usable data; and government procurement.

Government response: Government is working with relevant bodies such as the Technology Strategy Board to: promote innovation; examine and take steps to address barriers to innovation; and take forward delivery of agreed targets to improve innovation.

+Finding: Technology, particularly the internet, has transformed the power of consumers. Innovative businesses have responded by adapting their business models to meet customer expectations.

Government response: The Government has commissioned an independent review by Francesco Caio looking at barriers to next generation broadband networks in the UK, complementing Ofcom's work in this
area. The Technology Strategy Board's work recognises the importance of technology that underpins knowledge-intensive services.

+Finding: Highly-skilled people are needed at all levels of a business to develop innovative procedures that will increase its competitiveness.

Government response: The Business Support Simplification Programme will streamline the support Government provides businesses, including enhancing management expertise. The Train to Gain programme has been expanded and to give a particular focus on developing management and workforce skills in SMEs. The Learning and Skills Council is developing the concept of National Skills Academiesm which will cover innovative sectors.

+Finding: Internationally agreed standards would help innovative and growing businesses to operate within a clearly defined framework.

Government response: Government will work with the British Standards Institute (BSI) to develop a more strategic approach to standards, particularly in areas such as logistics and the carbon footprint.

The 'Supporting Innovation in Services' report is the result of a joint initiative announced in summer 2007 by Alistair Darling, then Secretary of State for Trade and Industry, and Jonathan Kestenbaum Chief Executive Officer of NESTA, that their organisations would work in partnership to look at how Government might stimulate and support innovation in the services sectors.

The report is based on a consultation of business in five sectors of the economy to develop a better understanding of what is driving innovation in service sectors, how innovation is developed and managed by leading businesses, the barriers to innovation and the role Government might play in improving the UK environment for innovation in services. It complements the recent Public Services Industries Review, a review by Dr DeAnne Julius, published by BERR in July 2008, which considered private and third sector delivery of public services and considered addressed innovation in the context of the public sector. www.berr.gov.uk/files/file46965.pdf

*The £1 trillion value on the service sector is a provisional estimate for 2007 provided by ONS to Eurostat, and excludes the Financial Services Intermediation Services (FISIM) adjustment.

The White Paper "Innovation Nation", published by DIUS in March 2008, may be viewed at
www.dius.gov.uk/publications/innovation-nation.html


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