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Think outside the box to help beat recession

The new Department for Business, Innovation and Skills (Bis) headed by Lord Mandelson is an opportunity, once and for all, to deal with Britain's Achilles heel: declining business competitiveness; sluggish growth; poor skills; badly conceived regulation; and unresponsive universities. The prize is what business leaders and forward-thinking college principals have been demanding for some time: a better focus on the things that underpin a successful modern economy.

Record levels of public investment and the economy stimulus package may not be enough. We need a more systemic approach to our business support, skills and lifelong learning ambitions. For too long, these goals have sat in different parts of Whitehall, disjointed from how businesses, innovators and learners actually interact with each other.

Lord Mandelson needs to get a grip quickly. With 11 ministers under his command, Bis looks top-heavy. There is an opportunity to streamline what is widely regarded as a bloated administration. People who really understand the low-carbon, digital economy are now urgently needed.

If skills activism is to mean anything, then Lord Mandelson must build on one of the few strengths of the old department for trade and industry, with its focus on industrial sectors. Many more skilled jobs will be lost unless the Government implements an ambitious sector-led plan that targets specifically the skills needed for the recovery from recession. Every region should be encouraged to develop "growth clusters" linked to the indigenous strengths of regional economies.

Further education, working alongside sector skills councils, could be a major force in the fight against the recession. They just need a bigger push beyond the entrenched interests of the bureaucracies, whose comfort zone is generally higher education and soviet-style delivery mechanisms.

One obvious candidate for greater market discipline is the labyrinth of skills and business support bodies that the new department inherits. Why does Business Link have to remain in public hands? Surely this is a role for reinvigorated local chambers of commerce working more closely with the high street banks?

Why can't proper degree-awarding powers be given to further education and large employers, or groups of small firms, acting together?

Our universities are one of the last great bastions of privilege in terms of policy protection from the centre. For too long they have escaped the reforming zeal of ministers, consuming public money without the improved economic outcomes to show for it. Government should agree a new pact with higher education that essentially achieves three things: a lifting of the cap on student fees to draw in more private investment from those who can afford it; new statutory targets to widen participation among poorer students through a national bursary scheme; and a link between a proportion of all funding of undergraduate courses to the actual employment outcomes of learners.

Alternatively, why stop at merging the two government departments? A new learning and skills funding agency could replace at least five quangos - either formed or in the pipeline - at a stroke.

We cannot get away from the fact that we are entering a new age of austerity.

Mr Bewick writes in a personal capacity.

Tom Bewick, Chief executive, Creative and Cultural Skills, and a government adviser from 1997 to 2002.

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