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60 years ago,
we put on an exhibition

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to show off the best of Britain.

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CONTEMPORARY NARRATION
This is the Festival of Britain

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in the city of London.

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In 1951,

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over eight million people visited
the South Bank of the Thames

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to see for themselves
where Britain stood,

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what we did
and what we could be proud of.

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According to the organisers,

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the festival aimed to demonstrate
firm confidence in our future.

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Under the constraints
of post-war austerity,

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such confidence was in short supply.

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Today, as we recover from
a financial crash,

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we're again anxious
about our future,

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asking what should we be doing
to pay our way in the world.

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What would a new Festival of Britain
say about us now?

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For years, we thought the City
could keep our economy growing.

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Then came the crash.

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Britain emerged burdened with debt,

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and unsure how to rebuild itself.

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In this series so far, we've seen
how, over the last 60 years,

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we've focussed our manufacturing
on leaner, higher-value sectors...

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HE LAUGHS
Oh, God!

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..how our economy
has become more creative,

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graduating from brawn to brain.

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But today we look at the biggest
change in direction of all.

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We rely less on
traditional manufactured exports.

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Instead, Britain has embarked on
a unique experiment,

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developing new ways
of paying its bills

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by selling services.

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Fantastic, isn't it?

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Rather than making things,
we do things.

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We run things. We organise things.

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'Eight out of ten of us work
in services,

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'and yet many still look down
on them...'

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What about your TV?
How does that go for you?

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'..even though they've helped
make us far richer than we were

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'60 years ago.'

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Moving from manufacturing
to services

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has changed Britain dramatically,

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far beyond anything that visitors
to the Festival of Britain

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would have imagined.
But this transition has had costs

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as well as benefits, leaving us
a difficult question to answer -

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is the service-based economy
that's grown since the '50s

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the right one to deliver us
a prosperous future?

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This is where you might come
to see how much we buy and sell

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as a nation.

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It's Felixstowe,
our biggest container port.

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Ships from all over the world
bring their cargo here.

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The overall figures for the port
are astonishing.

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In an average year, they unload
three million containers here,

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full of goods valued at £40 billion.

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Some of the ships that dock here
are a quarter of a mile long,

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and carry 15,000 containers.

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'But what do ships like these
take away from Britain?

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'What do we sell
to the rest of the world?'

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We sell some goods.

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But of the containers
the ships leave with,

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half will be empty.

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Many of the rest
will be full of rubbish

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sent abroad for recycling.

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'Last year, the gap
between the goods we bought in

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'and the goods we sold
to the rest of the world

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'was almost £100 billion.'

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In fact, the last time we were
consistently exporting more goods

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than we were importing
was the early 1980s.

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Scary stuff!

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Or is it?
It's not as bad as it looks,

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because here we've only been talking
about trade you can see

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in physical goods -

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things you can touch, put in a box
and transport across the world.

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And because you can see it all,
many people assume

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that that's what any self-respecting
economy should be all about.

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But it isn't -
at least not any longer.

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More and more of us work
in services.

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Far harder to get a sense of them
than the objects round here.

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It's a slippery kind of activity,
almost entirely intangible.

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'Services are everything
you can't put in a box.

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'But contrary to popular belief,

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'that doesn't mean
they're not valuable,

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'and it doesn't mean they can't pay
for container-loads

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'of solid imports.'

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In Britain, more than most,

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we do services.

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Forget your picture of people just
sitting at desks on the phone.

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'Our services come in
all shapes and sizes.

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'And right here on the ship
is an example of one.'

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T minus five. Five.

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Four. Three.

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Two. Engine ignition,

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and lift-off of the Atlas V rocket,

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carrying Inmarsat 4 F-1 satellite
for Inmarsat Limited.

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You may not have heard of Inmarsat,
but it's one British company

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that can reasonably claim to offer
a service that's out of this world.

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Sometimes you just can't go around
the weather.

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So it's vital to know
what's on the horizon.

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Anybody, wherever they are on Earth,

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can use
Inmarsat's satellite communications

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to stay in touch,

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and the entire network is run from
their control centre in London.

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Chris McLaughlin
is the company's vice president.

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We have an increasing number
of users -

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it's grown to 63
just as we're talking -

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in Egypt. And then these two up here,
cells 65 and 80,

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are Tunisia, which again is in
a current political turmoil.

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The satellites
are constantly adjusted

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to meet clients' needs.

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Here we're getting into
the Afghanistan area.

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Obviously very serious,
very dedicated...

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You get an idea
of what's going on in the world

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by seeing where the satellites
are being used.

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That's right. Often our engineers
know before virtually anybody else.

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Inmarsat is worth £2.8 billion.

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It's a service used by over half
a million subscribers worldwide.

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Everyone from aid agencies
to news organisations rely on it

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for communications
in remote locations.

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And, of course, the ships
that bring us our imports

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depend on it too.
The key thing about Inmarsat

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as a service company is,
it makes nothing at all -

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not the phones nor the satellites.

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Instead, it buys them
from manufacturers.

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All services need
manufactured goods to operate -

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but remember, all manufacturers
rely on services as well.

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Inmarsat has three I-4 satellites.

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Each one of them
weighs about six tons

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and each is 60 times more powerful
than our previous generation.

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We're very fond of them, because they
cost us 1.5 billion to launch...

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Right! ..between 2005 and 2008.

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So they're big satellites!
Each is the size of a London bus,

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and the solar panel is the width
of a football pitch,

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so it gives you an idea of scale.
Each one of them is a binary bet

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when they launch. It's one of the
most expensive bets you'll ever have.

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It works or it doesn't.
Light the touch paper.

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There's about a one-in-11 chance
of a rocket blowing up,

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so you've shifted around the rockets.

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Granted, most jobs in services

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don't involve firing rockets
into space,

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but I've picked this example

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because I don't think we value
services as much as we should.

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There's no reason to believe
services are second-best.

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Many think the transition
of our economy

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towards services,
like those of Inmarsat,

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was some kind of deliberate choice,
and the wrong choice at that.

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But in fact it was more of
a natural evolution.

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The world changed,
and our economy changed as a result.

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It wasn't the decision of one
person, and although it was painful,

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politicians found it very hard
to reverse when they tried.

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So how did we get
to where we are today?

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As we all know, great manufacturing
used to be spread

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right across Britain. Sunderland
was the dockyard to the world.

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At its peak, 12,000 people
worked in shipbuilding,

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and during the war,
one merchant ship a week

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was sent down the slipway
into the Wear.

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APPLAUSE

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I give you to the lads
that built the ship.

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Aye-aye! Here's to 'em!

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But these shipyards had a problem.

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Poorer countries found
they could make ships too,

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and more cheaply.

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Where we had once led,
others had caught up.

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It was devastating
for those involved.

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Is there a feeling in the yard that
there might be redundancies? Yes.

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Oh, yes.
What would this mean to Sunderland,

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if there were?
I think the town would be dead.

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The town would be dead? Definitely.

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In time, large-scale shipbuilding
disappeared.

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'Chris Mullin became MP
for Sunderland South

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'just in time to see it go.'

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So what was actually on
this site here?

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This was the North Sands shipyard.

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The last order
was the Danish ferry order,

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I think
about 15 or 16 Danish ferries.

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And that was in 1989, and if
you stood on the bridge behind me,

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and looked down at this site, you'd
have seen all the ferries lined up

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along here, waiting to have the tops
put on and go off to Denmark.

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It wasn't just ships.

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In so many of our industries,

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we found others could make
what we had been making.

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So naturally we had to move on.

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Over the last 60 years,
manufacturing had declined

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from 46 percent of our economy
to just 12,

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whilst services have rocketed
from 47 percent to 78.

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Given the trauma of this upheaval,
no wonder people have looked around

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for someone to blame -
usually Margaret Thatcher,

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because she welcomed the shift
towards services

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that our economy was making.

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So as we have redundancies
in the declining industries,

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so we are getting new jobs
in the new industries

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and new jobs
in some of the service industries,

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and they are being created
by our dynamic economy of today.

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But let us not belittle
our achievements.

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Many of her admirers and critics
agreed on one thing -

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that it was all down to her,

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that politicians could entirely
control the forces of economics.

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In 1986,

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chairman of ICI and TV business guru
Sir John Harvey-Jones

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addressed the nation.

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The subject of my talk this evening
is manufacturing -

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the business of making
tangible, useful objects

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with the aim of selling them
to people in the UK

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who would otherwise buy an import,
and selling them also

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to people abroad, whom
we want to choose a British product

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instead of a product made
in another country.

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Manufacturing is fast becoming
an endangered species.

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It is becoming so undervalued
in the country

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that our decline
could become irreversible,

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with truly painful consequences
for all of us.

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Sir John Harvey-Jones spoke,
right here in this room,

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as though the change
that was occurring in the economy

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was the result of
some kind of conscious decision.

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And yet the inexorable rise
of services

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had started well before his speech,

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and it's continued
in the decades since.

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Mrs Thatcher didn't cause it,

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and most telling is the fact
that politicians before her

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made one serious attempt to strangle
the growth of services at birth.

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And it didn't end well.

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SONG: "Taxman"
by The Beatles

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# Let me tell you how it will be

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# Cos I'm the taxman #

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It was the 1960s, the Labour
government under Harold Wilson.

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Jim Callaghan was chancellor.

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He thought services would never earn
enough export revenue

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to help Britain pay its way
in the world.

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So in 1966, he introduced
the selective employment tax,

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or SET, to drive workers
in the services sector

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back into manufacturing jobs.

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I think chancellors
in many years to come...

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They may not remember my name,
but I'm sure they'll bless the tax.

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It meant
that every services business

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had to pay an extra tax
for employing staff.

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The revenue could be used to
subsidise workers in manufacturing.

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Lloyd's brokers have to pay
this selective employment tax,

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and many other people,
who contribute much less

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to the balance-of-payments situation
of this country

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don't have to pay it.
We want to continue

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and to expand
and build up our business,

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and this is made more difficult
by this tax,

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00:14:17,320 --> 00:14:20,360
which really doesn't make any sense
at all.

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It produced
blatantly ridiculous results.

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Candyfloss makers were not taxed.

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The entire tourism sector,
a big exporter, was.

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In Brighton, the Metropole Hotel
pays SET on 350 staff.

244
00:14:36,920 --> 00:14:39,640
What does the director,
Mr Webb, think of SET?

245
00:14:39,640 --> 00:14:42,240
Well, it's shattering.
It's an absolute calamity

246
00:14:42,240 --> 00:14:44,440
as far as our industry is concerned,

247
00:14:44,440 --> 00:14:48,360
because we feel we are a sort of
Cinderella industry in this country.

248
00:14:48,360 --> 00:14:50,480
This is absolutely ridiculous,

249
00:14:50,480 --> 00:14:53,000
and it's due time
we had proper recognition.

250
00:14:53,000 --> 00:14:56,520
Unsurprisingly,
the selective employment tax

251
00:14:56,520 --> 00:14:59,120
couldn't thwart
the forces of economics.

252
00:14:59,120 --> 00:15:02,560
It was phased out,
and then abolished altogether,

253
00:15:02,560 --> 00:15:05,840
when VAT was introduced in 1973.

254
00:15:05,840 --> 00:15:09,880
Since then,
no-one has suggested reviving it.

255
00:15:11,800 --> 00:15:14,760
'Economies seem to have
a mind of their own.

256
00:15:14,760 --> 00:15:18,280
'Even though Mr Callaghan
and other critics of services

257
00:15:18,280 --> 00:15:21,600
'didn't like them, there was little
they could do about it.'

258
00:15:22,600 --> 00:15:25,520
Now, one of the reasons
they didn't like services

259
00:15:25,520 --> 00:15:28,440
was they didn't think
you could export enough of them

260
00:15:28,440 --> 00:15:30,640
to pay the nation's bills.

261
00:15:30,640 --> 00:15:32,960
But this is where it gets
really interesting,

262
00:15:32,960 --> 00:15:36,840
because Britain has embarked on
something of an economic adventure

263
00:15:36,840 --> 00:15:39,800
over the last few decades,
doing just that.

264
00:15:39,800 --> 00:15:43,280
We've found several novel ways
of exporting services.

265
00:15:43,280 --> 00:15:46,520
Each of these business models
has its limitations,

266
00:15:46,520 --> 00:15:49,600
but together, they've gone further
than anyone in the '60s

267
00:15:49,600 --> 00:15:53,760
might have imagined at helping
the nation pay its way in the world.

268
00:15:57,000 --> 00:16:01,280
To see one of the ways in which
we sell services overseas,

269
00:16:01,280 --> 00:16:03,840
I've come to Dubai.

270
00:16:03,840 --> 00:16:07,120
Service providers
from all over the world come here

271
00:16:07,120 --> 00:16:10,840
to do their thing,
and Britain is a key player.

272
00:16:12,000 --> 00:16:16,400
We export almost £2 billion
of services a year to Dubai

273
00:16:16,400 --> 00:16:19,480
and the other United Arab Emirates.

274
00:16:19,480 --> 00:16:23,000
People have a lot of
different reactions to Dubai.

275
00:16:23,000 --> 00:16:27,040
Some feel the excitement.
Others think it's rather vulgar.

276
00:16:27,040 --> 00:16:30,440
Some worry that it doesn't have
as much money as it used to,

277
00:16:30,440 --> 00:16:33,680
and some see it as obscene.
There are terrible stories

278
00:16:33,680 --> 00:16:37,640
of maltreatment of migrant workers.
Whatever you think of it,

279
00:16:37,640 --> 00:16:41,240
it's certainly a place
that's changing very quickly.

280
00:16:42,200 --> 00:16:44,000
It was only 40 years ago

281
00:16:44,000 --> 00:16:48,080
that Dubai began
its extraordinary transformation

282
00:16:48,080 --> 00:16:52,680
from a quiet desert town
into a futuristic metropolis.

283
00:16:52,680 --> 00:16:57,040
Dubai is strikingly new.
But that gives you a clue

284
00:16:57,040 --> 00:16:59,840
as to why it's been
such a great business opportunity

285
00:16:59,840 --> 00:17:01,640
for British companies.

286
00:17:01,640 --> 00:17:06,120
You see, one thing fusty old Britain
really does have is experience.

287
00:17:06,120 --> 00:17:08,920
We've been doing stuff for decades.

288
00:17:08,920 --> 00:17:12,440
Now, if you're a young country and
you want some of that experience,

289
00:17:12,440 --> 00:17:15,640
it's our services
you come shopping for.

290
00:17:18,760 --> 00:17:22,760
And if you've got the money,
this is what you can buy.

291
00:17:25,120 --> 00:17:29,240
In 1993,
Dubai wanted to announce its arrival

292
00:17:29,240 --> 00:17:33,560
as a global destination. The sheikh
commissioned the building of a hotel

293
00:17:33,560 --> 00:17:36,200
that could make a statement
to the world -

294
00:17:36,200 --> 00:17:38,280
the Burj Al Arab.

295
00:17:38,280 --> 00:17:41,600
Local talent wouldn't have been
up to pulling off a project

296
00:17:41,600 --> 00:17:45,120
of this scale, but a British
consultant engineering firm,

297
00:17:45,120 --> 00:17:48,040
called Atkins, was.

298
00:17:50,880 --> 00:17:55,160
'Architect Simon Crispe was part of
the original design team.

299
00:17:56,120 --> 00:17:59,600
'What we sold
was British service expertise

300
00:17:59,600 --> 00:18:03,600
'in architecture,
project management and engineering.'

301
00:18:05,920 --> 00:18:11,160
Let's show you some of the drawings
of the design.

302
00:18:11,160 --> 00:18:13,840
The old plans!
The old plans. Dusted down.

303
00:18:13,840 --> 00:18:16,120
Absolutely.
I bet this brings it all back.

304
00:18:16,120 --> 00:18:21,240
It does indeed. Now,
this one is the original sketch.

305
00:18:21,240 --> 00:18:23,200
This was August '93,

306
00:18:23,200 --> 00:18:27,320
and the client said,
"Yes. Thanks, Atkins. We'll have it."

307
00:18:27,320 --> 00:18:29,120
THEY LAUGH

308
00:18:29,120 --> 00:18:31,360
And, er, away we went.

309
00:18:31,360 --> 00:18:34,160
At a height of 321 metres,

310
00:18:34,160 --> 00:18:36,960
it stands taller
than the Eiffel Tower.

311
00:18:36,960 --> 00:18:40,520
The other drawing is
the external facade of the building,

312
00:18:40,520 --> 00:18:43,440
and that shows the wind braces
on either side.

313
00:18:43,440 --> 00:18:46,720
And these are the primary
elevational features that you see.

314
00:18:46,720 --> 00:18:51,640
It's what gives it its character,
that initial nautical feel.

315
00:18:51,640 --> 00:18:56,200
So the clever thing has been
to make engineering features

316
00:18:56,200 --> 00:18:59,480
aesthetically very attractive.
You haven't hidden them away.

317
00:18:59,480 --> 00:19:02,680
It's absolutely turning them into...
That's right,

318
00:19:02,680 --> 00:19:06,120
and it's the bringing together
of architecture and engineering

319
00:19:06,120 --> 00:19:08,120
to create a thing of beauty.

320
00:19:08,120 --> 00:19:12,200
'Beautiful it may be, but how does
it help us pay the bills?'

321
00:19:12,200 --> 00:19:15,240
Atkins didn't just draw up
the plans.

322
00:19:15,240 --> 00:19:18,240
They project-managed
the building's construction,

323
00:19:18,240 --> 00:19:21,320
and they commissioned
ten other British service companies

324
00:19:21,320 --> 00:19:23,760
to work on everything
from its safety features

325
00:19:23,760 --> 00:19:26,360
to interior design.

326
00:19:30,640 --> 00:19:34,440
'British services even helped build
the artificial island

327
00:19:34,440 --> 00:19:36,640
'on which the hotel stands.

328
00:19:38,960 --> 00:19:41,480
'So how much
does this all add up to?

329
00:19:42,480 --> 00:19:45,560
'All the exact figures are
commercially confidential.'

330
00:19:45,560 --> 00:19:49,080
Now, help me out here. You've got
a whole cost of the building.

331
00:19:49,080 --> 00:19:53,000
What proportion of that total cost
is the thinking bit,

332
00:19:53,000 --> 00:19:56,000
the sort of stuff that Atkins does?
In broad terms,

333
00:19:56,000 --> 00:19:58,760
because it's different
for different projects,

334
00:19:58,760 --> 00:20:03,960
you're talking probably... If
the whole building costs 100 percent,

335
00:20:03,960 --> 00:20:07,880
the overall thinking time,
the management, the design,

336
00:20:07,880 --> 00:20:11,280
the conceiving of the project
and the delivering of that design

337
00:20:11,280 --> 00:20:14,120
is roughly anywhere
between five and ten percent.

338
00:20:16,160 --> 00:20:20,080
Across Dubai, we've had a hand
in designing and building

339
00:20:20,080 --> 00:20:23,000
roads and railways,
airports and harbours,

340
00:20:23,000 --> 00:20:27,600
hotels and skyscrapers,
and even fantasy islands.

341
00:20:27,600 --> 00:20:32,040
British service exports are highly
regarded around the world.

342
00:20:32,040 --> 00:20:35,600
And it's not just
grand construction projects -

343
00:20:35,600 --> 00:20:38,760
the city is connected
by the Dubai Metro,

344
00:20:38,760 --> 00:20:43,280
operated by Serco,
a British outsourcing specialist.

345
00:20:46,520 --> 00:20:50,120
Around the world,
they run trains, hospitals,

346
00:20:50,120 --> 00:20:52,600
prisons, recycling centres,

347
00:20:52,600 --> 00:20:55,960
air-traffic control systems
and much else besides.

348
00:20:57,800 --> 00:21:02,320
So you can go abroad
and sell services

349
00:21:02,320 --> 00:21:05,040
and earn real money for doing so.

350
00:21:05,040 --> 00:21:08,840
'Britain has gone as far down
this track as anyone.'

351
00:21:09,800 --> 00:21:12,960
But of course we can't all
go and live and work

352
00:21:12,960 --> 00:21:15,080
in different countries.

353
00:21:15,080 --> 00:21:19,320
So exporting services
by going overseas has its limits.

354
00:21:19,320 --> 00:21:23,800
Fortunately, where Britain
has really made its mark

355
00:21:23,800 --> 00:21:26,480
is in developing
a second business model.

356
00:21:29,200 --> 00:21:33,360
We can make good money by going
abroad and selling services,

357
00:21:33,360 --> 00:21:36,120
but in commercial terms, even better

358
00:21:36,120 --> 00:21:40,160
is when foreigners
come here to Britain to buy them.

359
00:21:40,160 --> 00:21:43,480
'London is the epicentre.'

360
00:21:47,640 --> 00:21:51,840
The British capital
is like one huge factory

361
00:21:51,840 --> 00:21:54,320
of commercial service exports.

362
00:21:57,840 --> 00:22:01,400
This is where the world comes
to do business.

363
00:22:01,400 --> 00:22:04,560
Neatly positioned
between America and Asia,

364
00:22:04,560 --> 00:22:07,880
speaking the global language,

365
00:22:07,880 --> 00:22:12,080
since the days of empire,
London has embraced its role

366
00:22:12,080 --> 00:22:14,920
as a global city. And it's this role

367
00:22:14,920 --> 00:22:18,680
that helps Britain pay its way
in the world.

368
00:22:20,280 --> 00:22:22,480
We've encouraged people
to come here,

369
00:22:22,480 --> 00:22:25,200
whether on business
or to see the sights,

370
00:22:25,200 --> 00:22:27,440
and we've sold them services
when they do.

371
00:22:27,440 --> 00:22:30,680
Because they pay for things
with money brought from overseas,

372
00:22:30,680 --> 00:22:32,680
anything they buy is an export,

373
00:22:32,680 --> 00:22:35,160
helps pay for
our manufactured imports.

374
00:22:35,160 --> 00:22:39,120
And it's all possible because
Britain has carved a special role

375
00:22:39,120 --> 00:22:41,200
as a host nation.

376
00:22:41,200 --> 00:22:44,120
In order to understand
how it happened,

377
00:22:44,120 --> 00:22:47,760
let's consider London's answer
to the Burj Al Arab -

378
00:22:47,760 --> 00:22:50,200
the Shard.

379
00:22:52,480 --> 00:22:55,920
Well, I'm on the 37th floor
of the Shard.

380
00:22:55,920 --> 00:23:00,040
That's not even halfway up to
the top of the finished building.

381
00:23:00,040 --> 00:23:03,440
This is undoubtedly going to be
a symbol of our capital,

382
00:23:03,440 --> 00:23:06,840
given its height, but it's also
an interesting symbol

383
00:23:06,840 --> 00:23:10,320
of the internationalisation
of the nation and of London.

384
00:23:10,320 --> 00:23:14,520
When completed, the Shard
will be the tallest building

385
00:23:14,520 --> 00:23:16,720
in the European Union.

386
00:23:16,720 --> 00:23:19,920
But despite being built
on London soil,

387
00:23:19,920 --> 00:23:24,080
that's little that's
particularly British about it.

388
00:23:24,080 --> 00:23:26,560
This has been financed by money
from Qatar,

389
00:23:26,560 --> 00:23:28,760
the architect Italian,

390
00:23:28,760 --> 00:23:31,720
the workforce building it
from everywhere.

391
00:23:31,720 --> 00:23:36,120
The glass is Dutch,
and this floor, like another 17,

392
00:23:36,120 --> 00:23:39,880
has been taken by the first tenant,
a Hong Kong-based hotel.

393
00:23:41,240 --> 00:23:45,920
Many of the tenants in this building
won't be British,

394
00:23:45,920 --> 00:23:48,360
and that's the clever part.

395
00:23:48,360 --> 00:23:51,640
While they're here,
we can make money from them.

396
00:23:52,600 --> 00:23:55,680
So, what do we get out of being
a host nation?

397
00:23:55,680 --> 00:23:58,720
Well, imagine when this building
is finished,

398
00:23:58,720 --> 00:24:02,280
in an extreme case,
no British people work or live here.

399
00:24:02,280 --> 00:24:04,520
The foreigners
who work and live here,

400
00:24:04,520 --> 00:24:07,760
they'll be paying some taxes
to the UK government.

401
00:24:07,760 --> 00:24:10,640
They'll go shopping
in the streets nearby.

402
00:24:10,640 --> 00:24:13,800
They'll use British accountants
and insurance companies.

403
00:24:13,800 --> 00:24:16,760
The Russians living upstairs,
when they get divorced,

404
00:24:16,760 --> 00:24:20,640
will perhaps use a British lawyer.
All these services will earn money.

405
00:24:20,640 --> 00:24:24,880
Because they'll be earning money
from foreigners, they're exports -

406
00:24:24,880 --> 00:24:28,600
exports right here
in the centre of London.

407
00:24:28,600 --> 00:24:32,840
The Shard is testament to our
continued willingness and ability

408
00:24:32,840 --> 00:24:36,840
to attract the super-rich
from around the world to London.

409
00:24:36,840 --> 00:24:39,800
And once we've got them here,
anything we can sell them

410
00:24:39,800 --> 00:24:43,240
while they're in town
counts as an export.

411
00:24:43,240 --> 00:24:46,720
That's because everything they buy
has effectively been paid for

412
00:24:46,720 --> 00:24:49,000
with income derived from abroad.

413
00:24:51,680 --> 00:24:54,120
It's very hard
to put a precise figure

414
00:24:54,120 --> 00:24:56,400
on how much
this is all worth to Britain,

415
00:24:56,400 --> 00:25:00,600
but it easily runs into
billions of pounds.

416
00:25:00,600 --> 00:25:03,880
You might think it odd
for a country like Britain

417
00:25:03,880 --> 00:25:07,840
to thrive by collecting the small
change of the global super-rich.

418
00:25:07,840 --> 00:25:11,280
So how does it work in practice?

419
00:25:11,280 --> 00:25:15,200
'Tim Wright works for
estate agents Knight Frank.'

420
00:25:15,200 --> 00:25:17,520
Hello. Nice to meet you. Come on in.

421
00:25:17,520 --> 00:25:20,600
'They've built a tidy business
servicing this market.'

422
00:25:20,600 --> 00:25:22,480
Nice place!

423
00:25:22,480 --> 00:25:25,640
'The hall is as big as my flat.'
Come on in, please.

424
00:25:25,640 --> 00:25:29,400
If you wouldn't mind putting those
shoe covers on. Put my foot in here?

425
00:25:29,400 --> 00:25:31,760
Yeah. Wow! That'll be brilliant.

426
00:25:33,960 --> 00:25:37,720
If you'd like to come upstairs, I'll
show you the formal drawing room,

427
00:25:37,720 --> 00:25:41,760
which is a phenomenal space
overlooking the park.

428
00:25:41,760 --> 00:25:46,600
'Last year, nearly 100
£10-million-plus properties

429
00:25:46,600 --> 00:25:50,280
'were sold in London,
almost all of them to foreigners.'

430
00:25:50,280 --> 00:25:54,200
It's fantastic, isn't it?
We're lucky to have a day like this,

431
00:25:54,200 --> 00:25:58,200
but even on a dull day,
it's still a joy to look at.

432
00:25:58,200 --> 00:26:01,560
OK. So, break the bad news.
How much is it?

433
00:26:01,560 --> 00:26:06,320
Well, Evan, for circa 45 million,
you get the entire package.

434
00:26:06,320 --> 00:26:09,600
So everything that you see
is included in the price.

435
00:26:09,600 --> 00:26:12,360
You can pick up the key,
walk in and live...

436
00:26:12,360 --> 00:26:14,960
pretty comfortably, because...
Of course.

437
00:26:14,960 --> 00:26:17,360
The target market
for a house like this

438
00:26:17,360 --> 00:26:21,360
is the ultra-high-net-worth
overseas buyer.

439
00:26:21,360 --> 00:26:25,280
And what they want and what they
attach value to is convenience.

440
00:26:25,280 --> 00:26:29,520
They don't want to buy a building
that will take two years to do up.

441
00:26:29,520 --> 00:26:32,040
OK. Come on through here, Evan.

442
00:26:32,040 --> 00:26:35,280
'While we marvel at the house,
remember the economic benefits

443
00:26:35,280 --> 00:26:37,480
'to Britain
are the things you can't see,

444
00:26:37,480 --> 00:26:39,800
'such as
the estate agent's commission,

445
00:26:39,800 --> 00:26:42,080
'likely to be
over half a million pounds.

446
00:26:42,080 --> 00:26:44,680
'With the other services involved,

447
00:26:44,680 --> 00:26:47,680
'we could be earning a couple
of million in exports here,

448
00:26:47,680 --> 00:26:50,200
'equivalent to a factory
with scores of workers.

449
00:26:50,200 --> 00:26:53,360
'Multiply this
by all the other houses,

450
00:26:53,360 --> 00:26:55,360
'and it's a good business model.'

451
00:26:55,360 --> 00:26:58,360
Is this a bedroom or a lounge?
It is a bedroom.

452
00:26:58,360 --> 00:27:01,200
It is a master-bedroom suite
like you've never seen.

453
00:27:01,200 --> 00:27:03,120
Fantastic. Isn't it wonderful?

454
00:27:03,120 --> 00:27:06,480
Are there different national tastes
from the foreign buyers?

455
00:27:06,480 --> 00:27:09,920
Do the Russians go for one style,
the Chinese for a different style?

456
00:27:09,920 --> 00:27:13,840
The Middle Eastern buyer tends
to want more staff accommodation,

457
00:27:13,840 --> 00:27:16,040
for example, than a Russian buyer.

458
00:27:16,040 --> 00:27:19,160
The Russian will be very happy
with one housekeeper

459
00:27:19,160 --> 00:27:22,040
living in the basement full-time.

460
00:27:22,040 --> 00:27:24,960
Middle Eastern clients tend to want
four or five staff

461
00:27:24,960 --> 00:27:28,800
full-time in the house,
even though they might only be here

462
00:27:28,800 --> 00:27:31,800
two or three weeks of the year,
if they come over for Ascot

463
00:27:31,800 --> 00:27:33,760
or for Wimbledon.

464
00:27:33,760 --> 00:27:37,520
You must come and see the bathrooms.
More than one bathroom.

465
00:27:37,520 --> 00:27:40,000
There's a his and hers bathroom.

466
00:27:40,000 --> 00:27:43,600
You would be very surprised
if a British person

467
00:27:43,600 --> 00:27:46,800
came and bought this place.
I would be surprised, yeah.

468
00:27:46,800 --> 00:27:48,960
Definitely. And if you look at...

469
00:27:48,960 --> 00:27:52,560
On average, if you look at,
across the price sectors

470
00:27:52,560 --> 00:27:55,600
in central London, then,

471
00:27:55,600 --> 00:27:59,880
it's about 50/50
domestic to overseas buyers.

472
00:27:59,880 --> 00:28:02,760
But once you start getting up
the price scale,

473
00:28:02,760 --> 00:28:07,120
so if you're looking at the sector
which is the super-prime market,

474
00:28:07,120 --> 00:28:09,240
say, ten million plus,

475
00:28:09,240 --> 00:28:13,960
then, it's much more weighted
in favour of the overseas buyer,

476
00:28:13,960 --> 00:28:18,320
so it's probably more like 75,
80 percent to 20 percent domestic.

477
00:28:18,320 --> 00:28:20,520
Come through to his dressing room.

478
00:28:20,520 --> 00:28:23,160
'I can see how this is a big earner.

479
00:28:23,160 --> 00:28:26,360
'But I do have some concerns
about the sustainability

480
00:28:26,360 --> 00:28:28,600
'of the business coming our way.'

481
00:28:28,600 --> 00:28:30,440
Now...

482
00:28:30,440 --> 00:28:32,360
will it all just go away?

483
00:28:32,360 --> 00:28:35,120
Because when we've sold
the last house

484
00:28:35,120 --> 00:28:38,680
to a rich Russian, and
we're all squashed, incidentally,

485
00:28:38,680 --> 00:28:42,120
out in the 'burbs because
we can't afford anywhere in London

486
00:28:42,120 --> 00:28:45,280
because we've been priced out
by foreigners...

487
00:28:45,280 --> 00:28:49,720
When we've sold the last house,
your industry dies, doesn't it?

488
00:28:49,720 --> 00:28:51,600
Potentially I suppose it does, yes.

489
00:28:51,600 --> 00:28:54,560
I mean,
one of the big fears that we have

490
00:28:54,560 --> 00:28:58,080
is that the people
who buy houses like this

491
00:28:58,080 --> 00:29:01,200
will hold on to them forever,
but the reality is

492
00:29:01,200 --> 00:29:05,240
that actually it's
a relatively transient community.

493
00:29:05,240 --> 00:29:09,000
People will stay here for maybe five
years, maybe ten years, maybe 15,

494
00:29:09,000 --> 00:29:12,560
possibly even longer,
but ultimately they do either move,

495
00:29:12,560 --> 00:29:16,600
or they die,
they downsize, they get divorced,

496
00:29:16,600 --> 00:29:19,000
and every time that happens,

497
00:29:19,000 --> 00:29:21,600
it releases a big house.

498
00:29:21,600 --> 00:29:25,800
So I don't think it'll ever stop,
in those terms.

499
00:29:26,840 --> 00:29:28,360
Thank you, Tim.

500
00:29:28,360 --> 00:29:32,760
'So service companies got a slice
of the £3 billion of foreign money

501
00:29:32,760 --> 00:29:35,840
'that came into London's
property market last year.'

502
00:29:38,440 --> 00:29:40,880
It's an interesting old set-up,
that, isn't it?

503
00:29:40,880 --> 00:29:44,520
But a lot of people are in on the
game, earning a living out of it,

504
00:29:44,520 --> 00:29:47,000
and they then spend
the money they've earned,

505
00:29:47,000 --> 00:29:50,320
and it permeates its way
through the whole economy.

506
00:29:50,320 --> 00:29:54,640
But what an odd place
for our economy to have ended up!

507
00:29:54,640 --> 00:29:59,120
We're the support staff, the butler,
to the world's elite.

508
00:30:03,880 --> 00:30:07,880
'Not all our services exports
within the UK

509
00:30:07,880 --> 00:30:11,120
'depend on the whims
of the global super-rich,

510
00:30:11,120 --> 00:30:13,520
'and not all of them
are based in London.'

511
00:30:16,040 --> 00:30:19,360
Spread throughout the country
are institutions

512
00:30:19,360 --> 00:30:23,240
that are often characterised
as a drain on our resources.

513
00:30:23,240 --> 00:30:26,680
But I want to show you they're one
of our leading export industries,

514
00:30:26,680 --> 00:30:30,240
bringing in
an estimated £5 billion annually.

515
00:30:33,200 --> 00:30:37,720
'British universities attract
250,000 foreign students a year,

516
00:30:37,720 --> 00:30:40,280
'far outstripping
all of our neighbours.'

517
00:30:40,280 --> 00:30:44,080
A fifth of students
at the University of Birmingham

518
00:30:44,080 --> 00:30:47,280
are fee-paying foreigners.
It's a similar story

519
00:30:47,280 --> 00:30:50,640
at many of our other
leading universities.

520
00:30:51,720 --> 00:30:54,920
What some people see
when they come to a place like this

521
00:30:54,920 --> 00:30:57,240
is a centre for learning.

522
00:30:57,240 --> 00:31:01,600
Others see an institution
that engages in research

523
00:31:01,600 --> 00:31:03,800
and advances human knowledge.

524
00:31:03,800 --> 00:31:08,520
What I see is a thriving business
that's employing thousands of people

525
00:31:08,520 --> 00:31:12,160
and earning tens of millions
of pounds of export revenues.

526
00:31:24,920 --> 00:31:27,800
'Birmingham's medical school
sells its services

527
00:31:27,800 --> 00:31:31,400
'to budding doctors
from over 150 different countries.

528
00:31:31,400 --> 00:31:36,040
'The product they come here to buy
is a five-year course in medicine,

529
00:31:36,040 --> 00:31:38,480
'involving two years
in the lecture theatre

530
00:31:38,480 --> 00:31:42,040
'and then three more years
of hands-on training.'

531
00:31:43,720 --> 00:31:46,600
Here they all are.
Hi, gang. Hi. I'm Evan.

532
00:31:46,600 --> 00:31:48,960
Hello. My name's Himarshi. Himarshi?

533
00:31:48,960 --> 00:31:52,120
I'm Tala.
Tala. Nice to meet you. Rahini?

534
00:31:52,120 --> 00:31:55,520
Hi. Nice to meet you. Tristan.
Tristan. Good to see you.

535
00:31:55,520 --> 00:31:57,640
And you're the consultant,
obviously.

536
00:31:57,640 --> 00:31:59,520
Hello. Andy. Nice to see you.

537
00:31:59,520 --> 00:32:02,280
'The students on today's ward round

538
00:32:02,280 --> 00:32:06,480
'come from Sri Lanka, India,
Trinidad and Jordan.'

539
00:32:06,480 --> 00:32:10,040
Hi. My name's Tala. Is it OK
if I ask you a few questions?

540
00:32:10,040 --> 00:32:13,200
Do. Carry on.
So, what brought you into hospital?

541
00:32:13,200 --> 00:32:16,160
I was shaking,
hot and cold, everything.

542
00:32:16,160 --> 00:32:18,360
'The great thing for Britain

543
00:32:18,360 --> 00:32:21,720
'is that not only do we earn the
money from these students' fees -

544
00:32:21,720 --> 00:32:26,320
'any money they spend on rent and
other services while they're here

545
00:32:26,320 --> 00:32:29,120
'is an export too.
And then on top of that,

546
00:32:29,120 --> 00:32:32,760
'they're happy to lend us
their labour as apprentice doctors.'

547
00:32:32,760 --> 00:32:35,840
Do you mind if I just take a look
at your hands?

548
00:32:37,520 --> 00:32:41,320
OK, everyone. Happy? Thank you, sir.
Thank you very much. See you again.

549
00:32:41,320 --> 00:32:43,040
Let's move on.

550
00:32:43,040 --> 00:32:46,000
'These discerning customers,
or students if you prefer,

551
00:32:46,000 --> 00:32:49,120
'have chosen us
from a world of competition.'

552
00:32:49,120 --> 00:32:52,840
So what's the reputation, then,
of the British universities?

553
00:32:52,840 --> 00:32:55,680
When you go back...
This isn't Oxford or Cambridge.

554
00:32:55,680 --> 00:32:58,280
People have heard of
the city of Birmingham.

555
00:32:58,280 --> 00:33:01,040
They may not have heard of
the university.

556
00:33:01,040 --> 00:33:04,520
Is it going to hold...
Is it a good brand to have?

557
00:33:04,520 --> 00:33:08,480
In Jordan, I think, just the fact
that you've graduated from England

558
00:33:08,480 --> 00:33:11,960
with a degree in medicine
is quite impressive on its own,

559
00:33:11,960 --> 00:33:14,160
regardless of the name
of the university,

560
00:33:14,160 --> 00:33:16,200
regardless of the brand.

561
00:33:16,200 --> 00:33:18,720
I think so, as well.
It's quite similar.

562
00:33:18,720 --> 00:33:22,680
Carrying a UK education in general
still holds a great value.

563
00:33:22,680 --> 00:33:25,520
Do you get a good deal out of...
How much are your fees?

564
00:33:25,520 --> 00:33:28,280
That depends. The first few years,

565
00:33:28,280 --> 00:33:31,240
it's roughly about £12,000. A year?

566
00:33:31,240 --> 00:33:34,760
And the clinical years, it goes up
another £10,000. It goes up?

567
00:33:34,760 --> 00:33:39,280
So what is it in the clinical years?
It's about 22,000, 23,000.

568
00:33:39,480 --> 00:33:42,600
'Britain has a valuable product
to sell.

569
00:33:42,600 --> 00:33:46,560
'But if we want to sell more of it,
we're going to have to make choices

570
00:33:46,560 --> 00:33:50,400
'about how open
we're prepared to be.'

571
00:33:50,400 --> 00:33:54,880
I've got to ask you about visa
and immigration requirements,

572
00:33:54,880 --> 00:33:58,480
because obviously governments
have become worried

573
00:33:58,480 --> 00:34:01,880
about the sorts of people that
are coming in, and the numbers.

574
00:34:01,880 --> 00:34:04,120
How have you felt

575
00:34:04,120 --> 00:34:07,480
in terms of the welcoming advance
of the Home Office

576
00:34:07,480 --> 00:34:10,080
when you've applied for
your student visas?

577
00:34:10,080 --> 00:34:13,480
I applied three years ago, and it
was relatively straightforward.

578
00:34:13,480 --> 00:34:16,120
All I needed to get
was a letter from the university

579
00:34:16,120 --> 00:34:19,720
and all the accompanying documents,
and they just gave me my visa

580
00:34:19,720 --> 00:34:22,880
for the length of the course.
But I've heard from friends

581
00:34:22,880 --> 00:34:25,200
that it's progressively
getting harder.

582
00:34:25,200 --> 00:34:28,760
A couple of my friends from Trinidad
haven't got visas in time.

583
00:34:28,760 --> 00:34:32,520
The process is taking so much longer
and so much more difficult.

584
00:34:32,520 --> 00:34:34,640
It is getting to be
a bit more red tape.

585
00:34:36,160 --> 00:34:39,120
There are no clear rights and wrongs
to any of this.

586
00:34:39,120 --> 00:34:42,440
But if Britain really does choose
to open up to the world,

587
00:34:42,440 --> 00:34:45,480
there's a lot of money to be made.

588
00:34:45,480 --> 00:34:48,480
'Edward Harcourt
is the university's director

589
00:34:48,480 --> 00:34:50,720
'of international relations.'

590
00:34:50,720 --> 00:34:53,040
It's becoming
increasingly competitive,

591
00:34:53,040 --> 00:34:55,160
but it is still a seller's market.

592
00:34:55,160 --> 00:34:59,320
There's something over three million
international students now.

593
00:34:59,320 --> 00:35:02,360
Britain is
the second most popular destination.

594
00:35:02,360 --> 00:35:04,840
After the United States?
After the States.

595
00:35:04,840 --> 00:35:08,120
It's very difficult to do
any kind of sensible projections

596
00:35:08,120 --> 00:35:12,040
as to future demands.
If you think that there are....

597
00:35:12,040 --> 00:35:15,480
something like 220 million Indians
in primary school,

598
00:35:15,480 --> 00:35:19,080
and given the GDP growth rate
in India,

599
00:35:19,080 --> 00:35:21,080
um,

600
00:35:21,080 --> 00:35:24,720
many of those families
will have the wherewithal

601
00:35:24,720 --> 00:35:27,680
to pay for their tertiary education,

602
00:35:27,680 --> 00:35:31,920
and the Indian HE system is going
to have a major capacity constraint.

603
00:35:31,920 --> 00:35:35,280
So many of those families
will be looking overseas

604
00:35:35,280 --> 00:35:38,640
for a quality education.

605
00:35:38,640 --> 00:35:42,560
And quality education is exactly
what we sell here in Britain.

606
00:35:42,560 --> 00:35:45,920
'This is our nation
playing to its strengths.

607
00:35:45,920 --> 00:35:48,240
'Emerging economies around the world

608
00:35:48,240 --> 00:35:51,280
'simply can't match
the services we can offer.'

609
00:35:51,280 --> 00:35:55,000
When you hear people say we don't
make anything in this country

610
00:35:55,000 --> 00:35:57,360
any more, well,
now you have an answer.

611
00:35:57,360 --> 00:36:00,680
We make foreign doctors,
foreign engineers,

612
00:36:00,680 --> 00:36:03,640
foreign chemists, lawyers,
business people.

613
00:36:03,640 --> 00:36:07,280
And just think of all the good
that our universities do

614
00:36:07,280 --> 00:36:09,400
around the world.

615
00:36:17,280 --> 00:36:20,120
So this is the new British economy.

616
00:36:20,120 --> 00:36:23,440
Rather than just selling
the world goods,

617
00:36:23,440 --> 00:36:26,720
we sell our expertise
through services.

618
00:36:26,720 --> 00:36:29,960
And we're world-class at doing it.

619
00:36:29,960 --> 00:36:33,040
It all earns export revenue

620
00:36:33,040 --> 00:36:35,120
on a scale
no-one would have imagined

621
00:36:35,120 --> 00:36:38,560
at the time
of the Festival of Britain.

622
00:36:38,560 --> 00:36:41,880
So far, so good.
Our great national experiment

623
00:36:41,880 --> 00:36:44,640
in building
a service-exporting economy

624
00:36:44,640 --> 00:36:48,160
has worked, up to a point.
We've seen services sold abroad,

625
00:36:48,160 --> 00:36:50,640
services sold to foreigners
in London

626
00:36:50,640 --> 00:36:52,640
and elsewhere in the country.

627
00:36:52,640 --> 00:36:56,320
But each of these sales channels
has its limitations.

628
00:36:56,320 --> 00:36:59,600
These services are best sold
face-to-face,

629
00:36:59,600 --> 00:37:03,400
and that means they rely on people
coming into the country

630
00:37:03,400 --> 00:37:07,040
or leaving it. And there are
severe practical limitations

631
00:37:07,040 --> 00:37:09,560
as to how many people can do that.

632
00:37:10,880 --> 00:37:14,320
'So for Britain's experiment
to really work,

633
00:37:14,320 --> 00:37:17,200
'we've needed one other trick
up our sleeve -

634
00:37:17,200 --> 00:37:20,960
'the way of exporting services that,
of course, we all know about,

635
00:37:20,960 --> 00:37:24,160
'the one with the unrivalled ability
to earn money

636
00:37:24,160 --> 00:37:27,240
'but also to lose it - the City.'

637
00:37:29,880 --> 00:37:31,920
For most of the last two decades,

638
00:37:31,920 --> 00:37:35,840
it looked like we'd discovered
a national champion.

639
00:37:35,840 --> 00:37:38,920
Barclays Bank has announced
record annual profits

640
00:37:38,920 --> 00:37:40,480
of more than £5.25 billion.

641
00:37:40,480 --> 00:37:43,560
The HSBC banking group
has announced record profits

642
00:37:43,560 --> 00:37:47,120
of almost £7 million,
the largest ever by a British bank.

643
00:37:47,120 --> 00:37:50,240
Something we did
better than anyone else.

644
00:37:50,240 --> 00:37:52,240
The RBS looks set to complete

645
00:37:52,240 --> 00:37:54,640
the world's biggest
company takeover,

646
00:37:54,640 --> 00:37:56,960
worth almost £50 billion.

647
00:37:56,960 --> 00:37:59,720
The flow of profits
was unimaginable.

648
00:37:59,720 --> 00:38:02,960
Here's where you want to work
if you're young, brainy

649
00:38:02,960 --> 00:38:05,480
and keen to make loads of money.

650
00:38:05,480 --> 00:38:08,000
It collected plaudit after plaudit.

651
00:38:08,000 --> 00:38:10,640
This is an era
that history will record

652
00:38:10,640 --> 00:38:14,320
as the beginning of a new golden age
for the City of London.

653
00:38:14,320 --> 00:38:17,840
It's remarkable to think
that in recent years,

654
00:38:17,840 --> 00:38:21,920
official data suggests
this small corner of England,

655
00:38:21,920 --> 00:38:25,360
just a few square miles,
earns more in export revenue

656
00:38:25,360 --> 00:38:27,600
than the whole of Wales
or Northern Ireland

657
00:38:27,600 --> 00:38:29,760
or the northeast of England.

658
00:38:33,440 --> 00:38:35,760
The first thing to understand
about the City

659
00:38:35,760 --> 00:38:39,080
is that it makes its money
in remarkably varied ways.

660
00:38:40,800 --> 00:38:44,200
And here's one part of it
you might not have heard much about.

661
00:38:44,200 --> 00:38:48,160
BABBLE OF VOICES
'ICAP is a British service company

662
00:38:48,160 --> 00:38:50,360
'that makes its money not by trading

663
00:38:50,360 --> 00:38:52,680
'but by helping
global finance operate.

664
00:38:52,680 --> 00:38:56,680
'Michael Spencer
is its chief executive.'

665
00:38:56,680 --> 00:39:00,360
Let's just start by, perhaps,
you explaining just what ICAP does.

666
00:39:01,960 --> 00:39:04,400
It's not nearly as difficult
as people think.

667
00:39:04,400 --> 00:39:07,960
The world's financial markets
are enormous.

668
00:39:07,960 --> 00:39:11,160
They are global.
They are interconnected.

669
00:39:11,160 --> 00:39:14,520
There's a huge amount of business
to financial institutions

670
00:39:14,520 --> 00:39:18,320
in Japan, deal with financial
institutions in Singapore,

671
00:39:18,320 --> 00:39:20,200
in London, in New York.

672
00:39:20,200 --> 00:39:23,280
And we are the biggest
global intermediary

673
00:39:23,280 --> 00:39:25,360
between these transactions.

674
00:39:25,360 --> 00:39:28,000
Is it export revenue for the UK?

675
00:39:28,000 --> 00:39:31,720
Is it foreigners buying services
from ICAP?

676
00:39:31,720 --> 00:39:33,920
We have 50 offices around the world,

677
00:39:33,920 --> 00:39:36,840
of which only one is in the UK,
in London.

678
00:39:36,840 --> 00:39:39,640
London is our biggest office,
but we have big offices

679
00:39:39,640 --> 00:39:42,080
in many,
many other financial centres.

680
00:39:42,080 --> 00:39:45,680
Overwhelmingly, our revenue
is export earnings to the UK.

681
00:39:47,240 --> 00:39:52,560
Our financial services yield exports
worth 30 times those of France.

682
00:39:52,560 --> 00:39:55,360
They're even more valuable
than America's.

683
00:39:55,360 --> 00:39:58,040
At ICAP, they don't take risks.

684
00:39:58,040 --> 00:40:01,640
They offer a service to others,
who do.

685
00:40:01,640 --> 00:40:04,640
Clearly banks are in the business
of risk-taking,

686
00:40:04,640 --> 00:40:08,360
because lending money to customers
or dealing in foreign exchange,

687
00:40:08,360 --> 00:40:11,800
that is what their business is,
to take risk in various forms

688
00:40:11,800 --> 00:40:14,400
in order to facilitate
their customers' business.

689
00:40:14,400 --> 00:40:17,680
But businesses like ours
are not in the risk-taking business.

690
00:40:17,680 --> 00:40:20,640
We're in the facilitation business.
We will stay there.

691
00:40:20,640 --> 00:40:23,400
We're happy in that space,
and that's our expertise.

692
00:40:23,400 --> 00:40:26,680
Alongside you in the City,
in facilitation rather than risk,

693
00:40:26,680 --> 00:40:29,680
you've got the lawyers,
who are a huge part of the City...

694
00:40:29,680 --> 00:40:33,600
The insurance-broking firms,
all the equity-broking firms...

695
00:40:33,600 --> 00:40:36,680
The accountants as well. Of course.

696
00:40:37,800 --> 00:40:41,600
There's no denying
the enormous economic contribution

697
00:40:41,600 --> 00:40:43,760
companies like ICAP make.

698
00:40:43,760 --> 00:40:47,280
No risk, real income -
just what we want.

699
00:40:48,760 --> 00:40:51,040
It's a really interesting
business model.

700
00:40:51,040 --> 00:40:54,680
You charge a tiny commission
on a huge number of transactions,

701
00:40:54,680 --> 00:40:57,280
and it adds up to
a pretty good business.

702
00:40:57,280 --> 00:41:00,440
In a way it's an analogy
for a lot of what the City does

703
00:41:00,440 --> 00:41:02,200
and the services it provides.

704
00:41:02,200 --> 00:41:04,560
They don't bake cakes here.

705
00:41:04,560 --> 00:41:07,640
They provide services
to other people who bake cakes,

706
00:41:07,640 --> 00:41:11,440
and they pick up the crumbs.
And if you provide enough services

707
00:41:11,440 --> 00:41:15,280
to enough cake-bakers,
you can pick up a lot of crumbs

708
00:41:15,280 --> 00:41:17,680
and you can have
a nice cake of your own.

709
00:41:22,680 --> 00:41:25,000
OK. Now here's the bad news.

710
00:41:25,000 --> 00:41:28,000
You've got the parts of the City
that don't take risks,

711
00:41:28,000 --> 00:41:30,640
but just as big
are the parts that do.

712
00:41:30,640 --> 00:41:33,800
And we've needed them
to do some baking as well.

713
00:41:33,800 --> 00:41:36,520
We've needed them
to earn a lot of money.

714
00:41:36,520 --> 00:41:39,120
And you don't need me to tell you
those are the parts

715
00:41:39,120 --> 00:41:41,840
that have gone terribly wrong.

716
00:41:45,600 --> 00:41:49,320
The British government has now agreed
terms of a rescue package

717
00:41:49,320 --> 00:41:51,200
to stabilise the banking system.

718
00:41:51,200 --> 00:41:54,960
It has been another extraordinary
day of fast-moving developments

719
00:41:54,960 --> 00:41:57,080
for Britain's financial world.

720
00:41:57,880 --> 00:42:00,560
We all know that the bailouts
were expensive.

721
00:42:00,560 --> 00:42:04,400
But there are reasons to think that
the City might be costing us money

722
00:42:04,400 --> 00:42:06,320
in good times too.

723
00:42:06,320 --> 00:42:09,520
There is a radical new critique
taking shape -

724
00:42:09,520 --> 00:42:12,200
that although the City earns a lot
and contributes,

725
00:42:12,200 --> 00:42:17,120
paradoxically, a large part of it
is also a burden on the economy.

726
00:42:17,120 --> 00:42:19,840
It gives with one hand,
takes away with the other.

727
00:42:19,840 --> 00:42:22,880
And that's no way to build
a good export industry.

728
00:42:22,880 --> 00:42:25,360
It may be a good business model
for the City,

729
00:42:25,360 --> 00:42:28,240
but not for the country as a whole.

730
00:42:28,240 --> 00:42:33,200
So how can a successful City
not be successful for the nation?

731
00:42:33,200 --> 00:42:37,920
'Former City high-flyer
turned academic, Paul Woolley,

732
00:42:37,920 --> 00:42:41,120
'thinks many of its profits
have come at the expense

733
00:42:41,120 --> 00:42:43,280
'of the rest of us.'

734
00:42:43,280 --> 00:42:46,800
In finance,
it's only too easy for the banks

735
00:42:46,800 --> 00:42:50,920
and the middle men generally
to appropriate the gains.

736
00:42:50,920 --> 00:42:55,880
They do so by making things
complex and confusing.

737
00:42:55,880 --> 00:42:59,240
They don't even understand them
themselves in some cases.

738
00:42:59,240 --> 00:43:05,720
So there are ways in which
they can feather their nests.

739
00:43:05,720 --> 00:43:08,680
They create the demand
for their own products

740
00:43:08,680 --> 00:43:12,360
by making the product complicated
and saying, "This is what you need."

741
00:43:12,360 --> 00:43:16,920
What's the effect of it in the end?
More new financial instruments

742
00:43:16,920 --> 00:43:19,680
are introduced,
which are often complex,

743
00:43:19,680 --> 00:43:22,720
difficult to understand.
The fees are going up

744
00:43:22,720 --> 00:43:25,320
with this complexity,
and that's what happened.

745
00:43:25,320 --> 00:43:27,360
That's why the finance sector
is so big.

746
00:43:27,360 --> 00:43:30,640
The complexity
has become so extraordinary

747
00:43:30,640 --> 00:43:35,760
and, er, costly to the economy.

748
00:43:37,960 --> 00:43:40,360
Now,
if you have a strong export sector

749
00:43:40,360 --> 00:43:43,880
that is as costly to the economy
as Paul Woolley suggests,

750
00:43:43,880 --> 00:43:46,160
well,
that's not going to work at all.

751
00:43:46,160 --> 00:43:51,200
There's no point in exporting £100
if it's cost the rest of us 105.

752
00:43:51,200 --> 00:43:53,120
No - what Britain needs

753
00:43:53,120 --> 00:43:56,760
is sustainable,
value-creating businesses.

754
00:43:58,080 --> 00:44:02,400
'The new critique levels
another charge against the City.

755
00:44:02,400 --> 00:44:06,000
'The banks, it says,
are propped up by subsidies,

756
00:44:06,000 --> 00:44:08,840
'not just in crises but every year.

757
00:44:08,840 --> 00:44:11,880
'This argument comes from
the very heart of the city -

758
00:44:11,880 --> 00:44:14,040
'the Bank of England.

759
00:44:14,040 --> 00:44:16,120
'How does this subsidy work?

760
00:44:16,120 --> 00:44:19,160
'Because the taxpayer stands
squarely behind the banks,

761
00:44:19,160 --> 00:44:22,440
'they can borrow more cheaply
from around the world

762
00:44:22,440 --> 00:44:26,200
'and make bigger profits
than they otherwise would.

763
00:44:26,200 --> 00:44:29,160
'Andy Haldane
is the executive director

764
00:44:29,160 --> 00:44:31,720
'of financial stability
at the bank.'

765
00:44:31,720 --> 00:44:35,640
Your contention is that if the banks
had no government subsidy,

766
00:44:35,640 --> 00:44:39,440
they couldn't take risks
underpinned by taxpayers,

767
00:44:39,440 --> 00:44:42,400
and found it harder to borrow money
because of that,

768
00:44:42,400 --> 00:44:44,920
they would be a little smaller
than they are.

769
00:44:44,920 --> 00:44:48,720
Well, certainly the banks would have
been somewhat less profitable

770
00:44:48,720 --> 00:44:51,200
than was the case,
than has been the case,

771
00:44:51,200 --> 00:44:54,480
during the course
of much of this century.

772
00:44:54,480 --> 00:44:56,960
There would still have been profits
out there,

773
00:44:56,960 --> 00:44:58,960
but on a somewhat lesser scale,

774
00:44:58,960 --> 00:45:02,840
had the risk been borne
by investors and banks

775
00:45:02,840 --> 00:45:05,040
rather than implicitly
by the government.

776
00:45:05,040 --> 00:45:07,520
You've done the maths,
tried to add it all up.

777
00:45:07,520 --> 00:45:10,040
How much do you think
the implicit subsidy is?

778
00:45:10,040 --> 00:45:13,560
I think you'd measure it
in terms of tens of billions.

779
00:45:13,560 --> 00:45:15,320
Really? That much? I think so.

780
00:45:15,320 --> 00:45:17,760
The cheaper cost of funding for banks

781
00:45:17,760 --> 00:45:21,880
was a phenomenon
well ahead of the crisis.

782
00:45:25,280 --> 00:45:27,280
How ironic it is!

783
00:45:27,280 --> 00:45:30,440
So many in the City
were critical of the state

784
00:45:30,440 --> 00:45:32,160
pumping billions of pounds

785
00:45:32,160 --> 00:45:35,480
into those old, much-loved
manufacturing industries -

786
00:45:35,480 --> 00:45:38,800
and now we've come full circle
with a new critique,

787
00:45:38,800 --> 00:45:43,200
arguing that the City itself is
in fact propped up by the taxpayer

788
00:45:43,200 --> 00:45:45,280
and the rest of the economy.

789
00:45:46,760 --> 00:45:50,680
'The City was the ace in the pack
of business models.

790
00:45:50,680 --> 00:45:55,600
'But the crash forced us
to reappraise our entire experiment

791
00:45:55,600 --> 00:45:58,440
'of trying to pay our way
with services.

792
00:45:58,440 --> 00:46:01,200
'They did better than many critics
thought possible,

793
00:46:01,200 --> 00:46:04,120
'but they didn't do well enough.'

794
00:46:04,120 --> 00:46:09,080
'Even though we exported £160
billion of services last year,

795
00:46:09,080 --> 00:46:14,480
'we still had an overall deficit
of about 36 billion.

796
00:46:19,880 --> 00:46:23,640
'Time to get out of London,
with its billionaires and bankers,

797
00:46:23,640 --> 00:46:27,840
to explore one last
hugely important challenge

798
00:46:27,840 --> 00:46:30,600
'left by our shift
to a service economy.'

799
00:46:32,840 --> 00:46:36,760
You see, the export model Britain's
followed may not quite have worked,

800
00:46:36,760 --> 00:46:40,200
but its weakness isn't going
to be felt in the capital.

801
00:46:45,960 --> 00:46:50,200
'No - London has always had
a strong service economy.'

802
00:46:52,360 --> 00:46:54,920
But what about
the rest of the country?

803
00:47:03,440 --> 00:47:08,000
The worry is that services have made
for a more lopsided economy,

804
00:47:08,000 --> 00:47:11,280
with the most lucrative jobs
clustering in London

805
00:47:11,280 --> 00:47:13,240
and a few other select centres,

806
00:47:13,240 --> 00:47:16,520
with less well paid work
for other parts of Britain.

807
00:47:20,280 --> 00:47:23,680
'Where better to test that
than back in Sunderland,

808
00:47:23,680 --> 00:47:27,640
'a city that had to rise to
the challenge of industrial decline

809
00:47:27,640 --> 00:47:31,160
'when its great shipbuilding
industry disappeared?'

810
00:47:32,120 --> 00:47:34,840
Sunderland, of course,
has an economy

811
00:47:34,840 --> 00:47:38,520
that's had to reinvent itself
more than once, hasn't it?

812
00:47:38,520 --> 00:47:42,120
Sunderland has done a remarkable job
of reinventing itself.

813
00:47:42,120 --> 00:47:44,720
Even 25 years ago
when I first came here,

814
00:47:44,720 --> 00:47:48,080
the big industries
were still shipbuilding,

815
00:47:48,080 --> 00:47:52,120
coal-mining, glass...
We had a brewery,

816
00:47:52,120 --> 00:47:55,200
and textiles.
I had a thousand textile workers

817
00:47:55,200 --> 00:47:59,360
in my constituency as late as 1997.
And all of that's gone. All of it.

818
00:47:59,360 --> 00:48:03,520
And in its place has come
a large number of jobs,

819
00:48:03,520 --> 00:48:07,160
some of them manufacturing,
some of them service jobs.

820
00:48:08,800 --> 00:48:12,360
Of course he's right.
Sunderland has manufacturing.

821
00:48:12,360 --> 00:48:16,960
But in terms of new service jobs,
many think that what Sunderland got

822
00:48:16,960 --> 00:48:19,240
were low grade and low paid -

823
00:48:19,240 --> 00:48:22,200
the much-derided call-centre jobs.

824
00:48:24,600 --> 00:48:28,640
'Is that justified? Here at Doxford
International Business Park,

825
00:48:28,640 --> 00:48:31,560
'thousands of people work
in call centres,

826
00:48:31,560 --> 00:48:33,840
'or contact centres
as they're now known.'

827
00:48:35,280 --> 00:48:37,680
The closest connection
it has to shipbuilding

828
00:48:37,680 --> 00:48:40,640
is a prizewinning sculpture
of a ship's hull.

829
00:48:41,600 --> 00:48:44,160
So this is
the new Sunderland economy.

830
00:48:44,160 --> 00:48:47,320
I say Sunderland. It could be
anywhere really, couldn't it -

831
00:48:47,320 --> 00:48:49,800
these business parks
are all over the country.

832
00:48:49,800 --> 00:48:54,600
No grime, no belching chimneys.
Wonderful landscaping.

833
00:48:54,600 --> 00:48:57,600
Perhaps...a tiny little bit bland?

834
00:48:57,600 --> 00:48:59,840
Maybe.

835
00:49:01,080 --> 00:49:05,120
'One of the biggest employers
at Doxford is 2Touch.

836
00:49:05,120 --> 00:49:09,000
'Here the staff receive,
and, more often, make calls

837
00:49:09,000 --> 00:49:12,080
'on behalf of utilities,
telephone companies,

838
00:49:12,080 --> 00:49:15,360
'you name it. You might even
have spoken to one of them.

839
00:49:15,360 --> 00:49:18,040
'There's a real buzz
about the place -

840
00:49:18,040 --> 00:49:20,560
'more than in many factories
I've visited.'

841
00:49:20,560 --> 00:49:23,720
Right. Sure. How are you finding
your service with them,

842
00:49:23,720 --> 00:49:26,240
ie, like, speed and reliability?

843
00:49:26,240 --> 00:49:30,200
I was calling to see if we could
hopefully save some money

844
00:49:30,200 --> 00:49:33,520
on your phone bills.
So you're getting £23 on there.

845
00:49:33,520 --> 00:49:36,640
What about your TV?
How's that going for you?

846
00:49:36,640 --> 00:49:39,880
Workers can make 250 calls a day.

847
00:49:39,880 --> 00:49:43,680
Usually only two or three of these
will result in a sale.

848
00:49:43,680 --> 00:49:47,960
'It's hard work. But are these jobs
as bad as the critics maintain?'

849
00:49:47,960 --> 00:49:50,320
Just to let you know
our calls are recorded

850
00:49:50,320 --> 00:49:54,960
for quality assurance
and training purposes. Is that OK?

851
00:49:54,960 --> 00:49:58,280
There are
some former industrial workers here.

852
00:49:58,280 --> 00:50:01,040
Robert Carr
used to make refrigerators.

853
00:50:01,040 --> 00:50:04,160
A lot of people don't think
these are real jobs.

854
00:50:04,160 --> 00:50:07,160
They don't compare to the old job
you would have had.

855
00:50:07,160 --> 00:50:09,600
What did you think
when you first came here?

856
00:50:09,600 --> 00:50:11,480
It's a totally different world to me.

857
00:50:11,480 --> 00:50:14,720
When I first came, I was alienated.
I was struggling.

858
00:50:14,720 --> 00:50:17,760
The first few weeks I thought,
"This is not for me."

859
00:50:17,760 --> 00:50:20,280
Quite a lot of people
would be exactly the same.

860
00:50:20,280 --> 00:50:22,960
I had a few start with me.
They're not here any longer.

861
00:50:22,960 --> 00:50:25,760
They were here three weeks.

862
00:50:25,760 --> 00:50:28,720
But it's an environment
you've either got to cope with,

863
00:50:28,720 --> 00:50:30,480
make the best of it...

864
00:50:30,480 --> 00:50:33,000
64,000 question -
which do you prefer,

865
00:50:33,000 --> 00:50:35,480
this work or the previous work?

866
00:50:35,480 --> 00:50:39,840
I prefer this work, honestly,
because it's not hard work.

867
00:50:39,840 --> 00:50:42,520
It's stressful work,
but it's not hard work.

868
00:50:43,480 --> 00:50:48,480
'However, this is a long way
from the jobs-for-life culture

869
00:50:48,480 --> 00:50:52,080
'of the old industries.
Most employees are young,

870
00:50:52,080 --> 00:50:55,840
'and on average, those making calls
stay for less than a year.

871
00:50:57,600 --> 00:51:00,200
'Stuart Gray
is the managing director.'

872
00:51:01,400 --> 00:51:03,760
This isn't a job for everybody. No.

873
00:51:03,760 --> 00:51:06,920
Who doesn't make it?
What personality type does it take?

874
00:51:06,920 --> 00:51:09,200
You've got to be
a good communicator.

875
00:51:09,200 --> 00:51:11,520
You've got to be able to listen.

876
00:51:11,520 --> 00:51:14,120
You've got to have
a sales mentality,

877
00:51:14,120 --> 00:51:17,600
because that's what the job is.
Technically nothing too much.

878
00:51:17,600 --> 00:51:19,920
We can train all the technicals in.

879
00:51:19,920 --> 00:51:24,520
It's an ability to bounce back.
We call it bounceback-ability.

880
00:51:24,520 --> 00:51:26,680
There's a lot of rejection with it.

881
00:51:26,680 --> 00:51:32,160
But the good ones just keep going
at a good, solid pace.

882
00:51:32,160 --> 00:51:35,760
You never ask yourself, "Is this
really a good thing to do,

883
00:51:35,760 --> 00:51:39,840
to sell people these things,
utilities or phone packages?"

884
00:51:39,840 --> 00:51:43,640
I mean, would the world miss it
if it wasn't here?

885
00:51:43,640 --> 00:51:45,840
Um, yes, it would,

886
00:51:45,840 --> 00:51:49,480
because what we're doing
is playing our part

887
00:51:49,480 --> 00:51:53,560
in giving people opportunities.

888
00:51:53,560 --> 00:51:55,600
They're getting choice,

889
00:51:55,600 --> 00:51:59,520
so they have a choice
to switch supplier of a product.

890
00:51:59,520 --> 00:52:03,440
They have a choice to take an
additional product from somebody.

891
00:52:03,440 --> 00:52:05,880
And a lot of what we sell
is essential.

892
00:52:05,880 --> 00:52:10,000
We're big in utility sales.
Everybody needs a utility.

893
00:52:10,000 --> 00:52:12,680
TVs, broadband products...

894
00:52:12,680 --> 00:52:15,480
People have them,
and they enjoy having them.

895
00:52:15,480 --> 00:52:18,280
So we're not selling anything
that's worthless.

896
00:52:18,280 --> 00:52:21,200
We're selling something
that has a value.

897
00:52:21,200 --> 00:52:25,800
That may be, and services
have undoubtedly provided work

898
00:52:25,800 --> 00:52:28,640
where manufacturing couldn't.
But here's the thing.

899
00:52:28,640 --> 00:52:32,760
Over the last 20 years,
inequality between British regions

900
00:52:32,760 --> 00:52:34,760
has increased.

901
00:52:34,760 --> 00:52:37,600
BABBLE OF VOICES

902
00:52:37,600 --> 00:52:40,000
Just look at this place!

903
00:52:40,960 --> 00:52:43,800
Thousands of jobs,
lovely warm offices.

904
00:52:43,800 --> 00:52:47,360
I'm definitely not one
who is scornful

905
00:52:47,360 --> 00:52:50,240
of this part of
our services economy.

906
00:52:50,240 --> 00:52:53,080
But I do have a certain ambivalence.

907
00:52:53,080 --> 00:52:56,320
It's clear that
all the top-end service jobs,

908
00:52:56,320 --> 00:52:59,960
the ones paying 50,000 a year
rather than 15,

909
00:52:59,960 --> 00:53:03,160
tend to concentrate
in a few big centres.

910
00:53:03,160 --> 00:53:07,240
It's... It's really hard
for a city like Sunderland

911
00:53:07,240 --> 00:53:09,880
to get itself into
the first-class compartment

912
00:53:09,880 --> 00:53:13,240
of the services train.

913
00:53:14,880 --> 00:53:18,200
In short, it's the same
for Sunderland as it is for Britain.

914
00:53:18,200 --> 00:53:21,680
Services have been good,
but only up to a point.

915
00:53:21,680 --> 00:53:25,360
They're necessary,
but aren't sufficient on their own.

916
00:53:25,360 --> 00:53:28,280
I wonder whether Sunderland
could survive

917
00:53:28,280 --> 00:53:31,360
as an entirely service-based city,

918
00:53:31,360 --> 00:53:35,120
or whether it has to have
some manufacturing to flourish.

919
00:53:35,120 --> 00:53:37,520
I'd be very nervous about saying

920
00:53:37,520 --> 00:53:40,600
we could do without
manufacturing industry.

921
00:53:40,600 --> 00:53:44,000
My gut feeling is
that the world of the call centre,

922
00:53:44,000 --> 00:53:46,840
and even of
some of the high-tech industries

923
00:53:46,840 --> 00:53:52,000
is very short-term. It's very mobile,
and could easily disappear overnight.

924
00:53:52,000 --> 00:53:54,800
Manufacturing lasted
a couple of hundred years,

925
00:53:54,800 --> 00:53:58,240
and we're not completely confident
the new generation of industry

926
00:53:58,240 --> 00:54:01,520
will last so long,
so we may have to reinvent ourselves

927
00:54:01,520 --> 00:54:03,720
every generation or two.

928
00:54:03,720 --> 00:54:06,480
And that's a bit scary.

929
00:54:09,680 --> 00:54:12,400
Go back to 1951,

930
00:54:12,400 --> 00:54:18,000
to the hopes and fears people had at
the time of the Festival of Britain.

931
00:54:18,000 --> 00:54:21,360
You'll see that our economy
has reinvented itself

932
00:54:21,360 --> 00:54:24,960
more than anyone back then
would have imagined.

933
00:54:24,960 --> 00:54:28,640
In the sixth decade since
that festival was held here,

934
00:54:28,640 --> 00:54:31,880
Britain's economy
has taken a sharp turn.

935
00:54:31,880 --> 00:54:35,760
Services have just been one part
of a really big shift.

936
00:54:35,760 --> 00:54:38,440
Across the programmes
in this series,

937
00:54:38,440 --> 00:54:43,440
we've seen how our economy
has moved upmarket.

938
00:54:43,440 --> 00:54:47,080
'We didn't want to compete
in low-wage sectors

939
00:54:47,080 --> 00:54:51,040
'with countries like China. They
could make many things as well as us

940
00:54:51,040 --> 00:54:53,200
'but for a lot less money.'

941
00:54:53,200 --> 00:54:56,080
So we've discarded some activities,

942
00:54:56,080 --> 00:54:58,400
and become expert in others.

943
00:54:58,400 --> 00:55:01,760
We've focussed on areas
where we're still in front,

944
00:55:01,760 --> 00:55:07,200
specialising in products that
involve sophisticated engineering,

945
00:55:07,200 --> 00:55:10,120
small numbers, and high prices.

946
00:55:11,920 --> 00:55:17,000
The change is symbolised
by the humble bicycle.

947
00:55:17,000 --> 00:55:19,400
'The everyday bikes
we used to churn out

948
00:55:19,400 --> 00:55:22,720
'have been replaced by niche bikes
that are harder to design

949
00:55:22,720 --> 00:55:25,640
'and manufacture,
and more expensive to buy.'

950
00:55:26,760 --> 00:55:29,080
We've also gone upmarket
in another way,

951
00:55:29,080 --> 00:55:32,760
focussing on industries that rely on
intellectual property,

952
00:55:32,760 --> 00:55:36,080
like pharmaceuticals

953
00:55:36,080 --> 00:55:38,200
or microprocessors.

954
00:55:38,200 --> 00:55:40,600
'It's British know-how
that designs the chips

955
00:55:40,600 --> 00:55:43,440
'that help power
many of the world's mobile phones,

956
00:55:43,440 --> 00:55:45,400
'a lucrative business.'

957
00:55:46,840 --> 00:55:49,400
The change in our economy
has been painful

958
00:55:49,400 --> 00:55:53,480
and at times scary, but remember,
it has basically worked.

959
00:55:53,480 --> 00:55:56,880
Even after the financial crash
and the setbacks of recent years,

960
00:55:56,880 --> 00:55:59,440
we're living on incomes
three times those

961
00:55:59,440 --> 00:56:02,320
of the folks
of the Festival of Britain.

962
00:56:02,320 --> 00:56:06,280
But the crash has shown us that,
although we've got a lot right,

963
00:56:06,280 --> 00:56:09,520
it hasn't been perfect.
Banking has been exposed

964
00:56:09,520 --> 00:56:12,800
as not being quite
the great money-making enterprise

965
00:56:12,800 --> 00:56:14,600
that we thought.

966
00:56:14,600 --> 00:56:16,520
It's been a time to take stock

967
00:56:16,520 --> 00:56:19,920
of what our nation should
and shouldn't be doing.

968
00:56:19,920 --> 00:56:23,680
Despite all the clever
upmarket stuff we do,

969
00:56:23,680 --> 00:56:27,200
the fact is, we don't quite pay
our way in the world.

970
00:56:27,200 --> 00:56:29,760
We need to export more
to pay the bills,

971
00:56:29,760 --> 00:56:33,160
and we've learned
that services can't do it all.

972
00:56:34,160 --> 00:56:39,600
So if our economy is going to find
its way over the next few years,

973
00:56:39,600 --> 00:56:42,840
we're going to have to rediscover
some of the things we've lost.

974
00:56:42,840 --> 00:56:46,440
It's solid,
export-oriented manufacturing

975
00:56:46,440 --> 00:56:48,640
that needs to grow most quickly.

976
00:56:48,640 --> 00:56:51,520
And since the crash,
there are some signs

977
00:56:51,520 --> 00:56:53,440
that it's doing just that.

978
00:56:56,760 --> 00:57:00,080
There's one conclusion I'd draw
from everything I've seen -

979
00:57:00,080 --> 00:57:05,680
that we can't allow our economy
to be supported by just one pillar.

980
00:57:05,680 --> 00:57:09,840
You'll hear people say
it's all about manufacturing,

981
00:57:09,840 --> 00:57:13,640
or all about services
or the knowledge economy.

982
00:57:13,640 --> 00:57:16,760
Well, that's not true.
It's about all three

983
00:57:16,760 --> 00:57:19,440
creating a well balanced economy.

984
00:57:19,440 --> 00:57:24,080
Now, of course, it may well be grim
for the next few years.

985
00:57:24,080 --> 00:57:26,600
My goodness,
we've a lot of problems to solve.

986
00:57:26,600 --> 00:57:30,640
But long term, I reckon
we've every reason to believe

987
00:57:30,640 --> 00:57:34,120
that the forces that have made
so many people so much better off

988
00:57:34,120 --> 00:57:36,600
over the last few decades

989
00:57:36,600 --> 00:57:40,000
will carry on making us better off
over the next few.

990
00:57:48,200 --> 00:57:52,160
To discover more about how Britain
pays its way in the world,

991
00:57:52,160 --> 00:57:54,400
and to contribute your experiences

992
00:57:54,400 --> 00:57:57,680
to the Open University's
online toolkit, visit...

993
00:58:01,240 --> 00:58:04,520
..and follow the link
to the Open University.

994
00:58:07,000 --> 00:58:11,000
Subtitles by Red Bee Media Ltd

995
00:58:11,000 --> 00:58:15,000
E-mail subtitling@bbc.co.uk

996
00:58:15,000 --> 00:58:15,120
.