Fear is a powerful motivator. I fear for Britain, 10 years on. We take near-full employment and rising standards of living as part of the natural order of things. They are not. Twenty five years ago, a senior Chinese minister said to me: "The wealth of China is its people." I was not impressed. But 20 years later, I sat up when a Midlands businessman returning from China warned his listeners of the emerging implications of economic development in China for the British economy. Add India, once recently described as the Back Office of the World, and we are talking of the potential of something near 40 per cent of the world's population. These two economies have averaged annual growth rates of 6 and 8 per cent a year for a decade. Their wage rates are a fraction of ours. They are clever, entrepreneurial peoples. How shall we compete?
Answer, by acting now on a realisation that the only basis of competitiveness, whether against East or West, lies in investment, and most of all in the educational and skills capital of our people. That is the true measure of the wealth of the nation. By OECD (Organisation for Economic Co-operation and Development) standards, we are no more than an average investor. Compared with, say, France, Germany and the USA, Britain is well behind the game, and has been for years. To survive in a global economy 10 years from now, when China and India will be major players, we need to be ahead, not behind. In each of the three years of the forthcoming triennial review of public spending, the Chancellor needs progressively to increase the planned proportion of national income committed to education and skills. Last year's 5 per cent share needs to be pushed up to 6 per cent, worth an extra pounds 10bn a year.
The Government has, impressively, set a target of one half of young people under 30 in higher education by 2010. But will it be realistic about the cost? By the late Nineties, 25 years of expansion and tight control of finance had produced a 40 per cent cut in the amount spent per student on teaching in universities. That cut has now been halted. …