The second key challenge is to raise productivity. We need to rediscover our capacity to invent and see that there is profitable production. We are determined to increase investment in education - the key to our future. But we still need further structural reforms if we are to encourage a more dynamic economy through increased competition and through reforms in welfare and employment policy. We are committed to a wholesale modernisation of the welfare state.
Today sees further reports of skills shortages, which constrain our ability to expand.
Reform to both the tax and benefit system is needed as part of the modernisation of the welfare state, that has remained largely unreformed since its foundation in the 1940s. And the Government's welfare to work initiative will get the young and long-term employed from welfare into work. Last week we launched the New Deal for the young and long-term unemployed. There will be 12 pathfinder projects to give those under the age of 25 and unemployed for more than 6 months the skills to get them back to work and give them the skills they need. All these measures are focussed on getting the young and long-term unemployed from welfare to work.