"It gives me great pleasure to be here today at the Royal Society for the Arts - and I am very grateful to Matthew Taylor for inviting me to speak.
We are all here this morning because we share a common belief: we believe in the power of technology - in its ability to help transform society for the better by giving individuals more freedom, more choice and ultimately more power. At heart we are technology optimists.
Of course technological change isn't always easy to deal with because it so often disrupts the established way of doing things.
Just look at how digital networks have completely rewritten the rules of production and distribution.
Shelf space, airtime, room on the pages of a newspaper - these used to determine which artists got their records played, what TV shows we watched and which elite opinions appeared in print.
Today anyone can record songs and put them online; shoot home movies, edit them, add special effects and broadcast them to millions worldwide; or start a blog, sharing opinions and comments with readers in different countries and on different continents.
In fact the internet is like the child pushing at boundaries of authority and challenging the established way of doing things - the business models from the last century, traditional media, long accepted notions of national jurisdiction and concepts of governmental control.
The challenge is for the "pushed" - probably most of us here in this room - to resist the urge to push back: to regulate and legislate; to try to tame and to control.
Instead we need to harness the Internet to help us become more accountable, more transparent and more accessible - and so bridge the growing gap between government and governed.
Our willingness to change needs to match the scale of the technological revolution taking place all around us. Just as companies all over the world are changing the way that they do business, so too must we evolve.
Our ambition must be no less than this: to recast the political settlement for the digital age.
Last November, in a talk on politics in the internet age, I identified some of the key social changes that have been unleashed by this technological revolution.
Today I want to go further and set out the three pillars on which I believe this new political settlement should be built.
The first of these pillars is about equality - equality of information - or what Eric Schmidt, Chief Executive of Google, called "the democratisation of access to information" when he spoke to our Party Conference.
For centuries access to the world's information - and the ability to communicate it - was controlled by a few: the powerful, the wealthy and the well educated.
Today by typing just a few key words into a computer, the individual at home not only has access to more information than whole government's had access to just a generation ago - and, just as importantly, she has the power to search through it more quickly than any government clerk.
This is rapidly eroding traditional power and informational imbalances.
No longer is there an asymmetry of information between the individual and the State, or between the layperson and the expert.
This shift is changing the world.
It is empowering individuals; raising expectations of government services; and increasing accountability for all of us who work in the public sector and in politics.
But sadly, government thinking is still a long way behind ideas like this.
Take my area of responsibility: the Treasury.
In the US the federal government is creating a website that allows people to see how and where their money is spent by searching through all its contracts, grants and programmes. They call it 'googling your tax dollars'.
My Treasury team has introduced legislation in the House of Lords that would introduce a similar system here in the UK.
It would enable British taxpayers find out how much is spent in their local school or how much is spent by their local GP's surgery.
The legislation is about to complete all its stages in the Lords and come to the Commons. I know from private conversations that while there are some in government who like the idea, the Treasury is almost certain to kill off the bill in the Commons.
Of course the Government has created some new websites and many of the forms you need to fill in are now available for download. You can even fill in some forms over the net too.
But that's the most basic reaction to new technology: doing the old thing a new way.
Instead, just as successful companies are harnessing this new technology to do things in a new way, so we need to rethink the way public services work.
I know, Matthew, you agree. Just last month, you said in a lecture here that we need to move away from a "government-centric" model to a "citizen-centric model".
What's needed in government is as much a cultural shift as a technological change.
A shift to a culture that welcomes criticism and comment - then reacts to it.
A shift to a culture that seeks customers' views and ideas at every stage of developing a service.
And a shift to a culture where every service can be improved, and no service is ever fully developed.
That means more than constantly tinkering with public services for the sake of it.
It means being open to fresh thinking and input from both users and deliverers.
This approach is at the heart of our social responsibility agenda.
The democratisation of information is changing the relationship between government and the citizen for the good - and it is the first pillar of that new political settlement I talked about.
The second pillar of a new political settlement will be founded on new social networks.
I've asked this question before, but let me ask it again.
How many people here are friends with Tom Anderson?
You must know Tom. I went all the way to Los Angeles last year to meet him.
He's 31 years old. His interests are music, movies and the history of Communism. His favourite bands include Superdrag and the Sex Pistols.
Tom also has 125 million friends. That's right, 125 million friends. Because Tom is the co-founder of MySpace and when you join MySpace, as 125 million people have, Tom is your first friend.
MySpace is an on-line social network and each week another 250,000 people join it.
Think about it. Every week, roughly the same number of people who are members of the Labour or Conservative Party are joining just one of the new online social networks.
These people are not brought together by a common geography or experience. What they share is a common interest.
We are used to people living in a particular place, or being employees of a particular company, or members of a trade union or political party. We are used to being organised by others and having others speak on our behalf.
These on-line networks are different. People are organising themselves and speaking for themselves. And they are mobilising politically.
Ever since Howard Dean raised $30 million through donations from internet activists, mainstream American politicians have woken up to the vast potential of social networking.
The Presidential elections in 2008 will push the envelope still further.
Barack Obama already has 300,000 "supporters" on Facebook alone.
He's even set up his own social networking site - MyBarackObama.com.
On-line political networks are springing up in the UK too now - and interestingly they are almost all Conservative ones.
There are those networks actively set up by the Conservative Party.
Each week on WebCameron, for example, not only does David Cameron post his thoughts in short video clips but the public is invited to submit questions they think he should answer. Each week the question asked the most - no matter how awkward - gets an answer.
I do look forward to seeing WebGordon.
But it is not the official Conservative websites that I find most exciting. It is the unofficial ones.
It's an on-line community of Conservative activists that engages in a constant commentary on what the Conservative Party leadership is up to.
Although I, and other Shadow Cabinet members, am frequently the target of Conservativehome.com, it is for me unambiguously a good thing that it exists.
For it - and other websites like Iain Dale's blog and the new conservative internet TV station 18 Doughty Street - are sure signs of the health of the Conservative movement.
Nothing like it exists on the government side. Why? Because you simply couldn't imagine the current Labour leaders working with a website where Labour supporters took pop-shots at them.
This will surely have to change.
Top down politics is no longer sustainable in a bottom-up age.
There are some who say that blogs and on-line petitions merely give a platform to the angry activist - what you Matthew have called the voices of "shrill outrage".
Here, I disagree with you.
Of course it provides another channel for the activist, shrill-voiced or otherwise. But it's also opening up politics to people who would never ordinarily engage with politicians or mainstream political parties.
Look at what happened in Los Angeles last year.
500,000 people took part in a march to complain about the treatment of illegal immigrants.
It was one of the biggest marches ever in American history, and it was organised through online social networking sites, rather than by trade unions or pressure groups.
So the marchers weren't the usual hardened political activists - they were mostly non-voters, students and immigrants.
Exactly the type of people that conventional politics usually fails to reach.
So as people come to be increasingly disengaged from traditional models of political engagement, these new technologies and social networks gives us in politics and in government an opportunity to connect with and listen to new audiences, as well as engage with old ones.
It's too great an opportunity to be missed.
The final pillar of this new political settlement is open source.
Last week I went to hear my friend Professor Jeff Sachs deliver the first Reith Lecture. He talked about open source politics.
Open source politics means rejecting the old monolithic top-down approach to decision-making.
It means throwing open the doors and listening to new ideas and new contributors.
It means harnessing the power of mass collaboration.
And rather than relying on the input of a few trusted experts, it means drawing on the skills and expertise of millions.
The most well known example of open source is Wikipedia, the online encyclopaedia. As I am sure you know, every one of its entries is created, edited, corrected and up-dated by the on-line community.
The idea stands on its head the concept of the traditional encyclopaedia written by the most learned experts in its field.
I congratulate the RSA on recognising the power of this approach. You have just launched your own "Wiki", enabling your Fellows to contribute ideas for future research projects, and allowing them to comment on ongoing projects.
Companies are now increasingly using "Wikis" to solve internal problems - because you can have lots of people working on them at once.
Those people don't necessarily have to work for the company.
This is a radical departure from our traditional understanding of the business model.
Don Tapscott and Anthony Williams, authors of a fascinating new book called 'Wikinomics' use a Canadian gold mining company called Goldcorp to illustrate this point.
Goldcorp's CEO was frustrated that his in-house geologists couldn't accurately work out where new gold deposits might be, so he did something no one in the gold industry had ever done before: he published all the geographical data on his mine that his company had on line, and challenged the world to do the prospecting for him.
Enticed by the offer of a prize, over a thousand virtual prospectors submitted their thoughts. These included not just geologists, but mathematicians, physicists and computer systems analysts who brought unorthodox ways of thinking to a very traditional industry.
In total, the on-line community identified deposits that ended up yielding $3 billion worth of gold.
Proctor & Gamble are taking a similar open source approach to their research. On top of the 7,5000 scientists they directly employ in the traditional manner, they connect with more than 90,000 other scientists who they don't employ, but through their InnoCentive network, they use to help solve their R&D problems.
And YouGov, whose chairman Peter Kellner is chairing this event, is an online polling company that uses the internet to pull together polling samples faster and cheaper than would otherwise have been possible.
These new collaborations are not just commercial. Genebank, the world's largest public database of genetic information, is the result of an open source approach that is enabling free and open collaboration between scientists and companies all over the world.
How can this approach be harnessed in the public sector?
We need to start by taking advantage of the collaborative forums that are emerging on the internet.
If you have a query about Google, for instance, you can visit their online question and answer website to post a question.
And because everyone else's queries, and the responses to them, are published on the website, the chances are that your query will already have been asked, and answered, by other people.
This saves on Google's resources, but also provides users with more information more quickly than if a team of experts had tried to second guess every question that could possibly be asked.
Similar collaborative approaches could be applied in government.
The Patient Opinion website, a social enterprise set up by a Sheffield GP, is already demonstrating what can be achieved.
Patients are using the website to post accounts of their experiences of the NHS - both positive and negative.
These are then forwarded to the relevant hospital or clinic, which can respond, triggering "microconversations" about the quality of care and service that often result in changes being made.
The effect is to create a real-time exchange of qualitative data on public experience, from seemingly trivial issues like the lack of clear signs to bigger issues, like poor quality outpatient care.
The direction of travel is clear. The government needs to get onboard.
Another way the government could harness an open source approach is through the procurement of open source software.
Open source software is software that's developed collectively by a community of developers, including individuals, universities and small and large firms from around the world.
They build the product, suggest improvements, check the source code and critique each others work.
By this extraordinary and often unguided collaborative effort, they produce software that is then made available, often free of charge.
What is more, unlike traditional proprietary software, users can access the source code, making it possible for them to tailor the software to their needs and make constant iterative improvements.
Not only is this a cost-effective of designing software, but it's often faster and more effective too.
Ever since I visited the headquarters of Mozilla in Palo Alto I have become a user of their open source Firefox web-browser. I am not alone. Almost 20 per cent of on-line Europeans use Firefox instead of Internet Explorer.
There are plenty more examples of open source in practice.
Take Linux, the fastest-growing operating system in the world.
It's an open source model that IBM has now based their new hardware around.
The company has estimated that this decision has saved them around a billion dollars a year.
They're not the only ones to have benefited through open source software.
Amazon has estimated that it has cut their technology spending by a quarter.
This explains why 95% of the Forbes Global 2000 companies will have open source IT strategies by next year.
Farsighted governments are also taking advantage of this trend.
In Japan, the government is moving its entire payroll system over to an open-source platform. The switch is expected to cut operating costs by half.
The Spanish region of Extremadura migrated 70,000 desktops and 400 servers in its schools to open source software. It has calculated that this decision has already saved them over £10 million.
In 2001, the German Parliament ruled that open-source software should be used wherever doing so would cut costs without compromising standards.
And in Holland, ten cities, including Amsterdam, The Hague and Eindhoven have begun implementing open-source evaluation projects.
Here in the UK, some public bodies have already shown what can be achieved.
A recent DfES report found that, on average, primary schools using open source software cut their IT costs per PC by 50%.
They're not alone.
Bristol City Council, Bridgend County Council and many other bodies have also used open source software to cut costs whilst meeting their IT requirements.
Adopting open source software in government departments does not necessarily mean having to stop using Microsoft products.
That's not where the real savings lie.
Many open source software applications are used for "back room" operations, such as databases and infrastructure - and Microsoft is actively engaging with the open-source movement.
So this is not about being anti-Microsoft. Microsoft is an important and valued employer in the UK.
What it is about is better and more effective government.
A 2004 report by the Office for Government Commerce concluded that the "adoption of Open Source software can generate significant savings in hardware and software costs for infrastructure implementation."
But sadly I can tell you today that those savings have not been realised.
In recent months Conservative MPs have put down Parliamentary Questions that reveal most central governments departments make use of no open source software whatsoever.
What's going wrong?
The problem is that the cultural change has not taken place in government.
There isn't a level playing field for open source software.
As it stands, too many companies are frozen out of government IT contracts, stifling competition and driving up costs.
Not a single open source company is included in Catalyst, the government's list of approved IT suppliers.
And small companies often find it much too difficult to access government contracts.
Of course there will be occasions when open source is not the optimal solution, but unless it is being properly considered, the government will continue to lose out.
Another problem has been the lack of open standards in government IT procurement.
All too often, a government IT system is incompatible with other types of software, which stifles competition and hampers innovation.
Looking at the litany of IT projects that have collapsed or spiralled over budget, it's clear too that this has meant billions of pounds wasted and public service reform being hampered.
The government's entire approach needs to be overhauled.
Taking into account the experience of companies and public sector bodies, it is estimated that the Government could save at least 5% of its annual IT bill if more open source software was used as part of a more effective procurement strategy.
That adds up to over £600m a year.
The open source savings would come not just from reduced licensing costs, but importantly by freeing government bodies from long-term, monopoly supply situations.
I recognise that achieving these savings will not be easy.
But it can be done. As we've seen, other countries already are.
It will mean introducing best practice benchmarks.
Ensuring public sector managers have the resources and support to meet them.
Building public sector capability so that civil servants can generate real commercial leverage from open source.
And overhauling Office of Government Commerce procurement rules so they reflect the potential benefits of using an open source approach.
I want us to be able to start implementing these changes from day one of a Conservative government.
That is why I am today asking Mark Thompson of the Judge Business School at Cambridge University to advise us on how we can make Britain the open source leader in Europe.
Mark is an independent voice with no political agenda, a respected academic, and a practitioner in this dynamic field.
He'll be helping us develop the detailed procurement strategy that will enable a future Conservative government to harness open source software, just as companies and governments all over the world are already doing.
Improving public services.
Strengthening our political system.
These are the potential benefits to politics and government of harnessing open source politics.
They are part of a new political settlement for our age.
But I'm sensible enough to recognise that I don't have all the answers.
The internet age is transforming politics and has the capacity to transform government.
I'm now looking forward to harnessing the wisdom of this particular crowd, and hearing your thoughts on how you think politics and government needs to change in the internet age.
Let's start being open source right now.