It's time, says Sir James Dyson, to set a new vision for the UK economy: "To do this, a new government must take immediate action to put science and engineering at the centre of its thinking – in business, industry, education, and, crucially, in public culture."
Dyson sets out what's needed in his report Ingenious Britain, commissioned by the Conservative Party and just published [download from tinyurl.com/yepaqk3]. There are many encouraging things about it, but two stand out. One is that, despite all the continuing, breath-taking hubris of the taxpayer-backed bankers, we may, after all, have reached some sort of turning point for UK industry in terms of its political support. It's a long time since I was a Conservative, but I'm realistic enough to accept that the Conservatives, who despite all you read are still likely to form the next government, are in a much better position to do make radical changes to certain aspects of our national than the craven placemen in what will soon, deservedly, be her majesty's opposition. And there's a simple reason.
Labour has never had the self-confidence or, let's face it, the establishment support to do such dirty but necessary deeds as cutting armaments spending, particularly nuclear weaponry. The tories can do it because even the rapid attack dogs at the Sun and the Daily Mail would be hard put to doubt their patriotism. Similarly no one doubts the tories' support for the City. So if, in order to rebalance our economy, the City is to be reduced to a sane proportion of national economic activity, the tories are the only ones who can do so effectively. All that's in doubt, in either case—and it's a big, big question—is their deep conviction about doing what's so obviously needed.
We have the word of Ken Clarke, quoted on the Conservative Party website, that a Conservative Government will "undoubtedly follow [Dyson's] broad agenda." But note the word 'broad'. Note too that Clarke has long been at odds with much of the Conservative party, less because of his background as the son of a Nottinghamshire miner than because of his enthusiasm for the European Union.
The second reason Dyson gives us for cautious optimism is his attitude to support for R&D and for SMEs. He says tax credits are a great way of supporting companies willing to risk cash on R&D but, "the current system is well intentioned but not well targeted."
That's a (very) polite way of saying too much of the money goes to the big firms. Dr David Hughes FREng, managing director of the Business Innovation Group, former chief scientific adviser to the DTI and visiting professor of engineering management at City University, set this out on his blog [thebusinessinnovationgroup.com/Briefing.asp] as long ago as August 2008. He noted that tax-credit support for SMEs fell from £210 million to £180m between in 2002-03 and 2005-06, but that over the same period large companies' support under the scheme had risen from £180m to £420m—even though "during this time actual company spend on R&D did not increase at all."
Says Dyson, "A Conservative government should refocus R&D tax credits on high tech companies, small businesses and new start-ups in order to stimulate a new wave of technology. When the public finances allow, the rate should be increased to 200 per cent."
If that seems fanciful, note that, in its 2010-2011 budget, the Indian government has just raised the tax break for in-house R&D from 150 to 200 per cent.
There's no time to waste if the UK is to succeed, in Dyson's words, "in becoming the leading high tech exporter in Europe". January's exports showed the worst monthly fall for eight years. After being broadly balanced for half a century, notes Lib Dem treasury spokesman Vince Cable in a recent article, Britain’s balance of trade plunged to £60billion—five per cent of our economy—in the decade after 1997."
Suddenly the trade deficit matters again. Who'd have thought it?
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