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Why Britain needs an innovation economy

George Freeman, MP, believes radical thinking is needed if UK industry is to seize the opportunities provided by technological change:

 

Something is stirring in the boardrooms of British industry. You heard it at Davos. Peter Mandelson is onto it, and last week Vince Cable joined in. The scale of the structural economic crisis facing the western democracies after the crash of the consumerist boom is driving radical new thinking.

 

As western governments confront the structural and debt crisis legacy of the credit-fuelled boom in the City, retail and housing, industrial policy is "in" again. But as the chancellor finalises his budget, the industrial policy business wants to see today is unrecognisable from the discredited corporatism of the 1970s. It's an ambitious, modern, entrepreneurial vision of a "rebalanced innovation economy", and – as Mandelson acknowledged – today's industrial activism is being shaped by a new generation of Conservative ministers.

 

At this year's party conference, it was George Osborne and David Willetts who announced a £50m investment to fund a world-class research hub to capitalise on our discovery of the new wonder material, graphene. In December the prime minister announced an ambitious strategy for life sciences. This is the most "hands-on" Conservative-led administration for 30 years, with a bold vision of an export and inward investment-led economic recovery, exploiting our knowledge base to build a more sustainable model of economic growth.

 

Not all Conservatives are comfortable with it. Coming to parliament after a 15-year career in technology venture capital, I strongly support it. It's what modern business expects of a modern government. Unless we focus on the technologies and sectors of the British innovation and knowledge economy which can best compete in the new markets of the developing world, we will condemn Britain to further decline into an old and public-sector-dominated economy. We have to trade our way out.

 

We have world-class universities, a science and research base, and a globally competitive lead in key sectors like biopharmaceuticals, aerospace and the digital economy, but we won't unlock their full value without a long-term strategy for skills, research, infrastructure, procurement and global sales. This isn't about "picking winners". It's about picking the races on which to focus scarce resources, and the government doing what only it can do, but doing it better.

 

Take our medical life sciences. Last year the prime minister launched a new strategy setting out a comprehensive plan for a new "integrated healthcare economy" in which the NHS actively supports the UK as a global centre for biomedical research. Requiring little extra spending, it's about government removing barriers, creating new incentives and unlocking the potential of the NHS to support UK health innovation. If properly implemented, it could help restore the UK's historical role as an engine of medical innovation, meaning revolutionary new treatments for British patients on the NHS, paid for by export revenues from intellectual property and inward investment from industry.

 

Why don't we do the same for some other key industries? Take UK agriculture, for example. It is a highly competitive sector with the potential to serve vast new markets for western crops and food around the world, generating billions in foreign earnings. Why don't we sign a 10-year industrial collaboration with India to supply them with the plant science, seeds, training and food processing expertise we lead the world in?

 

Britain doesn't just need governments that back business. We need more businesslike governments. I believe a modern industrial strategy must contain five essential elements:

 

- We should focus on trading in the fastest emerging global markets. We must be prepared to use all the offices of state, trading on our historical ties, to develop new trade alliances and partnerships across the world.

 

- We should identify technologies and sectors where we have a genuine competitive advantage and provide the platform investment in scientific research, skills and infrastructure to exploit it.

 

- We need to develop our fertile innovation "clusters" where entrepreneurs create value – cities (Cambridge), corridors (M1 motorsports in Northamptonshire) and neighbourhoods (Tech City in east London). Infrastructure like smart rail and superfast broadband is key to linking clusters and driving innovation.

 

- We need a radical renaissance of entrepreneurship. The goal? Let's inspire our schoolchildren and make Britain the easiest place to start a business.

 

- We need liberate our best public servants to win new revenues to support investment in tomorrow's public services.

 

Our competitors are doing it. It is a curiously British delusion that other countries aren't working every lever to promote their economies. There is a difference between protectionism and pro-active industrial activism. We mustn't let out-of-date dogma or old party entrenchments hold us back from seizing the opportunity. The world has moved on. So must we.

 

George Freeman MP is a government adviser on life sciences. The article originally appeared in the Observer, 18 march, 2012

 
Comments

Comments

1 person has had something to say so far

I'm sure this observer article has been cut and pasted from Harold Wilson's Labour party conference speech in 1963. Some lines have been doctored to make it sound like 2012 but the basics are definitely recognisable.
And that led to the closing down of all Brtish heavy industry in the 1970s & 80s.
Posted on 02/04/12 00:11.

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