LET'S GET REAL - FINANCIAL MARKETS WON'T CREATE NEW TECHNOLOGY

Developing new technologies need direct government-backed incubator support

Mr Gordon Brown is prone to make uplifting and visionary speeches, rather reminiscent of Harold Wilson, about Britain as a world-leading hotbed of science, high technology and advanced engineering. It is becoming quite clear that his exhortations and indirect inducements to the private sector to lead the way are naïve and fruitless. The reality is that British investment in most fields of science and technology are lagging far behind the advanced scientific nations, Japan, Korea, Germany and the United States. United States?? Surely the US is the paragon of free enterprise and abhorrence of state involvement in industrial investment? Think again, and consider the size of the US government investments in military and space technologies. As one who was closely involved in companies supplying the US Department of Defense with electronic sub-systems, I can vouch for the fact that the US government took a jealous interest in any interesting technology. Many analysts seem to miss the closely bonded relationships between the electronics, aerospace and engineering industries and the US government, to the point that foreign companies will not get near prime contractor status for advanced systems that are deemed to be of national interest.

The UK Ministry of Defence has a comparatively miniscule budget and has historically tended to treat UK defence contractors as the enemy, frequently preferring European and US suppliers. In turn, the contractors have tried every scam possible to wring the maximum returns for inadequate performance. This has resulted in a nasty mess, frequently marked by mutual recriminations. When government does support the defence industry, it picks the wrong issues, like the Saudi bribery scandal and caves in to foreign bullying.

The latest nonsense concerns the government's strategy towards renewable energy. Alarm bells should really start ringing with the excellent news of the delivery of innovative Pelamis wave machines, developed in Edinburgh, tested in the Shetlands and manufactured in Scotland. Great, you might say - a double whammy - not only does the West of Scotland have a world class supply of waves to generate renewable power, but we also get to make the kit in Britain and therefore continue the process of innovation. Alas! The machines were delivered to Portugal, where the government has had the foresight to go for one of the best sources of renewable energy.

Another excellent example of positive involvement is the massive direct support given by the Danish government for the development of wind generators. Denmark has good wind supplies and now generates a large slice of its electricity from this source. But, thanks to the foresight of the Danish government and its willingness to incubate a developing technology, Denmark now boasts Vestas, a quoted company and the world's largest manufacturer of wind generators, with a 28% market share and an installed base of some 34,000 generators.

And Britain? With some of the world's best wind resources - nowhere really - and even worse, the Ministry of Defence keeps trying to sabotage developments on the grounds that windmills might undermine national security. The MOD could beneficially reflect on the fact that causing insecure energy supplies and failure in global markets caused by bureaucratic obduracy should rate fairly high on the near-treason scale!

The scale of the UK's failure can be judged by the fact that Germany generates 22,000 megawatts of wind power and Spain 15,000 to Britain's 2,400 MW.
How? By direct governmental action to subsidise the development of new technologies and the cost of power whilst volume is built and experience gained.

Yet the UK government persists in hoping that 'the market' will by its invisible hand ride to the rescue. At a 2004 conference sponsored by the British Energy Association and addressed by Rob Wright of the DTI's energy policy unit and speakers from privatised utility company Centrica and PriceWaterhouseCoopers, accountant Graham Ward, the chair of the BEA congratulated the neo-liberal free-market think tank Adam Smith Institute on their "fascinating" work on energy futures. Then Rob Wright stated amongst other things that the UK would seek 'Market-based' solutions and that "Markets will innovate if we encourage/let them". By 'market-based', Mr Wright seems to mean investment markets and private companies. In Finland, market-based seems to mean run for the customers - a huge philosophical and psychological difference.

The DTI was in interesting company - a privatised supplier and a neo-liberal free-market think tank are fascinating bedfellows with whom to present a national strategy for renewable or any other form of energy.

The heart of the matter

Come on, snap out of it!

Britain will continue to lose ground in new and long-term technologies and, even worse, will fail to cope with environmental changes unless governments provide decisive leadership. The supine and timorous "after you, private sector" approach is resulting in a national failure of terrifying proportions. It is quite simple: The British government must take a lead in directly supporting the development of promising nascent technologies. When they have become more mature and offer good returns, the private sector can be invited to participate.
Everybody else is doing it.

1 'UK Corporate Governance and Innovation.'
Professor Andrew Tylecote, University of Sheffield Business School and Dr Paulina Ramirez, University of Birmingham.

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