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Ingenious Britain

Making the UK the leading

high tech exporter in Europe

A report by James Dyson

March 2010

Foreword

When David Cameron invited me to help the Conservatives reawaken Britain’s innate inventiveness

and creativity I did not hesitate. Here was an opportunity to put forward my own views and those of

some of Britain’s leading industrialists, scientists, engineers and academics in a coherent form – a way

forward rather than a nostalgic glance back. There has been much debate and even more common

ground. The clear consensus is that action is required now. I am immensely grateful for the contributions

of these individuals.

The mission David set was clear and ambitious but undoubtedly within reach: for Britain to become

Europe’s leading generator of new technology. A challenge, yes. But forgive the mechanical analogy,

we have the right components: the chassis, an engine and all four wheels. We just need fuel, perhaps a

bit of tuning, and most of all, a sense of direction. Britain is not in a so-called “post-industrial” state, nor

is a science and technology niche. I am not an enthusiast lobbying to return to a bygone era. Industry,

science and technology create jobs and create wealth – beyond the Square Mile.

The task was broken down into five key challenges, challenges that a future Conservative government

must tackle if Britain is to generate and export more technology. Very simply:

Culture: How can a Conservative government bring about a culture where science, technology and

engineering are held in high esteem?

Education: How can a Conservative government inspire a future generation of scientists, engineers and

technicians? And how can we nurture those young creative brains so that they go on to pursue Science,

Technology, Engineering and Mathematics – the STEM subjects – in further and higher education?

Exploiting Knowledge: We have world-renowned universities, but how can a Conservative government

encourage the practical application of blue skies research in order to create world-beating products?

Financing High Tech: How can a Conservative government establish a financial system that actively

invests in high tech companies and projects?

Supporting High Tech: How can a Conservative government incentivise R&D investment by companies

and support British exports?

Not every opinion will be echoed by the Conservative team, nor will all of our ideas make it into the

final manifesto. Policy suggestions that clash with those developed by other taskforces could have been

weeded out, but that would be disingenuous and perhaps disloyal to the scientists, engineers, inventors

and manufacturers whose flag I am attempting to fly. My hope is that the Conservative team will see

that Britain’s talent for researching, developing, producing and exporting new technology is alive

and (relatively) well. With long-term government vision, focus and support, I believe that the nation’s

instinctive talent can propel Britain forward out of recession and towards sustainable growth.

We have brilliant, brilliant minds and a good dose of obstinacy. Ideal really.

James Dyson

INGENIOUS BRITAIN Making the UK the leading high tech exporter in Europe 1

Table of Contents

1. Culture: Developing high esteem for science and engineering

2. Education: Getting young people excited about science and engineering

3. Exploiting knowledge: Collaboration, not competition, between universities,

companies and not-for-profits

4. Financing high tech start-ups: Turning good ideas into world beating products

5. Supporting high tech companies: Creating the right conditions for R&D investment

INGENIOUS BRITAIN Making the UK the leading high tech exporter in Europe 3

Now, more than at any time over the past twenty years, I sense there is a real opportunity to set a new vision for our 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.

David Cameron and George Osborne have rightly highlighted the need to build a sustainable economy based on investments, exports and savings. I believe that it’s high tech companies that can contribute the most to this new economy. From my perspective, high tech companies are those who, regardless of the sector they are in, are making genuine investments in research and development to gain an advantage over their international counterparts. The UK has numerous examples of these companies – our goal must be to expand their size and number. And we’ll do this by combining our entrepreneurial culture and ability to innovate.

What should a Conservative government do to make it all happen? There aren’t any magic bullets – there rarely are. In contrast to previous reviews, rather than focusing on one component, we’ve tried to tackle issues across the board. Considered and implemented together, they have a chance of working for the long-term economic prosperity of the country. This requires a shift in public consciousness towards science and engineering – a challenge that requires a strong government.

Culture: Developing high esteem for science and engineering

Culture. I know that’s a challenge. But I worry that too much time is spent coming up with buzzwords and initiatives like ‘Creative Britain,’ without much substance to back them up. Britain can’t PR its way out of the financial black hole. It’s absolutely right to encourage creativity in all its forms, but why limit it by defining which sectors are creative and, by passive association, those which are not?

• To remain internationally competitive, government needs to get serious about engineering and science
  • in its commitment to research, delivering skills and backing significant infrastructure projects. High tech exports create real wealth and will help us recover from our deficit.
• We don’t need to look hard for excellent examples of science, engineering and invention. We simply need to celebrate them and the ingenious people who develop them. Future Conservative ministers

need to be vocal about these examples both at home and abroad – where ministerial advocacy can reap benefits. Bringing together key parties to consider campaigns, prizes and the role of the Design Council must be the first step for a new government.

• Commitments to grands projets, such as high- speed rail, nuclear and offshore wind power, will demonstrate to the public the Conservative government’s ambitions for the country. Commitment needs to be matched with better decision making by ministers. This requires a greater appreciation across government of the challenges facing companies in different sectors.

Education: Getting young people excited about science and engineering

The cultural assumptions of de-industrialisation extend to education. Design and technology education is struggling to shake off a dreary image, and core science subjects are being sidelined in the rush to expand the curricula. I believe that we must give our schools and universities the freedom and flexibility they need to deliver the future generation of scientists and engineers.

• Great teachers are the single most important factor in successful teaching. Facilitating the transition into teaching for other career professionals through a new programme, Teach Now, will be an important step. Utilising the expertise and goodwill of independent schools can also lift the standards of the whole system. But fundamentally we need to ensure that teaching is attractive to our top science and engineering graduates by paying off their student loans over time and giving Head Teachers greater scope to pay Science, Maths and Technology (STEM) teachers more.
• An urgent review is required to ensure that all STEM teachers are able to refresh their basic training and learn of the latest advances in industry and academia through Continuous Professional Development (CPD).
• Teachers want to teach the three science subjects – a Conservative government must let them. Kids get turned off by dumbed down teaching, but rise to the challenge of mastering something difficult and satisfying.
• Technical, as well as academic, qualifications must be promoted. For too long they have been pigeonholed. A Conservative government needs to

4 INGENIOUS BRITAIN Making the UK the leading high tech exporter in Europe

Executive Summary

The UK has an innate creativity, inventiveness and competitive spirit. We need to harness these attributes to develop new products that create nationwide wealth. Our need is greater than ever. The UK has to earn its way out of twin black holes – its yawning trade and fiscal deficits – and forge a new economic future. Can we achieve it? My answer: an emphatic ‘Yes’. I strongly believe that the UK can develop a prosperous high tech future, driven by science, technology and engineering (we are actually very good at them) and that we can end our over- dependence on the volatile paper wealth created by the property and financial services sectors.

As Rolls-Royce demonstrates with every engine it sells, innovation is the absolute key to its success.

The same is true of every successful high tech company. They all show that these are activities at which the UK can excel. According to 2008 OECD analysis of trade statistics of the G7 group of leading economies, the UK and the USA have the edge when it comes to developing and exporting high technology. 1 But decades of de-industrialisation mean there’s a lot of ground to make up. In the medium-high technology bracket, the UK barely makes an imprint on world trade (see Figure 1). Unsurprisingly, Japan and Germany are the global leaders in this important segment.

The same study shows that, between 1970 and 2003, the UK suffered the sharpest decline in manufacturing as a share of total employment of any advanced economy. A collapse that has seen employment from

The UK’s Challenge

(^1) OECD, Staying Competitive in the Global Economy: Compendium of Studies on Global Value Chains (2008)

6 INGENIOUS BRITAIN Making the UK the leading high tech exporter in Europe

(^2) Ibid. (^3) Geroski et al, The Profitability of Innovating Firms, RAND Journal of Economics, Vol 24, No. 2 (1993)

manufacturing fall from nearly one third of total workforce to just over a tenth.^2

Does this matter? Yes, for three reasons:

• Re-balancing away from financial services and property.

The banking crisis and subsequent recession showed that the UK had become over-dependent on financial services and property. Even worse, it is now clear that the banking and financial services sectors, taken as a whole, did not generate as much added value as has been supposed. Instead, paper profits were reported which were based on leveraging the price rise of financial assets. Economists tell us that exports can play a central role in reducing our current account deficit. Manufacturing, the sector that produces half the UK’s exports, is capable of generating more exports in the future. Additionally, the public can have greater confidence that the profits high tech companies generate are genuine. You create value by making things and then selling them for more than they cost. The profits and wealth this creates are real.

• Regional imbalances.

The speed and scale of job losses in manufacturing since the early 1970s inevitably had a disproportionate regional impact. Over-reliance on the financial services led to a concentration of economic activity in London. The example of Derby, with its Gross Value Added (GVA) 25% higher than the national average, highlights how a strong high tech manufacturing base can transform the fortunes of a city.

• Cyclicality

Growing high tech companies, who by their very nature are more innovative, can help the UK develop a more diverse economy – one that is more resilient to cyclical downturns. Studies have demonstrated that innovative firms are less sensitive to recessions: ‘Whatever it is that creates generic differences between innovators and non-innovators, the consequence is that the former are likely to be quicker, more flexible, more adaptable, and more capable in dealing with market pressures than the latter are.’ 3

INGENIOUS BRITAIN Making the UK the leading high tech exporter in Europe 7

Culture:

Developing high esteem

for science and engineering.

Our challenge is to stimulate science and engineering to generate wealth for the UK. Fiscal and

education policy is an obvious place to start, but I’m starting with something trickier: culture. It is not

a new debate, and it hasn’t been cracked – yet. But breeding a culture of appreciation, of esteem, for

technology (and those developing it) sets the wheels in motion for government policy.

And government is the place to start. Government must publicly celebrate technology: new inventions,

ambitious engineering projects and the pioneers propelling Britain forward. Their role in generating

wealth for the nation has to be underlined because there’s a creeping danger that people only

believe money can be made from money; the quick deal rather than the slow burn of generating new

technology. Slow, but thrilling.

But government must go further – actively pushing forward ambitious infrastructure projects, through

quick and timely decisions. Such schemes can be risky, but they galvanise and inspire. In 2008, the

Large Hadron Collider was among the Times’ most popular online topics (so what if there were some

teething problems – that’s engineering and people are interested in the fix as well as the fault). The

Conservative Party has already taken the initiative, committing to a new high-speed rail link linking our

major cities. Moreover, it is proposing to open the project up as a national competition. This is exactly

the kind of venture that inspires both understanding and enthusiasm for science and engineering. But

more than that, it instils pride in British ingenuity.

We need active leadership, setting the tone in language and action. Terms like ‘post-industrial’ and

‘creative industries’ only serve to reinforce misconceptions. In two words, they render invisible the

significant contribution of science and engineering to the economy. They must go. As long as we

continue to invent and make things (no matter if they’re assembled in the UK or elsewhere), we’re

industrial. Less chat about what songs are on the PM’s iPod, more about the British brains who actually

developed MP3 player technology (no, it wasn’t Apple).

I strongly believe that people are fascinated by technology and there is no need to dumb it down. If we

need to rally interest, then create a serious and prestigious prize to match the Stirling Prize, but only if it

can reach beyond the knowledgeable and interested few that other engineering prizes currently reach.

People need to know that we’re not technological has-beens or heroic failures. Britons are developing

new materials, creating greener energy and pioneering breakthrough medicines. There is an awful lot

to marvel at and be proud of.

And in terms of opening the eyes of the public and young people to engineering’s opportunities, we

already have a committed cadre of organisations out there doing some outstanding work to promote

the value of science and engineering. The key is to coordinate their activities so that the whole is greater

than the sum of the parts.

By leading in word and action, government can unlock the UK’s latent enthusiasm for design and

engineering. The young are innately curious about how and why things work. We must capitalise on this.

James Dyson:

12 INGENIOUS BRITAIN Culture: Developing High Esteem for Science and Engineering

Making the UK a leading high tech exporter requires aptitude: a talented workforce, an inspirational education system and effective research. It requires the right resources: supportive financing and incentives to innovate. But it also requires the right attitude. If changes proposed are to be effectively implemented, it will require the will to make them work. This can only come through fostering a culture of understanding and appreciation for science and engineering in the UK: in government, education, industry, media and the British public.

The UK has a great tradition of science, engineering and invention; new ideas were the driving force behind industrial and wartime Britain. Brunel and Stevenson are British icons. This ingenuity and potential still exists today: in the buildings and bridges of Wilkinson-Eyre; Formula One cars of Williams and McLaren; the high tech submarines of BAE; and the pharmaceutical breakthroughs made at GlaxoSmithKline and Astra Zeneca. UK companies and universities are alive with many other compelling examples of high tech ingenuity.

Yet despite these examples, the public perception of science and engineering is of geeks and mechanics. The achievements of scientists and engineers are rarely recognised or sufficiently commended. Unsurprisingly, this continuing misconception does not inspire young people to study these subjects, nor does it encourage high tech companies to flourish in our economy.

If the UK is to capitalise on its strengths as a high tech exporter, it needs to change the perception of science and engineering. This cannot be done overnight. Policies are important, but a new government should first set the tone of the debate and signal a real commitment to science and engineering.

Science and engineering have become progressively less valued and understood since 1945. People struggle to define what it means to be an engineer.^5 Only 4% of teenage girls are interested in training as engineers and 14% as scientists compared to 32% who want to be models.^6

While Lewis Hamilton and Jensen Button received the plaudits for winning Formula One titles, it was their British engineering teams that developed the technology that secured victory. Apple’s iPhone is a consumer phenomenon – but it’s not widely known that much of its technology is designed by British companies. In fact, the MP3 player was invented thirty years ago by a British innovator, Kane Kramer.

Young people’s perception of engineers and scientists would be comical if it were not tragic. Look at the national stereotypes. Scientists are egghead lab- coated geeks; engineers are metal-bashing factory workers or mechanics fixing broken appliances.^7 It’s no wonder careers in science and technology are deemed unappealing by both parents and their children. By contrast, countries like the USA, Germany and France hold these careers in much higher esteem. A 2009 Harris Poll found that the USA public thought being a scientist was the second most prestigious occupation while engineers were 9th – scoring significantly higher than lawyers, Members of Congress, athletes and entertainers. 8

The problem is not confined to the school playground. Many parents have no idea of the value and excitement of science, technology, engineering or maths careers – they assume that to succeed, their children must become bankers, lawyers or accountants (probably in that order). We must add engineers and scientists to that list.

But even more worryingly, this lack of understanding is shared by too many of our leaders and policy makers, as well as many in the media. The James Dyson Foundation experienced this when it tried to establish a school for 14-19 year-olds, focused on engineering and science in Bath. Its efforts were constantly rebuffed by bureaucrats despite the strong support it enjoyed from local Head Teachers.

Media reporting on manufacturing is weak. While high street sales and UK bank profits are important, they are not the sole barometers of UK’s economic success.

The Challenge The Evidence

(^5) Royal Academy of Engineering and the Engineering and Technology Board, Public Attitudes to and Perceptions of Engineering and Engineers (2007) (^6) New Outlooks in Science & Engineering (Noise) survey cited in The Guardian, 3 October 2008 (^7) Royal Academy of Engineering and the Engineering and Technology Board, op. cit. (^8) Harris Interactive Poll (August 2009)

INGENIOUS BRITAIN Culture: Developing High Esteem for Science and Engineering 13

Commitment to fast decision making on infrastructure

It is essential that a new government is clear and vocal about its upcoming infrastructure, technology and manufacturing requirements and that it makes early and bold decisions on large projects. The government is in a unique position to stimulate innovation and generate growth through infrastructural investment and it should take full advantage of this. Plans for high speed rail are an example of how a government initiative could set a vision for industry and academia to follow. This long overdue upgrade will help put Britain on a par with its competitors and provide significant stimulus to the individuals, companies and industries responsible for the project.

Endless discussion and indecision on the costs and benefits can needlessly delay essential projects. Assertive, forward looking action is required. The French nuclear industry is a good example: at the time of Chernobyl the French took a lonely path ploughing ahead – now they are reaping the rewards, exporting both power and expertise.

Championing success

Good high tech products should be celebrated. A new government should work with high tech businesses to make sure the right stories hit the headlines. Projects like HMS Astute submarine and the UK engineered Bloodhound, the world’s fastest car, are examples of British ingenuity that should be widely publicised and lauded by ministers.

We need leadership and agreement amongst the diverse institutions, industries, universities and royal academies to present a coherent, collaborative and convincing message – that can be marketed to the British public and media. In 2004, the current government set up the STEM programme, assigning specific actions to different government departments, as well as bodies like the Royal Academy for Engineering. Given the right support from communication professionals, actions like the STEM ambassador scheme have the potential to provide a strong platform to promote the UK’s cultural understanding of science and engineering.

A new government needs to ensure the message is reaching people, with a senior cabinet minister convening the various different interested STEM bodies to:

• Coordinate initiatives:

Get the buy-in of the major UK engineering and science firms, charities and organisations: use the skills of their PR and marketing professionals. Continue to streamline initiatives. Encourage more proactive engagement: promoting free resources and activities.

• Develop role models:

Ensure young engineers and scientists are trained as STEM ambassadors for use beyond education (like the Science and Engineering Ambassadors scheme run by STEMNET) – reaching out to the media, parents and the wider public. Encourage high profile industry leaders and TV personalities with STEM backgrounds to front campaigns.

• Communicate great stories:

Work with broadcasters like the BBC and Channel 4 to promote great British science and engineering stories, both historic and contemporary. The aim is to help children and parents understand science and engineering, without oversimplifying.

• Make science and engineering a product:

Science and engineering needs to be made relevant and tie in with contemporary issues that will make an impact on their future, like robotics and climate change. Support industry and SMEs in a coordinated approach to public engagement work, particularly with local schools.

The Design Council

A future Conservative government should review the funding, objectives, and impact of the Design Council. In an age where design is celebrated in the windows of Selfridges to the headquarters of large multinationals, the role of the Design Council in promoting good design is difficult to pin down. With the Design and Victoria and Albert museums both running excellent design education programmes, practical assistance for designers and engineers is more likely to be useful. For example, activities to help design and engineering students commercialise their products through incubators – a successful model pioneered by the Design London programme. The Council’s role in delivering these sorts of programmes should be examined.

INGENIOUS BRITAIN Culture: Developing High Esteem for Science and Engineering 15

Engineering prize

Celebration of achievements will undoubtedly stimulate cultural interest. The Stirling, Booker and Turner prizes, in architecture, literature and the visual arts respectively, are effective promotional tools: creating awareness and understanding of subjects often outside mainstream debate. A new government should consider setting up a major national prize scheme for engineering, or better yet, work with established STEM bodies to raise the profile of existing engineering prizes such as the Royal Academy of Engineering’s MacRobert Award.

A good prize will take time to establish itself and government would need to be prepared to start small and learn from early mistakes. Key design aspects to consider include:

• Be people and project focused: like the Stirling prize, the interesting stories are the projects, but there has to be a human interest too.
• Be supported by strong communication including a central website and educational links. ‘Important’ engineering projects are not necessarily immediately interesting to the public. Ideally, this would involve a media partner, rather than simply industry, to give it profile (as with National Lottery’s Living Landmarks: The People’s Millions, which was broadcast on ITV in 2005).
• Be suitably supported by a large prize fund and funding for logistical support.
• Provoke debate, like the Turner prize.
• Have a strong philosophy behind it. This could be Dyson’s problem-solving approach.
• Consider the long-term. The Stirling Prize judges new buildings, which haven’t had the chance to establish their worth. This engineering prize could look at a project that, through problem solving, has done the most to make an environment substantially better.

16 INGENIOUS BRITAIN Culture: Developing High Esteem for Science and Engineering

Education:

Getting young people

excited about science

and engineering.

Almost one in four

secondary schools in England

no longer has any specialist

physics teachers.

University of Buckingham.