The government has announced a review of its strategy for promoting U.K. technology and innovation.
Business secretary Peter Mandelson said in a statement on Monday that the government would seek to remove barriers to enable Britain to remain competitive in an economic upturn.
"To succeed in this hi-tech, low-carbon economy of the future, to drive growth and to secure more high-value jobs in the UK, we need to act," said Lord Mandelson. "It's not about picking winners or ignoring market signals but removing barriers which hold business back."
The strategy announced by the government will include a review of whether further long-term government capital investment will be made available to innovative small and medium-sized companies.
The U.K. government already provides venture capital as part of the Enterprise Finance Guarantee Scheme. The scheme is designed for companies seeking between 250,000 pounds (US$365,675) and 2 million pounds (US$2.92 million), and which may not have the right risk profile to attract other forms of investment.
"In the weeks ahead we will launch a review to consider whether and in what form further intervention could help increase the supply of long-term growth capital to small and medium-sized businesses," said the government in a report entitled New Industry, New Jobs on Monday.
The review will consider whether to set up a public-private partnership that will use private-sector capital to plug gaps in public- and private-sector risk-capital provision.
Research and development funding will also be reformed. Despite tax credits to the tune of 3 billion pounds (US$4.38 billion) for R&D since 2000, science and technology research has not yielded sufficient numbers of products to market, said the government. From April, all applications for academic funding for technology will have to assess the economic impact of research.
The government added that neither the public nor private sectors were investing as much of a percentage of gross domestic product in R&D as countries including Sweden, Finland, the United States or Germany.
The government will work with research funding bodies to "drive up the economic impact" of R&D efforts, said the report. The Department for Business, Enterprise, and Regulatory Reform (Berr) already provides up to 10,000 pounds (US$14,600) of "innovation vouchers" for hi-tech small businesses to fund R&D. In addition, the government said it would continue to support the work of the Technology Strategy Board, set up in 2004 as a forum between business, government and other technology stakeholders.
Educational needs could also be addressed. The government announced it will establish an organization called the Skills Funding Agency to help educational and training institutions provide skills "of strategic importance to the economy".
The government also repeated that the United Kingdom's technology infrastructure needs to be improved. The Digital Britain report, being undertaken by Lord Carter and due in the summer, will "establish the framework for a fundamental transformation of our broadband infrastructure", said the Berr report.
The report was published on the same day as a report by the National Endowment for Science, Technology and the Arts (Nesta), which said the United Kingdom could lose out by up to 44 billion pounds (US$64.35 billion) per year if the government fails to invest in healthcare, green technology and digital media.
"Previous industrial interventions in the 1960s and 1970s ignored demand and focused on unsuccessful attempts to pick winning firms rather than new growth areas," said Nesta chief executive Jonathan Kestenbaum in a statement. "The government must invest in areas where future demand will drive next-generation technologies".
Nesta's Attacking the Recession report urged the government to use the upcoming budget as "an opportunity to reshape the economy by investing in high-growth sectors".