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UK biz needs fattening up on gov IT contracts, says No10 bod

Downing St adviser wants to spread wealth - as long as it stays in Blighty

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Tim Luke, a policy adviser to Number 10, wants Blighty's government IT contracts spread more broadly and punting more money towards companies that don't to sell out abroad. He also thinks kids should be taught to code like real men.

Luke advises Downing Street on business and enterprise, and was speaking to silicon shippers and related companies at this year's Future World Symposium at Wembley Stadium. His focus was, unsurprisingly, on how the government is supercharging the domestic electronics industry, and despite briefly boarding the teach-children-to-code bandwagon, much of what he said was remarkably sensible.

One could tell he was being serious as he didn't mention Tech City nor Silicon Roundabout, only oblique references to "developments in the east of London" which were listed in conjunction with burgeoning tech centres in Cambridge, Oxford, Bristol and somewhere in Scotland.

There are, apparently, something in the region of 200,000 people involved in delivering electronics in the UK, with components being manufactured the length of the country if not the breadth, and the government is keen to see more of it too.

That means nurturing new companies, but also stopping them from selling out at the first sign of foreign dosh. UK success story Picochip was mentioned - the femtocell leader bought up by an American outfit in January. The problem is, apparently, endemic.

UK companies can raise seed cash easily enough, but when it comes to scaling then it's easier to sell out than find more investment or launch onto the public stock exchange, and the government thinks that's a loss to the British economy. Sadly there's no easy fix; government cash isn't always the answer, and changing the character of risk-adverse European VCs is probably beyond even Whitehall's capabilities.

Small companies can be allowed to fire deadweight employees under the new "no fault dismissal" currently being drafted and highlighted by Luke. But that only applies to companies with fewer than ten staff where recruiting mistakes are less common, and dismissed staff can still claim racism, sexism and half a dozen other exemptions that already account for half of employment tribunals, so the new rules won't make a huge difference.

Equally moot is the promise of lower tax on patent revenues. Fees levied on UK-filed patents will only attract ten per cent tax from next year, a move designed to encourage research and development from large companies as well as small. While such a cut might encourage Qualcomm and its ilk to ramp up UK operations, it won't help British SMBs unless they decide on patent licensing as a business model.

What would really help Blighty's small firms are fat government contracts. 85 per cent of government IT spending is split between five companies, we're told, and Luke reckons that has to change if the government is serious about encouraging the development of UK businesses.

He also couldn't resist the call for better teaching of IT, saying that children should be taught to "code and create, not just use PowerPoint". That's something of a populist war cry these days, despite the fact it denies the possibility that PowerPoint can be used creatively - the fact that PowerPoint is so often abused surely calls for more education in idea presentation, not less, but your humble hack digresses.

Other than that Luke's thoughts showed greater insight into the problems facing UK businesses than we've come to expect from a government that seems to prefer hanging around social network events to addressing proper issues. The solutions might be far from perfect, or even non-existent, but recognising the problems has got to be a good start. ®

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