'Mafia' of ageing scientists, academics and politicos suck at picking tech 'winners'

Rarely has a report on industrial strategy, unveiled by the Prime Minister Theresa May at the Sci-Tech Daresbury centre in the North West on January 23 contained so little about industry.

The strategy is built on what the Government is calling 10 "pillars": including investment in science, research and innovation, developing skills, upgrading infrastructure, improving procurement – and cultivating world-leading sectors.

The plans include a £556m boost for the so-called "Northern Powerhouse", an overhaul of technical education and £170m cash for a new emphasis on science, technology, engineering and innovation.

Yet in the past 10 years the Government has spent hundreds of millions supporting the wrong sectors, putting the wrong centres in the wrong locations, and failing to nurture the right ones – those with real commercial potential. Among its die-hard tech favourites in this latest strategy are space, graphene, and unmanned vehicles – none of which are likely to become UK industry leaders of the future.

First, space has often been described as a sector with huge potential – totalling £19bn in turnover by 2020 and 70,000 jobs. In fact, space revenue is rather modest – a few hundred million – which goes into satellites and instrumentation development, with a few lucky firms taking the lion's share.

Government statisticians wrongly add telecoms revenue to the total – a bit like saying my ancient Subaru is worth £100,000 because that is the cost of the petrol it will use. A review of the space startups funded by government reveal a great preponderance of student projects – and little evidence of commercial glory on the horizon.

Next, graphene, the wonder material discovered at the University of Manchester, is proving to be another difficult project to justify, and with no lucrative market yet in sight. It has already swallowed more than £150m in government support, primarily the National Graphene Institute, a costly bespoke building in itself. Researchers around the world are now discovering equally promising single-layer materials. The millions spent on graphene patents might have been wasted.

Ironically, for manufacturing and engineering in the UK, the PM unveiled the Industrial Strategy report at a high-tech institute near Daresbury – not at one of the UK's 8,000 world-class SMEs that exports its production of innovative products, employs apprentices, pays pensions, and generally lives in the real competitive world far removed from R&D and university laboratories. The PM was to be seen staring at the site's newest electron beam accelerator.

Other white elephants of government funding certainly include marine renewables, particularly in Scotland, where some £35m in funding has not prevented nearly all of the much-vaunted companies from going bust. Economist Professor Tony MacKay said the collapse of flagship marine energy companies Aquamarine and Pelamis shows that public money could have been "better used". Business angels joke that any company with "carbon" in its name goes bust quicker than anything else.

By contrast, thousands of well-run manufacturing SMEs in the North struggle to get a product development grant. Worse still is the recent completion of the £700m Francis Crick Institute in London – complete with a huge atrium that most researchers think is an awful waste of valuable lab space. Not surprising that many engineers and industrialists now think "industry" policy has been taken over by a mafia of ageing scientists and near-retirement academics.

They despair when InnovateUK, the government's main funding body packed with academics but very few professional engineers, spends only 5 per cent of its budget in the North West, and 4 per cent in the Yorkshire-Humber region – and 45 per cent in the South East.

If the choices are wrong and spending is skewed, what commercially focused techs should the Government investing in?

Offsite construction, which promises to solve the acute housing shortage, is one. Promoting Rolls-Royce's "small modular" nuclear reactor programme could deliver much cheaper energy than the £18bn Hinkley Point power station to be built by the Chinese and French firm EDF.

One key enabling technology ignored even by universities is magnetics – the special properties of which are being harnessed by many designers for a wide range of functions: for sorting fluids and solids, for making medical devices work, for innovative telecoms.

While the University of Manchester has grabbed most media attention, observers see its great rival, the University of Liverpool, beginning to create better success stories. One of Liverpool's ablest researchers, Professor Yi Huang, has devised liquid antennas, which promise much greater efficiency than traditional copper products.

According to Professor Huang: "It can meet the demands of the next generation of mobile devices, and the opportunities afforded by the Internet of Things. This research project provides an alternative compact reconfigurable and/or flexible device to the wireless world and meet the demands from the telecommunications industry."

Indeed, canny business analysts are now forecasting that Liverpool will become the new growth hub of the North West. Why? It is likely to be the biggest winner from the growth in trade from North America, post-Brexit. Its brand new container terminal is more than ready to handle that trade. As a result, a city that for three generations has been in terminal decline may have the brightest future of any UK hub, contrary to government assumptions.

Graham Hayes, long-time president of the mechanical engineering industry support group Engineering & Machinery Alliance, said the sector exports about 70 per cent of output – but receives very little effective government support.

He recently told the House of Commons Business Skills Committee: "The support we get in the export market is very poor. You go to exhibitions and see the German, French, Italian and American stands. Potential customers see the UK as tentative." Graham himself grew a small business into a £50m turnover company by exporting, some 80 per cent of production.

He is also founder of The Alternative Pallet Company, which is manufacturing a new ultra lightweight fibre pallet as an alternative to wood, plastic and metal counterparts.

If the PM wishes to know what sort of company should be at the heart of any future UK industrial strategy, Hayes and his many chief executive friends around the country are ready and waiting for her call. ®