In the business of comparing apples with oranges, I, like most journalists, am a past master. And the government’s annual R&D Scoreboard, which charts the research and development spending of the UK’s top 1000 companies and a global top 1000, offers me huge scope to indulge in meaningless comparisons. Or are they not meaningless at all?
I ought to say, at the outset, that I don’t dispute the government’s figures at all, and I know that talented analysts have pored over them with a diligence that makes my superficial commentary all the more unworthy. I also don’t, or rather can’t, disagree with the headline which says that UK R&D spending shrank a little in 2009, but not as much as might have been expected. It’s all true and it’s sensible and justified stuff.
But I ought also to say that I’ve been a bit sceptical about these things ever since one of these exercises proved that the banks were the most innovative sector of the UK economy. I mean, the banks? Inventive ways to relieve us of our money, presumably.
Anyway, you can go to www.bis.gov.uk and follow the links for the latest R&D Scoreboard, and then you can delve into whatever sector you’re interested in. And it’s a sectoral comparison that intrigues me because there’s some possible inchoate measure, in here, of our comparative national strengths and weaknesses. What I’m comparing is Appendix A, which lists by sector the top 1000 UK R&D spenders, with Appendix B, which aggregates the results from the global top 1000.
This isn’t, of course, comparing like with like, because the mix is different and there’s an overlap of only around 60 or so companies, the UK big spenders which make the global table. But the sectors are the same, so some correlation is possible. Globally, for instance, those of the top spenders which are in aerospace and defence invested £12.9 billion; the top UK firms in the same sector invested £1.6 billion, which is about an eighth. In pharmaceuticals and biotech, the ratio is similar: world spending of £65.9 billion, and UK spending of £8.9 billion, again about an eighth. These are patently sectors where the UK is strong and UK corporates are doing their thing well.
But elsewhere it’s different. The figures show that, in 2009, UK automotive R&D spending didn’t drop as much as the worldwide figure – good, but as £1.5 billion against a global total of £55.1 billion, ours is a pretty small percentage. Ditto “industrial engineering”, where the big UK spenders spent £351 million against a world big spenders’ total of £10.1 billion.
I’m not going to claim that this is anything other than a crude measure, and it may well be that there’s a vast underclass of small UK R&D investors which make a big difference. But the difference I can see is the one between some sectors where our top firms run at 10 to 15 per cent of the world total, and others where we’re in the 2 to 4 per cent range. And our banks, you’ll not be surprised to learn, outperform everyone: spending £1.3 billion against a world total of £4.4 billion, which is towards 30 per cent.
25 November Home comforts and cold comfort
I’ve often wondered who all those people are who sit in Starbucks (or Costa, or Caffe Nero) for hours on end, nursing a large paper cup of brown liquid. Now I know: they’re people like me. Not that I’m about to join them, you understand. But I can see why they’re there.
I’m at the point of the freelancing/homeworking calendar where a decision has to be made. Do I turn the heating on during the day, or do I continue to be brave, in the manner of a latter-day Captain Oates? So far, the heating has gone off at much the same time as the rest of the family depart for their warm workplaces, and it hasn’t come back on until they’re back in the evening. It’s been, at times, chilly working here, but not truly cold. Until this week. And as a somewhat well-padded person, I’m fairly immune to temperature variation. Except that I have, for much of the time, a warm left hand and a cold right hand: not a bother, as I’m ambisinistrous (equally clumsy with both hands).
Anyway, there are alternative strategies that I can pursue here. The London tube system is, until there’s a long cold snap, pretty constantly at or about blood heat, and though the unravelling of the Circle Line means there’s no longer the option to sit there going round and round in comfort, the Northern Line is still available. But it’s pretty unpleasant and you don’t get the internet. Yesterday, under the guise of meeting a mate, I was installed on a large table at The George in Borough High Street from mid-afternoon with my laptop open and a (mostly) untouched beer to add that air of verisimilitude. But that isn’t a cheap option, and I’m not sure either my liver or pub landlords would welcome my permanent presence. I could go and sit in my car, but I do have some work to do and it’s not an ideal office.
So Starbucks is a possibility, even though I don’t much like coffee. Or I turn the heating on.
Or, and this is the strategy that I shall be employing today, I keep typing furiously, generating heat if not light, until the time comes to set off for the Arctic wastes of Cambridgeshire later today to watch Histon versus Bath City in the Blue Square Premier, where the depth of chill is likely to make my current circumstances seem positively balmy. Tomorrow, though, is another day.
22 November Small is beautiful, but big can be lovely too
The EEF, the UK industry organisaton that used to be known as the Engineering Employers’ Federation, manages to put into figures what some of us have felt for a while: a suspicion that manufacturing’s role in “rebalancing” the UK economy may well be thrown into some doubt because of structural weaknesses in UK corporate governance. In particular, our lack of big companies. Here’s a report from today’s Guardian on an EEF report to that effect – http://ow.ly/1a5Ohk. There’s similar in the FT.
The EEF makes the point about larger companies among several others. One that caught my eye was the revelation, inconvenient as it may be, that although manufacturing is growing at the fastest rate since 1994, its plummet by 15 per cent in the recent downturn means that it’s a long way from catching up even where it was a couple of years ago. Two steps forward is good: but not if it starts from having taken three steps back.
Anyway, back to the stuff about our lack of big companies, which the EEF has contrasted with the state of affairs in Germany. Successive UK governments of all and every persuasion have made much over many years of how they want to create the climate in which start-up companies and small businesses can flourish. That’s fine, but it seems to me to miss the point that there’s a merit and impact in size. Small is beautiful, but big is lovely too – just so long as big doesn’t mean “unwieldy” or “monolithic” or “unresponsive to markets”. And we seem over a long period to have been remiss in the UK in encouraging middling-sized companies to take the next step onwards and in looking after the big companies we actually have.
Why is this? I’m afraid we’re back to our old villains here: short-termism and the lack of financing options that take a longer view. The tendency of our financial institutions in the UK – and it’s been true to an extent in the US as well – is to regard companies as assets to be traded, not as organisations that produce tradable goods or services. Shareholder value is realised through turning the companies themselves into the commodities, and the mechanisms of the City of London are geared primarily to this kind of trade. If you’re a big company, the City will analyse what you’re worth split into smaller ones, or broken up entirely, or sold to the highest bidder. The benefits of industrial-scale coherence or the products or services that companies make are given less prominence. The rollcall of major UK companies that have disappeared through dismemberment is grim reading.
Is it better for new companies on the upward growth path? Very possibly not. It seems that you can grow your small and middling sized company in the UK to a certain level, but then when you want the next tranche of cash to grow on further, you’re all but forced to go public or to sell out to someone bigger, very likely a foreign-owned group. There are of course exceptions to this, but they’re few and far between, and they often consist of determinedly private groups modelled on firms such as JCB, which can operate to a large extent independent of the City’s baleful influence.
Politicians seem to think they’ve done well if they’ve created a climate in which small business can flourish. That’s important, but it’s only part of the picture. Big firms make more impact than small ones ever can and while individual entrepreneurship is to be encouraged, it’s not for everyone: some people and some activities work better in bigger firms. So good for the EEF in making the point. Small may be beautiful, but it’s still small.
19 November Catch a falling tsar
It’s World Toilet Day today, and what better day to see the resurrected career of Lord Young of Graffham go down the pan? The UK government’s “enterprise tsar” has resigned after saying that most people in the UK “had never had it so good”, which goes somewhat against the Cameronian sharing-the-pain mantra. The bow-tied Young, looking for all the world as if he’d just wandered in from a Bupa commercial, was famously Margaret Thatcher’s favourite minister 20 years ago: where most of her ministers brought her their problems, she said, Young brought her answers.
Ah, what innocent days those were, when we thought there were answers!
Lord Young’s recent appointment, though, is a curious one. Reporting directly to the Prime Minister’s office, his brief seemed to be to ensure that legislation and regulation was business-friendly. In that every new government gets rid of vast numbers of bureaucratic bodies and rules – before settling back to create some new ones of its own, of course – then this doesn’t look a particularly arduous task, and Young has good business credentials going back to the good days of Cable & Wireless before he went into politics. It should have been a doddle for him. He falls, though, not for being business-like, but for being a poor politician, a mistake which his predecessor, Lord Sugar of Amstrad, for all the derision with which his appointment was hailed, did not make.
What I find curious, however, is the nature of these appointments. The enterprise tsar is one of a number of such people dotted around government, dealing with “issues” such as drugs and crime. And enterprise. Their remit is to be decisive and to bypass the existing systems, and they report directly at higher level than the ministries that notionally deal with these issues. They are a democratic curiosity: unelected, maverick, “thinking the unthinkable”, with an apparent brief to point out what’s wrong but no real responsibility to put it right. Both the current government and its predecessor of the opposite political persuasion have used them.
Why? Is it because our civil service is incapable of confronting the real issues within it? Is it because today’s politicians, with little experience themselves of real life, feel the need for a dollop of streetwise reassurance every now and then? Is it that our elected government can’t do the job we elected it to do, and needs unelected folk to tell it what to do? I’d like to know.
And I’d also like to know who thought up the “tsar” title. The tsars, when there were real ones, were in-bred autocrats wholly out of touch with the real lives of their subjects. Surely that can’t be what was intended? However accurate it has proved to be…
18 November A bucketload of stats
Predicting the future is a difficult job. Much easier to predict the past, or the soon-to-be-past. That somewhat unworthy thought occurred to me this morning when I read that the OECD, a rather shadowy international quango that pronounces on national economic performance and whose approval is much prized by the politicians, was revising upwards its forecasts for UK economic growth in 2010. And there was a second unworthy thought too: that macroeconomics is nothing to do with me and you.
The OECD – it stands for Organisation for Economic Co-operation and Development – says that UK growth in 2010 is now likely to turn out to be 1.8 per cent, which is a bit up on its May forecast of 1.3 per cent. As the UK government’s own figures show that GDP in the third quarter was 2.8 per cent up on a year ago, and the index of production has recovered more than five points in the past year, you can see that, with only about four weeks’ worth of real productivity to go in the rest of 2010, the OECD isn’t exactly sticking its neck out here.
And just in case it is, then it’s reined back in its forecasts for 2011. Instead of growing by 2.5 per cent next year, as the OECD thought it would back in May, the UK economy will actually grow at 1.7 per cent now, it says. (In fact, 1.7% on top of 1.8% is a worse result than 2.5% on top of 1.3%, but we’ll let that pass.) Thereafter, it adds, the UK will settle into 2 per cent growth in 2012.
All these percentage marginal shifts in the macroeconomic landscape are much seized upon by the commentators. But I wonder whether they have any real meaning at all. Corporate life and individual lives barely register these kinds of movement: you either win that contract or you don’t, and you either have a job or you don’t. Real life seems much more volatile that these macro nudges, and I suspect that, as measures such as the index of production are still some distance below their 2006 levels because of a pretty big fall in the recession, all these pastel shades that you get in the official figures disguise some pretty black and white stuff that’s going on in the reality.
There are other questions that these kinds of stats and forecasts don’t really answer, either. Alongside the marginally more rosy OECD figures this morning, there were also UK government figures showing that we’d borrowed more in October than we should have done and that the public debt measured as a percentage of GDP was now running at 57 per cent. Should I worry about these things? Or should I just put another log on the fire? I do wish someone would tell me.
And while they’re about it, can they answer another of my nagging little inquiries? Is economic growth actually a good thing and, more importantly, a sustainable thing? Or is it just something we strive after because it fits our current macroeconomic models?
17 November Reporting on the skills strategy
There was news yesterday of some importance to many people in industry, business and education, but you’d be hard-pressed to find it. Television and our national newspapers seemed to have given up all pretence at delivering a full news service, preferring to drown themselves in a tsunami of sycophantic speculation over the royal engagement. And if that makes me sound curmudgeonly, then fine, I am curmudgeonly – at least I’m not trying to pass myself off as something else, which the news channels and the newspapers are in danger of doing by elevating gossip to the status of news.
(I ought to add that I’m not so curmudgeonly as to imagine that the royal engagement isn’t a story: it’s just that some of the “reporting” and the questions posed by TV people had me cringing with embarrassment. And there was too much of it. See The Times today, for example. A headline that reads: “How a middle-class Babykins won the heart of Big Willies”? I don’t care much if the Royal Family has lost most of its dignity, but I do care that The Times is losing its dignity.)
Anyway, the story that I think is somewhat important without being absolute top-of-the-headlines stuff is that the coalition government has released its strategy for future skills provision in the UK and is claiming that this is the most radical shake-up ever for the much-shaken-up further education sector. The gist of the strategy is to open up more and wider apprenticeships as the “default” mechanism for grafting skills on to the population, and there are signs in the strategy report that the government wants to bring the funding of apprenticeships into line with its thinking on higher education degrees.
The coalition government has a lot of credibility in the skills area largely because of the efforts of one man: John Hayes is the skills minister at the Department of Business Innovation and Skills and shadowed the post for several years before the last election. In a world in which politicians don’t often seem to bother to get expertise and understanding of the subjects they deal with, Hayes is an outstanding exception. He’s spent years listening to employers, training organisations, individuals, FE colleges: none of the questions about skills produce easy answers, and lack of funds further complicates things. But you’d back Hayes to give it a good shot, and the strategy paper, whose main points are at http://bit.ly/bGPIc6, is reasoned and cogent.
It makes the sensible point that policy should be all about providing people with proper usable and transferable skills, not about numbers. And it’s good to see that Level 3 skills, technician grades, are seen as the “norm”. Too often training and education policies in the past concentrated on high level skills for “managerial” types, whether or not there were jobs in these areas, and very basic provision for everyone else.
Hayes was alongside his boss, business secretary Vince Cable, at the launch of the strategy yesterday, and they were doubtless scanning the papers today to see what coverage they got for what is a fairly important document. The answer is: not a lot. Cable let slip, in passing, as he announced the skills stuff, that he’d been signed up by the BBC for a Christmas special on Strictly Come Dancing – ballroom dancing is a Cable hobby – and that gets a paragraph in The Times and was the lead on the skills story on the BBC website. But on the skills stuff, The Times and The Guardian are silent.
It’s enough to make me come over all curmudgeonly again.
11 November Vox populi, vox ignorati
For some people it’s Jeremy Clarkson. For others Cilla Black does the trick. Lots of people have an irrational, or at least unrationalised, dislike for one or other of the characters that flit across our televisions: the kind of reaction that makes you want to shake your tiny, powerless fist at the screen. Increasingly, for me, it’s getting to be television news reporters. And that’s a shame, not just because it threatens to deprive me of what is, or should be, an extremely useful source of information, but also because it is stopping me from channelling all of my televisual angst into the stooping, faux-apologetic figure of Dan Cruickshank. And that is, I reckon, letting Cruickshank off very lightly.
TV news is now at the point newspapers were at 20 years ago, which is that it’s realised that its capacity for relaying hard news is now limited because of the rise and rise of other media and that its duty therefore is now to interpret and comment as well as report. In many areas, it does this very well: political and economic reporting, foreign news especially. The traditions of Martin Bell and Brian Barron live on in people such as Orla Guerin.
But TV news people really do seem to be struggling over how to cope with a different type of competition: citizen journalism. The availability of mobile phones as news gathering and transmitting devices and of media such as blogs and Twitter mean that we’re all, these days, potential reporters. And sometimes this works very well. My first indication that this was a force to be reckoned with (and I’m probably late in on the trend) came at the Buncefield oil depot explosion in Hertfordshire almost five years ago, where pictures and descriptions of what was happening from the locals seemed both more insightful and more immediate than the news channels were able to muster.
Buncefield, though, was an event: there was something happening. What bothers me now about TV reporting is that the news channels seem often to defer to citizen journalists, or rather citizen commentators, whether or not these people actually have something to say. We get the view of “the man in the street” presented to us as valid and credible, with no way of knowing what qualification these commentators possess for their sudden celebrity. I have no problem with the view that most people are a lot brighter than they’re ever given credit for, but instant expertise is still a very rare phenomenon, outside the saloon bar at any rate.
Anyway, passing briefly in front of local TV news last night, I saw what I thought was a new low in this cult of the ordinary. A TV reporter in the studio was “reporting” on the student demonstrations in London by reading out Twitter messages. As usual with Twitter, the names were a mix of real and made-up; there was no indication whether these were from people who know about the issues, or who were on the demo, or were just sitting on a sofa somewhere with their first pink gin of the evening. It was lazy and crass.
The ending of the expectation of free education for all and the impact of that and other measures on issues such as our ability to innovate and regain economic stability may well be the biggest news event of the year, perhaps of many years. It deserves better reporting than it got.
10 November Making a case for more science
Don’t cut the science budget: if anything, in times of woe you should be increasing it. That was the message that seemed to emerge from the debate held yesterday at National Instruments’ NIDays event in London.
I had the fun job of acting as the “moderator” in a debate at NIDays on the subject of “The Need for Innovation, Exploration and Discovery” and it was a doddle. NI had assembled a pretty cracking team for the debate: Andrew Miller MP, the new chair of the Commons Science and Technology Committee; Brian Cox, particle physics professor and the TV face of science; Chris Kirby, a serial entrepreneur who’s been successful in several science-based companies; and Ajit Gokhale, NI’s general manager for UK, Ireland, France and Portugal who brings a world perspective to discussion. The panel discussed and debated and the moderator was able mostly to sit back and listen.
Specifically the panel got stuck in to the question of the budget cuts and whether the special pleading that there had been on behalf of science spending was justified. Yes, yes, yes, and yes, seemed to be the view, and the government had pretty much got it right by safeguarding the budgets to the degree it did.
Chris Kirby, who knows about these things because he’s done it more than once, was very strong that there was a real link between the “science” of discovery in university research and the creation of economically viable companies to exploit the resulting technology. Ajit Gokhale was able to point to examples in the companies he deals with where the technology that NI supplies was able to bring ideas forward much faster than before. Andrew Miller said there was wide political consensus in the UK that the science budget had to be protected and that there was a direct link between public funding and the resulting economic boost. And Brian Cox spoke winningly about the serendipity of scientific discovery, and how the unlooked-for consequences of research were often those that made the biggest impact.
Even, Cox believes, in areas of “blue skies” research such as CERN and astronomy, with the world wide web being one of the unexpected outcomes of the work at CERN. And when we’re in need of new economic activities to replace the ones that have got away from us or whose time is up, then we should be raising spending rather than considering even the smallest cut, because the more spending there is, the more serendipitous benefits will flow. It’s a chancy business, perhaps, but if you don’t take that chance, then you certainly don’t win.
6 November The 92
This is going to sound somewhat trainspotterish, but there’s nothing wrong with that. Is there? Anyway, today, by dint of going to watch Fulham v Aston Villa in the Premiership this afternoon, I will have seen all 92 Premier and Football League clubs in the eight years since I started going to matches again fairly regularly. Villa complete the set. (And yes, I have already seen Stevenage this season. At Aldershot, since you ask.)
I’ve seen Villa once in the distant past, a 1-0 away win for them at York City in the brief period that they were demoted to the third tier of English football in the early 1970s. But my current footballing career dates only from 2002, when my sister-in-law declared that she had never been to a “proper” match and we duly went to a grim 0-0 draw between Wimbledon and Burnley on a mudbath of a pitch at Selhurst Park. She had to be compensated for that with a quick visit to Chelsea a few weeks later, and she’s been a couple of times since, I think. But I was hooked back, line and sinker. And most weekends I now go somewhere.
Which is how I’ve notched up 91 different clubs at about 30-odd different grounds in the past eight years. More than 91, in fact: the departed Chester City, Rushden & Diamonds and others who’ve fallen out of the League have also been watched. Many of them more than once. Some of those ghosts are now likely to reappear in my fixture list, since the promotion of Bath City to the Conference division just below the Football League has prompted me to renew acquaintance with the team I first supported. When you’ve been to Barnet, the Conference isn’t too much of a shock.
These days I don’t support anyone in particular, and usually don’t mind who wins. Today’s match looks odds-on to be another 0-0 draw, since Villa have almost no fit forwards and Fulham never seem to score many. But that would be, for me, fairly apposite anyway. And I’ll enjoy it whatever. Which is why, having done the 92, I’m already planning where to go next weekend.
PS. 0-0 was too pessimistic. It finished 1-1 with a last minute equaliser for Fulham.
5 November Home isn't necessarily where the heart is
A few weeks back on this blog, I mulled over some of the issues raised at a Royal Academy of Engineering debate about who owns UK industry. One of the points made in the debate – not, it has to be said, particularly originally – was that so-called multinational companies, which now control a huge percentage of UK manufacturing and other industries, might owe no allegiance in times of trouble to the UK, except as a viable and venerable market. As a manufacturing location, when the chips were down, the UK could easily lose out not just to other countries with lower basic costs but also to the multinational’s own “parent” nation.
The recent examples cited are the warning French-owned carmaker Renault gave to its plants in Eastern Europe about bringing work back to France if things went Louis-Philippe shaped, and the guarantee that Siemens seemed to give its German workers that, if there were cutbacks in its global workforce, Ausland would suffer before Heimat.
The UK’s problem in all this economic nationalism is, of course, that as we now own so little of our own manufacturing capacity (not to mention foreign ownership of large bits of our infrastructure, though they’re rather more difficult to uproot and relocate) we’re scarcely in a position to do likewise. If, indeed, we wanted to.
Anyway, there’s a news story today that, in headline terms, looks to be rather scary in this very direction, involving the company that is perhaps the epitome of a multinational and is also rather important to the UK’s manufacturing economy. “Toyota threatens to move production over surging yen”, trumpets the Financial Times.
But no, this isn’t a bad-news story. Not here, at any rate. The threat isn’t to Toyota’s UK or overseas plants: it’s to the ones it owns and operates in Japan, where the strength of the yen has made production even less economic than it was before. So much for international companies always looking after the home base: not in this instance. And though there’s a degree, doubtless, of traditional political sabre-rattling going on here, it’s a bit of a different take on the usual arguments.