http://www.ft.com/cms/s/9044734e-6ae0-11db-83d9-0000779e2340.html
Financial Times
November 3, 2006 Friday

By JAMES WILSDON

Four years ago, Tony Blair became the first prime minister to address the Royal Society, Britain's senior scientific body. He promised to make the country "one of the best places in the world to do science". Today, when he returns to this theme in a speech in Oxford, he can claim with some justification to have delivered.

Science budgets have more than doubled since 1997. Britainis home to three of the world's top 10 universities for scientific research. With just one per cent of the world's population, Britain produces nine per cent of all scientific papers and receives 12 per cent of citations.

Yet in spite of these achievements, the mood across the research community remains stubbornly downbeat. There are concerns about the dwindling flow of new recruits into certain subjects, notably chemistry and physics, which have led to the closure of several university departments. Contrasts are drawn with the growing capabilities of China and India, which this year will churn out a total of 5m graduates in science, technology and engineering. A related worry is the growing attractiveness of Asia as a location for corporate research and development, a trend reinforced by new data this week from the Department of Trade and Industry. Above all, there is the familiar lament that Britain may be good at basic research but remains poor at exploitation, under performing many of our competitors against key indicators of innovation.

This sense that Britain's success is fragile and vulnerable to wider shifts in the global distribution ofscience suggests two policy challenges that Mr Blair must now bequeath to his successor. The first is to rethink the relationship between scienceand innovation. Conventional measurements of innovation are still dominated by a "pipeline" view of basic scienceflowing into industrial applications. But as a provocative report published last week by the National Endowment for Science, Technology and the Arts argues, this model is outdated and in many respects irrelevant to how innovation occurs within the British economy. It emphasises new products at the expense of services and processes. Manufacturing is prioritised over other areas of innovation such as financial services, the creative industries, retailing, consultancy and the public sector.

Science and innovation can no longer be treated as interchangeable elements of the same policy discussion. In some ways, the sciencelobby has been a victim of its own success, swallowing up debates over education, skills and creativity into a particular story of where innovation comes from and then wondering why the reality fails to match up. The explanatory power of this story is diminishing fast and it needs to be replaced by a broader account of the diverse sources of innovation that sustain our economy and society. Investment in basic research and a skilled scientific workforce remains vital. But we should not allow the closure of a few chemistry departments to distract us from the larger task of developing the fundamental skills for innovation - analysis, problem-solving, creativity and resourcefulness - across the school and university curriculum.

This links to the second challenge: identifying Britain's relative strengths. Confronted by daunting statistics about armies of Chinese and Indian scientists and engineers, it is easy to feel pessimistic about our small island's long-term prospects. It is understandable to look for ways of coercing our young people back into the physics lab. But again, this is to misunderstand how and where innovation occurs.

At a recent Royal Society meeting, a senior R&D manager from Unilever admitted he would be relaxed if more of their synthetic chemistry moved to Shanghai, because the unique strengths of their British labs were in combining hard sciencewith a sophisticated understanding of what makes consumers tick, drawn from social and behavioural sciences. As science and innovation becomes more international, Britain's greatest assets may be its openness to international collaboration and its ability to combine advances in basic sciencewith insights from other disciplines, such as psychology, economics, social sciences and law. We will continue to benefit from our own inventions and discoveries, but also from our participation as specialist nodes in global networks of research. A growing number of scientists and R&D-intensive businesses recognise these opportunities and are reorientating themselves to meet them. Now policy needs to catch up.

The writer heads a project at the think-tank Demos on the new geography of science(www.atlasofideas.org)

Copyright The Financial Times Limited 2006