The relationship between scientific research and business is vital to Britain’s economic future. But using top research universities to promote economic development requires a subtlety and understanding that is not evident in the government’s science strategy. Indeed, odd though it sounds, by focusing on ideas as the means of creating wealth, we are making a big mistake. People create wealth, and we need to get the right people into the right places.

The link between scientific research and economic growth is well established and, in academic terms, Britain is well placed—much better than France, for instance, where Jacques Chirac has just announced the formation of an agency for industrial innovation. Britain has eight of the world’s top 50 universities, with scientific research a particular strength. Although it has only 1 per cent of the world’s population, it produces 5 per cent of the world’s scientific research, and achieves 12 per cent of all citations in scientific papers—more citations per pound of GDP than any other country.

But Britain’s spending on R&D at 1.9 per cent of GDP is well below the OECD average—comparing particularly badly with France, Germany and the US. The government’s goal is to raise it by 2014 to 2.5 per cent of GDP, requiring an extra £5bn a year to be spent by both public and private sectors.

In making the case for this kind of investment, the treasury’s science and innovation report observed last July: “Studies show that R&D delivers benefits by allowing an economy to do two things: understand and appreciate the value of others’ findings and results; and make new discoveries.”

But which of these “two things” should we concentrate on? It is clear that the government believes that the answer lies in making new discoveries in the hope of “commercialising” them. This is why the Higher Education Innovation Fund (HEIF) is to receive £90m in 2005-06 to stimulate enterprise from research, largely through university technology-transfer offices.

The government—or the relevant departments—believes in what has become known as the linear model of commercialising scientific research. This envisages the university, which owns a discovery, copyrighting, patenting or otherwise claiming it as intellectual property, then either putting it into a company (a “spin-out”), licensing it to industry or building a consultancy round it. Hence the role of technology-transfer offices in licensing, issuing patents and registering intellectual property rights.

The problem is that most of the…

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