Knowledge economy needs to be more than idle rhetoric

2007

Turning Britain into a true knowledge economy should be one of the "big ideas" of a future Gordon Brown premiership, a think-tank has urged.

The Work Foundation has said the Chancellor has a golden opportunity this summer, assuming he inherits the mantle of power from Tony Blair, to set out an economic policy that will enable Britain truly to flourish as a knowledge economy.

"The time has now come to promote the knowledge economy from usefully vague rhetoric to the framework around which economic policy is built," said Ian Brinkley, the director of The Work Foundation's knowledge economy programme.

The summer's Comprehensive Spending Review, which outlines government spending for the next five years, could also make success in the knowledge economy a key objective, it argued.

"Britain now competes on its ability to generate and exploit knowledge. What we need now is for the knowledge economy to move from being an unacknowledged guest at the table of economic policy-making to guest of honour," said Brinkley.

"The knowledge economy could be the unifying theme of Gordon Brown's stewardship of the economy – and perhaps, in time, the nation," he added.

With the traditional economic boundaries between manufacturing and services breaking down and after the painful adjustment shocks of the 1980s and 1990s, Britain now had a more sophisticated industrial structure, he argued.

Making things and providing services were now two interdependent aspects of economic activity, both depending on producing innovative, creative goods and services with a high value-added content.

What's more, at some point in the next few years, the majority of the UK's economic activity and the majority of its employment would take place in the "knowledge-based industries", argued the foundation.

What, therefore, was needed was greater investment in the country's knowledge base, an increased flow of skilled graduates into the workplace, increased demand for and spending on research and development, the reforming of intellectual property law and more decentralisation, it recommended.

"Depending on the definitions used, the knowledge economy now accounts for between 40 and 50 per cent of economic activity and employment in the UK," the report explained.

"Almost all the net growth in jobs in the 10 years to 2005 in the UK came from the knowledge based sectors – business services, finance, communications, education and health.

"The UK already leads the world in the export of knowledge services, from consultancy to financial services, it added.

The Comprehensive Spending Review offered an obvious point to set out a "big idea" to define a new term in the Labour government's history, and the knowledge economy was a strong candidate to be that big idea, suggested the foundation.

"Economic progress has always involved knowledge. What makes the 21st century distinct, though, is that never before have so many well-trained minds and such powerful computers come together," said Brinkley.

"When firms and organisations successfully combine the two and transform the result into economic value, what you have is the knowledge economy," he added.