Dr. Tom McDonnell:

It is. It may be because we have become reliant on assuming that the US multinationals will be the ones that will do the R and D and that we are too small to be good at anything. We cannot put all our eggs in one or two baskets because it is too risky, and therefore we will not do it. We will simply adopt the best technologies, such as AI or whatever it might be, but we will not spend the money on developing them ourselves. Of course, even when we fail to develop things, we are still building up the skills that allow us to have a world-class workforce that can attract those companies. That is the case even if we do not hit the bull's eye with every type of Government spending or every roll of the dice. One of the problems with R and D and why it is always underinvested in by the market is that there is enormous uncertainty as to whether it is going to work. That enormous uncertainty reduces the incentive. People are afraid to do it, except for a few, so we get less R and D, less innovation and less economic growth than we ought to. That is why the Government needs to intervene. Indeed, at the Foundation for Fiscal Studies, one of the papers that won an award last week looked at the type of R and D regime we ought to have. It starts with the subsidies, the high-potential start-ups and is done it that way. The R and D tax breaks come later on when we get to the medium and large companies.