The government needs to boost the level of tax breaks available for firms that invest in research and development.
The call came from entrepreneur and inventor, Sir James Dyson.
Addressing the Rolls Royce science prize ceremony in London, Sir James argued the case for lifting R&D tax credits to 200 per cent for those firms that are developing new technologies and hi-tech products.
At the moment R&D tax relief for smaller firms stands at 175 per cent of expenditure and at 130 per cent of expenditure for larger companies.
Sir James also recommended that qualification for tax breaks should be focused on the manufacturing sector.
He said: “Right now it’s the banks and the service sector that claim two-thirds of the tax credits. The criteria must narrow.”
He went on to press for a change in UK economic culture: “The City has no interest in engineering. Ten years ago it fell in love with Lastminute.com, lured by fashionable web entrepreneurs. But heavy industry – like Rolls-Royce – generates more cash, more exports, more technology and more jobs.
“It’s essential we put stimulus in place for long term research and development, sooner rather than later. While it’s important we cut the deficit, we also need to think about building long-term sources of wealth.”