Sir David McMurtry has urged the government to reduce university research funding and give that money directly to industry to invest.

The chairman and chief executive of Renishaw, the Gloucestershire-based engineering group, said companies were competing with universities to hire the best engineers and scientists. “The people we need are stuck in universities doing research paid for by money we’re giving to the government [in tax].”

Sir David said that given the current state of the public finances it would make much more sense to help companies generate exports – and thus tax revenues – to bring down the deficit.

He said he had made the argument to Vince Cable, the business secretary, at a recent meeting. “I made the point that while we’re in a debt situation, it’s a lower risk strategy to allow the companies that have found the secret of success of making profits to keep more of their money with the guarantee of employing more people. That will get the country out of the mire. It’s a lower-risk solution to wealth creation,” said Sir David.

He added that the system of university research grants was “a huge machine which now we can’t afford”.

Sir David was particularly sceptical of the value of universities spending public money to support business start-ups.

“If you look at the history of start ups, the failure rate is just horrendous for all sorts of reasons – [lack of] business acumen and [product] protection. As soon as they get going people just copy [the invention] and they haven’t got the wherewithal to stop them copying it,” he said.

“How many companies of any size have been generated in the last 10 years from our university investments?”

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