Britain needs to take a leaf out of America's book and create its own Silicon Valley-style ties between universities and business if it is to succeed in the modern economy, according to Shadow Chancellor George Osbourne.
Osbourne is currently on a trip to California to meet the heads of IT companies and Stanford University to see whether the UK can replicate their relationship.
"We've got big universities in Britain, some of international renown, and there is plenty of money in the UK. But it is not focused on investment in some of these small start-up companies," he told Radio 4's Today programme.
"There are things we've got to learn if Britain is going to compete in a world of China and India, where we are not going to compete on wage costs."
Osbourne insisted that changes are necessary because the UK is not making an impact in emerging markets.
"It is striking that it is difficult to think of a single major internet company in the world which is British. Why is there no British MySpace? " he said.
"None of these companies is British, and the worrying thing when you're here in Silicon Valley is that you can see they are moving into new industries such as biotech."
Osbourne suggested that intellectual property laws must be improved to protect business-winning ideas.
"The problem with intellectual property laws in Britain is that it costs four times as much to patent something in Britain as it does in the US," he said.
And it is not just a matter of making tax laws attractive to major IT companies. "California is one of the most highly taxed of the American states, so it's not just the tax regime," he said.
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