Asset sale cash could be used for technology innovation

Mandelson : "UK needs to invest in future growth."

Business secretary Lord Mandelson said that some of the cash raised from the sale of assets announced by Prime Minister Gordon Brown yesterday, should be used to fund technology innovation.

Speaking at the Technology Strategy Board’s Innovate 09 conference at London’s Business Design Centre, Lord Mandelson was asked whether the proposed £16bn raised from the asset sale would be spent on innovation.

He replied: “That is a very good question, but a good deal of that £16bn will be used to offset the national debt we have taken on to bail out the banks and save us from economic oblivion.”

However, Mandelson said that when the value of those assets was realised, some of the cash would need to be invested in economic success. “We cannot lose sight of the need to invest in future growth - this must run alongside measures to pay off the debt we have taken on,” he said.

Earlier in his speech Mandelson pointed out that one of the financial sector's challenges was to understand how best to finance innovation. He argued: "The sector has long under-delivered on finance for start-ups and fast expanding firms." adding that capital costs, long lead times for proof of concept and product development also posed financial problems for businesses.

“It is striking that over the past decade private equity has raised so much money, and invested so little of it in innovative small businesses. This is a real problem in my view,” he said.