Absolutely spot on Sir James, but just a minute...
Dyson's comments are largely correct. There is no prospect that web anything will make a reasonable return based in Britain. Anything that is created here will be snapped up in its formative stages by a Facebook, Google or Microsoft making the creators a bit of cash but making no impact on GDP here in the UK.
Where are our Googles, Oracles, Microsofts, Facebooks? They don't exist. They don't exist because there's no investment from funding companies in the UK. There's no investment by funding companies because there's no intellectual property protection in the UK. Many, many commenters here will assert that IP protection for software is not justified and I respect that position. But as an investor I can assure you that without protection, there's no investment and, so, no meaningful revenue generated for UK plc. Instead the ideas which do emerge here are snapped up early by largely US interests where, if they flourish, they will contribute to the US economy.
But don't take my word for it, do the analysis yourself. Consider the few software companies that do exist such as Sage, Misys, etc. and then consider whether their products satisfy a peculiarity of the UK (accounting, law, government systems, etc) or are vendors of more general applications. Most that have anything to do with software are consultancies because selling time is more reliable.
It's not just the UK. This pattern is repeated across Europe for much the same reason. Sure there are vendors meeting local needs or national government favours but beyond SAP are there many independent software companies able to survive internationally?
It's ironic, then, that the home of the intellectual property free zone does not provide much by way of free software. Think of the big open source project (such as apache, linux, open office, android, xen, wikipedia) and consider who are fostering these important projects. Is it some philanthropy in Europe to show how an IP free zone can thrive? No. They are mentored in the US. Sure, Europeans (and people from every other continent) contribute but without the the ability to channel cash to these projects, very often cash from US investors in IP, these projects would fold.
So in Britain IT is almost exclusively 'data processing'. Data processing is important but is a commodity which has long since be shipped off-shore. Instead of generating cash for UK plc it sucks cash and knowledge out of the country. Even where there are IT successes such as ARM (this is a hardware business with does benefit from IP protection) the manufacturing and selling of product and revenue and jobs which accrue from those endeavours are sub-licensed to companies in other countries.
So Dyson is right. In the current framework the government should focus more on manufacturing. However, Sir James, for me your words would have more force if I knew for sure all your manufacturing (and jobs) is here not abroad as I believe at least some of is.