Brave new world for the DTI

FAREWELL to the Department of Timidity and Inaction and welcome to the new whizzbang Department of Technology and Innovation.

As one of the longest-serving Trade Secretaries of recent times, Patricia Hewitt is determined to shift the DTI's budget and agenda over the next five years.

There is an underlying political plot. The LibDems have pledged to abolish the DTI and the Tories want to cut it down to size.

So Hewitt is setting out to convince us all that the redefined DTI intends to place itself at the disposal of the biotechnology economy where Britain plainly has clusters of research excellence.

Indeed, the restrictions placed on stem cell research in the US by George W Bush have gifted Cambridge University - one of the most respected teams of scientists in this area - with the goal of creating a cure for Alzheimer's disease.

Over the years, the DTI has shrunk itself as a department. The budget has come down from its peak £16bn with 26,000 staff and the goal is to reduce it to £5bn with 4,000 civil servants by 2008.

Of this money the aim is that at least 40% will be aimed at encouraging groundbreaking research and development with biotechnology at the forefront.

For this to be effective it will require the government to be more dynamic in taking on the animal rights extremists who Hewitt accuses of 'economic sabotage'.

She recognises that unless the authorities act, the slow drift of primary research on new drugs overseas will pick up pace.

Hewitt believes that for too long the police have regarded attacks on cars belonging to people working in the pharmaceutical industry-and similar offences as no more than vandalism.

The government is determined to bring Special Branch, the police authorities and the Home Office together in stamping out abuses. In her view, attacks on graveyards are 'unacceptable and disgusting' and should not be tolerated in a civilised society.

The public also needs to understand that when it gives money to anti-vivisection groups it might well be funding those capable of appalling violence.

Much of what Hewitt has to say will come as a relief to the pharmaceutical industry whose activities in Britain are increasingly made more difficult by extremists.

The message seems to be getting through that unless government wakes up it will find Britain's edge in life sciences and research and development lost to international competitors.

Hampton's role

THE latest figures from J Sainsbury are largely historic in that we saw most of them when Justin King unveiled his strategic plan.

Of far more interest at present is whether the supermarket group will attract a takeover at some point. That is an increasing concern otherwise Morgan Stanley would not have been taken on as financial advisers.

As important as King's stewardship as chief executive is Philip Hampton's role as chairman. In his previous high-profile jobs at pre-breakup British Gas and BT he never backed away from difficult decisions. Indeed, one of his BT babies, mmo2, is proving a singular success story as we report today.

If the right offer for Sainsbury were to come along - and several groups are thought to be sharpening their weapons - then Hampton would take them seriously, especially if the take-out price could be bounced up to 350p or so against 271½p last night.

The key would be bringing the Sainsbury family - keepers of the grocery flame - along. Some of the groups looking at Sainsbury might want to bring the family in as partners.

Indeed, they might be willing to leave the King management in place but twiddle with the strategic-controls. Competing in price with Tesco, which controls 29% of the domestic market, and Wal-Mart, with its global buying power, does not make a great deal of sense.

Restoring Sainsbury's quality edge, particularly own-branded goods on the Waitrose model, looks a better prospect.

On this model Sainsbury's larger, edge-of-town stores could become obsolete and useful property plays for the right buyer.

Rates peak

A FRESH slew of data suggests that British interest rates may well have peaked at 4.75%.

The Bank of England's last minutes show no signs of dissent, average earnings are easing down and unemployment rose slightly when it was expected to fall. The CBI says that manufacturing orders are falling for small and medium-sized companies.

The pound's decline against the euro will bring some relief for exporters but it continues to be dragged up against the sinking dollar.