Consider this quote: "The principal ingredients fuelling the decline are . . . the immaturity of software engineering as a profession, the shortfall in education and training of software practitioners, the reluctance . . . to adopt modern software practices, and the ignorance of our nation's leaders on software issues and the lack of a national software policy."

It could be a description of the state of software in the UK. It is, however, a quote from a study by Don O'Neill, executive vice president of the US Center for National Software Studies (CNSS), which is sponsoring a programme to improve the understanding of the added value of software to the national economy and global competitiveness.

Now the US is, without doubt, the world's most successful software nation. Its packaged software dominates global markets. The two largest international software companies, Microsoft and Oracle, are US-based. Innovations pour from its laboratories.

Yet it is concerned that its competitiveness may be in decline for the reasons Mr O'Neill outlines, and is already taking steps to counter them.

By comparison, the UK, which shares all these problems, seems mired in complacency. Its share of the global software market is small. It has a few, but only a few, excellent software companies like Sage capable of taking the fight abroad and winning.

Most of its bigger IT companies are foreign owned. John Higgins, the thoughtful director general of the UK trade body the Computing Services and Software Association, worries that the UK industry can seem little more than the sales arm of the US software business.

Yet the UK has neither a CNSS to spread awareness of the importance of software to the economy and to bring some coherence to what is still an entrepreneurial, opportunistic industry nor a national plan for the industry.

The depth of the problem is expected to be outlined in a forthcoming report from the Information Age Partnership between government and industry which will reveal a decline in software research and development by indigenous companies. Other countries have shown far more awareness of a need for action. More than three years ago, the Indian government unveiled an action plan: "to make India a Global IT Superpower and front runner in the age of information revolution". Ambitious perhaps, but India is already realising the benefits of that initiative in terms of increased offshore programming work.

That kind of approach is not an option in the UK where salaries are relatively high. Nor is shrink-wrapped software. The UK market is too small to provide the economies of scale which come naturally in the US. But the UK has strengths which could be exploited to a far larger degree. Its computer graphics expertise, exemplified by its superiority in computer games, is second to none. It is no coincidence that Microsoft's only laboratory outside the US is based in Cambridge.

A suitable business model for a country with these strengths might resemble the highly successful ARM Holdings, which licences the intellectual property for its chip designs around the world.

It will take, however, a new appreciation of the value of software development as an asset and a new appreciation of the significance of software on the part of the government.

In the early days of the last Labour administration I had occasion to be present at a meeting between the leaders of the UK information technology industry and DTI officials and ministers.

It was depressing that awareness of the software industry and the best ways to promote it was low and seemed to have changed little since the 1970s. Let us hope the new government has moved beyond that stage. Patricia Hewitt, the new industry secretary, could make an immediate difference by advancing plans, now believed to be at the consultation stage, to create tax credits to set against research and development expenditure.

The government could move to create what Mr Higgins of the CSSA describes as a "Milk Marketing Board" for the software industry with the brief, for example, to ensure that university research of promise is identified, adequately backed and properly exploited.

The CSSA and the Federation of the Electronics Industries - with which it may at some stage merge - would undoubtedly support the creation of such a body even if, as trade bodies, however, they would not be directly involved. Without such an initiative, however, it seems likely the UK will slip further down the league of global competitiveness.