I got my BS in physics, my PhD in medical physics, and have worked in a biomedical research lab for almost 15 years. There is a lot of truth to what you are saying. The funding model is broken, and it encourages scientists to sling a lot of BS to get funded. That said, I don't think the distinction that Ridley draws between tinkering and basic research is as clear as he lets on. Tinkering happens under both types of funding.
Public funding of science isn't just about technological advancement, it's also about increasing the scope of human knowledge and the training of new scientists. Publicly funded science is assumed to be wasteful from an economic perspective (in the short term). If it weren't, public funding wouldn't be needed. The US has done very well with both public and privately funded research, and it seems odd to argue that we need one and not the other. I would argue that our model for public funding leaves much to be desired, however.
I actually work on treatments for brain tumor. Some of my research regards a unknown mechanism of chemoresistance, and I am testing methods to overcome it. Oddly enough, some of my work is in collaboration with a physicist that models tumor cell migration. It was actually from this theoretical-based work that we came to identify a miRNA with a very unique property, and we are looking at the presence of this miRNA in patient blood as a possible diagnostic.
But, I stress, you are correct about the funding model. It is awful and needs to be overhauled. Personally, I think there should be a tiered system whereby scientists advance or fall in funding levels based on their previous work. No grant writing, just climbing a funding ladder if your work is good, or falling down it if it is not. More work should be done promote resource sharing rather than putting large capital expenditures under one or two PIs.
I dislike patents, but his criticism of patents seems to be tangential to the issue, since it is privately funded research that has the stronger incentive to patent.