At ten minutes to midnight on Hogmanay my Father-in-law and I would be ceremoniously dispatched from the house and the windows thrown open “to let the old year out”.
Fortunately we would then be invited back in just after midnight to “welcome the new year in” as first-footers - bearing gifts of coal and cake in order to bring good fortune into the house for the year ahead
Ruth completed her blog on 2016, with the government’s plans to bring Innovate UK, the Research Councils and HEFCE’s Research England together into one new organization, UK Research and Innovation (UKRI) - creating an unprecedented strategic focus on the UK’s science and innovation capability. The windows have certainly been thrown open to let 2016 out and we are looking forward to welcoming in the new CEO of UKRI in 2017.
There couldn’t be a more important time to get this right, as in the New Year we set our sights on shaping the UK’s Industrial Strategy in the context of the UK’s referendum decision to leave the EU.
To boldly go …
So it was very timely encouragement to see that Innovate UK had supported eight out of the thirty six finalists short-listed for the global FT Arcelor-Mittal Boldness in Business Awards including the majority of businesses short-listed in the “smaller company” category, such as Clyde Space, Nanoco Group plc and Oxbotica.
The aim of the awards is to highlight that in today’s business world, boldness matters more than ever and that our businesses need to be thinking beyond the short term. The shortlist is drawn up by the FT’s global network of bureau chiefs and senior journalists across Europe, North & South America, the Middle East and Asia Pacific.
In other categories we were delighted to see that Air Liquide for their work on “corporate responsibility/environment” and Oxford Nanopore Technologies for “technology”. These highly successful companies, from across our economy, located across the UK proving that commercial success can be achieved through world-class R&D.
Boldness is a word that is not used enough in UK business.
For many in the commercial world, it implies an inappropriate level of risk-taking. And that is exactly why Innovate UK exists: to give UK businesses the confidence they need to invest in the markets of the future by funding and connecting business-led innovation.
The World Economic Forum classifies economies at three levels, from factor-driven, through efficiency-driven to innovation-driven advanced economies. In other words, our future prosperity is tied to our ability to innovate, to continuously create products, services, processes and business models that deliver better outcomes. The challenge is that whilst the WEF places our economy overall as the 7th most competitive in the world it places the level of our innovation competitiveness at 13th in the world (down one place from last year).
One key insight into the innovation within an economy is the % of an economy’s GDP that is invested in R&D. If we look back over the last decade, we can see the UK has stagnated, with around 1.7% of its GDP being invested back into R&D, whilst our competitor nations have raised their R&D investment to above 2%, above 3% or even higher. The OECD average in 2014 was 2.4%.
The UK has outstanding businesses, which invest extensively in R&D particularly in the automotive, aerospace, electronics and pharmaceutical sectors and the benefits from this are clearly visible.
To succeed in the future we now need a bolder ambition: to lift the level of impactful R&D across all sectors of our economy, across all regions of the UK and across businesses of all sizes.
The House of Lords, Science & Technology committee, following its review of EU membership and UK science after the referendum, has also called for “boldness”, proposing that we “seek an even more prominent place for this country in the global economy”.
The Autumn Statement
In the Autumn Statement, the Chancellor announced a sizeable and very welcome increase to the government’s funding of science and innovation. Central to that additional funding will be launch of an Industrial Strategy Challenge Fund to be managed by Innovate UK and the Research Councils. A fund designed to trigger a step change in our economy through an increase in the level of R&D invested by the UK – not just from this additional government funding but from the private sector funding it will also be able to “crowd-in”.
The Autumn Statement also included announcements of:
- £390 million investment in the future of transport technology
- £1 billion investment in full-fibre broadband and 5G network trials
- £400 million investment in growing innovative firms through the British Business Bank
- an advisory panel led by Sir Damon Buffini to look at the barriers to long-term finance for growing firms
- funding for Charlie Mayfield’s productivity initiative to boost management skills across British businesses
Bold and important initiatives.
… crossing the 2% of GDP frontier
Innovate UK and the Research Councils have already shown how by working closely together, they can give the private sector the confidence it needs to invest in the markets of the future.
Over the last four years, the Biomedical Catalyst has attracted not just industry matched funding from participating businesses but it has also crowded-in follow-on private sector investment, which is four times the level of the original government funding provided.
So with the right focus, the increased government funding in science and innovation in the Autumn Statement should be able to attract sufficient follow-on private sector investment to take the UK’s total investment in R&D over that elusive 2% of GDP benchmark.
The government funding alone is not sufficient to do this. This frontier will only be traversed if the private sector also signs up to this bold ambition.
Happy New Year - may you live long and prosper.
Follow me on Twitter : @KevinBaughan
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