The autumn saw the Chancellor unveil the Budget and Spending Review 2021, critical for resourcing and implementing the government’s Innovation Strategy which was launched in July and signalled the government’s intention to place science, technology and innovation at the heart of the recovery from the pandemic by supporting the UK’s innovation capabilities. But the Budget signalled a slowdown in spending ambitions….
The target of lifting spending on R&D to £22bn per annum by 2024/25 was promised in the 2020 Budget, and represented a significant increase from the current public spending on £14.9bn per annum, but the government has now signalled that it will effectively ‘take its foot off the accelerator’ in implementing the new Innovation Strategy by readjusting its pledge £20 bn per annum by 2024/25. Although this is remains a serious spending commitment to science and innovation, this move risks curtailing opportunities to gear in private investment for R&D, and as a consequence diminishes likelihood reaching 2.4% of GDP for R&D intensity by 2027.
Pursuing this target is critical to driving innovation activities in the UK which create high-value jobs and prosperity, and which underpin levelling-up and the Net Zero missions – all central components of the Build Back Better and Build Back Greener plans. By slowing the pace of planned public investment in science and innovation, the government risks undermining its recently published Innovation Strategy, and so we are urging HM Treasury to take every opportunity to review its commitments for science and innovation considering the national economic conditions in the year ahead, to ensure that the UK remains globally competitive to fulfil its ambition for Science and Technology Superpower status.
The new Innovation Strategy was broadly welcomed as a progressive move by government to deliver on its stated goal for the UK to become a ‘global hub for innovation by 2035’. It will be an integral part of the plan for recovery and recognises that the societal challenges and global market opportunities identified in 2017 Industrial Strategy remain. In launching this strategy, the government signalled its intention to place science and technology at the heart of the UK’s recovery from the pandemic by supporting the UK’s innovation capabilities. The climate crisis and demographic crisis – arguably the world’s most pressing concerns – offer global trade opportunities for the UK, with its world-class expertise and international reputation for innovation and entrepreneurship.
The level of innovation required to tackle these big missions is colossal and needs nurturing if it is going to be successful. The fresh commitment and investment signalled in the Innovation Strategy, shaped by lessons from the Covid-19 pandemic to recognise the power that science and technology can play in tackling societal challenges and transforming lives, helping realise the ambition to ‘Build Back Better’, were broadly welcomed. With these latest announcements unveiling a scaling-back on investment ambitions for R&D, we are urging the government to keep science and technology at the heart of the UK’s recovery from the pandemic by supporting the UK’s innovation capabilities.
Close-to-market innovation across the UK is central to the new Innovation Strategy
The Innovation Strategy aims to harness assets across the country, recognising the UK’s geographically dispersed R&D and innovation ecosystem as a means of maximising the benefits of innovation for local economies and building on local strengths in places. Much of this activity is represented by members of the Association for Innovation, Research and Technology Organisations (AIRTO), and the UK Science Park Association (UKSPA). AIRTO is the foremost membership body for organisations operating in the UK’s innovation, research and technology sector. With a combined turnover of £6.9 billion and more than 57,000 scientific and technical staff, IRT sector organisations work at the interface between academia and industry. UKSPA represents more than 130 research campuses, science parks, technology incubators, and similar locations. Collectively, these house over 6,000 high-tech companies with 120,000 employees, comprising some of the nation’s most skilled scientists and innovative business leaders. Together, these vital sectors play a fundamental role in driving productivity. They include hotbeds of innovation operating in cities, such as the Met Office and National Physical Laboratory, and hubs of activity in non-urban areas, such as the European Marine Science Park near Oban, the Aberystwyth Innovation and Enterprise Campus, and Orkney’s European Marine Energy Centre.
Repeated call to building on our world-class existing capabilities
In addition, to committing to revaluating the annual commitment of £20 bn for R&D by 2024/25, it is clear that the government has the opportunity to go further in strengthening two particular areas of the Innovation Strategy, by smart deployment of the funds announced in the Budget 2021 to programmes which:
- Create more support mechanisms for boosting international collaborations – and in particular, taking steps to ensure that established and renowned UK entities continue to play their pivotal part in programmes like Horizon Europe. The UK’s international standing as a ‘Science and Technology Superpower’ will be hampered if we lose ground in our relationships with key collaborators in EU member states.
- Boost investment in the innovation ecosystem, recognising that some of the UK’s non-profit distributing organisations that lie at the innovation ecosystem’s foundations and have a critical role to play in the levelling up agenda, offering living labs, test-beds and demonstrators, remain undercapitalised. For the UK’s innovation ecosystem to be truly world-leading by 2035, this under investment must be addressed.
Patrick Bonnett is Chair of UKSPA , Chief Development Officer of NICA and a board member of the AIRTO. Steve Yianni is President of AIRTO and Jane Gate is Executive Director of AIRTO.