For centuries, the UK has been a home for global innovation. Scientific progress has not only transformed our economy, it has been the single biggest driver of productivity and helped to improve our lives for the better. As we look to the future, research and innovation will have an important role to
play in driving progress on the social challenges we face as a society. Supporting an ageing population, transitioning to a zero-carbon economy and tackling antibiotic resistance will all require significant research and innovation and business will have a central role to play.
Keeping the UK at the forefront of global innovation is a shared priority of the CBI and government. The Prime Minister has already made some promising statements to unleash innovation and make the UK a global hub for science and research, with the target to reach 2.4% of GDP spend on R&D by 2027 at the heart of its plans. The UK currently spends 1.7% of GDP on R&D, far below the 2.4% OECD average, and UK investment is particularly limited outside of the South East. It will be difficult but international experience shows us that it is possible. In the last 20 years, 14 other countries have successfully increased their R&D intensity by the scale that the UK is aiming to achieve over a ten-year timespan. Hitting this target and achieving the benefits that can flow from it will need a new approach though, requiring the UK to build its R&D capacity across the country and beyond the South East at pace.
There are already examples of ground-breaking R&D taking place all over the UK as demonstrated in the CBI’s recent report “Don’t Wait, Innovate”. Within this report the innovation strengths that the UK has to offer were explored and the findings are promising. From the pioneering life sciences cluster in the East of England, the thriving agri-technology sector in Northern Ireland to the cutting-edge transport cluster in the Midlands – the UK is leading the development of new innovations every day. Central to the success of these clusters of excellence is the strong partnerships being created between business, universities and a string of other local actors.
Yet the truth is that we need to see more of this R&D happening at pace and scale to make a real dent in the 2.4% target. At a time when the UK faces increasing global competition from other countries powering ahead with their R&D strategies it is important that we develop a clear, bold brand and offer for UK innovation. This must be built on making it easier for businesses, including international ones, to invest in R&D throughout the UK.
One of the ways the CBI believes this could be achieved is through the creation of a new network of “Catapult Quarters”. Catapult Quarters would be located around anchor institutions like Catapults and Research Technology Organisations (RTOs). They would build on local strengths and incentivise co-location and collaborative activity within designated geographic areas through a targeted benefits and support package, and in some cases regulatory flexibility. For example, the package provided by a Catapult Quarter could include access to business liaison services such as a dedicated business account manager, grant funding for collaborative R&D projects or access to new regulatory environments that enable the testing of technologies in the real-world. An important element of the Quarters would be taking a focus on applied research to help improve the UK’s capacity for commercialisation and enhance the attractiveness of the UK’s R&D offer – an area which businesses consistently highlight as needing improvement.
By encouraging business co-location and bringing key local stakeholders together in a coordinated way Catapult Quarters could also support the development of even more clusters of excellence in different parts of the country and strengthen those that already exist. And they could also provide greater international visibility for UK regional capabilities which could help attract international R&D investment and incentivise global businesses to anchor commercial activities in the UK.
The CBI is pleased to be working with business and other stakeholders to further test how Catapult Quarters could be implemented in practice. Government’s recent announcement that it will be holding a review on how Catapults can be used to strengthen R&D capacity in local areas will provide an important opportunity for us to develop this further.
Whilst Catapult Quarters provide a significant opportunity, they should be seen as part of a holistic and long-term strategic approach to R&D. Government will also need to significantly expand public R&D funding to crowd in the business investment needed to hit 2.4%. This includes making the R&D tax credit internationally competitive and growing funding towards late stage development and commercialisation.
Imagine, if R&D spending increases to 2.4% and Catapult Quarters are created, how much further the UK could grow its successful innovation-based economy. We could break even more ground on the grand challenges of our time and ensure the UK remains the home of global innovation for centuries to come.
Author: Alissa Dhaliwal
Head of Innovation Policy, CBI