Oxford University Press announced “rizz,” a succinct spin on charisma, as 2023’s word of the year.
A fitting choice as the UK whizzes towards a general election. Throughout 2023 the campaign machines have been roaring. All major political parties recognise that amid a cost-of-living crisis elections will be won or lost on economic credibility.
But substance must outweigh style. There is an urgent need for policies that genuinely encourage and unlock economic growth. So, what did 2023 deliver?
A (re)focus on business investment
In 2017 Theresa May’s government developed an Industrial strategy, which was replaced by Boris Johnson’s Plan for Growth in 2021 and then Rishi Sunak’s Growth Plan in 2023. The strategies have more similarities than differences. All three centre on the ambition to fundamentally rebalance the UK economy towards more innovation and R&D to drive growth.
NCUB has consistently pointed out that this ambition requires a suite of interventions to boost private R&D investment in the UK, alongside a well-funded and collaborative public research base. Various measures were taken to strengthen public funding and policy for publicly funded research, but arguably 2023 was finally the year for a much needed (re)focus on private investment.
We argue that the UK must act as a competitor in the global market of R&D investment. To help, we published a series of reports this summer on the factors that affect business R&D investment decisions. We strongly welcomed the subsequent Harrington Review of Foreign Direct Investment, which echoed many of our proposals. To back this up, we were also pleased to see additional investment incentives announced in the 2023 Autumn Statement, including permanent full expensing.
Growth will not only come from large, multinational companies. Becoming a Science Superpower will require the UK to start, grow and scale more R&D intensive companies and investment. University spin-out companies are amongst the most innovative in the UK. 2023 saw the delivery and publication of a much-anticipated independent review of spin-outs. Even more significantly, the Government also made important moves to unleash greater investment into all forms of high growth companies. The initiatives, which largely centre on unlocking greater investment from pension funds, may sound niche and technical but have potential to radically reform the UK’s attractiveness as a place to start and scale.
There is further to go still, but the welcome focus in 2023 on private R&D investment will likely continue into 2024. The creation of a dedicated government department for Science, Innovation and Technology creates significant opportunities to provide national leadership, coordination, and prioritisation.
A mixed picture on global connectivity
The UK’s Science Superpower ambitions build upon our rich history and reputation for outstanding research. Our success leans heavily on our global connectivity, with over 60% of all publications involving UK researchers including an international co-author. Over a third of the £47 billion of private R&D investment into the UK comes from businesses with foreign ownership. It should follow that securing a more prosperous future requires building upon this globally connectivity. However, 2023 offered conflicting policy interventions.
On the one hand, a landmark agreement was reached and ratified in 2023 for the UK to join the EU’s flagship research programme, Horizon Europe, as an associate member. The decision ended years of uncertainty for the research community. It followed persuasive, evidence-led arguments by NCUB and others that association will create new opportunities for ambitious global consortia to tackle the greatest challenges of our time.
On the other, the UK Government has continued to pursue an obstructive approach to immigration. A raft of new measures were announced in 2023, including a much higher income threshold for those applying for a Skilled Workers Visa. This is a move that will exclude many talented early career researchers, technicians, and others from coming to the UK. Steps have also been taken to reduce UK international student numbers by barring their dependents. This approach is contrary to the Government’s previous goal to raise the UK’s education exports.
Together, these immigration measures will have a hugely detrimental impact on employers who depend on highly skilled talent from overseas to drive growth. This has profound knock-on impacts on the economy and the ability of the UK to seed innovative firms and attract global investment.
Lofty ideas for schools, but not for higher education
People will drive the future economy. Regardless of the approach taken to immigration, we need a strong, diverse, and adaptable workforce to drive the rapidly changing economy. It is unsurprising and important that both the Government and the Labour Party used 2023 to set out a platform on education before going into the general election. The Conservatives have pledged to introduce a new British Standard, inspired by the International Baccalaureate system. Labour also previously proposed a British Baccalaureate and have emphasised the importance of schools preparing pupils with the ‘soft skills’ needed in the workplace. Both parties recognise the need for greater investment into further education and apprenticeships.
NCUB has long called for a national body to provide intelligence and insight on future skills needs after the formed UK Commission and Education and Skills was closed and not replaced in 2017. In 2023, this partially came to fruition with the launch of a new Future Skills Unit in the Department for Education. Labour have pledged to go further still, proposing a new body: Skills UK.
Despite the focus on education and skills, national policy on higher education has lacked energy and ideas. In 2023, the Government formally responded to the Review of Post-18 Education and Funding led by Philip Augar, which had been published four years earlier in 2019. However, beyond headlines regarding cuts to so-called “low-quality courses,” there was little of substance to help properly support higher education providers prepare graduates for the future of work. Many universities have been feeling the financial pressures of inflation, with the maximum tuition fee now worth less than £7,000 in 2012 prices.
UK universities are often praised for fronting the pack in the world rankings and hugely overperforming on research, but they do so while also quietly leading the way globally on the proportion of students completing their degree, according to figures from the Organisation for Economic Cooperation and Development (OECD). This is an immense achievement given the scale and diversity of the UK sector, reflecting universities’ collective commitment not just to expand access to higher education but also to secure success.
Collaboration in the spotlight
The impact of universities is often greatest in collaboration. Building a thriving, innovative economy with a talented and adaptable workforce, requires businesses, universities, and policy makers to work together. In 2023, we published the tenth edition of our State of the Relationship Report, which monitors and tracks collaboration between universities and businesses across research, innovation, skills, and talent. For the first time, this included analysis of collaboration over the last decade.
The story is mostly jolly. Drops in collaboration during the Covid-19 pandemic have mostly been restored. Many indicators demonstrate a gradual rise in collaboration, particularly in commercialisation activities. However, interactions with SMEs have been pretty stagnant, an observation also made by Sir Paul Nurse in his 2023 review of the research, development, and innovation landscape.
What is clear is that to become the science superpower that we aspire towards, the UK should not simply grow each individual part of the innovation system. The UK must also strengthen the interconnectedness of the system, such that the sum becomes much stronger than the parts. This must be the focus in 2024. Becoming the best place in the world for research and innovation, also requires becoming the best place in the world for collaboration.