Responding to CBI release on R&D target

The CBI’s press release helps to keep the focus on the critical conversation around increasing R&D investment in the UK – and the scale of the challenge in hitting that 2.4% target. We’re obviously keenly aware of the role university-business collaboration has to play in getting us there – the energy and vitality of their interactions, and the mutual sharing of insights, processes and cultures that sharpen the effectiveness of collaborative R&D and promote its diffusion to the benefit of the wider economy – and it’s heartening to see this case made eloquently and compellingly elsewhere.

We believe a whole-of-Government approach will be absolutely necessary to deliver on such an aggressive ambition as 2.4% – but that aggression is an asset if it helps to focus minds. We know Government and UKRI are working hard on the roadmap, and that public funds can align behind it – instruments like the Industrial Strategy Challenge Fund will continue to move the dial and Sir Adrian Smith’s review will no doubt identify key opportunities to blend excellence with impact. As previously trailed, we look forward to contributing to this debate.

But we also know how important raising the level of business investment will be. And there are twin challenges to overcome here. First, to raise awareness of and commitment to the target (from a very low apparent base) amongst the UK’s cohort of businesses best placed to help us hit 2.4%. That will require a clear-sighted articulation of the role such investment can play in improving a firm’s outlook and broadening its perspectives, and a sense of the potential public and private funds and measures can unlock together for the innovation environment at large.

Second: to pull the policy levers that maximise investment in R&D both from domestic high-growth innovative firms, and large-scale foreign direct investment. Creating an ecosystem favourable to both – one which encourages a channel of public and private capital into domestic high-growth propositions, and is also compellingly attractive to FDI – is the circle Government needs to square; and Chris Skidmore’s speech in Manchester this morning should shed more light on plans to maintain ongoing international partnerships which sustain our reputation as an attractive and welcoming place for global ideas, people and capital.

R&D is changing and our definitions of it – and approach to it – need to keep pace. To do that, we have to think big. We need to take a progressive approach to improving our collective understanding of what modern R&D really is and where it takes place. We need to look at activity from non-traditional but important parts of our economy – professional services firms and the creative industries, to name two possibilities – and in less conventional spheres, like process improvement and strategy design. Unlocking the potential of those businesses and their more creative but less clearly defined activity with universities is too important to overlook. As is looking beyond the population of firms that access R&D tax credits to those whose activity does not align easily with those prescriptions, or for whom engagement with the tax credit process would bring marginal advantage when weighed against administrative burdens.

Whilst we should be careful about extrapolating long-term trends from current performance too freely – especially against such a fluid backdrop, and with many critical interventions still to be unveiled by Government – it is vital that focus is maintained on the 2.4% target. By creating and nurturing the sort of ecosystem we all share responsibility in delivering for university-business partnerships, we can bring this ambitious target closer to reality.