Last week NCUB published Research to Recovery, the R&D Taskforce report. This blog summarises some of the key recommendations in this report.
Across the UK, businesses are managing one of the greatest periods of disruption and uncertainty that we have ever seen. They are focussed on saving jobs, protecting the safety of their staff and customers and responding to ever changing guidance and regulation.
However, even in the midst of crisis, there is an urgent need to start thinking about what comes next. The current long-term projections are worrying. Economists warn that the impact of the pandemic will exacerbate the UK’s weak productivity and investment growth seen in recent years, with businesses already projecting a 12% decline in investment in 2021. The crisis is not just impacting businesses now, but is likely to have long-term consequences on our economy and global competitiveness.
The solution we are all hoping for in this crisis is a vaccine – something that will only be achieved as a result of years of research and remarkable university-business collaborations. Many businesses see that the solution to the long-term economic crisis is similar: research, innovation and public-private collaborations.
Even before the Covid-19 pandemic struck, the world was experiencing change at a pace never seen before. The possibilities of billions of people connected by mobile devices, coupled with unprecedented processing power, storage capacity and access to data and knowledge are transforming the way we live, work and learn. Breakthroughs are coming at an unprecedented rate and the Fourth Industrial Revolution is arguably evolving at an exponential rather than linear rate.
In a changing world, research and innovation will be critical to help businesses meet new global demands and remain on the cutting edge. Experience from the 2008 recession shows that nations that invest in research and development (R&D) and innovation are able to boost productivity, improve livelihoods, and drive forward economic recovery.
The question is not how we adapt to a changing world. Rather the question is how we position ourselves as leaders of change.
First – we need to address years of underinvestment in R&D.
The UK is well placed to seize the opportunities of the Fourth Industrial Revolution, with an exceptionally strong and collaborative research base. However, in the last ten years the UK spent £44 billion less on R&D than it would have if we had invested at the OECD average.
The Government has already planned to rectify this, setting an important target to double total R&D spending in the UK by 2027. To achieve this, it has promised to raise public funding for research to £22 billion over the next four years. This might sound like a lot, but the majority of the UK’s spending on research actually comes from business. Achieving the Government’s target will require businesses to spend £17.5 billion pounds more on research than it does today. This would be a big ask at any time, but particularly so at the moment.
An R&D-led recovery needs much more than investment alone.
A refreshed industrial strategy
So, second, we need a plan. Not a plan for R&D alone, but for the economy.
Research shows that a one percent increase in government spending on research and innovation leads to increases in business R&D spend of up to 0.38 percent within the same year. Surviving and thriving will require seeing research and innovation, not as one of a series of important cogs in the economy, but as the critical engine that will power it.
A lot has changed since the UK’s Industrial Strategy launched in 2017. A refreshed Industrial Strategy is needed to reflect the changing patterns of today, from the UK’s withdrawal from the EU to the emerging technologies of tomorrow. Businesses almost unanimously call for a more coordinated system.
Research and innovation is affected by lots of different factors – from the availability of high level skills to buildings and laboratories to regulation, tax incentives and funding. A combined offer from government, involving trade, education, health and treasury working together will appeal to businesses and motivate them to invest time and money in research and innovation.
The Government has an important role to play in creating the framework for how it will prioritise the UK’s R&D efforts, focusing on where the UK could be world leading instead of spreading resource thinly across multiple areas.
Innovation Collaboration Zones
Third, a research-led recovery requires large-scale collaboration and a more joined up approach that brings all of the workings of the research and innovation system into one complete proposition.
If you imagine a shop offering introductory discounts to new shoppers, vouchers if you spend over a certain amount and a special free gift if you buy certain items deemed important to brand recognition, it is easy to understand the appeal.
To shore up business research and innovation spenders, the UK needs to bring together the web of tax incentives and deregulation, funding pots and co-location spaces to allow all of the different ‘shoppers’ to take advantage of what’s on offer.
Influenced by the Research Campuses in Germany and Silicone Valley in the US, the UK needs to apply that thinking to the creation of Innovation Collaboration Zones. Areas strategically placed to attract a critical mass of talent, ideas and like-minded academics, businesses and competitors into one so-called ‘shop’ with an offer to attract R&D investment they simply cannot refuse.
Positioning these zones strategically in areas around the UK where there is already research activity will deliberately spread the wealth beyond the corridors of London and the Southeast.
From climate change to healthy ageing to alternative energies, it will be more research, more cutting-edge technology and more vanguard solutions that will solve the most pressing challenges of our generation. We must act now or risk being left behind.