Successive governments in the UK have lauded the role of research in creating economic growth. Investment in innovation is valued to the extent that the science and research budget has been ring-fenced in cash terms since 2010 when most other areas of government spending have been significantly reduced or removed altogether.

However, investment in research and development (R&D) in the UK is low compared to its OECD competitors. The UK invests less in R&D as a percentage of GDP than the leading 22 OECD countries and is 19th of OECD countries in terms of private sector investment in R&D as a percentage of GDP. The UK also invests less in R&D than the average of other EU Member States. In fact, between 2011 and 2012 the UK’s expenditure on research and development decreased by 3% in real terms. This reduction was the result of a decline in the value of government expenditure but also a decline in business and industry investment.


Source: http://stats.oecd.org/
Extracted from The Innovation Challenge: A new approach to research funding, million+, September 2014

“Supporting universities and businesses to collaborate, translate research for commercial purposes and invest in innovation will have significant positive impacts on the economy”

In our new report, The Innovation Challenge: A new approach to research funding, million+ calls for the UK Government to increase its investment in science and innovation and set a target to be in the top ten of OECD countries by the end of the next Parliament in 2020.

But we can’t just increase funding; we need to think about spending it differently. We believe the next government must fund research capacity in all universities and create a new stream of funding for translational research in order to support innovation, address imbalances in regional growth. We also argue that students are entitled to have access to research-informed teaching and facilities wherever they study.

Investing in higher education makes economic sense and will generate significant impact across the regions. Supporting universities and businesses to collaborate, translate research for commercial purposes and invest in innovation will have significant positive impacts on the economy. The way in which government provides investment for the research base determines the extent to which universities can respond to the needs of national and regional stakeholders as well as to new and emerging markets and supply chains. The impact of research funding policies upon regional capacity and growth appears to have been given little thought by government. There are stark differences in the growth achieved by London and the South East compared to other regions in England.


Source: ONS, Regional Growth Value Add (Income Approach), December 2013
Extracted from The Innovation Challenge: A new approach to research funding, million+, September 2014

Since the publication of the outcomes of the last Research Assessment Exercise in 2008/9, research funding policies have led to a hyper-concentration of investment in a small number of universities. As a consequence of a focus on narrow definitions of excellence, by 2012-13, 25% of the £1.9bn of research funding provided by taxpayers was allocated to five universities with 12 institutions receiving 50% of the funding in spite of there being no reassessment of research quality.

“New approaches are also needed to ensure taxpayer investment is more widely distributed so that businesses, wherever they are located, can benefit from the expertise of research staff.”

The UK’s current approach to research funding stands in stark contrast to the Nordic model and other countries which fund research capacity and translational research and have better records in innovation along with attracting private R&D investment. A focus on STEM risks underestimating the value of research in the social sciences and creative industries in which the UK is currently world-leading

In Scotland there is a growing recognition that a new strategy is required, that new disciplines and emerging research areas should be valued and that all universities are part of the solution to the country’s ambitions. In comparison in England, research funding is increasingly seen as ‘a closed shop’. This limits opportunities for business and the not-for-profit sector to access excellent research from universities in their localities. It also creates more inequity in the unit of resource for students who are entitled to access research facilities and research informed teaching in whichever university they choose to study. The current policies in England are akin to spending loads of money on the roof of your house, but neglecting to look after the walls.

We think there needs to be a new approach; in particular we need to be better at funding the translational research which business and SMEs need to help them bring products to market, innovate and respond to changing technologies and demands. New approaches are also needed to ensure taxpayer investment is more widely distributed so that businesses, wherever they are located, can benefit from the expertise of research staff.

Rarely considered, but of equally vital importance is to make sure that students also get a better deal out of research investment. The government – through the funding councils – needs to take account of the impact of its investment strategies in research on the institutional unit of resource available to invest in the student experience.

The policies that have been in place over the last ten years have not been sufficient to stop the UK lagging behind competitor OECD countries when it comes to research spending. Nor have they been enough to support growth in the regions outside of London and the South East. In preparing their A 2015 general election manifestos, all political parties should consider a new approach to research funding that will ensure the UK steps up to the innovation challenge.

Professor Michael Gunn has been Vice Chancellor of Staffordshire University since 2011 and Chair of million+ since 2012. 

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