Building our Industrial Strategy: Investing in science, research and innovation

By Dr Kelly Davidge, Research and Development Manager at Kirkstall Ltd

In the Government’s recently published Green Paper on building the UK’s industrial strategy, they recognise the importance of investment in science, research and innovation and have committed to a number of strategies to boost the UK innovation economy. Although the UK has three of the top 10 and 12 of the top 100 world universities, we lag behind other countries when it comes to investment in innovation through research and development (R&D):

• 1.7% of UK GDP- gross domestic product- is invested in R&D funding, compared with the OECD (Organisation for Economic Co-operation and Development) average of 2.4%;
• business investment in R&D is 1% in the UK, but 2% in Germany, 2.5% in Japan and over 3% in South Korea;
• the UK produces a similar number of spin-off companies to the US but registers fewer patents;
• none of our universities feature in the top 10 of Reuters Top 100: The World’s Most Innovative Universities – 2016, a list that ranks the educational institutions doing the most to advance science, invent new technologies and drive the global economy.

Increasing innovation can’t be done just by increasing the total amount of money in the pot. As clearly shown by the figures, the UK needs to attract business investment as well as research funding; no Small Medium Enterprise (SME) can survive on grant money alone. The Green Paper sets out the Government’s approach on how to address these challenges and deliver a high-skilled competitive economy. Let’s take some of the highlights of the Green Paper one by one.

£4.7 billion of additional funding by 2020-21

I think this should be awarded to a cross-section of disciplines, supporting businesses as well as research organisations, and ensuring that innovation across all Technology Readiness Levels is supported. Crucial to this is the support of not just university spin-out companies but also established technology companies, especially those for which new R&D represents a risk to the business. The report recognises the need to improve Intellectual Property (IP) support by placing representatives from the Intellectual Property Office in key UK cities; this support must cover key questions that occur in the years following filing – for example, which additional territories to branch out into and how to tackle examiner questions – and not only initial patent filing. It is imperative that spin-outs and established companies alike are supported in this vital and expensive task. Entry into profit-generating mode can take many years; IP is the most valuable asset of a new company and continuing protection in the years before break-even is an absolute requirement in any industrial strategy.

Creation of UK Research and Innovation

While is it certainly important to ensure that research funded through the Research Councils is commercialised, often through projects funded with businesses via Innovate UK, we must not lose sight of what happens to companies once they are established. The Knowledge Transfer Partnerships and CASE-funded PhD studentships are ideal vehicles for businesses to gain university-based expertise and access to specialised laboratories and equipment. Both of these streams are invaluable for the further development of technology post spin-out. Any additional body such as UKRI must add to the current portfolio of RCUK plus Innovate UK, not merely duplicate their efforts, and be influenced by business as well as academia. In addition, we must take care to support innovative companies which are not formed through university spin-outs, for example, those that license technology, and tackle the large overheads that universities apply when preparing budgets for grant applications, often a barrier to collaborative research.

Building a pipeline of talent for an innovative economy

At Kirkstall Ltd, we are lucky to have close links with both universities in Sheffield and it is apparent that training of the next generation has expanded beyond technical skills and now embraces the development of innovation, entrepreneurship and communication skills. This can be the difference between success and failure of a new business. A report by Technology for Industry showed that commercial experience is an important factor in the funding and growth of start-up companies, with 70% of the businesses classed as high growth headed by a non-academic commercial manager. So, while it is important to attract and develop academic “stars”, in business it is equally as important to match these stars with commercial know-how.

The Industrial Strategy Challenge Fund

One of the most promising aspects of this Green Paper is the commitment to back technology at all stages, from early research to commercialisation, allowing businesses to invest in current and new technologies and focusing on challenges where there is a large, global market that the UK can address. There are many opportunities in the molecular biosciences: antimicrobial resistance, drug discovery, industrial biotechnology and bioenergy, precision and personalised medicine, to name a few. This additional funding will allow companies to de-risk R&D funding, increase the effectiveness of their investment and grow the UK economy through their innovations.

Government and investors recognise that innovation and R&D activities come before profit. The strategies outlined in this Green Paper should help UK businesses to grow and attract new funding. With the UK’s exit from the European Union, the support outlined in the Green Paper could not be more timely. We need to capitalise on the UK’s strengths in blue skies research by nurturing our small businesses, and measure our success in terms of business output and not just grants attracted or spin-outs created.

The Biochemical Society has fed into the Royal Society of Biology’s response to the consultation and is no longer accepting comments. However, you can submit individual responses to the Department for Business, Energy & Industrial Strategy online until 17 April 2017.