How to use UK research and innovation (R&I) to drive growth
In order to achieve above-average economic growth, a company, or even a country, usually needs an asset which differentiates it from its peers. In the case of countries, that is often some form of natural resource – cheap energy sources, large land area, substantial critical mineral supplies et cetera.
We have none of those. The UK’s biggest, perhaps only, differentiating asset from other major economies is the quality of our research and innovation system, which by most metrics is, per capita, best in class.
We have four of the top 10 universities in the world, five of the top 30, 17 of the top 100 – so not just quality, but depth of quality. Some of our national research organisations are also globally unique. We produce more spin-outs and more start-ups than any other country in Europe.
I cannot overstate what a tremendous asset this is. But, to date, it is a somewhat latent, undervalued and underappreciated asset.
So how can we do more with this asset? How can we make the most of it?
The government is putting record investment into research and innovation to make it the heartbeat of national success. About half of the research and development (R&D) budget is spent by government departments on research and innovation that is directly in their remit and forms their priorities, typically applied research and usually (though not always) relatively near-term outputs. Of the remainder, UK Research and Innovation (UKRI) invests the majority, at around £10 billion each year. Our responsibility is to ensure this investment delivers meaningful outcomes for the UK public.
Our mission statement is to advance knowledge, improve lives, and drive growth.
Seven words that convey a huge intent.
We are the champions, nay the guardians, of world-class, curiosity-driven research. However, we also deliver the research and innovation needed to meet government priorities for the public and we aim to enable companies to start, to scale, and ultimately to stay in the UK.
We are at our best when we develop a mutual symbiosis between those three elements. We invest in the best discovery research even when we don’t immediately know its application, but it goes on to have applications we hadn’t necessarily expected and ultimately leads to growing companies providing high-quality jobs and economic growth.
We have of course been doing this for years… We invested in the mathematics of complex scheduling algorithms – without immediate commercial intent. This led to an application in rail crew logistics, laying the ground for software now used globally by Tracsis who now employ over 900 people.
Or work on the physics of lasers which led to spatially offset Raman spectroscopy being applied to detect chemicals through barriers, and found application in airport security scanners – indeed you see a Cobalt scanner every time you pass through Heathrow.
Or fundamental molecular biology which led to the discovery of tiny stable molecules that find and adhere to cancer cells very precisely. This led to a company, Bicycle Therapeutics, which have raised well over £350 million and employ more than 250 people.
The researchers and innovators in whom UKRI invests every year are already making a tangible difference to the lives of UK people and to their economic opportunity.
Indeed, it was the brilliance of those people that made me want to join UKRI.
We as a nation should be very proud of them, and cheer them on at every opportunity – I’ll say more on that in a minute.
But yet, we need to deliver more across the length and breadth of the nations and regions of the UK. Without wishing to sound too hyperbolic, our nation’s future depends on us doing more, on sweating our research assets to their maximum.
That’s all well and good I hear you say, but what is your strategy for doing that? Actually, even better than talking hi-falutin strategy, I will tell you how we will spend our money.
I said that our mission was to advance knowledge, improve lives and drive growth. Going forwards we will break down our budget in line with those three clauses. As the Secretary of State announced earlier, we will invest £14 billion in curiosity-driven research – the foundational investment that underpins the UK R&D system.
£8 billion on targeted R&D addressing national and societal priorities, including clean energy, health resilience and national security. This investment will be delivered through targeted programmes with clear outcomes, co-investment with industry, and utilising to the greatest extent all the cross-government levers at our disposal, like procurement and enabling regulation.
Finally, £7 billion will support innovative company growth, helping UK businesses scale and commercialise cutting-edge technologies.
And for those that have noticed that 14, eight and seven don’t add up to 38.6, the rest is invested in foundational things that cut across all three of these ‘buckets’, such as skills, infrastructure and international collaboration, all of which are vital to the health of our sector.
The government’s recent Industrial Strategy white paper sets out a clear direction for the sectors that matter most to our future economy. UKRI is responding by aligning tightly to these priorities. For instance, we will increase our spending in creative industries and the digital and technology sectors by over 50% over the next spending review period.
As well as being clear where our money goes and the sectors that we will support most strongly, we will also be more choiceful about precisely what we invest in within each sector.
In my view, UKRI has historically tried to do too much. We must be clear-eyed about where we can lead on the global stage and then back those areas concertedly.
That means making choices, prioritising with intent, and stopping things when we no longer think we have a right to win significant market-share in that sector.
I am a firm believer in the mantra that when you make choices, there are some losers, but when you don’t make choices, everyone loses.
This is more interventionist, more directive than you will have heard from UKRI in the past. Put simply, the government is backing research and innovation to deliver on the public’s priorities and top of their list is improving their individual economic opportunity and growing our economy overall to enable better public services.
We need to make the difficult choices that give us the best chance of truly making research and innovation the growth engine for the country. If we do that, if we respond to the challenge and make the difference the nation needs from us, then we can expect even greater investment and the opportunity to do this in more sectors. If we don’t, if we continue to spread thinly, then we will all lose.
So, we will make choices, there will be short-term losers, but I am convinced that this is the only way for us all to succeed in the long-term.
Now you may say that there will be no long-term for some sectors if we squeeze them out now. I do want to be really clear about this issue.
As I said before, we will shift our budget to overtly align with the three clauses in our mission. The first of those is to protect curiosity-driven research.
We will grow our investment in this discovery research, where we will support the best ideas with the biggest chance of transformation, in any area, of any sector. In this way we aim to ensure our long-term options.
Conversely, in applied research that addresses government priorities, and especially when helping companies to start and scale, we will be much more selective – thinking more as investors who not only assess the technical excellence of the proposition, but also its timeliness, the market opportunity, the competitive position of the UK, and the additionality of our pound.
To maximise the impact of these decisions we will need to use every lever and work concertedly with all of our partners towards a shared mission.
That means working in true partnership with businesses (large and small), with government (national and local), with research organisations (institutes, catapults, and Universities) and with all types of investors.
I promise that we will move towards longer-term commitment to our partners, being more inventive in how we construct joint programmes, and giving you more certainty so you can invest with confidence.
I want to end by paying tribute to the people who provide the UK’s advantage – we only have this asset and the opportunity that I’ve been talking about because of the brilliant researchers and innovators we have.
We must nurture that talent, provide the conditions for their success and help amplify and accelerate the impact they can have.
This has always been, and always will be, the most important thing UKRI does. We invest in over 5,000 PhD students every year, and top-quality people will continue to be the biggest asset we produce.
I’m a big football fan, and I really believe in the power of supporters. My team were once in a European cup final… But at half-time we were losing three-nil. For those that don’t do football, winning from that position only happens 1% of the time statistically, so you feel success is unreachable… The players trudged off, crest-fallen, despondency all around. But collectively, the crowd knew they had to step in. I was in that crowd. Folk didn’t leave to go to the bathroom, or get a drink, or even go home, they stayed and sang and cheered. The team ended up turning it around and winning from an almost impossible position, and all commented afterwards that the show of support gave them renewed faith and confidence to keep trying.
What’s he on about you may well ask…. I was a researcher for a long time, and for most of that time it felt like being three-nil down at half-time. I was always trying to do transformative things, always trying to make a real difference, not an incremental one. And it felt tremendously tough – depressing much of the time, arduous almost all of the time, but then occasionally joyful, inspiring, even triumphant when it came together. I needed all the support around me to get to those rare moments. That is our job. That is your job. We are the supporters, the crowd. We need to back our researchers, give them that unequivocal, unerring support and then together, we can achieve anything.