How we grow our way out of the crisis and develop healthy, vibrant and sustainable prosperity should be the daily preoccupation of every policy maker in the UK, no matter which department they sit in. One answer lies in world class research and development (R&D) and innovation collaboration between businesses and universities. David Eyton, Global Head of Research and Technology at energy giant BP, and co-chair of Growing Value, a new Task Force report published today by the Council For Industry and Higher Education, notes: "The UK has a fabulous tradition of world class inventions...but the UK is more reliant on foreign funding for research than any other industrialised nation. Finding a better way to connect UK research with UK jobs is essential if we are to seize the opportunities for growth and ensure we protect our world-leading research base."
The UK spends close to £26bn a year on private and publicly-funded R&D. Of this the public sector funds £8.5 billion, including £3.3 billion direct funding across all R&D performing sectors, indirect funding of £2.9 billion through the research councils and £2.3 billion through the higher education funding Councils. To better understand how to grow the value of this R&D, the CIHE brought together a powerful and highly-experienced group of business and academic leaders and managers, including former government science minister, Lord Sainsbury, and interviewed over seventy executives from the construction, creative and digital, energy and pharmaceutical sectors.
This group concluded that the UK is a world leader in university research. It has four of the world's top ten universities and the second highest level of academic citations. Furthermore, the openness and excellence of the UK research base is reflected in its attractiveness to overseas firms, with the world's highest percentage of R&D at 40% coming from foreign subsidiaries. But this extreme position also carries risks. This investment could go elsewhere as developing countries incentivise inward investment, or the UK could increasingly be viewed as providing a higher education and research service 'at cost' to the world. This would profit other countries' innovation systems with little or no follow-on benefit to the UK. The UK cannot afford to be the world's best contract researcher for other countries' development.
Most business investment in UK R&D comes from large companies, whether it is carried out in house or in collaboration with universities or SMEs. Only 3.5% of UK R&D is conducted directly by SMEs. Large companies have the capacity to interface effectively with UK universities and funding organisations. Smaller companies often struggle to leverage the university and funding systems, due to a lack of resources and relevant 'bridging' skills, both in the companies and in universities.
Reflecting on these conclusions, the Task Force identified four recommendations that, in the words of Shirley Pearce, former Vice Chancellor of Loughborough and the other co-Chair of the Task Force, will help "maintain our wonderful history of invention and discovery". First, government should maintain the excellence of the UK Research Base through long-term strategic commitments. Research funding policy requires a steady hand and sustained commitment, not tactical swings in funding by category from one year to the next. Second, collaboration between universities and business should be prioritised and financed, as should the sharing of best practice in innovation, both local and global. Research into this area should be a priority for the newly formed National Centre for Universities and Businesses, which was proposed as part of the Wilson review.
Third, more structured programmes on entrepreneurship and entrepreneurial corporate management should be promoted in universities in order to enhance risk-taking and innovation in business. And finally, government working with all partners in the innovation system should develop consistent and different sector strategies. Innovation and collaboration varies hugely by sector and must be understood and incentivised by going with the grain of an industry rather than relying on one size fits all solutions.
If we can successfully implement these four recommendations, and commit ourselves to facilitating greater university-business collaboration in the pursuit of innovation, then not only can we secure the UK's research and development base, but also provide a springboard and platform for growth for decades to come.