By Elena Siniscalco
One consistent low hanging fruit for politicians when it comes to economic growth is innovation policy, which consists of spending public money to fund new research and development of new technologies.
While the public and different political parties might see its purpose as slightly different, it is broadly perceived to be unproblematically valuable for both society and the economy.
Innovation policy is uniquely politically expedient. It’s remarkably easy to attach it to numerous other major policy priorities, and so it resonates with everyone differently. I recently wrote about innovating mental health care to improve treatment – but innovation means a swathe of different things. It could also be foundational to building self-sufficient regional economies. Others would argue it is critical to addressing climate change or revolutionising healthcare.
All this is compounded by the fact it is also essential to remaining competitive in the global marketplace, thus pretty easily satisfying both sides of the political spectrum.
This is especially unique at a time when many policies conducive to growth are often perceived as coming at the expense of policy that improves public services. The prospect of spending considerable amounts of public money on innovation seemingly transcends this conundrum, as it clearly offers both the improvement of our societies and our economies.
Across the board, the public feel that innovation has made their lives better, rather than worse, according to research done by Nesta. No doubt, rapid discovery of the Covid-19 vaccine and Dexamethasone during the pandemic helped to bolster this perception.
As we edge closer to what will presumably be a less provocative, but similarly significant budget, the government’s approach to innovation should hopefully be forthcoming. It is particularly pertinent as revised calculations from the Office for National Statistics show that previously, they and the government severely underestimated private business expenditure on research and development (R&D).
This essentially means that, because of these new calculations, the UK is already spending 2.4 per cent of GDP on R&D, a target the government set for 2027.
However, as with many other policy areas, the conversation may end up focusing disproportionately on how much money the government spends, versus how it is best used. Here, as with indeed virtually every other policy area, the term ‘spending’ is often misleading. Money spent well – to produce financial or social returns in the future – is investment.
Which leads nicely onto my second point: investment in and of itself could be meaningless without a reform agenda to complement it. And increased investment will mean increased scrutiny and so it is essential that government is able to deliver tangible output.
Reform is crucial in the UK because innovation is about effective systems as well as available funding. Our country has a chronic problem with overly bureaucratic processes for applying for innovation support. Funding often goes to people already established in their field trying to make marginal gains at already existing technological frontiers, not people with ideas that are exploring new fields and new tech frontiers.
It is a strange spectacle that the party that gave us Brexit – a movement motivated by improving the UK’s competitive advantage and economic resilience – has also given us a confusing cacophony of science ministers with a similarly puzzling set of organisations for researchers to navigate. There were a dozen strategies across government between 2017 and 2021. None of these add up to anything coherent enough to make the UK an established policy or funding environment, in comparison to other international leaders in R&D.
For businesses, innovation for its own sake is pointless – firms want a pathway to a market, not just in the UK but globally. Right now, the best UK firms are being bought up and the ideas or capabilities are being exploited abroad. While the UK has an excellent academic research base – UK papers are more likely to be highly cited than any of our peer group – the UK exports fewer high tech manufactured goods by value than France, Japan and Korea, let alone Germany, US and China, according to Onward.
Just because we know we’ve been investing more in R&D, that doesn’t make the UK any more prosperous or immediately solve our levelling up challenges. The UK must stay ambitious, not just in setting stretching targets for R&D spend, but also in reforms that help get more economic bang for our buck.
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