4 May 2017 | By Patrick Day Insight

5 areas of focus to reach 3 per cent spend on R&D

Insight: Patrick Day, CBI digital and innovation senior policy advisor

The CBI report, Now is the time to innovate, calls on government to target public and private sector UK R&D spend of 3 per cent of GDP by 2025, to strengthen the UK’s innovation ecosystem, drive productivity and raise living standards

From robotic limbs to self-driving vehicles, game-changing innovations will shape the course of the next decade. Many will improve lives across the globe and could help reverse the UK’s shortfall in productivity. While much of what the UK needs to deliver a world-class innovation ecosystem is already in place, UK spend on R&D has stagnated at just 1.7 per cent of GDP over the last decade. 3 per cent will be vital to ensure growth and opportunity reach all of the UK’s regions and nations.

Now is the time to innovate. Here are fiveareas of focus where the biggest gains can be made in the UK’s innovation ecosystem.


Public funding and incentives

The government should adopt and publicise a long-term objective to reach a total 3 per cent of GDP expenditure on R&D


Public funding is a vital piece in the R&D puzzle as, in turn, it lifts private sector expenditure on R&D. Yet government spends just 0.6 per cent of GDP on R&D. Businesses were pleased with the government’s decision to place science and innovation at the centre of the UK’s industrial strategy, and its commitment to an extra £2bn a year for R&D by 2020 – the largest increase in public spending on R&D since 1979.


Culture and skills

Businesses should share internal strategies to promote an enterprising culture and drive innovation across all levels of the organisation


To exploit knowledge developed in other parts of the innovation ecosystem, firms rely on having people with the right skills. But there is a need to improve management skills in business, and to address shortages of people skilled in science, technology, engineering and maths (STEM). Business culture can also frustrate innovation – 88 per cent of respondents to the CBI Innovation Survey 2016 stated their board supports innovation, yet just 45 per cent thought their employees have time to innovate – a topic that the CBI will be covering at its Workplace 2030 event taking place at this year’s MSB Summit.



The government should ensure UK Research and Innovation leverages its unique role within the innovation ecosystem to stimulate collaboration and, in doing so, support commercialisation


Collaboration allows companies to develop new techniques or technologies, de-risking investment in research and extending the capabilities available to them. Two-thirds of respondents to the CBI Innovation Survey 2016 answered that increased collaboration would help them to innovate more. The creation of UK Research and Innovation (UKRI), the new overseeing body, is a unique opportunity to build collaborative links between the science and innovation community.


Regulation and IP

The government should review existing regulations to ensure that they are fit for purpose, particularly those key to industries where disruptors are situated


Factors like regulation play a critical role in a company’s investment and location decisions. Disruptive companies are already worth £500m to the UK economy, but with the right support they could reach £9bn by 2025. In order to encourage these – and other – new forms of innovation, we need to ensure that UK rules and regulations are well placed to attract businesses from the UK and overseas to invest and innovate here.


Public procurement

Business should support the delivery of new guidance for public buyers on how to drive innovation, providing real-life examples where they have worked with government on successful, innovative procurement


Public services touch the lives of citizens every day through healthcare, education and the environment around us. Here, the government currently spends about £268bn each year with external providers. It’s true that some of this spend will be for things like stationery but, where possible, this spend could be used to drive innovation and simultaneously improve public outcomes and support sustainable public finances. Businesses were pleased to see procurement as one of the ten pillars in the industrial strategy green paper and want to work with government to help support innovation.

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