Businesses are the lifeblood of a successful innovation ecosystem. They drive discovery and play an important role in commercialising the brilliant ideas that come from the UK’s research base - turning innovative ideas from concept into reality.
But while there are examples of UK businesses undertaking pioneering research, development and innovation, not enough of this R&D is currently happening across the UK - risking progress on achieving the target of 2.4% GDP spend on R&D by 2027 and the longer-term aim of 3%.
The UK currently spends 1.7% of GDP on R&D - far below the 2.4% OECD average - and UK investment is particularly limited outside of the South East. Just three regions account for 52% of UK R&D spend (London, South East, and East of England) and just five of the UK’s forty sub-regions are investing over 3% of GDP.
This tail of underperforming regions risks holding back progress in improving the UK’s national R&D performance, and with that, progress on regional competitiveness and growth.
To capture the benefits that flow from innovation-led growth and realise ambitions to lead the world in challenges like clean growth, healthy ageing and the future of mobility, the UK must take action to catalyse an R&D movement throughout the UK.
The size of the prize from doing so could be significant. A greater focus on accelerating R&D investment in the worst performing regions could provide a £7.3bn boost to UK R&D spend, bringing the 2.4% target for R&D spend within grasp.
The CBI is calling on the next government to take three actions:
- Set out a roadmap for raising UK R&D activity within its first year of office – this should include measures to ramp up public funding support for Innovate UK; drive innovation through Government procurement; and push innovation diffusion throughout the UK economy.
- Jumpstart innovation activity across the UK with a network of new ‘Catapult Quarters’ – a ‘Catapult Quarter’ brings together all of the services that make current clusters great in a coordinated and consistent package. A special support package will incentivise businesses to co-locate and collaborate along a specific locally-relevant theme. CQs would be specific to a geographic area, centred around a Catapult and would create an internationally competitive brand for UK innovation.
- Establish robust methods for measuring impact and success – this should include a new measurement tool that captures regional and sectoral breakdowns of FDI in R&D.
The CBI’s innovation team will continue to work with the government and members to support the adoption of these recommendations. To find out more, get in touch with Ollie Diss.