Prosperity Pending, a new report by CBI Economics, highlights several gaps in the UK’s current performance on IP creation by business, starting with an under-spend on Research & Development (R&D) by business and government alike.
The analysis points to several areas for policy development which could unlock the potential of UK businesses to invest in IP in the UK and fully realise the UK’s potential to capitalise on its academic success:
- Enable the commercialisation of ideas from earlier stages of the R&D process to translate academic research into commercial outputs, increasing spend on experimental development, encouraging collaborations, and incentivising the generation of IP
- Target the barriers to R&D spend and IP investment faced by SMEs to unlock valuable and disruptive innovations and increase the share of high-growth SMEs. This is an area of untapped potential where the UK could show leadership amongst its international peers
- Develop the UK’s patent box and extend its scope to encourage increased patent and other IP related activity. Policy is crucial in ensuring businesses have the confidence to invest in R&D and IP, and the UK could do more to integrate its patent box into the wider support for innovation and investment, and to provide more accessible options for obtaining IP rights (beyond just patents), particularly for SMEs.
The analysis comes at a particularly crucial time for UK policymakers, who have pinpointed innovation as one of the key drivers behind the post-COVID economic recovery plans.
What it means for business
The UK would stand to gain considerably by supporting UK businesses to develop ideas and take them to market such as:
- Increased international competitiveness for investment
- Acceleration of the development of solutions to societal and environmental challenges
- A boost to economic growth and prosperity.
To encourage UK businesses to invest in IP, as well as to attract IP investment from abroad, the evidence shows that the UK needs a balanced and integrated policy environment for innovation. This involves supporting and enabling businesses to be successful at all stages of the R&D lifecycle. Policy interventions must therefore be tailored to the needs of business at each stage.
A particular area of untapped potential identified in the research is to unlock the SME contribution to IP creation, recognising the unique challenges faced by smaller businesses which act as a barrier to fully realising their potential. There is therefore a role for policy to play in addressing these barriers to drive further value from R&D by increasing the share of SMEs typically characterised as ‘high-growth’ and supporting them to commercialise their ideas.
CBI Economics analysis also suggests that the current patent box framework is not working to its full potential. While the UK has one of the most developed patent boxes, the presence of this support is not reflected in its IP intensity. The UK patent box could therefore play a greater role in driving the UK’s IP investment if its scope was extended to include other forms of IP (in addition to patents). Improvements to the patent box process and the provision of more accessible forms of IP rights would help encourage IP applications from SMEs.
The case for policy action is clear. However, there is no silver bullet to do this. Closing these gaps will require a package of policy support, as well as action from the business community. Good policy development and execution is often difficult and further investigation will be required to assess the effectiveness of policy interventions that could fulfil this objective.
For any questions in relation to this research, please contact Adriana Curca, Senior Economist, CBI: Adriana.email@example.com, +44 (0)7713 505 811.