A crowd of the great and the good, including the BIA, gathered in Westminster this morning to hear Vince Cable’s thoughts on science and innovation investment. However what we had expected to be a summary of the new Science and Innovation Strategy (originally anticipated to be announced alongside the Autumn Statement last week) turned out to be more of a legacy speech from the Business Secretary of progress made so far within this Parliament and challenges and opportunities for the next five years.
Cable was keen to set the tone by introducing the sub-title of his speech as “how to manage long-term investment in science and technology in an environment of austerity”.
He posed three key propositions in relation to this before proceeding to set out three key questions for the future and his views on how these might be answered.
Cable’s propositions were as follows:
- Investment in science and innovation has proved to be economically productive
- Investment in R&D crowds in, rather than crowds out, private money and public investment can effectively support innovation
- The UK is an established world leader in science but has historically been less good at translating this into commercial success – which is why government has focused on this issue since 2010
His questions concerning the future were:
- Is government doing enough? And what is the right target to aim for?
- Are we spending money in the right way?
- Are we really cracking the innovation question?
His answers and proposal to those were:
- Government has held the line on investment in science and innovation in a challenging environment and last week’s announcement of a £1.1bn a year investment rising with inflation from 2016-2021 does, he believes, go a long way to assuage concerns about the level of capital investment. However he was keen to point out that despite improvements, the UK still lags behind other countries in terms of R&D investment. The UK invests 1.7% of its GDP compared to 2.8% in the USA, 3% in Germany and 3.5% in Japan. Cable’s view was that if the UK wants to remain ambitious and competitive it should be at least aiming to achieve the OECD average of 2.5% of GDP invested in R&D. It would be a joint challenge for industry and government to work out how it would find that additional investment.
- Following the “northern powerhouse” rhetoric of last week’s Autumn Statement, the Business Secretary also questioned whether the geographical spread of scientific research was quite right and whether more needed to be done to help Northern Universities build the right research centres. He also posited the broader question of how do we manage the consideration of the longer term issues of relevance to UK plc, balanced with the existing and short term mechanisms of research approval.
- On innovation, Cable said he still thinks there is scope to build the innovation base in SMEs and listed a number of ways the coalition government has tried to support innovation including investment in Innovate UK, focus on sector specific industrial strategies (including life sciences), and investment in Catapults (hinting that more would be announced soon). He also pointed to initiatives such as the Business Bank and Business Growth Fund as government led initiatives to keep innovative businesses in the UK.
The tone of this speech was very much a review of progress made by this government and a genuine portrayal of cross-party issues that require ongoing thought and commitment to progress, whoever holds the keys next May. It was encouraging to see the importance of R&D investment outlined as well as the need to continue focused policy making to ensure that scientific endeavour does translate to commercial success and that those businesses are incentivised to emerge and stay in the UK.
The text of the speech is not yet available so we hope this is a useful update for those looking out for the Science and Innovation Strategy and we will of course be back in touch with a full brief when that is released.