Developing Government policy:
Innovation and Research Strategy for
Growth and the Industrial Strategy
John Dodds
Director of Innovation
Department for Business,
Innovation and Skills
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Recessions and how they compare
Source: National Institute of Economic and Social Research, 2011
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“In the future we will not be able to compete on the world
stage with low labour costs or by exploiting vast reserves
of mineral resources. We will have to compete with our
brains and with our science.”
Sir Paul Nurse
‘The New Enlightenment’
Richard Dimbleby Lecture
February 2012
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Six pillars of growth
• ‘Hard’ infrastructure and
long-term investment
• Banking for the real
economy
• A new industrial strategy
• The knowledge economy:
‘soft’ infrastructure
• Being open for business
• Supply side reform.
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The role of Government
• Innovation and technological leadership
• Public sector seed capital to leverage private
investment
• Skills
• Supply chains
• Public procurement
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Innovation
The Government's growth strategy
is central to the UK's economic
recovery and its competitiveness.
The commercial exploitation of
innovation is a key element of this
strategy.
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Innovation and Research Strategy for Growth
• Launched 8th December 2011
• Supported by BIS Economics Paper – provides analysis
to underpin the policy document
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Seven key lessons from the Innovation and Research Strategy Economics
Paper
Lesson 1: Innovation is pervasive. UK data shows high levels of innovation and low
variance across industries. Highly innovative firms are found in all industries and
regions.
Proportion of innovation active enterprises in the UK, by sector (2006 – 2008)
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Seven key lessons from the Innovation and Research Strategy Economics
Paper
Lesson 2: UK R&D performance is uneven. In terms of R&D, the UK performs
relatively strongly in small high tech sectors, and relatively poorly in large low tech
sectors.
R&D expenditure in businesses as % of gross value added, annual average (2003 – 2006)
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Seven key lessons from the Innovation and Research Strategy Economics
Paper
Lesson 3: Non-R&D inputs are large, growing and central to innovation. NonR&D inputs are larger than R&D across all industries. More than half of innovating
firms do no R&D at all.
Innovation expenditure in 2008
(proportions of total expenditure)
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Seven key lessons from the Innovation and Research Strategy Economics
Paper
Lesson 4: Universities and the innovation infrastructure interact well with
industry. Evidence suggests close and productive links between the knowledge
infrastructure, as a whole, and business. Take-up issues may be more on the side of
business.
Degree of academic-business engagement across types of interaction in the UK
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Seven key lessons from the Innovation and Research Strategy Economics
Paper
Lesson 5: Cross-border value chains are increasingly important. Many products
derive from cross-border collaborations. Shocks to production have major trade
impacts. Innovation capability seems important to participation in global value chains.
Location of cooperation partners
(% of UK innovative enterprises with cooperation agreements)
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Seven key lessons from the Innovation and Research Strategy Economics
Paper
Lesson 6: UK’s science performance is strong. UK research quality is growing and
the UK research base achieves the best value for money among the large economies,
leading on all counts of papers, citations and highly cited papers per pound spent on
R&D.
Scienitific publication pattern
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Seven key lessons from the Innovation and Research Strategy Economics
Paper
Lesson 7: The public sector has a significant role in innovation performance.
The public sector shapes the environment, generates technologies, innovates in
services and procures products on a large scale. A strategic approach to procurement
could target whole market areas that are important for the economy and ripe for
innovation.
Government as a purchaser, by sector
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Innovation and Research Strategy for
Growth
From this analysis four priority areas for policy emerged:
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Driving research and innovation in all sectors of the economy: lowand medium-tech as well as high-tech
•
Creating a more coherent and integrated research and innovation
system
•
Improving innovation performance by intensifying the roles of the
science, research and information infrastructures
•
Ensuring that the public sector is a major driver of innovation
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Innovation and Research Strategy for Growth
Discovery and Development
• Recognises UK technology strengths and
announces Catapult Brand for technology
innovation centres.
• Identifies synthetic biology, energy efficient
computing, energy harvesting and
Graphene as emerging technology areas.
Innovative Businesses
• Details of £75m additional funding for Innovative SMEs including
relaunch of Smart (grant for R&D), expansion of Small Business
Research Initiative and Innovation Vouchers.
• Details of expansion of R&D Tax Credit for SMEs and introduction
of an ‘above the line’ Credit to encourage large company
research and development.
• £25m for large scale demonstrators
by the TSB.
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Innovation and Research Strategy for Growth
Knowledge and Innovation
• New measures to support Clusters including TSB Launchpad and
enabling multi-institutional bids to apply for research funding.
• Confirmation of Chancellor’s announcement on EU VAT costsharing exemption to be extended to Universities and charities.
• Details of £145m e-infrastructure funding and additional £13m for
ARCHER phase II.
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Innovation and Research Strategy for Growth
Global Collaboration
• Strengthen EU engagement
including access to EU
funding.
• Joint RCUK and Chinese
MOST funding to undertake
bilateral research projects
New Innovation challenges
• Open Data Institute with Tim Berners-Lee and Nigel Shadbolt
• New Research Councils ‘ Gateway to Research’
• NESTA UK Prize Centre and Prize Fund
• More focussed work on public procurement including Centres
of expertise and Public Private Procurement Compacts
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Focus on growth
£100m for Research & Innovation Campuses
(2011 Budget)
£50m to commercialise
graphene ▪ £145m for
high performance
computing
(October 2011)
£200m of new science capital funding
(Autumn Statement, 2011)
Innovation and Research Strategy
for Growth (December 2011)
Wilson Review of University– Business
Collaboration (February 2012)
£300m UK Research Partnership
Investment Fund
(2012 Budget & October 2012)
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Industrial Strategy: Economics Paper
• Why sectors matter
• Describing sector performance
• How to maximise long-term sectoral
growth
• How Government support can play
a part
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Industrial Strategy: Key sectors
Advanced Manufacturing
• Aerospace
• Automotive
• Life Sciences
Knowledge-intensive traded services
• Professional / business services
• The information economy
• Further and Higher Education
Enabling Industries
• Energy
• Construction
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Industrial Strategy: Horizontal strands
Technologies:
• Support emerging technologies, systematically identifying those with
the most potential (working with TSB, Research Councils and
Foresight).
• Support longer term investment in research and innovation.
Procurement:
• Develop a coordinated approach to strategic procurement across the
whole of government.
Skills:
• Deliver STEM and related skills pipelines to meet the needs of
tomorrow’s economy.
Access to Finance:
• Proposing the set up of a government-backed institution to increase
diversity in the supply of finance and institutions which provide a
coherent relationship banking service to viable growing businesses.
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Thank you
john.dodds@bis.gsi.gov.uk
http://www.centreforum.org/assets/pubs/moving-from-the-financial-crisis.pdf
http://www.bis.gov.uk/news/speeches/vince-cable-industrial-strategy
http://www.bis.gov.uk/news/speeches/vince-cable-industrial-strategy-september-2012
http://www.bis.gov.uk/assets/biscore/economics-and-statistics/docs/i/12-1140-industrial-strategy-uksector-analysis
http://www.bis.gov.uk/policies/innovation/innovating-for-growth
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