Recent Report Suggests The Government Should Do More To Boost Innovation in the UK

In a recent blog post we looked at the ways in which governments can help to increase R&D investment. However, an area that wasn’t covered in the article was how spending by government departments can contribute to a more innovative economy. This is precisely the area that was addressed in a report called ‘Creating Markets For Things That Don’t Exist’, which was released on Monday 24th November. It has been published by the Centre for Business Research at Cambridge Judge Business School (part of the University of Cambridge), and the Cambridge Network, a membership organisation based in Cambridge’s high technology cluster.

It was written by David Connell, who, amongst other things, is the Chairman of Archipelago Technology and a Senior Research Fellow at the Centre For Business Research. The foreword was written by Labour peer Lord Adonis, who supports Connell’s strong views that the government could be doing much more to encourage R&D through its own departments.

In his foreword, one of the comments made by Lord Adonis was that the UK has much to learn from the US government when it comes innovation: “The US government has led the way in using R&D to create markets to address challenges in the public sector, including most notably for the US military and space programme. This demand-led, or “technology-pull”, process has spawned innovations which create all sorts of new markets and world-leading companies – and the UK should continue to learn from this approach.” Notable schemes in the US include DARPA (Defense Advanced Research Projects Agency), which was set up by the US Department of Defense in 1958, in response to the 1957 launch of Sputnik by the Soviet Union. DARPA continues to undertake ambitious R&D projects to this day. According to Connell, the UK’s Department of Defense should replicate this on a smaller scale in the UK.

The NHS was another government department mentioned in the report; but Connell highlighted the National Health Service as a “role model” in terms of how it has utilised the Small Business Research Initiative (SBRI), which was set up in 2009. This has led to a number of breakthroughs in healthcare, including new ways to diagnose acute infection at an early stage and products to reduce costs in care homes for the elderly. Results have also been positive for businesses that engage in healthcare-related R&D, with 120 companies winning contracts to undertake R&D projects for the NHS: “The Department of Health and the NHS have together been the most active participants in SBRI programmes since it was relaunched in 2009, with around 120 companies awarded contracts over the five years. NHS England is currently the only government department operating a rolling long-term programme, and the way it does so should be seen as a role model for other departments.”

Many will be surprised to hear that “Since 2001… net UK business R&D expenditure as a percentage of GDP has actually fallen by around 14%.” The overarching argument made by Connell is that creating a more innovative culture both across business and within the government will help to address this issue: “A country is only as innovative as its customers, those that can define problems and unmet needs, are open to new ideas and willing to pay for them to be turned into reality. So innovation policy must try to ensure

that there as many such customers as possible, from both the public and private sectors. Stimulating demand is one of the keys to creating an effective market for things that don’t exist.”

Many wait in anticipation of the 2015 General Election, when all of the main political parties will outline their plans to boost innovation and R&D spending in their respective election manifestos.

You can access the full report here.