Why it’s time to change the way we approach investing in innovation

Over the past fortnight, it’s fair to say that our new Labour government has tried to get straight down to business when it comes to tackling its ever-growing to-do list. While addressing the current challenges facing the UK’s STEM sector wasn’t a central focus of the election campaign, we see the same sense of urgency and drive being applied to the new administration’s revamped Department of Science, Innovation and Technology (DSIT).

This urgency is very welcome. There is a growing list of issues facing the UK’s innovation drivers – high-spending R&D companies and our universities are among the most important. In my view, there are a number of interconnected challenges that the new government must address to supercharge our innovation sector and help it realise its huge growth potential.

Understanding the scale of the challenge

There have been a number of worrying reports in recent weeks about the looming prospect of bankruptcies in the university sector, with 40% set to incur deficits, according to recent reports from PricewaterhouseCoopers and the OfS, and up to a third forced to cut staff, according to The Times. The prospect of losing research-driven universities is all too real and would be a devastating blow to the UK’s position as a leader in innovative and cutting-edge ideas.

This brings me to my second point. There is a growing feeling that while the UK is exceptional at delivering bold ideas, we are failing to help entrepreneurs, innovators and spin-outs scale their young businesses and therefore succeed with their ideas. Our biggest innovators increasingly believe that the grass is greener elsewhere and are either withdrawing their companies from UK markets or seeking equity investment from (or even selling to) large international investors. Nowhere is this more evident than in the ongoing wave of delistings from the London Stock Exchange, AIM, junior market, with many innovative companies leaving to seek investment in Europe or the US.

Of course, none of this is to say that foreign direct investment in UK innovation sectors is inherently bad, but rather that there is an imbalance that needs to be redressed and a sense that UK entrepreneurs are not being supported as they seek to take their businesses to the next level. There is considerable wealth in the UK – we simply need to unlock the patient sources of capital that can best serve the interests of our innovators.

The arrival of a new, completely refreshed government inevitably creates a natural opportunity to rethink and assess how decision-makers and the public sector approach these serious challenges, from both a policy and financing perspective.

The Role of Public Sector Leadership

In both my current role at Bruntwood SciTech and in previous roles – including at Innovate UK, part of UKRI – I have had the privilege of seeing the inner workings of public sector funding for innovation in both business and academia. For all the good that the public sector does in these areas, and for all the amazing projects it funds and coordinates, its approach and processes can sometimes be overly bureaucratic – something that was widely recognised in the previous government review of research bureaucracy.

In a climate where public money is tighter than ever, and where some may see research or investment in innovation as an unnecessary luxury, it is vital that we approach this area of ​​the economy as efficiently, coherently and impactfully as possible. Shaking the public sector out of its slump – as the new government seems intent on doing – will be a key step in unlocking the potential that is pent up in our universities and the private sector.

Now is the time to bring expertise into the public sector – and specifically into DSIT and its affiliated agencies. Put simply, new people with unique perspectives bring new ideas. Encouragingly, the new Labour government seems to be taking this approach, given the appointment of Patrick Vallance as Science Minister, whom I was delighted to welcome to Manchester Science Park and Citylabs for discussions on greater industry-government collaboration earlier this week.

Vallance brings unique life experience to the role, having been at the heart of the government’s response to COVID-19, as well as key industry experience, having led GSK’s R&D function. We can only hope that this will be a philosophy they continue with their upcoming appointments as UKRI CEO and Innovate UK Executive Chairman.

Along with the new government bill to improve lives through science and technology – as outlined in last week’s King’s Speech – I would also like to see it make better use of collaboration between the private sector and academia. There is a wealth of expertise that can be unlocked by bringing together academia, the public sector and the private sector in what we commonly call triple helix partnerships. These are typically collaborative projects designed to support economic or social development and usually focus on specific areas of innovation. They are particularly effective in unlocking investment for all parties involved. As a useful vehicle for supporting innovation, investment and growth, the public sector must play a leading role in steering complex projects such as these.

The new government has the opportunity, through its appointments and unique coordinating role, to harness our best business and academic minds and transform the way we approach research funding and innovation support. A more entrepreneurial and dynamic public sector would be a good thing for everyone in the innovation community, and for the country’s ambition to become a science superpower.