Reflections on the UK’s new Innovation Strategy

The UK published an Innovation Strategy last week; rather than a complete summary and review, here are a few of my reflections on it. It’s a valuable and helpful document, though I don’t think it’s really a strategy yet, if we expect a strategy to give a clear sense of a destination, a set of plans to get there and some metrics by which to measure progress. Instead, it’s another milestone in a gradual reshaping of the UK’s science landscape, following last year’s R&D Roadmap, and the replacement of the previous administration’s Industrial Strategy – led by the Department of Business, Energy and Industrial Strategy – by a Treasury driven “Plan for Growth”.

The rhetoric of the current government places high hopes on science as a big part of the UK’s future – a recent newspaper article by the Prime Minister promised that “We want the UK to regain its status as a science superpower, and in so doing to level up.” There is a pride in the achievements of UK science, not least in the recent Oxford Covid vaccine. And yet there is a sense of potential not fully delivered. Part of this is down to investment – or the lack of it: as the PM correctly noted: “this country has failed for decades to invest enough in scientific research, and that strategic error has been compounded by the decisions of the UK private sector.”

Last week’s strategy focused, not on fundamental science, but on innovation. As the old saying goes, “Research is the process of turning money into ideas, innovation is turning ideas into money” – and, it should be added, other desirable outcomes for the nation and society – the necessary transition to zero carbon energy, better health outcomes, and the security of the realm in a world that feels less predictable. But the strategy acknowledges that this process hasn’t been working – we’ve seen a decline in productivity growth that’s unprecedented in living memory.

This isn’t just a UK problem – the document refers to an apparent international slowing of innovation in pharmaceuticals and semiconductors. But the problem is worse in the UK than in comparator nations, and the strategy doesn’t shy away from connecting that with the UK’s low R&D intensity, both public and private: “One key marker of this in the UK is our decline in the rate of growth in R&D spending – both public and private. In the UK, R&D investment declined steadily between 1990 and 2004, from 1.7% to 1.5% of GDP, then gradually returned to be 1.7% in 2018. This has been constantly below the 2.2% OECD average over that period.”

One major aspiration that the government is consistent about is the target to increase total UK investment in R&D (public and private) to reach 2.4% of GDP by 2027, from its current value of about 1.7%. As part of this there is a commitment to increase public spending from £14.9 bn this year to £22 bn – by a date that’s not specified in the Innovation Strategy. An increase of this scale should prompt one to ask whether the institutional landscape where research is done is appropriate, and the document announces a new review of that landscape.

Currently the UK’s public research infrastructure is dominated by universities to a degree that is unusual amongst comparator nations. I’m glad to see that the Innovation Strategy doesn’t indulge in what seems to be a widespread urge in other parts of government to denigrate the contribution of HE to the UK’s economy, noting that “in recent years, UK universities have become more effective at attracting investment and bringing ideas to market. Their performance is now, in many respects, competitive with the USA in terms of patents, spinouts, income from IP and proportion of industrial research.” But it is appropriate to ask whether other types of research institution, with different incentive structures and funding arrangements, might be needed in addition to – and to make the most of – the UK’s academic research base.

But there are a couple of fundamentally different types of non-university research institutions. On the one hand, there are institutions devoted to pure science, where investigators have maximum freedom to pursue their own research agendas. Germany’s Max Planck Institutes offer one model, while the Howard Hughes Medical Institute’s Janelia Research Campus, in the USA, has some high profile admirers in UK policy circles. On the other hand, there are mission-oriented institutes devoted to applied research, like the Fraunhofer Institutes in Germany, the Industrial Technology Research Institute in Taiwan, and IMEC (the Interuniversity Microelectronics Centre) in Belgium. The UK has seen a certain amount of institutional evolution in the last decade already, with the establishment of the Turing Institute, the Crick Institute, the Henry Royce Institute, the Rosalind Franklin Institute, the network of Catapult Centres, to name a few. It’s certainly timely to look across the landscape as it is now to see the extent to which these institutions’ missions and the way they fit together in a wider system have crystallised, as well as to ask whether the system as a whole is delivering the outcomes we want as a society.

There is one inescapable factor about the institutional landscape we have now that is seriously underplayed – that is that what we have now is a function of the wider political and economic landscape – and the way that’s changed over the decades. For example, there’s a case study in the Innovation Strategy of Bell Laboratories in the USA. This was certainly a hothouse of innovation in its heyday, from the 1940’s to the 1980’s – but that reflected its unique position, as a private sector laboratory that was sustained by the monopoly rents of its parent. But that changed with the break-up of the Bell System in the 1980’s, itself a function of the deregulatory turn in US politics at the time, and the institution is now a shadow of its former self. Likewise, it’s impossible to understand the drastic scaling back of government research laboratories in the UK in the 1990’s without appreciating the dramatic policy shifts of governments in the 80’s and 90’s. A nation’s innovation landscape reflects wider trends in political economy, and that needs to be understood better and the implications made more explicit.

With the Innovation Strategy was published a “R&D People and Culture Strategy”. This contains lots of aspirations that few would disagree with, but not much in the way of concrete measures to fix things. To connect this with the previous discussion, I would have liked to have seen much more discussion of the connection between the institutional arrangements we have for research, the incentive structure produced by those arrangements, and the culture that emerges. It’s a reasonable point to complain that people don’t move as easily from industry to academia and back as they used too, but it needs to be recognised that this is because the two have drifted apart; with only a few exceptions, the short term focus of industry – and the high pressure to publish on academics – makes this mobility more difficult. From this perspective, one question we should ask about our institutional landscape, is whether it is the right one to allow the people in the system to flourish and fulfil their potential?

We shouldn’t just ask in what kind of institutions research is done, but also where those are institutions situated geographically. The document contains a section on “Levelling Up and innovation across the UK”, reasserting as a goal that “we need to ensure more places in the UK host world-leading and globally connected innovation clusters, creating more jobs, growth and productivity in those areas.” In the context of the commitment to increase the R&D intensity of the economy, “we are reviewing how we can increase the proportion of total R&D investment, public and private, outside London, the South East, and East of England.”

The big news here, though, is that the promised “R&D and Place Strategy” has been postponed and rolled into the forthcoming “Levelling Up” White Paper, expected in the autumn. If this does take the opportunity of considering in a holistic way how investments in transport, R&D, skills and business support can be brought together to bring about material changes in the productivity of cities and regions that currently underperform, that is not a bad thing. I was a member of the advisory group for the R&D and Place strategy, so I won’t dwell further on this issue here, beyond saying that I recognise many of the issues and policy proposals which that body has discussed, so I await the final “Levelling Up” White Paper with interest.

A strategy does imply some prioritisation, and there are a number of different ways in which one might define priorities. The Coalition Government defined “8 Great Technologies”; the 2017 Industrial Strategy was built around “Grand Challenges” and “Sector Deals” covering industrial sectors such as Automotive and Aerospace. The current Innovation Strategy introduces seven “technology families” and a new “Innovation Missions Programme”.

It’s interesting to compare the new “seven technology families” with the old “eight great technologies”. For some the carry over is fairly direct, albeit with some wording changes reflecting shifting fashions – robotics and autonomous systems becomes robotics and smart machines, energy and its storage becomes energy and environment technologies, advanced materials and nanotechnology becomes advanced materials and manufacturing, synthetic biology becomes engineering biology. At least two of the original 8 Great Technologies always looked more like industry sectors than technologies – satellites and commercial applications of space, and agri-science. Big data and energy-efficient computing has evolved into AI, digital and advanced computing, reflecting a genuine change in the technology landscape. Regenerative medicine looks like it’s out of favour, replaced in the biomedical area by bioinformatics and genomics. Quantum technology became appended to the “8 great” a year or two later, and this is now expanded to electronics, photonics and quantum.

Interesting thought the shifts in emphasis may be, the key issue is the degree to which these high level priorities are translated into different outcomes in institutions and funding programmes. How, for example, are these priority technology families reflected in advisory structures at the level of UKRI and the research councils? And, most uncomfortable of all, a decision to emphasise some technology families must imply, if it has any real force, a corresponding decision to de-emphasise some others.

One suspects that organisation through industrial sectors is out of favour in the new world where HM Treasury is in the driving seat; for HMT a focus on sectors is associated with incumbency bias, with newer fast-growing industries systematically under-represented, and producer capture of relevant government departments and agencies, leading to a degree of policy attention that reflects a sector’s lobbying effectiveness rather than its importance to the economy.

Despite this colder new environment, the ever opportunistic biomedical establishment has managed to rebrand their sector deal as a “Life Sciences Vision”. The sector lens remains important, though, because industrial sectors do face their own individual issues, all the more so at a time of rapid change. Successfully negotiating the transition to electric vehicles represents an existential challenge to the automotive sector, while for the persistently undervalued chemicals sector, withdrawal from the EU regulatory framework – REACH – threatens substantial extra costs and frictions, while the transition to net zero presents both a challenge for this energy intensive industry, and a huge set of new potential markets as the supply chain for new clean-tech industries like batteries is developed.

One very salutary clarification has emerged as a side-effect of the pandemic. The vaccination programme can be held up as a successful exemplar of an “innovation mission”. This emphasises that a “mission” shouldn’t just be a vague aspiration, but a specific engineering project with a product at the end of it – with a matching social infrastructure developed to ensure that the technology is implemented to deliver the desired societal outcome. Thought of this way, a mission can’t just be about discovery science – it may need the development of new manufacturing capacity, new ICT systems, repurposing of existing infrastructures. Above all, a mission needs to be executed with speed, decisiveness, and a willingness to spend money in more than homeopathic quantities, characteristics that aren’t strongly associated with recent UK administrations.

What further innovation missions can we expect? It isn’t characterised in these terms, but the project to build a prototype power fusion reactor – the “Spherical Tokamak for Energy Production” – could be thought as another one. By no means guaranteed to succeed, it would be a significant development if it did work, and in the meantime it probably will support the spinning out of a number of potentially important technologies for other applications, such as new materials for extreme environments, and further developments in robotics.

Who will define future “innovation missions”? The answer seems to be the new National Science and Technology Council, to be chaired by the Prime Minister and run by the government’s Chief Scientific Advisor, Sir Patrick Vallance, given an expanded role and an extra job title – National Technology Adviser. In the words of the Prime Minister, “It will be the job of the new National Science and Technology Council to signal the challenges – perhaps even to specify the breakthroughs required – and we hope that science, both public and commercial, will respond.”

But here there’s a lot to fill in terms of the mechanisms of how this will work. How will the NSTC make its decisions – who will be informing those discussions? And how will those decisions be transmitted to the wider innovation ecosystem – government departments and their delivery agencies like UKRI, and its component research councils and innovation agency InnovateUK? There is a new system emerging here, but the way it will be wired is as yet far from clear.