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3% target for R&D as % of GDP
There have recently been calls for the UK to spend 3% of GDP on R&D (Government & Business). This has been tried before in 2002 and failed so why does anyone think this target would stimulate economic growth?
Click here to see a fuller article on why I think this is a poor measure of innovation
Presentation at the Aerospace Technology Institute
I was invited by the ATI to talk about how innovation could impact the future growth of the Aerospece sector.
Click here to see a synopsis of my presentation
Input to Government enquiry into Industrial Strategy
The Prime Ministers lead in wanting a UK Industrial Strategy is a really positive step forward. On behalf of the R&D Society, my colleague Uday Phadke and I have prepared a submission for the Select Committee enquiry on the new UK Industrial Strategy
Click here to see the full submission
Bid for ARM Holdings
The premium on the pre-bid share price of SoftBank’s bid for Arm Holdings looks attractive at first glance but shareholders may be missing a greater prize.
Click here to see my blog on this.
The future of the UK Innovation Agency
The proposal to integrate Innovate UK into UKRI is deeply flawed.
Click here to see why I think this...
Round table discussion on UK innovation policy
In April, the R&D Society organisaed a round table discussion on future Innovation policy. Here is the scene setter paper I presented to get the discussion started.
Click here to see my outline
What happened to my website??
Just discovered that my website manager has deleted all my articles since April 2012 (no this is not an April fool joke!!). Apologies if you have been looking for comments on innovation & growth. As they say, normal service will be resumed as soon as possible!
Fuzzy logic of Wilson review
The Wilson report on University-Business collaboration is fundamentally flawed. The report offers up 30 recommendations plus 24 so-called “study recommendations”. Many of the statements in the report seem to be broad statements based on perception not fact, offering little by way of clear policy recommendations. What a wasted opportunity – see my full article for why I think this..
Click here to see our full review
Government Innovation and Research strategy
The Government has just published its Innovation & Research Strategy. This introduced an economic analysis of the innovation eco-system (Economic paper 15). While some of the paper dwells on traditional measures of innovation, it does comprehensively cover some of the newer ideas around innovation activity, most notably the concept of intangible investment. This forms a sound basis for policy development. However it is unclear how the main policies in the actual strategy are driven by this economic analysis. It would be helpful to cross reference the IRS to Economics paper 15 – I think there will be some major gaps and some major imbalances in funding priorities. For example, perhaps less weight should be given to the R&D tax credit (currently more than £1 billion/annum and who knows how much of this is done in UK).
Innovation spending trends
Allianz Insurance has recently reported on a survey they conducted with 500 UK CEOs. The good news is that innovation is seen as a key factor in business success the vast majority of UK business leaders. However, while recognizing that innovation pays off and improves performance, the challenging economic climate means that innovation is not immune from cutbacks. Nearly a quarter of the CEOs reported that the recession has impacted their innovation programmes with the research suggesting that over the past year, innovation spend has been reduced with this downward trend set to continue over the next few years. It’s been our experience that the recession presents a great opportunity to outperform hesitant competitors with new creative ideas that have the potential to change the game. If you would like to know more please see full article on this or call for a chat.
End of the road for Regional Development Agencies (RDAs)
The Coalition Government has signalled the end of the RDAs and has set about totally dismantling the structures established by the previous Government. That is a pity. After 10 plus years of operation the RDAs are starting to have some impact and the most effective interventions are becoming clearer. It would be better if the plan for the RDAs was transformational, building on the best bits, rather than complete wipeout. The so-called Local Enterprise Partnerships (LEPs) are a poor substitute because of the minimal funding at their disposal. Without a more balanced view of the RDA potential I can confidently predict that some good elements will be thrown out only to be recreated later with a loss of time and money. I hope I am wrong.
R&D tax credits
The Government has just announced a review of the R&D tax credit scheme. This scheme needs a substantial overhaul as it no longer meets the innovation needs of the UK. See my fuller article on this subject for my suggestions.
Technology Innovation Centres
In October, David Cameron announced £200million funding over four years for Technology Innovation Centres based on the Hauser Report. No details have yet been published but if we must do this let's build on what we have - not start something new.
The Hauser Report
Two recent reports recommend the government acts to establish technology centres for exploiting UK scientific research. The Hauser report focuses simply on technology innovation centres (TICs); but in Dyson's report they are one facet of a more wide-ranging consideration. How will these recommendations help UK companies innovate and bring new products to market?
The Dyson Report March 2010
For many years I have been arguing that Government policies on innovation since 2005 have lost their way and failed to recognise how industry creates wealth. At last, we are beginning to see more prominent voices supporting the policy ideas I have been advocating to stimulate wealth creation through innovation. In his recent report, 'Ingenious Britain', James Dyson has put forward in simple terms some hard hitting actions based on his own highly successful business creation experience
Time to scrap the SBRI scheme
In recent speeches, Lord Mandelson has made great play out of a relaunched SBRI scheme which he says is now funding small business to the tune of £200 million. BUT in 2006, in the Treasury report on the Science & Innovation strategy we were told that in 2004/05 the SBRI spend was £269million and again in the 2007 report we were told that the 2005/06 spend was £225 million. How depressing is that, despite further Government intervention we are going backwards on SBRI. Of course some companies have been helped but isn't it time to scrap this scheme and concentrate on real public procurement opportunities
Technology Strategy Board shoots itself in the foot.
The TSB has come up with an interesting idea - a light touch competition to support SMEs in carrying out feasibility studies to explore new products and services. True the funding is limited to £25k per project but the application is simple and quick and for many SMEs will give them support to reduce some of the risk of new product development. The briefing for this call was planned for 8 September but people were told this week that the meeting is already oversubscribed and no new registrations were being accepted. What a ridiculous situation. There is clearly a need for this type of support and to deny people the opportunity to understand the competition rules and how to shape their bids represents a lost opportunity. I hope the TSB management will learn some lessons from this and make better provision in the future.
Business and Innovation rejoined
I should be rejoicing that innovation is to be reunited with business in the latest government reshuffle. I have argued for a long time that the separation of innovation from business was a flawed change which has set the UK innovation strategy back several years. So why do I feel uneasy now? One reason is the profusion of detailed ministerial titles announced last Thursday. The responsibilities of the 10 ministers now reporting to First Secretary of State Peter Mandelson overlap not only with each other on matters as wide ranging as business, innovation, science, skills and education but several of them also have dual responsibilities with other departments. This, if not resolved quickly, will paralyse decision making. There is so much to be done, and much of it is self evident. Alas, the creation of a mega-ministry does not show much evidence that the government has grasped what is required.
Drayson to focus research
At a recent meeting of the Foundation for Science & Technology, Lord Drayson proposed that research should be focused on areas that had the potential for commercial exploitation. This seems to me to show an appalling lack of understanding of the difference between scientific research and commercial exploitation of new ideas (innovation). My recent article in Research Fortnight (18 February 2009) explains why I think he has got it wrong and what Government should be doing to help Business.
To see the full article click here.
Bail out for the UK auto industry
Yesterday, Lord Mandelson stated that our automotive industry ‘contributes £10bn added value to the economy’. To put this in perspective, the automotive sector represents about 1% of the Value Added of the top 800 UK companies compared to nearly 7% of the Value Added by the automotive sector in the top 750 mainland Europe companies. By coincidence, in the UK, general retailers together with food & drug retailers represent nearly 7% of Value Added to the economy. If support for the UK automotive industry is justified on a Value Added basis, why not for hard pressed UK retailers? The truth is that the auto manufacturers should be doing more to stimulate sales. Take for example what Hyundai have just done in the USA. They have launched an 'assurance program' which if you buy a Hyundai car and lose your income in the next 12 months they will take the car back. Imaginative and innovative I think.
See their commercial here:
Innovation myths
A new report (December 2008) by Accenture and The Manufacturing Institute aims to help manufacturers find that right road to innovation, offering paths to explore as well as summarizing the current state of innovation. It also cautions industrial manufacturers about buying into three innovation myths, explains James Robbins, Accenture partner and North American automotive and industrial equipment lead.
To see the full article click here.
Government changes
Let’s hope that the new Secretary of State for Business can bring some sense to what has become a diffused and ragged Science & Innovation policy that is neither helping Research nor Business. I expand on this in a fuller article which first appeared in the Research Fortnight magazine on 8 October 2008.
To see the full article click here.
Boston Consulting Group annual survey
Just published is the 2008 survey. The report suggests that there is rising dissatifaction with the return on innovation investments. In my experience this is usually due to poor planning and poor project execution. Understanding the job the customer is trying to achieve, objectively comparing ideas with competitor offerings, seeking out collaboration to deliver something new/ innovative and strongly managing the implementation to ensure successful exploitation should be demanded by CEOs before any investment is made. I would be happy to work with any CEO to increase the success of their innovation investments!
For the full BCG report please follow this link .....
UK R&D tax credits
What possible basis is there for the recent Treasury suggestion that R&D tax credit for SMEs will increase by £80million pa? In fact if you look at the actual support claimed by SMEs it has fallen from £210 million in 2002-03 to £180million in 2005-06 (the latest published figures). By contrast, the amount claimed by large companies has risen from £180 million in 2002-03 to £420 million in 2005-06. Large companies are obviously getting better at claiming the tax credit because during this time actual company spend on R&D did not increase at all. A high profile debate is now required to quickly determine the most effective way for government to support business growth in the UK, particularly small innovative companies. I hope that the major industry organisations—the CBI, IoD, EEF, TUC, BCC—will put this issue high on their agendas.
To view the full commentary click here
Innovation Nation white paper.
Three cheers for the new White Paper on innovation, Innovation Nation, published on 13 March by the Department for Innovation, Universities and Skills (DIUS) —because at the very least it increases pressure on government to do more on innovation policy. The paper does cover a wide range of important issues and, for the most part, the direction outlined looks right. Having said that, however, the paper lacks detail, is very light on tangible actions, falls short on a pace-setting agenda and does not yet demonstrate that DIUS really understands how business operates. I expand on this in a fuller article which first appeared in the Research Fortnight magazine on 19 March 2008.
To see the full article click here.
Back to basics for the Technology Strategy Board
The old DTI Technology Strategy Board has been revamped and relaunched as an 'arms length' agency reporting to the new DIUS department. In my view the new TSB lacks a clear strategy, is underfunded and too far removed from innovation policy. This article traces the history of the TSB and makes some suggestions going forward. The article first appeared in the Research Fortnight magazine on 10 October 2007.
To see the full article click here.
R&D tax credits - poor value for money?
David Cameron’s task force on science seems to have concerns about the R&D tax credit. Their recent policy paper states: “We recommend the R&D tax credit should be retained, but the effectiveness of the tax credit in stimulating additional R&D should be carefully examined”. There are practical reasons for retention. For a start, dismantling of a credit that some firms have come to rely on could be punitive if swept away overnight. But, from a national point of view, the R&D tax credit is demonstrably not good value for money. There are two reasons for this. First, there is now ample evidence from economic research that while an R&D tax credit will increase business expenditure on R&D, its full impact will be felt only after a period of up to 10 years. In addition, the eventual benefits are limited for the costs involved. Economists conclude that for every £1 of permanent tax break an extra £1 will be spent on R&D. At the current level of spending on tax (£600 million per annum), this means that the Inland Revenue must forfeit £6 billion in taxes over 10 years to generate an annual increase in business R&D that reaches £600m only by the end of the 10-year period. And yet, even an increase of £600m per annum, if achieved, represents just 4.5 per cent of the current level of business spending on R&D (£13.4bn, in 2005). This is nowhere near the increase of 50 per cent that is required if the Treasury is to meet its target for R&D spending by industry of 2.5 per cent of GDP by 2014. Second, around 80 per cent of the value added to the UK’s economy is generated by highly successful and innovative businesses, such as the financial services, the oil & gas sectors and the creative industries. These enterprises are significant users of technology but they traditionally report low R&D expenditure because of the very restrictive definition of R&D. The Conservative party paper highlights this and calls for innovation in the service sectors to be recognised. Meanwhile, the Sainsbury Review, released last week, has reached the astonishing conclusion that the R&D tax credit is a success. The basis of this claim is an economic study (Do R&D tax credits work? Evidence from a panel of countries 1979-1997 by Bloom, Griffiths and van Reenan, Journal of Public Economics, August 2002). But that paper concludes that “a 10 per cent fall in the cost of R&D stimulates just over a 1 per cent rise in the level of R&D in the short-run, and just under a 10 per cent rise in R&D in the long-run.” This is precisely the point that I make above—huge expenditure for limited benefit. In addition, the review overplays the 2005 HM Revenue & Customs survey of R&D tax credit users in saying that 57 per cent felt the initiative was an incentive to boost R&D. The more telling response is that only “around a fifth, 19 per cent, of the successful claimants took the expected value of the tax credits into account when setting budgets.” So there is very little evidence to suggest that the initiative encourages businesses to do more R&D, and much evidence to suggest that tax credits are a heavy deadweight cost to taxpayers. A high profile debate is now required to quickly determine the most effective way for government to support business growth in the UK. I hope that the major industry organisations—the CBI, IoD, EEF, TUC, BCC—will put this issue high on their agendas.
New voices in support of wider innovation
For some time, I have been commenting that wealth creation through innovation is far more than science. It was therefore interesting to see in the Sunday Times today that The Secretary of State at the DTI has now recognised the importance of the low R&D (but high value adding) 'service sector' in creating economic growth. In the same article Jonathan Kestenbaum, the new Chief Executive of NESTA makes exactly the same point. He has coined the phrase 'hidden innovation' to describe those activities which are going on but not widely publicised and is quoted as saying, "Too many people still see innovation as the reserve of scientists and in doing this they overlook our broader capacity for innovation in the UK." To find the most profitable area for innovation in your business please call me for a confidential discussion.
R&D tax credits - the King's clothes?
The recent Budget report from the UK Treasury says, "As one of the key drivers of productivity growth, the Government has ensured the tax system acts as a positive incentive for business innovation. ....... As innovation becomes increasingly important in maintaining the UK’s globally competitive position, R&D tax credits play an even greater role in the UK’s response to globalisation." Really? where is the evidence for this? Innovation is much more than inventing new technology. What about all those companies who are successfully innovating by motivating their staff, thinking up new ways of doing business and collaborating in the open innovation model?And what about all those companies whos are really adding value to the economy but are not eleigible for the R&D tax credit because they are not covered by the very restrictive definition of R&D? It is time to start a discussion on how government support can really benefit business.
Government support for Enterprise & Innovation
Are Britain’s smaller businesses really worth all the government money that’s being spent on them? This provocative question was posed when February’s Cambridge University Centre for Business Research (CBR) conference on Enterprise and Innovation unveiled the picture of the enterprise economy painted by six successive CBR surveys in 13 years. So now instead of continuing to hand out hefty tax breaks – like R&D tax credit and the zero rate corporation tax – alongside funding for training and other such government support expenditure that now totals a hefty £7.9 billion, shouldn’t the government be asking for its money back? Or at least asking what it,and the British economy, is getting in return? It’s a question that does not surprise CBR director Alan Hughes: “It’s true we are spending an awful lot of public money – the equivalent of £220 per year for every person of working age in Britain,” he says. “And what is more, it’s being spent through a very wide range of government departments and through lots of different programmes. Individual support programmes, especially in the DTI, are carefully evaluated. But what is not clear is whether anyone has asked what we are getting back in aggregate for all this spending, and whether we should be spreading the funding so widely. The time is right for the question to be asked, should business support spending be more focussed?” ................... Well, let’s see if the forthcoming Budget answers this very important question.
The Cooksey Review -UK health research
Sir David Cooksey has produced a report with recommendations which among other things attempt to bridge gaps between research and clinical application. This is very surprising to me as analysis of the US experience (National Institute of Health) shows little evidence of a direct correlatiion between investment in basic research and exploitation. Basic research is a vital investment for government both for the skilled people and the knowledge it generates. But innovation strategy for wealth creation is all about providing goods and services that add value to what people do -- not artificially trying to push scientific research into commercial exploitation. There is a huge danger that the basic research capability will be weakened and no real commercial benefit will be gained. In another interesting recommendation, there will be an intermediate body (OSCHR) which will arbitrate Medical Research Council and Dept Health research funds. I fear this will add another level of administration into the process and further dilution of basic research. The Treasury is asking the Research Councils to demonstrate the economic benefits of the money that has been invested in research. Are they behind this latest move? Personally I doubt whether such a direct correlation exists.
Government Technology Strategy
The Technology Strategy Board has just announced it's latest call for proposals. The technology direction continues to build on the work of earlier calls and the process for application is improving with every round. BUT I am worried. This round of funding (£50 million) appears to be substantially lower than previous rounds which had grown to £80-100 million. This inevitably means a stalling in the momentum which had been building on this exciting new programme. I asked the chairman, Graham Spittle, whether the funding would be increased in future calls and what his budget would be for the new 'arms length' arrangement for the TSB. Alarmingly he could give no assurances on either of these points. I will be writing a fuller article on this issue in the New Year.
Comments on HM Treasury Science & Innovation strategy
With the Spring 2006 budget, the Treasury published a consultation on their 10-year Science & Innovation Investment Strategy: next steps. The Royal Academy of Engineering has made a response raising several important issues.
The RAE response can be downloaded here.
Global Business Symposium – Judge Institute, Cambridge -- July 2006
David Hughes presentation at this conference suggested that there is more to innovation than technology and called for a wider focus in innovation policy thinking, particularly focusing on ‘users’ of technology, the Services sector and public procurement. Understanding how business creates wealth and that ‘one size does not fit all’ are key requirements to helping businesses add value. This theme was supported by several other presenters and in the panel sessions.
Click here to download report of event
IBM – text to speech synthesiser
Have you looked at IBM’s latest research "text to speech synthesiser" project? What innovative products could you imagine with this capability?
Click here to try it out
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