Business R&D is the weak link in the UK’s innovation system

What’s wrong with the UK’s innovation system is not that we don’t have a strong science base, or even that there isn’t the will to connect the science base to the companies and entrepreneurs who might want to use its outputs. The problem is that our economy isn’t assigning enough resource to pulling through the fruits of the science base into technological innovations, the innovation that will create new products and services, bring economic growth, and help solve some of the biggest social problems we face. The primary symptom of the problem is the UK’s very poor performance at business funded research and development R&D. This is the weak link in the UK’s national innovation system, and it is part of a bigger picture of short-termism and under-investment which underlie the UK economy’s serious long-term problems.

For context, it’s worth highlighting two particular features of the UK economy. The first is its very poor productivity growth: currently on one measure (annualised 6 year growth in productivity) we’re seeing the worst peace-time performance for the last 150 years. Without productivity growth, there will be no growth in average living standards, and that’s going to lead to an increasingly sour political scene.

The second is the huge current account deficit, which at 5.4% of GDP is worse than in the crisis years of the mid-1970s. Now, as then, the UK is unable to pay its way in the world. Unlike the 1970’s, though, there’s no immediate political crisis, no humiliating appeals to the IMF for a bail-out. This time round, overseas investors are happy to finance this deficit by buying UK assets. But this isn’t cost-free. An influx of overseas capital is what is currently driving a price bubble for domestic and commercial property in London, severely unbalancing the economy and leading to a growing gulf between the capital and the regions. The assets being bought include the nation’s key infrastructure in energy and transport; there will be an inevitable loss of control and sovereignty as more of this infrastructure falls into overseas ownership. Chinese money will be paying for any new generation of nuclear power stations that will be built; that will give the UK very little leverage in insisting that some of that investment is spent to create jobs in the UK, and it will be paid for by what will effectively be a tax on everyone’s electricity bills, guaranteed for 35 years.

These are long-term problems, and so is the decline in business R&D intensity. The last thirty years has seen this drop from 1.48% in 1981, to 1.09% now (measured as a percentage of GDP) Continue reading “Business R&D is the weak link in the UK’s innovation system”

Surely there’s more to science than money?

How can we justify spending taxpayers’ money on science when there is so much pressure to cut public spending, and so many other popular things to spend the money on, like the National Health Service? People close to the policy-making process tend to stress that if you want to persuade HM Treasury of the need to fund science, there’s only one argument they will listen to – that science spending will lead to more economic growth. Yet the economic instrumentalism of this argument grates for many people. Surely it must be possible to justify the elevated pursuit of knowledge in less mercenary, less meretricious terms? If our political economy was different, perhaps it would be possible. But in a system in which money is increasingly seen as the measure of all things, it’s difficult to see how things could be otherwise. If you don’t like this situation, it’s not science, but broader society, that you’ve got to change.

The relentless focus on the economic justification of science is relatively recent, but that doesn’t mean that what went before was a golden age. The dominant motivation for state support of science in the twentieth century wasn’t to make money, but to win wars. Continue reading “Surely there’s more to science than money?”