Investing in Innovation

Dr Helen Ewles, Research Policy Advisor at the Royal Academy of Engineering, on making the case for public investment in innovation

The UK has a world-leading research base, which provides the foundation for new ideas and discoveries, which, through innovation, can result in advances to our economic, social and cultural well-being as well as our health.

This is one of the key messages that we, at the Royal Academy of Engineering, have highlighted in our recently published report ‘Investing in Innovation’, which makes the case for public investment in innovation.

Innovation is the process by which new ideas generate economic and social value

Innovation is a surprisingly difficult concept to define. Innovation is diverse and stretches far beyond the traditional view of commercialisation of a discovery resulting in a marketable product; innovation can also derive from developments in design, business models and mechanisms of service delivery.  Neatly fitting innovation alongside R&D or commercialisation is not simple; although innovation often relies on R&D and involves commercialisation, it is not synonymous with either.

Regardless of the details of the definition, the importance of innovation is clear.  Without innovation, the UK would struggle to reap returns from its scientific and research investments, jeopardising economic growth, much-needed increases in productivity and the creation of high-value jobs. The rest of the world is in agreement; the consensus is that the ability and capacity to innovate is the way to prosper in the 21st century.

Engineers play an important role in innovation.  Sectors with high concentrations of graduate engineers report higher than average levels of innovation activity and innovation-related income, as well as higher levels of labour productivity. However, despite our Academy’s clear affiliation with engineering, neither the report, nor innovation itself, is engineering specific. The involvement of all sectors and disciplines in innovation is critical for the development of new tools and approaches to tackle major societal challenges and improve quality of life.

The UK has many of the strengths required to excel in innovation.  In fact the UK consistently ranks within the top 10 countries for innovation performance in most international league tables. However, these league tables also identify some areas of relative weakness for the UK, as shown in the figure ‘UK innovation profile’. Our weaknesses include the level of R&D investment and concerns about the STEM pipeline, both of which could be improved with appropriate public support.

Innovation doesn’t happen instantaneously whenever and wherever a brilliant idea occurs. Similar to research, government has a pivotal role to play in stimulating, supporting and enabling innovation, and there is a rich evidence base demonstrating the value of government innovation support, which the Academy’s report has sought to bring together.

It is also clear that public sector investment in both R&D and innovation crowds in private investment, that firms receiving significant support from government have large and statistically significant results on all measure of innovation activity and output, and that receiving a public sector grant can double a company’s spending on innovation.

Government support for innovation through non-funding routes is also important, through smart public procurement, regulations and standards, support for skills development and articulating an overarching vision and a coherent, stable and strategic innovation policy framework.

It is not a choice between research and innovation. To safeguard the UK’s ability to compete globally and secure our future prosperity, public investment in innovation is essential to enable us to derive full benefit from investment in our research base.

At a time of severe pressure on public finances and growing global competition, government should be investing in innovation to secure our further growth.