Jakob Edler comments on spending review and innovation

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While there were some positive announcements in the Autumn Statement, the government still lacks an over-arching vision for innovation linked to delivering policy goals, says Professor Jakob Edler.

The Autumn Statement was much less worse than I expected. The ring fencing of science is good news, especially compared to other areas, while the overall budget of the innovation agency Innovate UK does not seem to have been overly damaged – in fact we are promised an increase in funding for the Catapult centres. The main signal therefore is that science and innovation are seen as engines of development and growth, and for that George Osborne can be applauded.

Some moves are surprising, such as the new global challenges programme. Without knowing the precise details at this stage, it could mean an opportunity for science to take advantage of programmes that are problem driven and have an impact on a global scale, supporting the development agenda. Linking science funding and development has always been a tricky issue, as often excellence and relevance for development are not seen as going together. But I hope this programme will develop into a meaningful instrument for relevant excellent science towards global challenges, and to showcase UK science competencies to the developing world.

The Statement also stressed the devolution agenda again. Given that national budgets for science and innovation have not been cut dramatically, this could be an opportunity for city regions to see the devolution as positive sum game, leveraging national money with intelligent local initiatives.

My main concern however is the reduction of staff capacity and the 17% cut in the budget at the Department of Business, Innovation & Skills, a deal that was agreed before the spending review. While some streamlining of locations and quangos may make sense, the bottom line is that the capacity to reflect, design and deliver will diminish. Looking from the outside as a German, the UK – ever since the days of the Department of Trade & Industry – has always been at the forefront of reflecting, formulating new ideas and designing new policy approaches that then spilled even over to other countries. This capacity has been good for the UK, but it is more and more limited, or delegated. In the long run, this will haunt the country.

Related to that it is not clear what the integration of Innovate UK into the new body Research UK will mean. Most likely is that it won’t have much impact and it might even improve coordination between science and commercialisation, which can be a good thing if done properly. But it might also water down the profile of Innovate UK and open the door for further organisational savings in years to come.

Also, the change within the innovation agency Innovate UK from handing SMEs loans rather than grants could backfire, although the evidence is not conclusive at this stage. Loans might reduce risk taking in the economy, and thus also reduce the leverage that public funding has.

Above all, I do not see a vision that innovation is anchored across government, linked to delivering policy goals. We see it a little in the energy area with a doubling of funds for energy innovation (much of which are in the nuclear area), and in the NHS (e.g. the 10 Mio Testbed programme) and in the defence sector.

However, the idea of using government expenditure more generally to boost innovation has gone. Instead, government procurement is exclusively seen as a means for efficiency gains across all departments. This points towards a bigger problem, namely the lack of vision as to how generating and diffusing innovation can actually make a difference to addressing our challenges and societal goals we, as a society, want to prioritise.

Jakob Edler is Professor of Innovation Policy and Strategy at Alliance MBS, and Executive Director of the Manchester Institute of Innovation Research.

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