How to turn the UK into a science and technology ‘superpower’

“It was one of the real inflection points for the business when we got our first grant,” recalls Neill Ricketts, the CEO of Versarien, an advanced materials business based in Cheltenham. “It shows a level of credibility to our investors and proves what you’re working on is valid”.

Versarien’s grant came from Innovate UK, one of the country’s big sources of R&D funding, and an important lifeline for businesses like Versarien.

Private companies, academic researchers and scientists working on cutting-edge technologies often rely on funding to pay for some or all of their R&D. Without this kind of support, most would run out of cash before being able to turn potentially revolutionary ideas into marketable products.

Currently, however, the UK falls behind other comparable countries on R&D spending and support. World Bank data shows we spend about 1.7 per cent of GDP on R&D, compared with 2.2 per cent in France, 2.8 per cent in the USA, 3.1 per cent in Germany, 4.8 per cent in South Korea and 5 per cent in Israel (the highest spender).

Yet this could be about to change. In June 2021, Prime Minister Boris Johnson announced plans for a ministerial National Science and Technology Council (NSTC)that will help direct funding for research. It will be supported by supported by a new Office for Science and Technology Strategy (OSTS), to be headed by sciences tsar Sir Patrick Vallance. It will gradually increase all R&D funding, with a new budget worth £39.8 billion for the 2022-25 period. The goal is to get the country up to the OECD average of ~2.4 per cent of GDP spend on R&D (which will partly be achieved by industry increasing its R&D investments too).

There’s no doubt that providing more funding for science and technology is welcome. But will this increase in funding really turn the UK into a “superpower” of innovation comparable to leaders like the US, Japan, South Korea, or Germany? How does our current system work, and what can we learn from the most innovative nations?

Professor James Wilsdon, who directs the Research on Research Institute (RoRI) at the University of Sheffield, explains how the UK currently funds R&D. Money comes from several sources, but the split is roughly two-thirds from the private sector (industrial R&D and private investors), and most of the rest comes from the government via various funding vehicles.  

A significant limitation for UK private sector investment is that few businesses have the heft or the budget to invest in speculative research – the kind that has a relatively low chance of turning into something profitable. Most R&D budget at established firms therefore goes on refining and improving existing products, rather than on discovering brand new things. And that means most funding for the more speculative stuff comes from government.  

Most government funding for research and development goes to universities, and it comes through two streams, says Wilsdon. First there are various university funding councils for each of the UK nations. Universities are allotted a chunk of cash based on research output; the more papers a university’s researchers produce, the more funding they are allocated. The second stream of funding comes through dedicated research councils such as the Medical Research Council or the Engineering and Physical Sciences Research Council.

Outside of universities, the government also provides funding through a variety of other agencies. These include the Catapult programmes, a group of organisations designed to strengthen links between academia and industry and turn promising ideas into profitable businesses. Then there is Innovate UK, an agency that supports early-stage firms with bringing their products closer to market.

Individual government departments also get involved in funding research and innovation. The Ministry of Defence or the Department of Health, for instance, have money set aside for researchers working in related fields.

There is also a new body named ARIA, which will have an £800 million budget to support “moonshot” ideas. The brainchild of former Number 10 adviser Dominic Cummings, ARIA is still in the process of being set up. The vision, however, is for an agency that allows programme managers to independently choose and fund avenues of research that might not be approved by more traditional funding bodies.

Finally, cities and county councils provide loans and grants to businesses and universities.

So where will the new National Science and Technology Council (NSTC) fit into this established infrastructure? Specific details are still hard to come by (E&T did contact the council for comment but Sir Patrick Vallance was unavailable). However, it is expected to play an oversight role, steering funding right across the UK government.

The body will provide leadership and incentives and decide where to focus resources on R&D that is expected to give the country a competitive advantage. It will focus on several technology ‘families’ where the UK can make the most of its strategic advantage. This will include things like advanced materials, AI, computing, genomics, green energy, environmental technologies, and robotics.

This could be a very positive development. Ardi Janjeva, an analyst at RUSI, a think tank, notes that there is currently a gap in the policy market for an organisation to set priorities consistently. “In the absence of an overarching policy infrastructure, different departments have taken the initiative to focus on different things” he explains. For example, “in the security and defence industry there is a good amount of expertise in things like artificial intelligence, but it is not always leveraged more widely”. A body like the NSTC could help with marshalling and organising funding across the currently disjointed landscape.  

In principle, a body like the NSTC makes a lot of sense. At the very least, it could play an important role in increasing investment into the UK science and technology sector. Whether it’s enough to make the country a science and technology superpower is another matter.  

There are some questions about how much of this new funding will actually reach researchers. Professor Wilsdon from the University of Sheffield is somewhat sceptical about how much of the money announced is new and how it will really be delivered. He notes that “the Johnson government is prone to big announcements with detail ‘to follow’”.

According to the 2021 announcement, the plan is to start with an extra £14.9 billion for R&D per year which will eventually grow to an additional £22 billion. It also makes it clear that the private sector is expected to match or surpass this commitment.  

The difficulty is knowing where this money will really go. The UK has signed up to the European Union’s Horizon innovation programme. Membership of this body, which, pre-Brexit used to come out of our EU membership fee, will take a significant chunk of the newly announced budget (rising to £3 billion annually in the next few years) – so it is not exactly new cash for R&D departments’ coffers.

There is also a lot of uncertainty about where the funding will go. Wilsdon explains that most funding for speculative research currently goes to universities – and most of that gets spent in the south-east (the Oxford, Cambridge, London triangle). However, in line with the government’s ‘levelling up’ agenda, Wilsdon believes there’s scope that more funding will be directed to new institutions, government laboratories or non-university research establishments dotted around the country. There will be a government spending review at the end of October, which may help clarify how the funding will be distributed.

If we are to assume that the talk of the UK becoming a science and technology superpower is more than mere bombast, we first need to understand what makes a country a leader in these fields. The UK does of course have a strong heritage of scientific research and engineering breakthroughs. At the beginning of the Industrial Revolution, the country was top of the table. But today, we sit relatively far down the league table of innovators. What can we learn from countries that have maintained a leading position, or ‘leapfrogged’ ahead?

There are several ingredients that are generally believed help countries become advanced innovators. One prerequisite is a large scientific community which can freely explore new ideas; the more scientists and engineers there are, the higher the chance they will occasionally stumble on breakthroughs.

Otherwise, innovation tends to favour democracy and decentralised states, since established interest groups have a harder time preventing change (although it is not essential). Capitalist countries with free markets are also more likely to innovate than nations following other economic models. But again, there are several examples that break this rule (not least, China). It’s also helpful to have a large market of consumers who can buy the products of innovation. Finally, it is helpful if the government gets directly involved in supporting innovation; it has the heft to invest in new markets until they can sustain themselves.  

These conditions have applied in many countries around the world at different stages of their history. However, no single factor explains why certain countries seem to become superior innovators. For instance, both the USA and Spain are highly decentralised democracies, yet Americans generate far more new technologies than Spaniards.

Zachary Taylor, a political scientist at Georgia Tech, has investigated why certain countries become technology leaders in his book ‘The Politics of Innovation’. Taylor used patents filed as a marker of a country’s rate of innovation and found that there are several countries that have long maintained their leading position over the last 50 years. These leaders include the United States, Japan, Switzerland, Canada, Sweden and Germany. Behind this leading bunch, you find a group of mid-level innovators, which includes the UK, many European nations, New Zealand, and Australia. These generally wealthy countries still produce a respectable number of patents every year, and their rates of innovation are relatively stable.

Finally, there is a group of countries that have gone very rapidly from low levels of innovation to becoming some of the world’s most innovative countries. These include Taiwan, Singapore, Finland, South Korea and Israel.

Through his research, Taylor identified a common factor that is shared both by countries that have remained innovation leaders and those that have rapidly accelerated their rate of innovation: networking.

He found that countries which actively encourage people in industry, government, academia, finance and business to meet one another seem to be very good at turning breakthroughs into successful enterprise.

Take Israel for instance. Despite being small and resource-poor, the country punches far above its weight in terms of innovation. Just 50 years ago, Israel was a largely agricultural society, Taylor explains. However, over the past five decades it has transformed itself to become one of the world’s most innovative nations. Now, as noted above, the country also spends a high portion of its GDP on R&D. But according to Taylor, this doesn’t explain why a tiny country in the eastern Mediterranean should have leapt so far ahead in terms of the number of new technologies it produces.

According to his research, the differentiator for Israel was its encouragement of networking, or “innovation ecosystems”. In the 1970s Israel had elite scientists working in its military on breakthrough R&D. Crucially some of these scientists were encouraged to set up private enterprises where they turned scientific discoveries into businesses. People from the private sector were also encouraged to cycle through into government, where they could inform policymakers of what businesses really needed and build trust between the sectors.

Taylor also shows how the country benefited from the Jewish diaspora elsewhere. Whether it was introductions to high finance in New York or technologists in Silicon Valley, the government’s encouragement of international networking helped those nascent businesses access capital, learn how to market themselves and expand internationally.

He argues that similar processes can be observed in other countries that are regarded as highly innovative. Whether it’s recently emerged innovators like South Korea or more established nations like the USA, the countries that invest in fostering “ecosystems of innovation” seem to bridge the gap between scientific discovery and profitable technology businesses.

To an extent, the UK government is already trying to do this. For example, Pilgrim Beart, a technologist who has founded multiple companies over the last three decades, argues that the greatest benefit of applying for government funding is the connections this process forges.

While the application process is “relatively tortuous”, companies applying for funding “have to meet other potential bidders, and decide whether you want to join them in consortia”. He explains that “this whole process where you have to work with others is really good. And I sometimes wonder if that’s the biggest benefit of the whole thing. By getting people who should be talking together to talk to one another…it builds the ecosystem up”.

For example, Beart’s current company, DevicePilot, produces software for the electric vehicle charging industry. Crucially, the team are also working closely with a hardware firm that provides charging cables and a university in Scotland. “We definitely wouldn’t have been talking to [either of] them unless we’d been introduced [by the funding body]”.

If the UK were to achieve its goal of becoming a science and technology superpower, this would certainly be beneficial to many. The question, of course, is whether the National Science and Technology Council will achieve that goal, or simply become another body in an already crowded marketplace.

Ultimately, if the country is to take a lead in innovation, it will require more than just throwing money at the problem. A more proactive and sophisticated approach, which encourages collaboration, and the sharing of ideas and people between universities, businesses, government, academia, and finance will all be essential. Whether this happens or not remains to be seen.

As Ardi Janjeva of RUSI notes, the government’s new council will need to consult as widely as possible to find out how and where funding needs to be allocated to achieve the goal of turning the country into a science superpower.

For Professor Wilsdon of the University of Sheffield, who regularly speaks with university researchers across the country, perhaps the biggest factor is predictability. Academics want to know how much funding they will have in two, five or ten years so they can plan their budgets and research programmes accordingly

Pilgrim Beart of DevicePilot, meanwhile, says that the “healthiest thing” for any technology business is to actually have customers. It would be very helpful for more start-ups if they could access government contracts – although he acknowledges that it’s challenging for big entities to buy from small firms.

Meanwhile Neill Rickets of Versarien notes that many small businesses could really do with support on the practicalities of building a company. Not all inventors or academic researchers necessarily have the entrepreneurial mindset or knowhow to turn their breakthroughs into profitable companies; additional support here would really help.

Are you working on cutting edge innovations or initiatives which have the potential to make dramatic improvements to modern society? The E&T Innovation Awards 2022 are now open for submissions. Until 13 June entries are free. Take a look at our 16 categories and decide which one is best for you: eandt.theiet.org/innovation