This response is from AIRTO (The Association of Innovation, Research and Technology Organisations). AIRTO’s members comprise representatives from:
AIRTO’s members generally operate in the private sector but with varying degrees of interaction and financial involvement from the public sector. All are to a significant extent involved in aspects of the translation of ideas, research and technological advances into the commercial arena, for clients in both the private and public sectors.
AIRTO welcomes the review of the Government’s Productivity Plan. Organisations in the innovation, research and technology sector play a pivotal role in driving economic growth and innovation, frequently acting as the aggregator of scientific and technological demand from businesses and markets. Such organisations typically work at the mid-level technology readiness levels (TRLs) and are well placed to understand company and sector based innovation strategies, where they are optimally positioned to facilitate interactions involving academic partners, SMEs and large organisations to approach challenge-led innovation projects.
Britain has a large and thriving Innovation, Research and Technology (IRT) Sector, which contributes significantly to our national capabilities1, with the economic impact for UK plc now estimated to stand at £32-36 Billion pa. The Research and Technology Organisations (RTOs) that AIRTO represents are a significant component of the UK’s innovation ecosystem, but differ from universities in their primary objectives, strengths and capabilities, which are centred on commercial translation of applied research. In its 2011 ‘Innovation and Research Strategy for Growth’, BIS recognised the sector as an ‘under-utilised asset’2. Both universities and RTOs have vital and complimentary roles to play in leveraging publically funded research to drive economic growth. The best outcomes for the UK will be achieved by supporting these two crucial sectors, working together, to operate at the TRL levels where they excel.
RTOs are well equipped to help companies seeking mid-TRL research capabilities, either on a self-sufficient basis or in conjunction with university partners. The recently launched Catapults (which are effectively new RTOs) are intended to provide a match to the research needs of business in specifically identified areas of technology and application. The intention is that these new organisations complement existing RTOs, and they are a welcome addition to the AIRTO Membership.
AIRTO’s response to the specific questions posed with particular reference to the science and innovation component of the Government Productivity Plan (Section 8), is as follows:
Executive summary of main points
This is a welcome plan and good in its ambition, but in our opinion there are nevertheless a few important omissions.
We should therefore like to see:
Our more detailed discussion follows, but we would reiterate our welcome for the publication of the Government’s plans to address the critical challenge of enhancing the UK’s productivity.
1. Do you agree with the Government's assessment of the reasons for the UK's productivity slowdown (as outlined in the Annex to the Plan)? Has the Government acknowledged all of the main causes of the UK's poor productivity growth?
products and services and their deployment
in the wider
economy. Innovation in products, processes, services and business models is the
main driver of change and the means of lifting
the economy. The
the role that
Government can and should play in stimulating innovation of all kinds and
developments, particularly by pulling
them through to improve
the quality and cost-effectiveness
Innovation is not mentioned until page 11 of the Plan.
InnovateUK is a key player in this arena and it is vital that support should
continue and if at all possible be expanded, particularly given the excellent
and widely reported
return on the Government’s
investment in its activities.
successfully in any context, pulling innovative developments through into
everyday use and delivering the benefits for the economy, requires skills that
are in very short supply. It requires
a combination of multidisciplinary technical skills, soft interpersonal skills,
good communication skills and business skills. Investment is badly needed in
this aspect of the human capital. For business and industry to play its part
there has to be a good flow of capable and
well-motivated people from our educational system. If this is lacking the
private sector has to recruit from overseas and/or subcontract work to overseas
suppliers. This leaves a domestic workforce underemployed and ultimately
productivity as a whole.
There has been
focus on matching
training and experience provided all the way from primary through to tertiary
education with the human capital required
by high value,
high productivity sectors
of the business
is a need for innovation in
at filling skills
gaps in value adding innovation teams,
ideally undertaken ‘in company’. Apprenticeships should
not just be
as many people as
some kind of
employment as seems
to have been the case in many instances
in the last five
1.4 In this regard, many new and growing SMEs are poorly equipped to assess and handle the risks associated with making the changes that accompany innovative developments; hence there is a comparatively high mortality rate amongst SMEs and a stunting of ambition in many instances. Government and large companies both have a role to play in helping SMEs to upskill and develop their capabilities. The r&d tax credit system might be used to this end (see later).
2. One pillar of the Government's Plan is to increase "long-term investment". It outlines eight areas with specific measures to increase productivity.
a. Why has the UK's long-term investment been so low up to now?
2.1 Factors restraining long-term investment include:
b. How can we ensure that the measures relating to long-term investment in the new Plan will contribute to productivity growth?
2.2 Key to ensuring that investment contributes to productivity growth is in turn ensuring that the execution of initiatives and plans is well managed and carried out using experienced practitioners. The community of AIRTO’s members is a major source of such expertise and an asset that can be deployed to advantage in the planning and execution of developmental initiatives.
2.3 Another priority should be to make sure that the economy makes best and productive use of its indigenous workforce, rather than having to resort to importing skills and capabilities from overseas to compensate for weaknesses in the UK’s own skills base. This comes back to upskilling the workforce.
2.4 It means not just making the UK the best place in which to inwardly invest but also the best place in which to build supply chains.
2.5 It means that the UK has to be the best place to innovate. This cannot be achieved by relying solely on the academic research base and business. To compete globally the Government needs to be a partner in the UK enterprise, as is the case in other countries, and to set an ambition and targets jointly with business for lifting productivity in both the private and public sectors.
2.6 It will be essential to incentivise disruptive innovation and not just encourage ‘more of the same’ in terms of r&d, meaning direct intervention as well as indirect support; stimulating new areas of innovation and not simply subsidising r&d in general; supporting an expansion of the Catapult concept therefore where there is a “gap” in the UK’s innovation infrastructure (this should involve the development of existing organisations, as recommended in the first Hauser Review, as well as setting up new Centres).
2.7 The Catapults are an important and relatively new part of the innovation support community, a network that also includes PSREs, RTOs and a number of other specialist suppliers. This network and its constituent organisations are key assets that should all be connected to the productivity agenda to inject their expertise into the efforts to raise the UK’s game in this regard.
2.8 Key features of the Catapults are their independence, as non-profit organisations, and their core funding of human and physical capital, which enables them to stay at the leading edge of innovation and maximise their impact. PSREs and other non-profit RTOs should be enabled to access core capital funding in a similar manner for the same reasons. The important thing is that they should be able to plan for the development of both their human and physical capital in a coherent way. Their role is to create enduring but up-to-date capability and infrastructure and this needs coordinated and long-term investment in both knowledge/skills/experience and physical capital. For PSREs, annualised capital (or indeed programme) budgets as currently practised make this kind of activity very difficult and can easily end up wasting money, constraining innovation and limiting their ability to address new opportunities and to support government and industry in a timely manner. Capital funding lines therefore need to be available on a multi-annual basis.
3. The second pillar of the Government's Plan is to encourage a "dynamic economy". It outlines seven areas with specific measures to increase productivity.
a. What are the main weaknesses of our economy, in terms of dynamism, which are supressing our productivity?
3.1 Weaknesses in terms of dynamism could be said to be rooted in:
b. Do the measures introduced under in the plan address those weaknesses and are they appropriate?
3.2 The measures in the Plan will in principle contribute in different ways to enabling business to increase productivity, relying on the premise that the incentives and operational flexibility introduced will result in the shift towards the greater innovation and risk taking required. This is not assured and will require the Government to keep track of indicators relating to levels of innovation and productivity in the economy and to make adjustments in the event that progress falls short of expectations and target.
3.3 In general the measures are appropriate but we would highlight a perception in Government that persists and which threatens to weaken moves to embed innovation across the economy. Paragraph 15.14 says “The Government will invite universities, LEPs, businesses and cities to work with the government to map research and innovation strengths and identify potential areas of strategic focus…”. This omits the main practitioners and experts in innovation and the infrastructure that supports innovation, namely the community of AIRTO’s members, including Catapults, PSREs and RTOs. The asset and expertise represented by these organisations should be included because, as paragraph A26 states, “The challenge is to make the most of ideas from wherever they come, and to help best practice to spread”.
4. Overall, does the Plan adequately address the main causes of low productivity in the UK (as discussed in question 1) and will it have the desired results?
4.1 In many respects the Plan does address most of the main causes of low productivity but there are some important areas, namely innovation and skills, which are not sufficiently emphasised.
4.2 The main challenge will be to ensure that the Plan does in practice lead to the desired results. Simply rolling out the listed measures as a collection of separate initiatives from the different departments of government is of itself unlikely to be sufficient to ensure the desired result. Each individual measure will have to be carefully and professionally implemented.
4.3 But just as importantly, the Plan needs to marshal these measures with some indication as to their interdependencies into a roadmap for improving the UK economy; the current presentation gives the impression of a basket of sometimes only weakly connected initiatives. Attempts to introduce too many of the intended measures at once, unless it is clear that they do not risk interacting confusingly or interfering with each other, could in the long run result in more problems than it solves; hence the advisability of producing a roadmap. A roadmap will also enable businesses and other stakeholders to see clearly the proposed timing, sequencing and interrelationships between the measures and hence the overall picture; and it will permit each stakeholder to plan and act accordingly.
4.4 For the public sector, an emphasis on the adoption of productivity enhancing technology, data usage and process models, rather than cost cutting as the headline, would be helpful.
4.5 Finally, the Government should accept that it will need to intervene, not to subsidise but to prompt more radical innovation and to lead innovation in public services to match productivity improvements as they are made in the private sector.
Declaration of interests
This submission is made by the Association of Innovation, Research and Technology Organisations (AIRTO). The organisation represents research and technology organisations operating in the space between the academic research of universities and the commercial needs of industry. AIRTO members undertake research and development, and knowledge and technology transfer. This submission does not necessarily represent the views of individual member organisations. AIRTO currently comprises organisations, employing more than 40,000 scientists and engineers1, with a combined annual turnover in excess of £5billion (AIRTO Ltd. is a company limited by guarantee registered in England No. 1217006 Register office address: National Physical Laboratory, Hampton Road, Teddington, Middlesex, TW11 0LW. AIRTO is a not-for profit organisation funded by membership subscriptions, and managed under contact by NPL Management Ltd). The members of AIRTO currently are:
BMT Group Ltd
City University London
East Malling Research
Fraunhofer UK Research
Fripp Design & Research
Future Cities Catapult
Health & Safety Laboratory
High Value Manufacturing Catapult
Institute for Sustainability
Leatherhead Food Research
Manufacturing Technology Centre
Medilink (Yorkshire & Humber)
National Composites Centre
National Institute of Agricultural Botany
National Nuclear Laboratory
National Physical Laboratory
National Non-Food Crop Centre
Offshore Renewable Energy Catapult
Organic Research Centre
Satellite Applications Catapult
SATRA Technology Centre
Science and Technology Facilities Council
The European Marine Energy Centre
The Scotch Whisky Research Institute
Transport Systems Catapult
University of Greenwich
University of Surrey
1 The impact of the Innovation, Research and Technology Sector on the UK Economy; Oxford Economics, November 2014.
2 Innovation and Research Strategy for Growth; BIS, December 2011.
Professor Richard Brook OBE, FREng
10 September 2015