Update on Innovation Policy in the UK

The Government’s innovation policies to date can be summarised into three phases:

  1. Initial reductions in innovation support, e.g. removal of Regional Development Agencies (RDAs) and reductions in innovation & business support initiatives;
  2. Spending Review 2010: refocus of support and baseline budgets, e.g. reaffirm the ‘ring-fenced’ science and research budget and focus support via the Technology Strategy Board and Technology Innovation Centres (now known as Catapult Centres);
  3. Subsequent stepwise announcements of investment and initiatives, e.g. further funding for Catapult Centres, Grant for R&D, Innovation Vouchers and capital spending

The removal of RDAs significantly reduced the funding available for innovation but has resulted in a simplified landscape of national innovation support which is now largely provided via the Technology Strategy Board (TSB).

The Government rapidly established the importance of innovation and research by maintaining (and continuing to ‘ring-fence’) the annual £4.6b budget for science and research programmes and with £150m each year to support university-business interaction through Higher Education Innovation Funding. However, these budgets also incorporated some significant reductions, in particular, in capital investment which was removed from the ‘ring fenced’ budget.

The Government has collated the current innovation policies and initiatives in ‘The Innovation and Research Strategy for Growth’1 published in December 2011. This paper highlights universities as a ‘national asset’ with a key role in the development knowledge economy. Alongside the accompanying economics paper2 the strategy provides a detailed summary of the current and future role of universities and their expected impact in driving innovation and economic growth. The Budget 20126 provides the latest update of innovation related funding, policies and initiatives.

Key issues from the Innovation & Research Strategy for Growth & Budget 2012

The Innovation & Research Strategy for Growth (IRSG) identifies three roles for the Government is supporting the UK to succeed in the global innovation economy:

  • Funding blue skies research as well as new discoveries and inventions;
  • Improving the interface between Higher Education Institutions (HEIs) and Business; and
  • Delivering a better environment for commercialising research.


Recognising the value of collaborations & clusters

There is overwhelming evidence to show that multi-partner collaborations can add more than the sum of their parts. The IRSG recognised the need to encourage and invest in new collaborations, including internationally and with business, as well as working to remove obstacles that inhibit clusters from growing. To achieve this Research Councils UK, in discussion with individual HEIs and consortia, will establish a principles-based framework for the treatment and submission of multi-institutional funding bids.

Capital investment

The capital budget to support science and research was significantly reduced in the 2010 Spending Review. Subsequently, a series of announcements have added an additional £465m of investment but concerns remain that the capital investment is still insufficient and is comparatively uncoordinated (with other funding streams) so that future problems may well arise. Thus, it is unlikely that the most efficient use of funds will be achieved to maximise future economic growth potential of the research base.

The Budget 2012 announced a further injection of capital investment with a new £100 million fund to support investment in major new university research facilities, including through additional provisions. The fund will allocate its first bids in 2012–13 and will attract additional co-investment from the private sector.

Catapult Centres

Technology Innovation Centres have been rebranded as Catapult Centres and aim to provide a new elite national network to act as a bridge between academia and business and to support the commercialisation of new technologies. The TSB will invest over £200 million in six centres, with the network completed in 2013. In December 2011 it was announced that the Cell Therapy Catapult will be based in London. The TSB will invest up to £50m over five years and the new centre will initiate activity during spring 2012.

The Budget 2012 announced a further two Catapult Centres to be completed by 2013. The Transport Systems and Future Cities Catapult Centres will bring together world leading IT companies, innovative SMEs and leading universities to commercialise technologies that will increase efficiency and improve the quality of life for transport users and city residents.

A £60 million investment will establish a UK centre for aerodynamics which will open in 2012–13 and support innovation in aerospace technology, commercialise new ideas and spin-off technologies with wider applications in other sectors.

London Tech City cluster: although this is not formally a Catapult Centre it has received special support and attention from the TSB and Government, e.g. a £2m Launchpad completion to help small businesses finance developing digital products or services from proof of concept to user facing trials and to leverage in private sector finance.

Super-connected cities

Belfast, Birmingham, Bradford, Bristol, Cardiff, Edinburgh, Leeds, London, Manchester and Newcastle have been selected to become super-connected cities, as part of the £100 million investment announced at Autumn Statement 2011. By 2015 this will deliver ultrafast broadband coverage to 1.7 million households and 200,000 businesses in high growth areas as well as high speed wireless broadband for three million residents. The Government will also provide an additional £50 million to fund a second wave of ten smaller super-connected cities.

SMART Awards

The ‘Grant for R&D’ scheme has been rebranded as SMART Awards and the IRSG announced an additional £75m of funding via the Technology Strategy Board for smaller businesses for new research and development projects. This will provide funding for proof of concept, market and prototype development activities, enabling more small businesses to develop innovative, technology-based products and services. These awards have been critical to the successful growth of many university spin out companies over the last decade.

Innovation vouchers

Working in partnership with business, the TSB and Local Enterprise Partnerships will implement a new innovation voucher programme in 2012-13 to support SMEs to collaborate with knowledge based institutions across the public or private sectors. The programme will invest at least £1m pa and will initially focus on geographical areas and sectors which to date have had relatively low levels of private sector innovation and growth. Whilst the re-introduction of an innovation voucher scheme is welcome it is unclear why a new pilot is required when previous schemes ran successfully for many years. Also, the proposed targeting of the new scheme may leave some regions under resourced compared to the size of their business and university bases.

Designing Demand

The IRSG announced that the investment in the existing Designing Demand scheme is to be increased to £1.3m pa. The scheme is run by the Design Council and aims to build greater design capability and understanding among SMEs.

Supercomputing research

To support UK supercomputing research £145 million will be invested to boost Britain’s e-infrastructure and promote the UK as a world leader in scientific and business use of supercomputing plus a further £13m investment in ARCHER Phase 2 – the next phase of development of the next generation UK high performance computer.

Access to research data & information

The Research Councils expect the researchers they fund to deposit published articles or conference proceedings in an open access repository at or around the time of publication. However, this practice has been unevenly enforced and Research Councils have been tasked to ensure that researchers they fund fulfil these requirements. Additionally, the Research Councils have agreed to invest £2m in the development, by 2013, of a UK ‘Gateway to Research’ that will facilitate access to Research Council funded research information and related data.

European funding

The TSB will receive funding to ensure businesses and universities maximise their opportunities to secure funding from EU schemes to support innovation and research, in particular, the European Regional Development Fund and Framework programmes. This provides for resource and coordination that was lost with the removal of the RDAs.


Strategy for the UK Life Sciences

In December 2011 the Government also launched the ‘Strategy for the UK Life Sciences’ 3 and a review of innovation in the NHS4. These reports recognise the world renowned strength of the UK’s life science research and the importance of life sciences to the UK economy. In particular, the importance of the London-Oxford-Cambridge cluster is recognised in terms of both universities and businesses

The life science strategy announced a new £180 million catalyst fund to help the next generation of medical breakthroughs to become great British companies. This fund will target the funding gap that exists – the ‘valley of death’ – between the new idea being developed in the laboratory and the point when a new drug or technology can be invested in by the market.


Wilson review: A Review of Business–University Collaboration

Professor Sir Tim Wilson, former vice-chancellor of the University of Hertfordshire, has undertaken a review into how to make the UK the best place in the world for university-industry collaboration7. The review was published in February 2012 and highlights the huge progress in business–university collaboration during the last decade. The review makes a series of recommendations relating to capturing best practice, students, skills and sandwich courses as well as links to innovation and economic growth policies and initiatives.



The Innovation & Research Strategy for Growth is an attempt to provide a framework for the basis of future investments & initiatives. To succeed the strategy will need to be reinforced with further investment and resources to avoid opportunities for economic growth being missed. However, the research strengths of specific regions and sectors are being increasingly recognised and rewarded as national strategies and initiatives replace the sometimes regionally competitive focus of the past5. The Budget 2012 has offered little further support to the IRSG and maybe the first evidence that, yet again, the overall strategic vision for the future of innovation in the UK will remain only partially fulfilled.


1. Innovation & Research Strategy for Growth, Department of Business Innovation & Skills, 2011:

2. Economics paper: innovation and research strategy for growth, Department of Business Innovation & Skills, 2011

3. Strategy for the UK Life Sciences, Department of Business Innovation & Skills, 2011

4. Innovation Health and Wealth: accelerating adoption and diffusion in the NHS, Department of Health, 2011

5. Streets Ahead: What makes a city innovative? Big Innovation Centre, 2011

6. Budget 2012, HM Treasury, 2012

7. A Review of Business–University Collaboration, Professor Sir Tim Wilson DL, February 2012


Paper prepared by Nigel Banister,
Quantum Innovation Centre
Updated March 2012