Leading innovation insights – but will policy in 2024, and beyond, help or hinder our innovation potential?

Dr Nik Kotecha OBE DL, founder and chairman, RandalSun Capital

By Dr Nik Kotecha OBE DL

Early 2024 marked yet another successful Leicestershire Innovation Festival, followed by a stunning awards event – recognising some of the best and brightest innovators in our region. We’ve also just marked the 20-year milestone for Medilink Midlands – another Midlands based, and life sciences innovation-enabling organisation, which goes from strength to strength. And there are many more innovation centric companies right here in our region – within an innovation ecosystem I’ve long-since championed at every (and any!) opportunity.

The end of Q1 saw the publication of the UK Innovation Report 2024, from the University of Cambridge and the Cambridge Industrial Innovation Policy group – a report trailed as “Benchmarking the UK’s industrial and innovation performance in a global context”.

It’s an excellent and thought-provoking analysis, comparing the UK to a number of other countries, analysing sector innovation and competitiveness – and a serious prompt for key policy considerations.

The paper talks openly about the potential for significant shifts in innovation policy ahead, given we are in an election year, and that across the spectrum, the opportunity is here – to reflect on, and renew, policy trajectories. It’s clear to me too that, whatever the election outcome, the future policy picture on innovation is anything but clear, just yet.

The report authors advocate a position I would encourage – one of adaptation of existing policy, post-election, to ensure some degree of continuity. I’d go further and suggest we need evolution, indeed acceleration and progression – but no sea-change for innovation policy.  Support must rapidly build and grow – not be “swapped out” for different support or focus areas, if UK innovation momentum is to build and grow. That was a material early prompt for thoughts in the report for me – but there’s much more.

There’s a reminder, a nudge in fact, about the Department for Business and Trade’s Advanced Manufacturing Plan – proposing £4.5bn investment from 2025. That has a focus on several sectors including life sciences. Forward public investment to grow the sector including our domestic production capabilities, post Brexit, is critical. Will it be implemented in current form and quantum? Let’s see.

Drawing on 2019 – 2022 datasets, there’s analysis of the macro performance of the UK economy – comparing ours to the likes of Switzerland, Korea and Germany. The conclusions are interesting – with the UK performing well against “peers” with the fastest growth rate during 2021 of 8.8% – starting to close the gap on pre-pandemic levels, and between 2019 and 2021, labour productivity in manufacturing increasing by 9.1%.  But then, a concerning retraction in manufacturing output (-3.3%) in 2022.

Knowledge intensive services and manufacturing have underpinned post Covid economic recovery, so the 2022 manufacturing retraction is surely of concern.

Switzerland outperformed the countries analysed during 2022, with high manufacturing growth, driven largely by its chemical and pharmaceutical sectors, something the UK could strive to achieve – but we’ll need focused investment and clear policy enablers to do so. Generic pharmaceutical investment in particular being almost entirely absent since Brexit – according to analysis by the British Generics Manufacturers Association (BGMA).

The report authors note how the UK is a leading hub for academic research – the adverse counterbalance to this is the note too, that we are least able in converting research output into commercial success. That’s a finding that troubles me as an entrepreneur – and an academic. It should trouble policy makers too – todays and tomorrows. Will they respond? Let’s see.

I was concerned, but not surprised, to see that UK investment in R&D falls behind the leading nations. We know this regionally, from a public sector investment perspective, all too well. The East Midlands has received the lowest level of public R&D investment over many years, and the impact of that has been to stifle our true innovation potential, and more – it has removed the oxygen from both entrepreneurs and academics who, without this, have often left the region in order to grow. Too many have taken their skills, their energy, their ideas and their enthusiasm elsewhere; an outflow we must reverse quickly now, to both underpin our regional economy – and that of UK plc too.  

It’s great to read analysis that confirms future potential for the U.K. – and that’s exactly what I felt when I read that we’re training a high number of students in STEM subjects. I hope that growth continues – and continues as STEAM … but staying with STEM for now, the authors highlight that 42% of graduates completed STEM disciplines and of those, 52% were health related studies. UK employers in the same period report finding it hard (still!) to employ staff with scientific knowledge, and in medical or production areas.

This is something I experienced first-hand – overcoming this will need sustained government policy and investment to really turn this “super tanker” of a problem. Policy needs to be carefully and consciously crafted in this space to see success.

There’s much more besides in this important analysis – and in an important year for potential big shifts in public policy, private sector investment and the U.K. economy – all within a dynamic and challenging global context; it is sound and timely food for thought.

Will all those that need to, take the due time they should, to “digest” and act on all this paper presents?

And will they curate next steps, underpinned by the formative evidence which shows a path with many opportunities ahead for UK innovation?

I sincerely hope so – but let’s see.

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