The House of Lords Science and Technology Committee consulted on how the UK can better finance and scale science and technology, given persistent challenges in translating R&D strength into economic growth.
They sought input on barriers to scaling companies, international comparisons, and the effectiveness of government decision-making and coordination in S&T strategy. The inquiry also asked about the roles of public and private sector investment, including late-stage investors and capital markets. Finally, they explored policy levers, such as procurement, that could help bridge the “Valley of Death” and support UK innovation to deliver societal and economic benefits.
Click here to view EPC’s full response, or read it in detail below:
Introduction
The Engineering Professors’ Council (EPC) is the representative body for engineering academics in higher education. Our primary purpose is to provide a forum within which engineers working in UK higher education can exchange ideas about engineering education, research and other matters of common interest and to come together to provide an influential voice and authoritative conduit through which engineering departments’ interests can be represented to key audiences such as funders, influencers, employers, professional bodies and Government.
We are a unique network: all branches of engineering are represented within the membership: Aeronautical, Civil, Chemical, Electrical, Electronic, Manufacturing and Mechanical Engineering, as well as Minerals, Metallurgy and Marine Engineering and the broad areas of general engineering studies and those in which engineering is combined with a range of other topics. In some universities, frequently those where computing forms part of an Engineering School or Faculty, academic staff in Computer Science are also members.
There are currently 82 institutional members encompassing over 7,500 academic staff (permanent FTE) from all UK nations. There are also Partners, including Royal Academy of Engineering.
The EPC’s Research, Innovation and Knowledge Transfer (RIKT) Committee exists to oversee the EPC’s work relating to engineering research, enterprise, innovation and knowledge transfer activities and policies at national, EU and international levels. The committee has a specific interest in R&D growth and the regions and offers the following evidence to the inquiry.
Section 1
for the UK. Many policy initiatives have tried to address this. What are the key barriers that the Government must address to fix this? What specific policies need to change? Why have previous attempts not succeeded?
The UK has some track record of translating basic science into global companies (e.g. DeepMind, ARM). However, the usual challenges and essential differences compared with more performant innovation ecosystems (US, China, Switzerland) lie in two areas:
– Incentives for researchers (both early career and established) to take the risk and invest a large share of their energy, time and resources into an entrepreneurial adventure that might lead to nowhere. This is a challenge at university level and should be delt with at that level. There are few notorious examples of success (Oxbridge, Imperial) so perhaps it is a matter for universities rather than government. It is essential to note though that the examples above are resources rich and attract very easy global talent including with entrepreneurial appetite.
– Scaling up after a certain level, at which the investor and VC ecosystem elsewhere is more open to risk. This is probably linked to the depth and breadth of the US and Chinese financial markets in which successful IPOs are more likely to generate the return those investors and VCs are expecting. London stock market has lost significant share in the global IPO market so naturally any company with a decent prospect for IPO would rather go elsewhere than stay in UK. The alternative is only to be bought by a bigger competitor, which could be from abroad too.
Germany, France, Ireland, Sweden, the Netherlands, or Singapore? Which international innovation ecosystems offer the most relevant policy lessons for the UK, and why? Are there specific policies the UK should adopt or case studies from which we can learn?
We would note that not all countries listed in the question are good examples of innovation ecosystems. In the US Bayh-Dale Act of 1980 requires all federally funded research to make a ‘good faith effort’ towards commercialising the technology. It is a legal requirement that the university do their best to commercialise IP. Perhaps there is something for the UK government to look at – how can we create a funding environment more conducive to effective and genuine commercialisation performances
to the economy, public services and wellbeing? Does Treasury decision-making adequately account for the long-term benefits of science and innovation research? What should be done to ensure the Treasury has the capacity to support a long-term strategy for science, innovation and technology to benefit the UK economy? What can the government do to improve our understanding of R&D in the UK?
We don’t believe that it should be only the Treasury assessing the return on S&T investment and its contribution to the society, and only in monetary terms. That’s probably the main flaw of our current system, and the main barrier against a more open to risk approach to innovation and entrepreneurialism.
and strategic benefit to the UK? Do other countries have policies––for example, in intellectual property––which have allowed them to retain more public benefit domestically?
The legislation around IP is essential to this. The capability and interest to defend the IP rights is rather weak. Enforcement of export control legislation is important and should happen at the place where IP is generated (e.g. universities). Occasionally this conflicts with open-access policy therefore this is another change required at government and UKRI level.
between academia, business and Government, are often cited to explain why the UK’s technology sector has not matched the excellence of its basic research. Do you agree with this view, and if so, what can the Government actually do to change the culture?
No, we believe that the British culture is open to entrepreneurialism and innovation at global scale. The relationship between academia, business and government needs some fine tuning rather than a radical change.
and actively seek out top scientists and innovators to move to the UK? How can the UK ensure that it trains sufficiently skilled people for its wider science and technology ambitions?
The brain drain is a clear possibility, especially to countries more, or perceived as being more open to entrepreneurialism such as US and Australia. The UK’s current ability to attract/retain specialised international talent is significant, but it is impacted negatively by the poor management of the immigration policy.
Section 2
A clear, consistent and loud message to the world that UK is open to attract and retain talent in science & technology would be essential. The significant investment the UK government is making, especially in cutting edge areas (e.g. AI, computing, advanced materials, biotech etc) should be also communicated better.
be improved?
We think that the bureaucracy should be simplified. The universities must navigate a very complex environment with multiple funders, regulators, and PSRBs. All this requires effort and resources, draining universities’ finances already stretched by the decline in the value of tuition fee and enrolment. Having said this, we also believe that the UK government is traditionally focused on job creation rather than wealth creation. In entrepreneurship, jobs are an effect of the value added not an objective in itself.
and weaknesses? What about the emerging prioritisation in the Government’s Industrial Strategy? (8) What implications will a required shift to defence spending in R&D have?
The strategic priorities and critical technologies are formulated well, it is important for the government to be able to embed the right level of flexibility while keeping stable as governments change.
The shift to defence spending is relevant and requires a change of paradigm is some sectors, but overall doesn’t change dramatically the strategic priorities of R&D.
(and de-prioritise)? Which sectors offer opportunity for the UK to obtain a strategic advantage, given global supply chains and the nature of the UK economy?
We believe that the current framework (strategic priorities, critical technologies etc) is fit for purpose and will probably need some adjustments in the future as time goes by and other technologies will emerge.
high-impact science and technology? How can it be reformed to do so without just adding more bureaucracy to the system? Are there any lessons the UK’s public research funders, such as UKRI and ARIA, can learn from the field of metascience to maximise their impact?
The very low success rate is some areas (e.g. less than 10%) highlights the fact that a lot of high-quality work put in the development of excellent research proposals, and internal support is wasted.
Section 3
Overall it is, but only few major universities (Oxbridge, Imperial) seem to benefit from it at the expected level.
technology companies that want to bridge the valley of death from initial idea to billion-dollar company––and
if not, where are the gaps?
Just in few geographical areas – the golden triangle, eventually Manchester. For the rest of the UK there is no such clear pipeline easily available.
Review of University Spin-outs (10) resulted in positive policy changes?
Except for the universities already mentioned, the universities aren’t sufficiently effective. The current HE financial landscape doesn’t look promising for commercialisation – an activity that at best generates minimal return with a long cycle. In contrast, a successful REF returns a constant QR income for a certain period of time, so the universities are focusing at this moment of REF submission rather than on a significant number of potential spin-outs.
Section 4
capital and companies to the US, and is there anything that the UK can do to prevent this? We would welcome case studies from entrepreneurs or investors who have moved abroad, setting out their reasons for doing so.
The exodus to US has been generated by higher salaries, easier spinning out process, investors’ stronger appetite for startups and higher returns. The landscape is US is currently undergoing significant changes that could be an opportunity for the UK.
R&D activities and foreign direct investment here? What factors lie behind their reluctance? Does the UK compete sufficiently for this investment?
Such companies react well to taxation, so this policy should be better tailored to obtain the desired outcomes.
The major investors are not coming to UK for its S&T environment but to benefit from its place at the heart of the global financial system.
Final section
that it hopes will support the UK’s science and technology sector and scale-up.(12) Are these measures working? Do they address the right problems? What additional policy levers exist for the Government to support scale-up?
The quality and impact of S&T investment and policies are remarkable, and UK still ranks well above most countries of similar size and economic power. There are some limitations regarding the successful commercialisation of the results of S&T. This seems to be a regional issue rather than an across the sector one.
