Chancellor’s ongoing commitment to R&D investment is critical.
By Chris Warkup, CEO, Knowledge Transfer Network
There was much in yesterday’s Budget that was welcome news for those of us operating in the innovation landscape – from an additional £2.3bn for the National Productivity Investment Fund in 2021-22 to a commitment to additional skills training; particularly in mathematics and computer sciences.
The Government’s aim of increasing R&D spending to the OECD average 2.4% of GDP by 2027 will go some way to bringing the UK in line with its peers. We have a brilliant science base on which to build, but brilliant science is not enough on its own. It is still important for new investment to be directed into the translational space, bridging the ‘valley of death’ funding gap between discovery science and the point at which technologies are de-risked enough to be carried through to commercialisation by industry alone.
It is widely acknowledged that the UK is the best place in Europe for starting a company and obtaining the money needed to make it happen – and by unlocking £20bn of new investment in our knowledge-intensive, scale-up businesses through changes to the rules governing private financing, it’s clear that the UK intends to strengthen its reputation as the European start-up powerhouse.
The powerhouse behind this company creation has been venture capital trusts (VCT) and enterprise investment schemes (EIS). Yesterday, in addition to new funds, the Chancellor announced plans to double EIS investment limits for knowledge-intensive companies, and companies will have greater flexibility on how they apply the first investment age limit. VCTs were also targeted, with changes to the scheme to promote investment into higher risk areas while addressing conditions that restrict their activities.
These new initiatives are part of the Government response to the Patient Capital Review, which identified a number of barriers that innovative companies encountered when looking to access long-term finance for growth and scale up.
The doubling of Enterprise Investment Scheme relief for investors and companies, with no changes or exclusions to the eligibility criteria, will continue to build on the success of the scheme and attract additional funds from private investors.
KTN’s role in growing emerging technology
The Chancellor’s focus on supporting new digital technologies as a means of future economic growth is also closely aligned with our work here at KTN.
Philip Hammond is correct when he says that the world is on the brink of a technological revolution that will change the way we work and live. Adapting to that rapidly shifting reality is part of the reason why we run carefully selected Special Interest Groups (SIGs) to build communities and activities in targeted technologies to accelerate innovation – among them, artificial intelligence and immersive technology – both highlighted in the Budget as priority areas for investment.
The Chancellor announced £500m of investment for programmes in artificial intelligence, 5G and full fibre broadband, including 450 AI Fellowships; the establishment of a new Centre for Data Ethics and Innovation and a £10m Regulators’ Pioneer Fund, which will help to integrate new technologies into the regulatory environment. The pace of change in many technology areas provides an incentive for more adaptive regulatory processes if the opportunities are to be captured to deliver a more prosperous UK.
It is estimated that widespread adoption of AI could benefit households throughout the UK by up to £2,300 per year by 2030, and increase GDP by 10%. Critical to this is the development of skills that will create a pipeline of talent to embed the technology in a range of industries, and the National Retraining Partnership announced in the Budget will help to deliver those skills.
The Government’s efforts to build a world-leading eco-system with the potential to accelerate the uptake and introduction of Robotics & AI in businesses right across the UK economy were welcomed by KTN’s Robotics & Artificial Intelligence Special Interest Group (RAI SIG), which is also dedicated to informing the business community about the technology’s valuable economic impact.
The RAI SIG is working with businesses across sectors as diverse as Agri-Tech, Health and Manufacturing to raise awareness of the potential these technologies have to raise productivity, and has also been looking at ways of working with international partners. With a number of SMEs from the AI community, KTN recently led an Innovate UK Global Expert Mission to Canada to explore bilateral synergies and potential collaborative opportunities in the AI space.
Immersive technology, meanwhile, was flagged on the first page of the Budget, with its importance as a vital growing area of the UK economy acknowledged through Government’s announcement of additional support for the sector from 2018.
The global AR/VR sector is predicted to grow to $108bn by 2021, and to date, the UK has attracted the second highest share of global investment in the immersive sector after the US. UK augmented and virtual reality companies have raised $2.3bn this year, already matching 2016.
The opportunities coming on stream for UK AR/VR business are growing, as more industrial applications of the technology demonstrate more value for business and as consumer awareness increases through developments such as Apple ARkit for the iPhone, immersive tech is starting to become a reality for all.
Immerse UK, funded by Innovate UK and managed by KTN, is supporting the growth of the sector in the UK by bringing together industry, researchers, the public sector, entrepreneurs, innovators and end users to support the UK in becoming the global leader in applications of immersive technologies.
The network, which is free to join, has grown to 1,300 members in 12 months, and has delivered a broad range of programmes with industry to target market opportunities and business growth from construction, engineering, health, retail and the creative industries. In March 2018, it will be delivering the first Immersive Economy report, which will shine a spotlight on UK immersive tech businesses, profiling the sector on a national level.
Starting with skills
The innovators underpinning all of these technologies, of course, are specialists in STEM subjects, and we were delighted to see that the importance of mathematics to a modern economy is being recognised with a large investment in maths teaching. Vital to realising the benefits which the mathematical sciences can bring to a modern economy is not only strengthening the people pipeline from schools, but also ensuring those who progress to university education and beyond are equipped and supported to translate their unique skills into industrial and social solutions.
That is why KTN, along with the Engineering and Physical Sciences Research Council, is working with Prof Philip Bond to review Knowledge Exchange in the Mathematical Sciences. This review will be launched in the House of Lords in late March and will provide recommendations on how to ensure the maths excellence we generate in this country is routinely translated into economic impact. We are also aiming to address the engineering statistics knowledge gap with our Uncertainty Quantification and Management Special Interest Group.
We look forward to further detail on planned research, development and innovation investments in the forthcoming Industrial Strategy White Paper.