Opinion: Spend on innovation to drive economic growth

At a time when we are seeing some of the biggest government cuts in a generation it may seem to belittle the suffering people are facing to complain about the effect of the spending review on the science budget. As the government is trying to reduce our debt to income ratio, they have cut the deficit but we also need to create long-term sustainable economic growth. For this to happen investment in science and innovation is key. Our spending on research and development is vital to drive forward economic growth and reverse the current stagnation we see in our economy.

In 2010 the science budget was fixed in cash terms at £4.6bn, but the capital budget was drastically cut. Since then we have thankfully seen a reversal in those capital cuts, although we are still not at the pre-2010 level. However the ring-fencing in cash terms in 2010 has in reality nibbled away at our science budget and damaged our international competitiveness to attract the best scientists to the UK.

That is why in the spending review it was good to hear the role of science and innovation being talked up by both George Osborne and Vince Cable, especially in establishing the role R&D will play in rebuilding our economy. The spending review saw a continued commitment from the Chancellor to freeze the science budget, but this is extremely worrying. There has already been a substantial loss since 2010 and with this new commitment for 2015/16 there is expected to be a £276m fall in the science budget, roughly 6% of the current budget.

That said there are some positives to come from this, the boost in the capital budget from £0.6bn to £1.1bn is welcome and does give some confidence for the future with the budget being maintained in line with inflation in 2016/17. We also see an increase in the budget for the Technology Strategy Board which is helping to support innovation as well as £100m being made available to the Small Business Research Initiative to help SMEs invest in R&D. It was also promising to see postgraduate funding coming to the forefront, especially to help students from disadvantages background through a fund for HEFCE.

Overall this looks like positive news, that is until you start to look at the international stage where our science and innovation funding is woefully short and sees us 27th in the league tables of science spend as a percentage of GDP. In the UK we spend around 1.7% of our GDP on R&D and 0.57% on publicly funded R&D. Comparing this to other countries, South Korea is increasing its expenditure to 5%, China is at 2%. In the US they spend 1.2% on publicly funded R&D while in Singapore it is 1%.

The UK is not only lagging behind, but our direction of travel is also the opposite of most other countries. Whereas our competitors are showing increased investment in real-terms the UK is falling rapidly. And this is the worry. How can we hope to stay internationally competitive and to drive new, creative innovation leading to economic growth when we are lagging so far behind in our R&D investment?

Credit should be given to the Chancellor, Vince Cable and David Willets for the positive messages they are giving out in terms of scientific investments and its links to long term economic growth. But we now need to step up a gear, to set out a commitment for long term investment in science and innovation and reverse the downward trend.

* Richard Davis is a prospective Member of the European Parliament for London. His website is here.

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13 Comments

  • Adam Corlett 27th Jun '13 - 6:05pm

    We’ve got some work to do on LD policy from last September!: “We would seek to build a cross­-party consensus to provide an annual increase in the science budgets, both revenue and capital, of 3% over inflation for the next 15 years.”

    Our own manifesto will be a good place to start.

  • Eddie Sammon 27th Jun '13 - 6:18pm

    Not one mention of risk. There’s no such thing as a growth money tap. This article is misleading to the public and is simply one sided lobbying and politicians need to stop it. If I did this as a financial adviser I would get struck off.

  • Science spending needs to be seen in context as part of a wider ecosystem of innovation and there we have a problem. Risk capital prepared to take on early-stage projects is too scarce, larger companies that inevitably have the greatest capacity to bring new ideas to market are too often driven by the ultra short-term priorities of quarterly results statements and so on. We need a far broader and more strategic vision of science spending.

  • Spending is a concern. A huge one. But so too is the coalition’s immigration policy which prevents scientists coming to the UK, and forces newly graduated PhD and Masters students out.

    If Cable and Willets want to make significant improvements in the UK’s science and tech abilities then they need to loosen immigration restrictions and encourage skilled migrants and their families to move to the UK.

    This Coalition are doing the exact opposite.

  • Michael Berridge 27th Jun '13 - 11:02pm

    The issue of science and technology is important and should transcend party boudaries. Political point-scoring is out of place here.

  • The issue of science and technology is important and should transcend party boudaries. Political point-scoring is out of place here.

  • Eddie Sammon 28th Jun '13 - 12:54am

    I fully appreciate the importance of diversification, however in order for diversification to be effective it has to be based on an independent analysis of the whole economy, not just by listening to lobbyists who have only studied one sector.

    I had to make the same point to the arts people.

  • THe UK is a terrible place for scientists

    Perhaps we maintain a certain level of competency in our research organisations but the issue has always been application.

    Our scientists (and to an extent engineers) are appallingly paid and the lack of respect shown to scientists is manifest. When you have a PhD scientist getting paid the same or less than a process operator then why spend 6-7 years studying?

    The British are always suspicious of experts as well so we can never have a mature debate about science and/or risk. I would like to know how many A-Levels/degrees in the core science subjects there are amongst the cabinet. Science is for geeks, boffins and nerds – the chattering classes are always prepared to give us their view on science but never seem to want to bother learning any!

    I heard Clegg join on about science-based precautionary principles the other day – what does that mean? What criteria does he make a judgement on the risks linked to GMO?

    I am a proud scientist but would never advise a child of mine to do science in the UK

  • Totally agree with Adam Corlett. We passed a really good motion on science policy in September in Brighton. I really hope that this will enter into our manifesto – alongside apprenticeships, pro-manufacturing, exporting outside of the EU – in short modern, intelligent, green, sustainable growth.

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