Innovation is something we all depend on. As the process by which new ideas generate economic and social value, innovation is responsible for the technological developments that improve our quality of life and tackle the world’s biggest challenges like hunger and poverty.
The UK has long possessed the strong research base required to fuel innovation and enjoyed the subsequent rewards. Innovation accounted for half of the UK’s productivity growth from 2000 to 2008 and it has generated significant job creation too.
For every £1 the government invests in InnovateUK, the UK economy receives £6 in gross value added.
However, we are engaged in a fierce global competition for talent and investment and cannot afford to rely on past achievements to secure our future prosperity.
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In this highly competitive and internationalised environment, the role of government in providing an assertive, effective and long-term commitment to innovation is more important than ever to ensure the continued growth of the UK economy. The UK’s world-leading small satellite industry is the perfect example of how this has worked in the past. Government funding helped to establish Surrey Space Centre as a centre of excellence and enabled pre-commercialisation development for what became Surrey Satellite Technology Ltd (SSTL).
Now part of Airbus Defence and Space, SSTL is a £100 million a year business which has launched 47 space missions, and created hundreds of jobs.
Yet the prospect of replicating successes like this looks bleak. The UK already spends under two per cent of GDP on R&D; significantly less than our major international competitors including Germany, Finland, Singapore, and the US.
Both UK and foreign companies are increasingly making decisions about where to site their high-value activities on a global basis. With many of our international competitors adopting assertive knowledge-driven growth strategies, it is essential that the UK keeps pace.
The chancellor has promised to make the UK the best place in Europe to innovate and the richest of all the major economies by 2030, but potential spending cuts could hamper that, driving investment from private companies abroad.
It's vital that the government’s industrial approach delivers a long-term strategic framework that gives business and other innovation funders the confidence to invest.
Innovation has a key role to play in ensuring that the potential in our world-class research base is actually converted into products and services of value to our economy and society.
The rest of the world is in agreement that the capacity to innovate is the way to prosper in the 21st century. At a time of severe pressures on public finances and growing global competition, government should be investing in innovation to secure our future growth and ensure the UK isn’t left behind.