Government's role in supporting innovation

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The Wright Review of Advanced Manufacturing in the UK and its Supply Chain will be released tomorrow. One major strand of the review is innovation, so ahead of this I thought I would look at the role that government can play in this space.

The government has a key role to play in partnering with industry to support innovation.

A range of evidence suggests that public-sector funding of science and innovation can “crowd in” private-sector investment in R&D. For example, a recent report by CaSE looks at the impact of public sector-provided research grants. It finds that researchers who receive such grants are more likely than non-grant holders to be "outward facing" and have research applied in a commercial context.

Encouraging engagement between the research base and companies is a key way government spending can boost the effectiveness of innovation. Take the example of Knowledge Transfer Partnerships (KTPs), which place recently qualified people into companies, while maintaining links with their universities. A review of KTPs by Regeneris found that a range of businesses' ambitions for innovation would not have been achieved without KTP assistance.

The value of innovation support for boosting growth is recognised by companies too: manufacturers identify additional innovation support as a key way to boost the growth of the sector. In EEF/GfK's survey Make it in Britain, 26% of manufacturers said that more government support for commercialising new technologies would encourage their company to expand manufacturing activity in the UK.

The government is aware that its spending has the potential to boost innovation.

A report published by BIS earlier this year showed public investment in R&D plays a crucial role in boosting business expenditure on R&D, not only through the direct funding of science and innovation but also because there is potential for public investment to drive virtuous circles of private investment and innovation. This report also points to the possibility that – given relatively low levels of expenditure on R&D in the UK – there could be increasing returns to additional investment on R&D.

Next month we will publish the EEF/NatWest Innovation Monitor 2014/15, which will include recommendations on government's role in boosting innovation support. Keep an eye out on the blog for more details.

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