Smarter R&D investment

All three major parties have pledged to increase government spending on research and development from its current pitifully low level of 0.46% GDP, well below all of our OECD colleagues. This is good news. However, how should this be done effectively? Those of us of a certain age can remember prior splashes of money thrown, for instance, at failing companies. Too many of these had dire results, giving the phrase ‘picking winners’ a bad name.

With the publication of an Industrial Strategy White Paper expected before Christmas, and with the recent publication of the independent Industrial Strategy Commission Report, much focus will, of course, be on how a refreshed Industrial Strategy might feed into the promised uplift in Government R+D, but there is more to making a success of the pledged increase than simple consideration of the industrial landscape, important though that is and however widely the phrase may be interpreted.

A recent OECD report authored by Stuart Elliott reckons that within 10 to 20 years, only those workers who possess very strong literacy and numeracy skills will easily outperform computers in many jobs. Across OECD countries currently, only about 10% perform at that level. We need to rapidly upskill our workforce. It isn’t only in pure digital skills we have a pressing need – although that is manifestly the case – but, as the report makes clear, also in a broad ability to communicate. That includes in writing and verbally, as well as handling and interpreting quantitative data (often bucket-loads of it; although computers are particularly good at analysing such data, the interpretation is harder without human input). What are our schools, our FE colleges (so often the Cinderella in any discussion about education) and our universities doing to make sure these crucial skills are being taught, and how should the government facilitate this?

Value for R&D money

Making sure we have the correct ‘absorptive capacity’ in our workforce, to improve our economy and make use of increased research and development (R&D) funding, relies heavily on workers having acquired enough of the right sort of skills during their formal education (almost regardless of any subsequent ongoing development opportunities which may be offered throughout their careers). We need hard thought about our various educational structures if we are to deliver a step change in our ability to innovate, to be productive and to transform our living conditions wherever in the country we live.

While other countries have seen their productivity rise, there has been an almost complete flat-lining of it in the UK recently. Productivity is linked closely to innovation, which in turn links to research and development in the science and technology sector. The relationship is not, however, simplistically linear and a researcher’s bright idea may falter or fail for a wide range of reasons before its full potential can be adequately judged, let alone exploited.

It is insufficient to think that the fault for this solely lies with the university sector not doing enough about knowledge transfer, whatever the Minister may think about introducing a knowledge exchange framework (KEF) to measure this. Key roles for the government’s increased spending must be to ensure that businesses can afford to take the long-term risks that developing new – and particularly disruptive – technologies may require, and greater investment in the structures that allow further development work to be done that is not immediately tied to any specific company. However, to invest in R&D without tackling the infrastructure associated with developing the skills base adequately, at every stage and age, will be doomed to failure.

The UK used to have many organisations involved in pre-competitive development work (RSRE at Malvern – sold off to the private sector – is just one example). The loss of such institutions is another example of our failed ‘absorptive capacity’. As in our education system, the structures we have are ill-suited to make the most of what scientists (broadly defined) in the university system could deliver. Additionally, there is an inadequate tie-in between which skills are valued within the formal educational structures (and their assessment via league tables) and what is needed from the demand side, in business and industry. Undoubtedly there have been many (far too many?) changes introduced in our education system over the years, but it isn’t clear that any of these changes have given adequate thought about how they will impact on workforce skills.

Given that 39% of firms are reporting a shortage of individuals with the skills needed for the jobs they have on offer, it is clear that our so-called ‘gold standard’ education system, fixed around A levels, is not providing what business and industry require. The Royal Society’s President, Sir Venki Ramakrishnan has called for a broadening of the school syllabus to something more appropriate, reinforcing the Royal Society previous recommendation of a move towards a broad and balanced curriculum, highlighted in the Royal Society’s 2014 Vision Report.

Geography lessons

Beyond these generic problems, it is instructive to consider regional and local disparities. Cambridge, the city in which I live plus the University in which I work, has a well-known and hugely successful ‘cluster’ of hi-tech companies. There is plenty of porosity between the university and these companies: our students join these firms, our researchers exchange ideas and are often directly involved in new start-ups. The local schools are, by and large, excellent and children see the local economy thrive and feel they have a place to aspire to.

Contrast that with towns and villages a few miles down the road, where small businesses are uncommon and the local economy largely rests on agricultural products; unemployment is relatively high. The school children in Wisbech or Chatteris tend not to have the same high hopes and aspirations as their Cambridge peers. That is wrong, needing thought and money to correct. Why does the University, indeed any university, not look relevant to the youth of Chatteris? Work has to be done; money invested appropriately to enable existing small fenland companies to also derive benefits that the thriving Cambridge economy appears to offer, through up-skilling and the diffusion of knowledge and innovation, as well as the creation of new businesses. Similar arguments apply to many parts of the country. As the Industrial Strategy Commission Report made clear, our country has huge regional disparities, far larger than competitor nations and immensely damaging for our economy.

By all means, let us invest in industry and universities. The requirement for better funding of research in universities is made all the more acute by the threatened loss of Horizon2020 funding post-Brexit, a hugely important current source of funds. But we need better structures (and that includes basic infrastructure such as road and rail, digital connectivity as well as national research laboratories and near-market testing grounds). We also need to start with better education for all, wherever they live. It isn’t sufficient for pockets in the south to thrive while other areas have bad schools, inadequate further education, and universities with high dropout rates. Attention is urgently needed if the value of the increased R&D spending pledged by all parties is to deliver on its promise.

The Royal Society, Academy of Medical Sciences, British Academy and Royal Academy of Engineering have today published an explainer of why the 3% target is important for the UK, and factors that should be considered to deliver it.