Between 1990 and 2008, business investment accounted for 15 per cent of UK growth. But, as public and consumer spending tighten, investment needs to play an even more central role in driving the recovery. The CBI’s report, Making the UK the Best Place to Invest, published in April, calls on the government to bolster the UK’s attractiveness to investors or risk losing investment and jobs to other countries. After discussions with more than 400 businesses, the CBI identified three broad priorities for government action.
First, business and personal taxes need to come down to make the UK internationally competitive and attract and retain top, internationally mobile, talent.
Second, the UK needs a transport, energy and digital infrastructure fit for the future and must significantly reduce planning and regulatory burdens on businesses. We also need a more effective talent pipeline linked up with the needs of business.
Third, government should use public procurement to stimulate innovation, prioritise the roll-out of an ‘industrial-strength’ broadband infrastructure to create new market activity and ensure the UK is well positioned to take advantage of the transition to a low-carbon economy.
Investments are often made over a long time, so our recommendations are accompanied by a discussion on how to frame a 20-year vision for the UK. Underpinning each recommendation is the need for businesses to innovate, as ultimately this is what will drive economic growth. So it is encouraging that businesses identified universities as a UK strength in attracting investment.
Four of the world’s top 10 universities are here and there are world-class courses and research strengths at many others, from video effects at Bournemouth to biotechnology at Dundee. However, more can be done to harness the research base to drive business investment. The Science Budget fared relatively well in the spending review, but the lack of a long-term research and innovation investment plan is now starting to cause concern. This is something we will be looking at in detail this year.
Our report calls on the government to nurture changes in the university system to align it more closely with business and economic needs. One way is for the government, businesses and professional organisations to work together to develop kite marks for the courses that employers value most. This builds on what universities minister David Willetts has already suggested and will help businesses to direct prospective students to suitable study.
The research councils should continue their efforts on the impact agenda. When I review research proposals, it is usually clear where business has been involved from the start in helping shape a project or programme. But small and medium-sized enterprises in particular can still find it difficult to know how to get involved in these early discussions or gain access to university intellectual property that they might be able to commercialise.
Part of the answer is to build wider formal and informal networks for knowledge exchange. The CBI remains a strong advocate of Knowledge Transfer Partnerships and Knowledge Transfer Networks. They build relationships organically and create value—intellectual and social as well as economic—that business sees as a real UK strength. Funding for KTPs has been affected by the government’s efforts to address the deficit, but we would recommend this is looked at again as soon as public finances allow.
Similarly, funding for the Technology Strategy Board, which is responsible for KTPs, KTNs and the new Technology and Innovation Centres, has always looked somewhat meagre. We want the TSB to support research and technology development much closer to commercialisation. This means ensuring the TSB is adequately funded to do the job.
Experience in the UK and from overseas suggests that the TICs will only fulfil their mission if driven by business demand. They must work for and with business on business problems. If they can do this, it will further improve the UK’s innovation ecosystem and make the UK an attractive place to carry out innovative activity.
At the heart of our 20-year vision is for the UK to have the ‘best environment for business innovation in the OECD’. This means upping our game in many areas important to investment decision makers, such as tax, planning and infrastructure. The science base starts from a position of strength, but international competition for the most innovative business activity is fierce and the UK cannot rest on its laurels.
The government has made a positive impression with its recent Plan for Growth, but this is just the first chapter in the investment and growth book that now needs to be delivered.
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Tim Bradshaw is head of enterprise and innovation at the CBI.