Travelling Hopefully to 2.4% GDP

David Willetts, for a number of years the Minister of State for Universities and Science, now an FRS, President of the Advisory Board for a think-tank (Resolution Foundation) and writer (most recently, A University Education), has just published a pamphlet about The Road to 2.4%.  All the three main parties (in England) are supportive of an uplift, a substantial uplift, in the amount of funding for science and innovation in the UK. The figure of 2.4% – as a percentage of GDP – is not simply plucked from thin air but is the OECD average and hence the number homed in on by the Conservatives. The Labour party has even greater ambitions. But, and this is a big but, this isn’t simply Government money. It requires a huge increase in financial input from the private sector too, roughly in a proportion of 2:1 from industry to government. Hence talking in terms of a ‘road’ seems appropriate, since we may be more likely to travel hopefully than to arrive. Pessimists in the room have been heard to say that it will be easy because post-Brexit GDP will plummet, and so the figure could be achieved simply with flat cash, but I will put their negativity aside. Willetts makes no mention of Brexit, or its impact, apart from a couple of fleeting quotes from the Tory manifesto referring to ‘getting Brexit done’. This omission of potentially the largest change to the UK landscape on the horizon seems too blaringly obvious to be accidental in Willetts’ writing.

I recently wrote a blogpost about a report on science within government departments and their interactions with the wider community, in which the culling of research establishments during the Thatcher era was implicitly mourned. Willetts makes similar points about the damage to the UK R+D ecosystem in his pamphlet.  He is absolutely clear that when it comes to getting to 2.4% – which will need all that industrial input and plenty of innovation to kickstart increases in productivity and hence economic growth – it is not appropriate to look to universities alone. To quote at some length a part of his analysis

The Heath Government took money from the Research Councils to go to departments to purchase applied research. But over the subsequent decades departments proved to be very poor protectors of their own R&D budgets. They behaved like short-sighted British businesses cutting their R&D budget whenever they were under financial pressure. As the customer who is supposed to be purchasing R&D regularly cuts their budget, that leaves behind only the science budget which is allocated under a different model and protected behind the Haldane principle. It means the science budget is under pressure to fill the gap in applied research left by departments. ….

There is one more twist to this. The minister who received Rothschild’s report was none other than Margaret Thatcher who was then Secretary of State for Education and Science. Some time after she arrived in Number 10, in the mid-1980s, the Rothschild doctrine that applied research requires a customer, was taken to its next stage. Business not Whitehall was to be the customer…..

This doctrine creates the funding gap called the “Valley of Death”. It means public spending stops long before applied research is commercially viable.

Yet universities have been fingered as the key player in growth by innovation by many. Why don’t they have more spin-outs? Why don’t enough of these spin-outs turn into the next Google or, more locally, ARM? Questions like these get bandied around all the time, with the added rider that ‘of course’ the UK has always been bad at capitalising on its inventions. Sentiments neatly illustrated by the headline The Brits: great at inventing, not so good at monetising are common. Furthermore, the various instruments of university accountability – most noticeably REF and KEF (the latter as yet fully to materialise) – put explicit value on ‘impact’ so often (but not invariably) translated within an economic framework leading to, I believe, unrealistic expectations.

As the ‘scientist of the moment’ (to quote from this article) my friend and physicist colleague Richard Jones has said

I think British universities are really good at interacting with industry. That’s not to say that they couldn’t be better, but we’re not starting from a bad place at all….People expect too much of universities…the British system has become very unbalanced because it’s over reliant on them to deliver all the R&D.

Richard’s view is in line with Willetts on this point.

And since Richard is the scientist of the moment precisely because his extended views have, apparently, been endorsed (not necessarily to his unalloyed joy) by arch-Tory-policy-driver Dominic Cummings, perhaps his thinking on how to move forward will get some traction. His analysis of how to get the economy moving, particularly in those left-behind regions that are impacting so significantly on polls, has suddenly penetrated beyond simply the readers of his own blog, although the article itself has been there for months.

What David Willetts, the review on Science Capability within Government and Richard Jones all home in on is the lack of those research establishments that once provided the mechanism to take a neat academic idea through the next phase of development that must occur before a company is likely to wish to invest substantially or be able to scale-up to large scale production. An extremely detailed and comprehensive analysis of all the things that can go wrong in this intermediate stage has been provided by Uday Phadke and Shailendra Vyakarnam’s book Camels, Tigers and Unicorns: Rethinking Science and Technology-enabled Innovation. In Germany, the existence of the network of Fraunhofer Institutes provides the structures whereby this intermediate work can be done. There is no expectation there that universities will do the necessary leg-work. Yet in the UK, in the absence of such organisations (the nearest equivalent would be the Catapults, of which there are few and not all have been notable successes) is ever more clearly becoming a factor in the lack of disruptive and innovative ideas turning into disruptive but successful and pervasive technologies with consequent positive benefits for the UK economy.

Universities have many issues on their hands ranging from widening participation to Brexit, from Prevent to the giant issue of financial sustainability and survival. And of course the burden that REF (and KEF-to-be) place on their people and structures. It would be helpful if future ministers for science and education would do battle with the Treasury to propagate the understanding that universities cannot act alone to be the solution to this aspect of the economy. The road to 2.4% needs strong financial support (such as, to quote Willetts again, full economic costing of research grants meaning full and not the 80% it has been for so long) but also investment in other parts of the innovation chain so that our bright minds’ best ideas actually turn into solid returns for the UK and don’t get lost in translation. To conclude with more words culled from Willetts pamphlet

Exceptionally but above all we need to promote more applied R&D outside the university. It would be wrong to do this by cutting research funding for universities who face their own funding pressures.


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One Response to Travelling Hopefully to 2.4% GDP

  1. Keith Allen says:

    I think a model does exist and Richard alludes to it in his long paper — the Advanced Manufacturing Research Centre in South Yorkshire. This pre-exists the HVMC and should be the role model for a new kind of institution — a little like SRI International in the USA perhaps — that is key to rebalancing the economy; raising R&D investment to improve innovation/productivity. Centre for Cities report indicated why this has not happened. AMRC seen in Whitehall as ‘regional asset’ and in the region as a ‘national asset’ — in reality it is a global asset and its largely the private sector that cottoned on to this fact a decade or so back. Perhaps a big part of the problem is cultural — the major decision making institutions seeing translational or applied research as somehow secondary or inferior

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