The UK government has published ‘the R&D Roadmap’, which sets forth a vision for a more innovative Britain. But what does this Roadmap propose, and how will this impact the UK’s startups and scaleups?
On July 1 the Department for Business, Energy & Industrial Strategy (BEIS) published its R&D Roadmap, a 60-page paper outlining the government’s vision for cultivating a more science and technology-focused economy.
The roadmap is a sprawling work, ambitious and commendable in many ways, particularly its breadth and depth of analysis. But let’s be clear: this is no ‘map’. It is not a step-by-step instructions for moving the economy from point A to a pre-determined and more prosperous point B.
What it lacks in scrutable policy, though, the roadmap makes up for with a wealth of promising ideas, and a thorough inspection of the UK’s innovation engine. From the fuel pumps of public funding to the spark-plugs of the startup scene, BEIS finds a largely operational machine, but one that is shackled by inefficiency, uncertainty and underinvestment.
With the government planning a substantial expansion to R&D investment – rising to £22 billion a year by 2024/5 – the roadmap offers a valuable preview of how this money will be spent to increase productivity and cultivate future breakthroughs.
Let’s take a closer look.
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Office for Talent
The supply of talent featured heavily in the R&D Roadmap. This is not surprising given the pivotal role talent plays in innovation. The roadmap presented a range of ideas for attracting talent from overseas, nurturing it domestically, and increasing workforce diversity – an important step in distributing the benefits of innovation evenly across the country.
The most significant announcement in this or any other section of the roadmap was the creation of the Office for Talent, which will be tasked with luring high-skilled workers from overseas. Its precise remit is unknown, but analysts believe this new office will hold sway over immigration policy and have the power to award, modify, and accelerate visas for skilled workers.
Yes, the Office for Talent will have the power to increase the supply of skilled labour into the UK. But well outside of its control will be the short and medium-term damage caused by Brexit and the likely cancellation of freedom of movement. While decreasing visa processing times will inevitably help startups and scaleups, a visa-based system cannot match the speed and dynamism of unfettered access to the EU’s jobs market.
The government must do more work to protect the supply of talent once the transition period ends in December. This new office is a set in that direction.
R&D Place Strategy
The R&D roadmap teases the government’s R&D Place Strategy, a new initiative to cultivate regional increases in productivity. The government will do this by funding centres of excellence, areas of “untapped potential”, and regions that are traditionally less R&D-intensive.
At its heart, this is a plan to restore some parity between tech hubs like London and Manchester, which take the lion share of funding, and the rest of the country. This imbalance is one of many factors spurring regional inequality, which the government is hoping to address through its much-touted ‘level up’ initiative.
We cannot project the full impact of the R&D Place Strategy until it is published in full this Autumn. Even then, it will be difficult to unpick its outcomes from those of other region-specific schemes. But plans to bringing opportunity to a more diverse set of founders and thinkers is a positive step.
Without a doubt, empowering entrepreneurs from a wider variety of backgrounds will give rise to a host of new ideas, driving innovation.
One of the biggest questions facing the UK’s innovation ecosystem is ‘will British companies have access to EU grant funding after Brexit?’ The R&D Roadmap has provided an update here. And it appears to be good news.
The report says the UK government is seeking to “fully associate” with Horizon Europe, the successor to the widely successful Horizon 2020 scheme, which expires this year. If it succeeds, UK businesses would have complete access to Horizon Europe’s numerous competitions, with the potential to secure billions of Euros in development funding.
The government is currently negotiating a “fair and balanced deal” to participate in Horizon Europe. We will be keeping a watchful eye on how these negotiations progress.
If negotiations do fail, the government is promising to “implement ambitious alternatives as quickly as possible from January 2021”. This could see existing grant schemes given extra funding, or the government covering additional costs associated with participating in Horizon Europe as a third party.
Appreciating the need for public investment
The R&D Roadmap makes a crystal clear case for innovation: it creates jobs, lessens social problems, and increases prosperity for the whole country. It also makes a case for public investment in innovation, the benefit of which has been documented by numerous studies.
Funding, delivered through well-designed schemes like R&D Tax Credits, the creative industries tax credit, EIS and Innovate UK simultaneously reward development work while reducing the risks associated with it. This double-edged benefit creates a powerful incentive for thousands of innovators. And for certain businesses working on risky, blue-sky projects, government funding is often their only source of finance.
The fact that the government is taking such a positive view of public investment is gratifying. As is its intention to distribute funds to where they are most needed.
We are also pleased that the government is embracing a collaborative approach to advancing the R&D Roadmap. Academics, founders, and government departments are all being consulted, while outsiders can add their input through this online survey.
Still, it remains to be seen what additional complexity these new proposals will add to an already complicated government funding apparatus. While necessary to target investment, hyper-specific schemes risk creating a mountain of paperwork for already time-poor companies.
The government must consider the trade-off between transparency, time investment and financial rewards when formulating its approach.
GrantTree is one of the UK’s leading government funding consultancies, specialising in R&D Tax Credits and Innovation Grants. If you have any questions about these schemes or would like to discuss your funding options, please get in touch!
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