Driving Innovation for a Better Future

1. Influencing the Future of Innovation Encouraging Innovation for a Better Future Rebecca Endean UKRI Strategy Director

2. UK Research and Innovation Rebecca Endean, UKRI Strategy Director 26th November 2018

3. Mission UK Research and Innovation: benefiting everyone through knowledge, talent, and ideas.

4. The Numbers UKRI has a combined budget of around £7bn per year 3,900 research and business grants issued every year 151 universities receiving research funding 38 institutes, laboratories, units, campuses and innovation catapults

5. Overall spend on Research and Development in the UK • Total R&D expenditure in the UK was £33bn in 2016. The public sector funds over £9bn of this (28% of total). • UKRI covers the majority of public R&D funding, standing at £7bn in 2018 but rising out to 2021/22. • The government has allocated £7bn to the National Productivity Investment Fund (NPIF) over the period 2017/19 to 2021/22. UKRI has a key role in delivering this investment. £33bn Source: ONS GERD (2016), UKRI Strategic Prospectus

6. Foreign direct investment (FDI) is a strong driver of R&D in the UK [1] The Effects of Foreign Direct Investment on R&D and Innovations: Panel Data Analysis for Developing Asian Countries, L. Erdal and İ Göçer, 2015 [2] UK business enterprise research and development, ONS, 2017 [3] FDI Stocks, OECD International Direct Investment Statistics, 2017 [4] The impact of Brexit on foreign investment in the UK, S. Dhingra et al, 2016 1% increase in FDI is associated with a 0.8% increase in national R&D expenditure and a 0.4% increase in patenting activity. Non-UK sources account for about half of all business R&D within the UK – doubling from £5bn to £11bn since 2005. The UK held the third-highest quantity of inward FDI in the OECD in 2017

7. Working towards 2.4% The Government has committed to reaching: • 2.4% of GDP investment in R&D by 2027 • Reaching 3% in the longer term • Additional £7bn by 2021/22 In 2015 UK’s expenditure on R&D represented 1.7% of GDP – below the OECD average R&D intensity of 2.4%.

8. A wide range of R&D competitor nations have targets • The popularity of R&D intensity targets increased in the late 1990s and early 2000s, reaching 42 countries with an active R&D target in 2011. Other countries pursued non-target based R&D strategies. • The vast majority of countries have experienced increasing R&D intensity since 2000 and the UK is towards the lower end of the spectrum in terms of the scale of increase achieved. Source: Carvalho (2017) Source: OECD MSTI database (Data extracted on 4 Nov 2018) 8

9. … although fourteen other countries have achieved an increase of the scale which the UK is aiming to achieve under 2.4% • The 2.4% target implies increasing the UK’s R&D intensity by 0.7%points in 10 years. • 14 countries have achieved at least a 0.7% points increase in R&D in recent years. • Much of the increase in each case came through business-funded R&D. • However, public investment has an important role to play, in leveraging additional private investment and ensuring the increase is sustainable. Source: OECD MSTI database (Data extracted on 4 Nov 2018) 9

10. Foundations to the Industrial Strategy

11. ISCF and the Grand Challenges

12. Universities and innovation Estimates imply that doubling the number of universities per capita is associated with 4% higher future GDP per capita In 2016/17, universities led to the creation of 4452 companies, of which 4161 were started by graduates and 143 were spin-offs, designed around exploiting a new IP Collaborating with universities increases the probability that a firm will undertake new-to-the-market innovation by: 22% for small firms, and 21 % for medium and large firms. Companies in innovation networks (such as UKRI’s Knowledge Transfer Network) are 4.5 times more likely to be innovative, and 3 times more likely to enter an R&D collaboration.

13. People - Achieving 2.4% is as much about people as money • Having the right skills in place will be crucial for the development of priority sectors • Around 110,000 researchers work in industry Source : ONS, OECD

14. There are key shortages • This is not just about researchers but also support staff like technicians, who account for almost a third of UK R&D personnel, and apprenticeships • Half of businesses say there is a shortage ofSTEM graduates with highest annual shortages in engineering (20k), manufacturing (15k), computer science, and construction (12k). • 700,000 STEM technicians may be required by 2024 to meet employer demand5

15. Places • £115m Strength in Places Fund • Supporting regional growth by identifying and supporting areas of emerging R&D strength • Growing the capacity of existing research excellence and high quality innovation across the country Innovate UK funding intensity per capita in different areas of the UK

16. Thank you @UKRI_CEO @UKRI_news www.UKRI.org

17. Influencing the Future of Innovation Encouraging Innovation for a Better Future Thank You