View from business community

1. View from business community Norman Price Deputy Chair LMC of ERDF funds Chair of Birmingham Science City Chair Regional Finance Forum Board of Regional CBI…. Future EU structural funds for Innovation

2. What does business need to be successful? (1) • Financial return • Economic return not enough • Appropriate to risk • Market to sell to • Existing • Future general growth • Developing new geographic markets • Developing new sector markets • Something to sell - products or services • Existing • Developed product • R&D (new knowledge) based innovation • New to sector/ market innovation

3. What does business need to be successful? (2) • Processes Competitive in economics and quality • Hard: Physical equipment • Medium: Systems and logistics • Soft: Organisation and business models • Resources Competitive in economics and quality • Skilled people • Finance • Public infrastructure

4. How can public policy and funding help? (1) • Financial/ Economic framework • establish a market based benefit framework with sensibly balanced risk/ reward between the participants • Markets. Stimulate and improve access General conditions • National environment for growth based on confidence and certainty, reducing risk perception. • Business sympathetic and competitive regulation, and taxation. • Competitive export support and financing Innovation growth • Outcomes based public sector procurement to open markets, and encourage innovation. • Public encouragement of demand lead technical solutions such as SBIR, (as practised extensively in USA), and demonstrator projects to share risk. • Focus support on key sectors/ clusters of strength and opportunity (Smart Specialisation) to build critical mass, supply chains etc. • On-shoring initiatives for supply chains based on world best practice

5. How can public policy and funding help? (2) • Products. Mitigate cost and risk from Research Development and Innovation, • Support for underpinning research, much in universities but also independent research establishments. Encouragement of more ‘impact’ research. • Support to bridge ‘valley of death’ to commercialisation e.g. via proof of concept, university-business collaboration, traditional ‘smart and spur’ grants, not confined to esoteric science. • Encourage innovation up and down supply chains, particularly recognising the resource constraints of lower tiers. • Routine and internationally competitive tax credits, drifting into innovation more. • Processes. Support investment • R&D and I is not just for products but also processes. Modern equipment is often material ‘wrapped round’ innovation. Source of high value added jobs. • Capital investment and revenue support for improvements, modernisation, and skills in hard (e.g. robotic production), medium (e.g. process control systems) and soft (e.g. skill development) elements of process, particularly for SMEs.

6. How can public policy and funding help?(3) • Resources Skills are a particular weakness of West Midlands Economy. • ESF must be more focussed on defined needs of the local economy. • Relationship between Universities , FE colleges and businesses through such as KTPs and graduate training /placements is a key weapon Finance for SMEs is still weak with a deterioration in bank lending. • Financial engineering instruments must be a high priority covering ; start up grants, early risk capital, growth venture capital, loans , mezzanine, Business angel encouragement. • Various sectors have specific needs ,and attention must also be focused on these identified strengths and opportunities. • SME lending probably require imaginative thinking beyond that of UK government..maybe guarantee funds Public infrastructure • Transport continues weak compared with London and major EU cities • Broadband and its use has scope for improvement • Little power generation in the region and opportunities for innovative new green methods.

7. Smart Specialisation – LEP supporting plans • Sector focus. Remarkable agreement across the LEPs of the region on sector priorities e.g. of advanced manufacturing , environmental/green technologies and digital technologies, which will enable • Greater focus of (limited) funding to have more impact of sectors/ strengths of greatest potential, particularly in the larger more traditional sectors • Will focus effort of all players in addition – public, private, universities etc – and encourage cooperation • SIF priorities. Broad agreement too on SIF priorities with innovation implications • Strengthening research, technological development and innovation • Enhancing access and use and quality of ICT • Supporting the shift towards a low carbon economy • Enhancing competitiveness of SMEs

8. Support for Innovation must recognise • Needs • Balanced risk and reward • Market, Benefit driven--- contribution to quality of life---needs a customer. • Product or service. Beyond good ideas---add blood sweat and investment. • Processes. Needs route/organisation to beneficiary • Resources..nothing for nothing Competitive world. Cant sell yesterday’s ideas to tomorrow's customers.