Public anxious over UK's lack of innovation, new poll shows

24/10/2006

"We are clear that innovation will be the defining issue for this country's competitiveness and quality of life over the next decade. As the largest endowment exclusively devoted to innovation we can test models and take calculated risks over the long-term. You could describe NESTA as an innovation laboratory."

70% of the public believe innovation is the best way to solve economic and social problems, yet only 40% say the UK has an environment where innovation can flourish.

An alarming 44% of British adults believe they are "not very" or "not at all innovative" and four times as many people say their employer does not provide enough support to foster innovation than those with an employer that does. Surprisingly, those working in the public sector thought they were given more opportunity to be innovative in the workplace than those in the private sector.

There is both a gender and social gap apparent in UK innovation. More than twice as many people from the AB social grade believe they have had innovative ideas applicable in their workplace than those in the DE social grade (56% to 22% respectively). The poll also found that twice as many men as women believe they are "very innovative".

The results build on a body of evidence that indicate the UK is not yet realising its innovation potential.

Addressing these issues, NESTA's event will include speeches and debate with:

• Tessa Jowell, Secretary of State for Culture, Media and Sport
• US economist, Dr. Irwin Stelzer
• Yo! Sushi founder, Simon Woodroffe
• Former Finnish Prime Minister and current Sitra President, Esko Aho
• Journalist and broadcaster, Jonathan Freedland
• Dean of the London Business School, Laura Tyson

Commenting on the event, NESTA Chief Executive, Jonathan Kestenbaum said:

"We are clear that innovation will be the defining issue for this country's competitiveness and quality of life over the next decade. As the largest endowment exclusively devoted to innovation we can test models and take calculated risks over the long-term. You could describe NESTA as an innovation laboratory."

NESTA, the National Endowment for Science, Technology and the Arts, is launching its new five-year plan to transform the UK's capacity for innovation. It uses its unique national endowment of over £300m to provide early-stage funding, influence policy and develop a UK culture where innovation can flourish. This includes a new £50 million investment fund targeted at early-stage innovative ventures.

For further information, please contact Sarah Hayward on 020 7645 9583/ 07957 156 759 or James Marsh on 020 7645 9563/07990 973880.

1. NESTA's event will start at 9.00am on 24th October at the Business Design Centre, Islington. Full details and how to register may be found here.

2. The event will showcase fifty of the UK's most innovative young companies and individuals supported by NESTA as well as highlighting new activities.

3. 0ver 2000 people were surveyed by MORI between 12th-18th of October.

4. The event coincides with the launch of The Innovation Gap, a new NESTA report which calls for greater support of "hidden innovation". The report - endorsed by the CBI, the Work Foundation and The Young Foundation - analyses the innovation taking place in the UK and demonstrates that much innovation remains hidden to traditional indicators. The full report may be downloaded here.

5. Despite having huge creative talent, the UK is still not fulfilling its innovation potential because it is held back by a number of cultural and financial factors:

Britons are risk averse - Fear of failure as an obstacle to starting a business has risen in the UK between 2001 and 2005 from 30.1% to 34.2%. 68% of senior executives in the UK believe that entrepreneurial behaviour and entrepreneurs are not highly regarded in this country, compared with the global average of 41%. Only South Korea ranks lower. If the UK's total entrepreneurial rate was similar to that of the USA, there would be an additional 1.8 million people actively engaged in creating a new business or recently having started one.

Access to capital remains a major barrier to young firms - The average amount of venture capital per company in the United Kingdom ($1.19 million) is higher than in Japan, but still completely out of line in comparison with the United States ($8.1 million). In 2005, UK private equity activity increased to its highest ever levels. However, buyouts represented 70% of the total amount invested at $32.3 billion. Seed investments represented 0.4% by amount at only $186 million and 4% by number.

Business angels are helping to fill part of the equity gap but we are way behind the US - There are up to 350,000 business angels in America who invest around $30 billion a year in some 50,000 ventures, an average of $600,000 per investment. In the UK, optimistic estimates put the number of angels at 40,000.

Small firms are frightened of growth - 72% of UK businesses with over 250 employees are "innovation active", compared to just 57% of firms with only 10-250 staff. This is particularly significant as our economy is predominantly made up of small and medium enterprises. Overall proportion of innovation activity in the UK has risen 14% in four years, from 48% to 62%; however this still means that over one-third of UK enterprises have no innovation activity.