ICYMI innovation policy update: it’s party (Conference) time
This week, I look at the recent Labour and Conservative party conferences; the Diamond Review of Higher Education funding in Wales; and the most recent version of the Global Competitiveness Index.
Industrial strategy makes an appearance at the party conferences
Unveiled with the new BEIS department, industrial strategy looks set to form a key part of the government’s business policy, and was referred to a number of times during the Conservative Party Conference.
During her speech, Theresa May took the opportunity to assure her audience that a return to industrial strategy did not mean “picking winners, propping up failing industries, or bringing old companies back from the dead” - the main accusations levelled at the 1970s approach - but would instead look to support “industries that are of strategic value to our economy”.
On the matter of sectors, the Prime Minister’s speech invoked memories of David Willetts’ ‘eight great technologies’ policy, and highlighted financial services, aerospace and car manufacturing as key UK strengths that government policy would look to support.
In his conference speech, Greg Clark (Secretary of state for BEIS) reiterated the focus on current UK industrial strengths. He also mentioned the importance of combatting climate change with clean energy, which is likely to have been added in order to counter objections previously raised over the absorption of DECC into BEIS.
For more detail on Clark’s plans for industrial strategy, we can turn to his speech last Tuesday at the Institute of Directors, at which the Secretary of State stated his view that “any industrial strategy has to be local”. Given his previous role at Department for Communities and Local Government and background as a proponent of devolution, it is perhaps unsurprising that he considers ‘place’ a key aspect of industrial strategy.
“...for too long, government policy has treated every place as if they were identical”
Clark also raised the prospect of reforming the tax system to encourage entrepreneurship and innovation, which could take the form of tax breaks for startups or perhaps an increase in R&D tax credits. The issue of corporate governance was also discussed, which we’re likely to hear more of given the Prime Minister’s proposal to “put workers on company boards” in order to broaden their social demographic.
Support for innovation and industry also made a brief appearance at the Labour party conference in Liverpool. In one section of Jeremy Corbyn’s keynote speech he included reference to his plans for spending on research and development, noting that the UK spends less on research as a share of national income than France, Germany, the US and China. To address this and the wider productivity problem, Corbyn revealed plans to increase research and development spend to 3% of GDP. This appears to be a reference to the R&D targets set in the Lisbon strategy, an EU initiative from March 2000 that aimed to ensure the region became “the most competitive and dynamic knowledge-based economy in the world”.
UK up three places in Global Competitiveness Index
The UK placed 7th out of 138 countries in the latest Global Competitiveness Index, an improvement of three places compared to the previous year. However, the report does point out this data was collected before the Brexit vote, which is likely to have a negative impact on the nation’s standing. In particular, the UK currently performs relatively well for attracting and retaining international talent; given the increasing likelihood that the UK will leave the single market and uncertainty over the status of its European students, this indicator may see a drop next year. There is also a gloomy outlook for trade - the report mentions the observed relationship between distance and trade (previously discussed at length by Paul Nightingale and Douglas Carswell MP in a now-famous twitter exchange).
More positively, the report also goes on to detail the main drivers of the competitiveness of the UK economy: highly efficient goods and labour markets; sophisticated business processes; and a high level of digital ‘readiness’ by both businesses and consumers. It also mentions the possibility of opportunities post-Brexit, largely around regulatory control.
In a wider context, Europe is still performing above the global average for competitiveness, although this has much to do with “regional champions” such as Switzerland (which leads the rankings for an eighth consecutive year) raising the average for the continent, with seven of the top 12 countries in the index from Europe. However, the uneven recovery from the global financial crisis across the region has led to a weak median performance in the innovation indicators.
Diamond review of HE Funding in Wales
Last week, the Diamond Review of Higher Education funding in Wales was published, and a large part of the report (and much of the media coverage) focused on increasing financial support for those in education and potential changes to the current fees structure. Recommendations in this area included: loan repayments based on earnings; increasing tuition fee loans to cover future fee rises above the current £9,000 ceiling; and finance for part-time and postgraduate students through maintenance support. The report also recommended that for subjects with a cost of teaching above £9,000, HEFCW assist universities with the cost of delivering these subjects.
There were also a number of (less publicised) recommendations regarding knowledge transfer. The report extols the success of the ‘dual support’ system, through which universities can access Quality related research (QR) funding, provided by the Welsh Government, through HEFCW. ‘Quality’ is assessed using the Research Excellence Framework. Universities can then also apply for a number of public and nonpublic funding sources.
“QR funding is crucial in providing the baseline investment that enables the long-term strategic development of research and the creation of a critical mass of research capability. The certainty and predictability of QR funding is important given the long planning horizons that university research strategies have to address”
In light of this, the review emphasises that QR funding remains essential, suggesting it should be maintained at the current level of £71m per annum (as a minimum) in real terms over the next five years.
A similar dual support system is then proposed by the Review Panel to support knowledge transfer, stating it could ensure that the “research and knowledge generated in universities provides maximum benefit to the economy and society of Wales”. This proposal would be achieved through two steps: first, the Welsh Government would fund two knowledge transfer hubs; and second would instigate a project-based funding stream aimed at projects that will impact on the Welsh economy. The report also suggests core funding (from the Welsh Government) for the Welsh Institute for Social and Economic Research and Development.
Further analysis on the Diamond Review and its implications is can be found here, by David Morris of WonkHE.