The role of innovation in the UK’s COVID-19 recovery

www.nesta.org.uk/blog/the-role-of-innovation-in-the-uks-covid-19-recovery/
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The role of innovation in the UK’s COVID-19 recovery

For many people and places, the economy never really recovered post 2008. The downturn induced by the COVID-19 pandemic risks layering even greater economic fragility onto those already doing badly. Cities in the North and Midlands have seen the largest rises in unemployment in the impact of the lockdown and early analysis suggests lower-paid people, young and women stand out as the hardest hit in the economic impact of the pandemic.

Innovation will be vital to Britain’s economic recovery. While policymakers have put in place many measures to try and mitigate the worst impacts of the crisis, the country’s longer term prospects depend on improving productivity, and to do so we must promote innovation. But unless we change the way innovation is funded and supported, recovery will leave too many people and places behind.

At Nesta we have already begun to explore how the UK (and world) could change in the COVID-19 recovery. Over the coming months, we’ll be looking in more detail at how innovation can help create a resilient and inclusive economy post COVID-19, and the windows of opportunity for lasting change.

We start with The Missing £4 Billion: making R&D work for the whole UK, which looks at where the UK’s public investment in research and development (R&D) is spent. It asks provocative questions about whether its skew towards London, Cambridge and Oxford can be justified. Authors Richard Jones and Tom Forth argue that whether calculated by head of population, or ratio of public to private investment, other parts of the UK have effectively missed out, to the tune of £4 billion of public R&D funding each year. You can explore the data using our online tool, which tells the story of where the UK invests in R&D across the country, and allows you to experiment with setting your own priorities for where public money should go.

Although the UK’s expenditure on R&D has historically been low compared to our competitor countries, the government has committed to significantly increasing the amount that the UK spends on R&D by 2025. This gives an opportunity to redress historical imbalances, and Jones and Forth propose several ways in which this could be done, including devolving a substantial portion of the promised uplift in the R&D budget to nations, cities and regions.

'A more proactive approach is needed to guide innovation in a way that creates public benefit'

Maintaining - and increasing - investment in innovation in a context of strained public finances makes it even more important to show how the benefits of that investment will be widely shared.

In forthcoming publications and events, we will explore what it would look like to design innovation policies that serve the whole economy.

We will make the case for supporting innovation in sectors that aren’t normally thought of as being at the ‘technological frontier’, like social care and retail. These sectors employ large numbers of people, so small productivity improvements within them could have a big effect both on overall productivity, and more importantly, on the wellbeing and livelihoods of many people across the UK. While the pandemic is hitting many firms in these sectors hard, it is also showing their importance. And we will explore ways in which the government could help innovation to diffuse across the economy, so that more firms in more places can start to catch up with the leaders.

Finally, we’ll argue that a more proactive approach is needed to guide innovation in a way that creates public benefit and addresses potential downsides of new technologies early on. The pandemic has brought discussions about risks and benefits of innovation into the mainstream, as governments decide whether and how to introduce contact-tracing apps, immunity passports that would allow more freedoms to people shown to have COVID-19 immunity and challenge trials that would involve giving the virus to healthy individuals to speed up vaccine development. Nesta’s work has shown that the public have nuanced views on the trade-offs that might arise from innovation - for example, the majority want to see innovation benefiting the whole country and are willing to see some areas’ economies grow more slowly if that means benefits are spread more evenly across the UK. As decision-makers plan for post-COVID-19 recovery, and the role of innovation within it, they need to involve the public meaningfully.

We look forward to the conversations this work generates, and to working with the UK government and institutions across the country on how innovation can truly benefit more people and places in the UK.

Webinar: The Missing £4 Billion

Join us online to hear new analysis from the authors of 'The Missing £4 Billion: making R&D work across the UK’

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Author

Jen Rae

Jen Rae

Jen Rae

Head of UK Innovation Policy

Jen Rae is a policy advisor on innovation and economic growth for Nesta’s Policy and Research team.

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Madeleine Gabriel

Madeleine Gabriel

Madeleine Gabriel

Head of Inclusive Innovation

Madeleine Gabriel leads international projects that explore how new models of innovation can tackle big social challenges. Her current work includes a study on whether and how the conc…

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