Industrial strategy should boost support for commercialisation and local and global partnerships, says Stuart Croft
In October, the government’s industrial strategy green paper gave welcome recognition to the role of the UK’s universities as drivers of innovation. It showed that the UK is well positioned to secure a global competitive advantage in sectors including life sciences, advanced manufacturing and digital technologies, using its world-leading research-intensive universities as a powerful asset.
We are still waiting to hear which levers the government will pull and how it will involve universities in these plans. Last week, the Russell Group Industrial Strategy Expert Panel of university and business leaders, which I chair, offered its own recommendations to ministers. Our report, Future Ready: The path to growth, sets out where action by government, combined with commitments from universities, could support and enhance UK industrial strength.
The government faces stubborn and wide-ranging challenges: from barriers preventing fledgling companies from scaling up, to underinvestment in infrastructure holding back housing, transport and digital capacity.
Effective partnership between government, business, the public sector and universities can help to clear these barriers. An ambitious industrial strategy should maximise this opportunity to drive change with speed and at scale.
Unlock commercialisation
The UK’s research-intensive universities are some of the best in the world at turning their research into new businesses and innovative products and services. However, our panel highlighted the wealth of prospects that stall because of limited funding and gaps in the early stage of the pipeline.
To tackle this, the government can look to both new and existing mechanisms. The Higher Education Innovation Fund (HEIF) has already proven effective in fostering university-business collaboration and activities such as licensing, nurturing student entrepreneurs and supporting high-growth spinouts.
The latest Research England data show that every £1 invested in HEIF yields £14.80 for the UK economy. This rises to as much as £20 at large research-intensive universities, when accounting for spinout performance.
However, institutional HEIF funding is capped, restricting each university’s innovation activity. One estimates that 60 per cent of its potentially viable spinouts are unable to develop further. An increase in HEIF as part of an overall increase in the R&D budget could tap this huge well of potential.
Aligned to this, we are suggesting a new Spark Fund specifically to address the early, high-risk phase of spinout creation. This could help leverage co-investment from private sources, such as university-affiliated patient capital funds, and would focus on spinning out high-growth companies in priority industrial sectors.
A strategy for the whole country
There are also areas where government can take action not by injecting more money but by reshaping policy to better support universities to increase growth.
The government has already committed to Local Growth Plans that will balance national priorities with each region’s needs and strengths. Embedding innovation and skills into these plans and wider regional development strategies, with contributions from research-intensive universities, will help the industrial strategy drive growth across the regions and nations.
The UK is currently one of the most geographically unequal countries in the OECD. We know that factors such as a lack of access to specialist facilities, private investment and workforce skills hinder some areas from building momentum on innovation.
Universities are ready to work with local government to maximise regional R&D strengths and build skills, creating high-growth clusters, driving regional economies and, ultimately, improving everyone’s quality of life.
Leveraging our global reputation
Alongside boosting local economies, attracting overseas investment is vital for the UK’s economic strength and soft power.
Research-intensive universities already have strong relationships with many global partners. Universities received over £1.5 billion in non-UK income for research grants and contracts in 2022-23 alone, and they are instrumental in producing the skilled workforce that 35 per cent of overseas investors in UK R&D projects name as a key attraction.
Integrating the strengths of the UK’s universities into the wider national offer could make the UK more attractive for overseas investors. But it will require more joined-up thinking between government bodies and initiatives, including the Office for Investment, the Science and Technology Network, individual departments and the Great campaign.
A more unified message on what the UK has to offer can only boost the country’s international reputation and relationships, in turn supporting economic growth at home.
The barriers to growth may be wide-ranging, but so are universities’ strengths. Getting the industrial strategy right means putting the UK on a long-term path to greater productivity, economic resilience and stability. Universities and their partners are ready, with the right operating environment, to step up and be a partner in the push for change.
Stuart Croft is vice-chancellor of the University of Warwick and chair of the Russell Group Industrial Strategy Expert Panel.
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