R&D focus putting innovation at risk

CBI says government is ignoring business creativity

Government policy focuses too heavily on research and development (R&D) and fails to support much of the innovation being conducted by businesses, says the CBI.

A survey from the employer’s group published this week shows that just 41 per cent of companies agree that R&D is the best indicator of innovation activity.

But more than nine out of 10 firms (93 per cent) believe innovation is critical to the success of their business.

‘UK firms take innovation very seriously and invest significant amounts of their profits in developing new ideas and finding better ways of working,’ said CBI director general Sir Digby Jones.

The Department of Trade & Industry’s (DTI’s) annual R&D scoreboard (Computing, 27 October) estimates corporate spending on R&D to be about two per cent of sales, or about £17bn in the UK, while the CBI’s report suggests companies are spending six times as much on innovation-related activities.

To better capture the range of activities that firms undertake, Jones is calling for an innovation scoreboard to accompany the DTI’s annual R&D scoreboard.

‘Government expresses strong support for business innovation, but most of it is focused at the R&D technology end,’ he said.

‘Service sector innovation may be more difficult to pin down, but as services now account for 70 per cent of the UK economy, government must put this sector on its innovation policy radar.’

Jones says that outside of policy changes, government could make the most impact on stimulating innovation in firms.

‘Government spending power is enormous – £125bn a year,’ he said. ‘It should engage with companies in a more informed way, buy more innovative goods and services, and get more involved with firms at an earlier stage in the procurement process.

Speaking at the CBI’s annual conference on Monday, Chancellor Gordon Brown promised further enhancements to R&D tax credits.

‘The pre-Budget report will report on changes and improvements we can make in the R&D tax credit,’ he said.

Researcher MORI carried out 173 interviews for the survey on behalf of the CBI.