Innovate UK: funding the future

Simon Edmonds, director of Innovate UK’s Manufacturing and Materials division, spoke to The Manufacturer about the investment and how it will work.

Edmonds: Sixty-nine per cent of all research and development in the economy happens in manufacturing across all sectors, so this is going to have a huge impact. It’s £4.7bn over four years, which means science and innovation are really going to benefit. That’s the biggest injection we’ve had in science and innovation funding for – technically – a hell of a long time!

How efficient will Innovate UK be at delivering such a huge investment effectively?

Innovate UK is an efficient organisation. We have just rationalised all our schemes. A report by Dame Ann Dowling (President of the Royal Academy of Engineering) a year ago said, it’s all very complex out there in the world of innovation and science funding, it needs to be simpler for the businesses that receive funds.

Now, we have just 10 competitions for funding, replacing all the myriad of little competitions that we had before. Second, this Industrial Strategy Fund will be for much larger challenges that lots of companies and organisations can contribute to.

For example, one of the projects highlighted in the Budget was an investment in batteries for the automotive sector. This is a massive challenge. By 2030, half of the cars we produce in the UK will be electric vehicles or plug-in hybrid versions of electric vehicles, which means that battery packs will replace engines.

That’s a huge job because out of all the engine plants we have currently, only one is a battery plant, run by Nissan. Every other carmaker, like Honda, Jaguar and Land Rover, is going to need batteries to replace engines. This is a major scale challenge.

We invented lithium-ion technology at Oxford University in the 1980s, so we still have that expertise. Now we need to improve the product, improve the power density, make batteries last longer, make them more stable, and really get the cost down.

We will have a product, which is made here, innovated here and all the cars that are produced here will use those battery packs. We will become a centre of expertise in this area and therefore, potentially, encourage inward investment and increased trade out of the UK, which is going to be important in the future.

And hopefully keep some of those car manufacturers that might be tempted to leave the UK after Brexit.

I think that is clearly in the minds of our Ministers. You know, the automotive sector is hugely successful here, very productive, with high quality jobs, and complex supply chains throughout the UK and in Europe. Keeping that intact must be a clear priority for Ministers.

In one of your policy papers last year before the June23 referendum, you said our aim must be to increase the number of companies who base their operations in the UK, and reduce the trade gap. That would be virtuous at any time, but of course, after Brexit, it becomes even more virtuous and imperative.

Yes, even more important. Before the referendum, we were already seeing signs that manufacturing is re-shoring. When I first came into government, into what was then the DTI, companies were offshoring and there was a constant stream of bad-news stories about companies moving production to China or India.

We are now seeing some of them return. A great example was McLaren a few weeks ago, announcing their second manufacturing plant in Sheffield alongside the AMRC (Advanced Manufacturing Research Centre, operated by Boeing and the University of Sheffield – part of the High Value Manufacturing Catapult sponsored by Innovate UK). McLaren is bringing very detailed and complex work back from Austria, and that’s extremely welcome.

Horizon 2020 is a European Union science research initiative that you say is going to be protected come what may. How can you guarantee that?

Well, it’s not me saying it, it’s the Chancellor. The government has set out very clearly that for certain European programmes, Horizon 2020 being one, they will honour all commitments entered into up until the point of Brexit.

Horizon 2020 is hugely important for the UK – 30% of Horizon 2020 funds that come to the UK fund projects with business. We have a whole network of people helping business work with the programme.

What’s more, there’s a neat little tool in Horizon 2020 called the SME Instrument, and actually more UK SMEs get funding from that than German ones! In the Prime Minister’s speech about the 12 points she wanted to achieve out of Brexit negotiations, access to scientific funding and big research programmes was one of her priorities.

It all now depends on how that negotiation goes. Innovate UK and the research councils will continue to make the case for Horizon 2020 to Ministers up until the point of exit. There is a good guarantee in place, but we need to be vigilant that during the negotiations we are not neglected or negotiated out.

You mentioned the SME Instrument, and of course growth-focused SMEs in the manufacturing sector are vital to our economy. Can you guarantee they will be given enough information and encouragement to take part in what is clearly a much-expanded programme of support for manufacturing?

Yes, we can. A huge amount of our funding also goes to SMEs and microbusinesses. There was a time when several of our research programmes were all pretty much directed at large corporates, which you can understand because government as an entity generally talks to big business and to big business associations.

However, over the past eight or nine years that has changed completely and we now fund more SMEs and microbusinesses, than large corporates or mid-sized organisations. Happily, our funding has increased over time so nobody feels out of balance, but as a percentage of grants, our funding is going a lot more to support SMEs, and it will continue to do so.