Sir Andrew Mackenzie, chair of UK Research and Innovation discussing catalysing growth throughout the entire UK, and on funding things that leverage investment from the private sector to stimulate innovation and growth.
Full speech transcript
I had quite a few remarks prepared to start off with, but actually most of that was covered this morning. So I’m going to be pretty brief. I hope you appreciate that.
And then hopefully we’ll tease a lot more out in questions with Graham and with yourself. It’s kind of interesting because I’m very much here to represent the public sector, but most of my life has been in the private sector. But it gives me a particular window.
I mean, I come to it with really a very strong belief about innovation, and that’s based not in just what I observe, but in much as what I have studied of economic history. And that ideas matter, connected with the right culture and so on, as much as capital, if you’re going to drive economic growth. If you don’t have the ideas, you have nothing to invest in, so no economic growth.
And actually, despite somebody who’s come from the private sector, I am a strong believer that the origination of some of the best ideas, in fact, the most powerful ideas, probably comes from the public sector. And actually, when I think about the ideas generation within the public sector, or at least their nurturing, it’s actually a lot bigger number that the government, on our behalf, is investing annually than you might think.
Now, I chair UKRI. Our government annual grant, which we invest, obviously, through all the research councils and Innovate UK, is around, or just short of, trying to settle this at the moment, about £10 billion. But a lot of other R&D is given to the departments, and those departments sometimes do their own work, but quite often, they then commission that work to be done by UKRI. And that kind of doubles the spend to £20bn.
But actually, when you take a step back more widely, and you look at all the things that I see within the innovation system that the public sector is contributing, it’s more like three times that, or a bit more than that, because I’m adding in a number of other very important institutions, like the British Business Bank, like the New Wealth Fund. Quite a lot is given in R&D tax credits. There’s a lot that is given in export promotion.
And you could say that some parts of the public sector pensions investments should be being used as a form of innovation. So it’s an incredibly large number, £60-65 billion annually, that the government notionally controls and tries to understand that system. But I would put it to you that right now, whilst diversity can be a strength, it gives you greater flexibility, it also leads, in my observation, to quite a dilution of impact.
And I’m trying very hard, and we can talk about that, to try and understand this system better, to really understand the system of innovation so we know the levers to pull, certainly for broadly described economic growth. But there are other issues to deal with, like regional inequalities, poverty, a lot of other things that you might want to know, what are the big levers to pull, and be a bit more coherent about it rather than just diversity for diversity’s sake. I’m going to hand over to Saul in a moment because I just would much rather have a conversation about that.
But obviously, this morning, we’ve heard an awful lot about trying to work better across the public-private interface. And, you know, I’m into that. I would just call out, not an action list of 15 things, but just two things that I find very striking.
And one of them is the role of universities in this whole system, and generally within the UK or any country, in my view. And we’re hearing better and better examples of them owning the challenge I would give them. But I think we really have to force the issue that they are part of the economic powerhouse of the country.
And they should be managed that way, they should be run that way. You know, we’ve got many people from the university there. Of course, we want excellence in skills development, in teaching, and indeed, research in its academic sense.
But I do actually think it’s very important, and I challenge university leaders on this, are you doing enough to make sure you’re equipping your students and staff with the right mix of skills and research experience to be part of the economic growth engine of the country? And crucially, are you making sure that they are getting the opportunities and intellectual property to connect with finance entrepreneurs and industry? And some do, some don’t. It’s getting a lot better. Even in my short time of chair, I think I’ve seen quite a big shift.
But I do think there is more to do. So that’s my first point. And my second point is that we have said this morning sometimes, oh, we’ve got all the skills, we just need the money, we just need to connect them.
We actually don’t have all the skills. In my view, we have a dearth of skills. I know we try hard at really figuring out, in my mind, how we can actually attract more private sector money into the whole research innovation system that I’ve described.
Because that private sector money, if you look at the money that’s being managed at the moment in London, is 100 times, at least, about 100 times, the sort of 65 billion, which is still enormous, that is invested by the government. And it does give them great public policy leverage. But actually, if you can connect to that, and we don’t really have a lot of the skills in our public sector to do that as well as we should.
But, and I’m going to throw the ball to Saul, I don’t think the private sector has it either. I don’t actually think they know how to, in the way that we need it for the growth that the country needs, know how to spot the things to invest in, how to invest them, how to nurture those people. But actually, from a private sector, I think, actually to sell those investments to things that your pension should be invested in.
