National Innovation Plan

2 Headline manifesto commitments: -“Making the UK the best place in Europe to innovate, patent new ideas and grow a business” -“Making the UK the best place in the world to start and grow a business”

What is innovation? The application of knowledge to the production of goods and services to meet economic and social challenges 3 Type Product/service Process Business Model Marketing Who Entrepreneurs Universities Business Government How Open business environment Promoting collaboration, sharing ideas Supporting business R&D investment Increasing workforce skills Encouraging demand for innovation

What do we know? UK is seen as relatively strong on open, competitive markets -10 th in WEF Global Competitiveness Report -2 nd in Global Innovation Index (trade and competition 5 th, regulation 9 th, business environment 10 th ) UK has a relatively low spend on both public and private R&D -Spend less than OECD average (UK 1.6X% of GDP, Japan 3.47%, Germany 2.85%, US 2.73%) -Investment falling as a proportion of economic activity since 1980s R&D spend is concentrated in a very small number of companies and sectors -Top 4 sectors account for half of R&D (pharma 20%, ICT 12%, automotive 12%, aerospace 9%) -400 companies account for 80% of business R&D -Proportion of SMEs introducing new products or processes below EU average Most innovation is business to business -40% of businesses innovating have co-operation agreements, usually with customers (public and private sector) -Only 10% of ideas used by business come directly from university collaboration Need demanding customers -So called “frontier firms” have labour productivity that is ten times higher than others – gap growing over time 4

7 Priority Areas Regulation: where we should ask our regulators to drive innovation, and seek to make the UK the regulatory test-bed capital of Europe. Intellectual Property (IP): where we should support a more effective system for exploiting, trading and commercialising IP, remove the disincentives for university spin-outs and ensure our IP system keeps pace with a changing economy. Government driving innovation: where we should deliver real culture change with government acting as ‘first customer’, embedding a challenge-based approach to procurement, and substantially increasing the amount of government spending that results in innovative products, services and processes for citizens and taxpayers. Access to finance: where – as the world’s financial capital – the UK Government should work alongside the private sector to create the deepest pool of innovation finance in Europe, explore the potential to move towards the landmark figure of 3% of GDP being spent on R&D and further support our university sector to bring spin-outs to market. Data: where we need to put the UK at the forefront of open data opportunities, making sure that departmental R&D is open access and as effective as it can be. Challenger Businesses: where we should build on the success of the Challenger Business Programme by involving all departments in ensuring that the regulatory environment keeps pace to enable businesses to create new markets and services. And we should continue to strengthen the UK’s intellectual property rules. National infrastructure: where we should maximise the opportunities for innovation as we deliver high-quality infrastructure that unlocks economic opportunities. 5

Next Steps Survey closes on 30 May Citizen Space Results will be summarised and feasible ideas developed Publication – soon 6