Policy 13: Improve access to Innovate UK grants

In collaboration with The Coalition for a Digital Economy (Coadec), we have produced a manifesto to make Britain the best place in the world to start and grow a business. It features 21 policies across three key policy areas: access to talent, access to investment, and regulation. We’re sharing the policies on our blog. To read the full manifesto, click here.

The cost of making UK research funding more professionalised in the past three decades has been to make it more bureaucratic and managerial as well.

This has meant that many innovative firms prefer not to bother with grants from Innovate UK, for example, because of the time and cost of applying and the amount of reporting necessary. The cumulative cost to all the applicants for any particular grant could be a sizeable per cent of the actual grant award: for example, 8 applicants spending 2.5% each on the application would be 25%.

Apart from the bureaucracy involved, it is not clear that research grants are very well targeted. Inevitably, many good projects will fail the approvals process, and application reviewers end up separating not just good from bad, but good from good, a more difficult and probably less valuable task.

There could also be clearer focus on Innovate UK’s reason for existing – the market failures, like uncaptured spillovers or collective action problems, that means that private investment may underfund innovation from society’s point of view.

To simplify and better-target grant funding, the next government should pilot a lottery-based funding system, where grant applications are reviewed to pass a certain threshold and those that do are entered into a funding lottery. The assessment could include whether there is a “market failure” case for support where for-profit VCs have decided not to, so that government funding has a clear purpose grounded in the economic case for supporting innovation.