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Recent figures from a government report show that there has been a 9% drop in the number of UK companies actively innovating, down from 45% in 2018-2020 to 36% in 2020-2022. As always, the detail is important as there are sector and size nuances which we will come back to, but overall this trend coupled with the drop in privately funded R&D is not good news for the UK government in its quest to be a science superpower. The effects of innovation on growth and productivity are shown by the regression analysis conducted by government statisticians, so it’s important stuff at the heart of the real economy. In fact you have to go back to 2008 for innovation figures this low. The National Centre for Universities and Business weighed in saying that the UK was missing out on attracting and building the companies that are critical for economic resilience and growth.
The value of R&D tax credits claimed has, however, increased from £6.3 to £7.1bn over the same period so the cost to the taxpayer has actually increased. The driver behind this is larger companies, 50% of whom are actively innovating compared to only 36% of SMEs. There are sector differences with transportation warehousing and storage mining and construction seeing the biggest drops and manufacture of computer, electrical and optical equipment and the manufacture of transport equipment remaining the most innovative industries. There are geographical differences as well with the usual north south split so it’s a mixed picture overall. One of the key statistics is the number of businesses receiving financial support from the UK central government for innovation activities which saw a fall from 6% in 2021 to 4% in 2023.
Some of this decline could be explained by the effects of Covid, with smaller businesses simply focusing their efforts on survival and recovery rather than innovation and larger ones having the capacity to continue innovating and accessing funding to do so.
It will be interesting to see if this trend is a blip or part of a longer term trend – is there a change underway currently with smaller businesses now able to innovate that will be picked up by the next report? Let’s hope so, but there is a potential solution worth exploring regardless. If smaller businesses were more aware of the grant funding available to them and also had the support in place to access that funding, could the picture be different. Also, this awareness could be targeted by sector, geography and size so that the message gets across to those that can benefit the most from grant funding. Here at getbusinessgrants.com we can see those trends in real time and offer specific slices of the grant pool to specific audiences.
It’s something that not only the government can help with. There is an ecosystem of funding and business support from banks to accountants that can make the real difference here alongside institutions such as The National Centre for Universities and Business so it would be encouraging to see them promoting the benefits of grant funding alongside their own messages.
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