We have just released our latest research report, a deep dive analysis into the performance of 18 years of Innovate UK investments, with successful applications for funding totalling over £9.8 billion over this period. ‘Innovate UK: The impact report’ examines funded projects using publicly available data. The data analysed includes 49,527 successful applications relating to 26,242 projects, from 17,698 separate organisations.
The role of Innovate UK as a lever for growth
Government is certainly bold in its ambition when it comes to the UK R&D agenda. This report focuses on one deployment mechanism in particular, Innovate UK, and asks how good Innovate UK is as an investor. Every single penny of government spend should be scrutinised to make sure that taxpayers are getting bang for their buck. Where it is working, how do we deploy more. And if it’s not – should it change?
There are some staggering findings in this report, not least when you consider the current narrative around levelling up, focused investment in target sectors and accountability.
The payback from investment needs to improve
60% of companies in our data set recorded a decrease in at least one of the four key measures after funding:
- Average company employee growth rate reduces to 4% post funding vs 21% pre funding
- Average company turnover growth rate stalls to 16% down from 23% pre funding
- Number of companies with improving net worth reduces by 7 percentage points post funding
- Number of companies with improving tax liability increases by 2 percentage points post funding
There is an opportunity for Innovate UK to play a role in “levelling up”
- 64% of Innovate UK funding for commercial entities awarded to companies in southern regions (South East, London, South West, East of England)
- The South West, London and the South East are among regions with the highest average funding per application, ranking first, second and fifth
Call for greater accountability around Innovate UK’s lack of publicly available data
A 7x return is a big claim for any sort of investor. It would be great to see some form of calculation to justify this claimed benefit from Innovate UK.
- £293 million of Innovate UK funding committed to 2,270 companies now dissolved — 5% of the total funding to commercial entities
- £1.05 billion invested in 2,630 companies identified as being at high risk of dissolution** — 18% of Innovate UK’s funding to commercial entities
- £206 million (6% of the total funding for commercial entities) remains unpaid once the project is complete
And frankly the data isn’t readily available. Our analysis is based on the 25% sample with enough data to model. I would be surprised if the trends were inaccurate, but surely we should be able to fully access the whole picture.
Which commercial entities have benefitted most.
Extraordinarily, data finds that large businesses take 32% of the funds — Rolls-Royce PLC has received 11.73% of all Innovate UK funding to commercial entities — which either underlines the importance of collaboration and the role large organisations play, or questions if the process is a level playing field for smaller businesses.
I hope you find this report insightful and helps push the conversation forward. It is in everyone’s interest to find the best way for government to invest in innovation.