Recently I came across Sir Andrew Witty’s report that wants to ‘encourage a British Invention Revolution’.
Since then, I have been looking for energy production and consumption data and came across the Annual Business Survey by the Office of National Statistics. It shows why the UK is unique with its SMEs:
Country/continent of owner no. Of Businesses Turnover Average Turnover
Africa 154 6,006 39.0
America (N & S) 7,142 405,773 56.8
Asia 1,911 122,305 64.0
Europe (excluding UK) 11,263 671,411 59.6
Oceania and Antarctica 634 14,484 22.8
Non UK total / av T/O 21,104 1,219,980 57.8
UK 1,920,337 3,341,542 1.74
An experienced small business lobbyist and publisher of NSWG writes:
“So the average turnover is low. However, there are 400,000 farms, most scarcely making any money; the average turnover around here is only about £100k / per farm, and this is one of the of the most profitable agricultural areas in the UK.
There’s 150,000 consultants / one man bands and the average turnover again is low. There’s over 500,000 corner shops, washing machine repair men, window cleaners, IT repairers, TV aerial installers, garage mechanics – and the like. A large number of listed companies are dormant.
My point is, all countries have this large base of relatively low turnover industries “at home” it just seems to me to be a unique case in that the UK allows large scale operations here by companies of non – UK ownership while most European and Asian countries do not.
The upshot of which includes: no corporation tax, profits are declared in the lowest possible tax haven; no support to the UK SME base as “overseas” firms look to their own countries as their supply base (even in the washrooms at Nissan in Sunderland the soap is imported from Japan). No obligation to train staff, join apprenticeship schemes – just come in, pick the best people, and make money.”
By contrast: the CEO of a GSK without SME experience writes what I am criticising here:
1. Give universities bigger role in growing economy
This is the title under which Sir Andrew Witty’s report is published by the Government. He and his panel of expert professors do not, however, address how either employment or the value of goods and services would grow through their ten recommendations. They just make the assertion “Universities have extraordinary potential to enhance economic growth.” The commonly used growth measure is GDP. But would GDP be improved by
- making £1 billion available over the life time of the next Parliament for ‘Arrow Projects’,
- the government spending £250 million per year to Higher Education Funding [HEIF]
- and Local Enterprise Partnerships [LEPs], the Technology Strategy Board [TSB] and UK Trade & Investment [UKTI] embracing ‘industrial strategy’ and ‘third mission’ as objectives?
Assuming economic growth is an acceptable mantra, both the sums and the sources of money ought to be investigated. However, economists are social scientists and don’t teach what ‘money’ is. Neither do they propose how ‘economic growth’ can co-exist with ‘austerity cuts’. But 2014 will be the anniversary of WWI as well as one of the best kept secrets in UK history: the Bradbury Pound: ‘treasury money’ issued free of interest – like all Cash – to complement ‘bank money’ aka interest-bearing Credit. A summary of all currently known texts is on Bradbury Pound: the historic precedent for public or green credit. They include:
- Government Debt and the Creation of Credit – a 50-page booklet published by the Economic Research Council in 1981
- John Bradbury and Thomas Paine – an historic article by the author of the History of Usury
- Warmongers, Newspapers and the Ruling Class – 1891 – 1914 under the looking glass.
The Forum for Stable Currencies has been advocating public credit – such as the Bradbury Pound – as the best avenue for economic growth through Early Day Motions and submissions to Select Committees. In addition to proposing this source of money to grow the economy most effectively, further considerations are suggested below.
2. Funding Innovative Start-Ups and R&D for existing SMEs
As the typical lone inventor, I have explored funding opportunities for start-ups across the full spectrum, from Research Councils to venture capitalists. This includes crowdfunding as one of the most visible signs for web technology creating new finance and changing funding culture. I have made applications to the TSB since it was launched and have seen my confidentiality agreements violated by the Greater London Authority. I was advised to with draw my five patent applications and am familiar with the challenges expressed by the SME Innovation Alliance (SMEIA), one of whose members burned his patents outside Westminster and publishes Don’t Patent It. SMEIA members have told government on many occasions:
- That funding is required for R & D;
- That patent violation needs to be made a criminal offence;
- That banking facilities should support rather than bankrupt SMEs.
Before this report, the assumption was that innovation comes from academia and money from industry. This report now relies on
- innovation coming from SMEs;
- funding from government to support collaborative projects between universities and SMEs;
- ‘economic growth’ and ‘industrial strategy’ as drivers of innovation.
If government cared for the real economy of the nation, rather than the financial economy of the City, it would use the centenary of WWI and the Bradbury Pound to
- fund Arrow Projects and HEIF
- thereby implementing recommendations 3 and 4 of the Witty Report
- and facilitate a strategy of innovation and entrepreneurship
- to mitigate financial risks in an inherently risk averse culture
- to test whether potential products and services are desirable and attract potential customers.
- set up an SME Investment Bank online
- set up web portals for project evaluation and ‘crowd research’
Special focus groups of the PSL Think Tank and SMEIA are likely to be more effective than committees populated by academics and big business to foster the SME culture inherent in the UK.
The Recommendations of Sir Witty’s Report
Economic Growth: a core strategic goal
1. ‘Third Mission’ to facilitate economic growth as core strategic goal
Universities have extraordinary potential to enhance economic growth. Incentives should be strengthened to encourage maximum engagement in an enhanced Third Mission alongside Research and Education, and universities should make facilitating economic growth a core strategic goal. Universities should report their Third Mission activity, for inclusion in an annual report to the Government which also identifies impediments to this activity, with recommendations as to where the Government could act to remove these. Each year the Government should publish its response to these reports and recommendations.
2. Research indicators for prospective investors
Prospective investors in research should have online access to as much information as possible as to where there is research strength. This should include identifying research by sector and technology, and where possible by the businesses and charities funding it. It should also include further development of indicators such as citation-based measures of research strength by sector.
Arrow Projects: for advancing Industrial Strategy
3. £1 billion over the Life of the next Parliament
The Government should establish a funding stream worth at least £1 billion over the life of the next Parliament available to Arrow Project consortium bids where:
- there is a credible prospect of technology offering the UK comparative advantage in international markets
- the collaboration includes the key research centres, their LEPs or devolved equivalents, and private sector partners, with funding from the latter two
- there are robust research/development/economic outcome metrics.
Funding for bids should be decided through independent assessment by a panel of leading figures from industry, academia and government. Most weight should be given to proposals which advance the Industrial Strategy.
Collaboration between Universities and SMEs
4. Long term commitment to HEIF. [£250 million / year]
In order to strengthen the incentives on universities to engage with innovative SMEs the Government should make an explicit long-term commitment to HEIF, which should increase to £250 million a year. It should be adjusted so that:
- Institutions’ HEIF strategies show how all local SMEs that could benefit from working with an HEI are enabled to do so.
- The five-year allocation period does not entail excluding institutions which do not qualify for more than a year.
The method of determining institutions’ allocations should be reviewed to sharpen the incentive to engage with innovative SMEs. The impact weighting in the Research Excellence Framework should be increased to 25% in the next REF, strengthening the incentive on universities to achieve effects such as benefits to local businesses.
5. Single Point of Entry for SMEs
Universities should put in place a single point of entry for SMEs that ‘triages’ their needs and directs them to the relevant part of the university. This point of entry should also look to drive up SME demand and engagement, and work with external partners across the locality, as well as within the university. University business schools should be incentivised to prioritise working directly with local businesses on workable solutions to practical problems.
Local Enterprise Partnerships (LEPs)
6. Local Enterprise Partnerships as Funders
LEPs have up to €1 billion of European Structural and Investment Funds to invest in innovation. They should look to direct a large share of innovation funding towards excellent universities and research centres in order to nurture sustainable growth founded in comparative advantage, including through universities supporting innovative SMEs in their localities. LEPs should do this within frameworks which relate funding to economic outcomes. They should collaborate, and support university collaborations, beyond their own areas wherever these will deliver an economic or research benefit.
7. The Governance of Local Enterprise Partnerships
Ministers should write to the chairs of all LEPs with universities in their areas setting out the expectation that these LEPs should have a university presence on the Board. Where a LEP is participating in an Arrow Project led by a university in its area then it may well be appropriate for the university to provide co-chairmanship of the LEP. University members should be prominent in, and may often chair, LEPs’ Innovation or R&D and Innovation sub-committees.
8. Getting the Best out of Local Enterprise Partnerships
The Government should ensure that all the funds available to LEPs to invest in Innovation and R&D are spent on these areas. It should establish an authoritative advisory capability to advise it and LEPs and other relevant decision-takers on how strongly LEP proposals are based in a sound assessment of comparative advantage, and to identify and communicate the best practice of the most effective of LEPs so that the Government and LEPs can work to bring all LEPs up to the level of the best.
Technology Strategy Board
9. TSB to include Arrow proposals plus
The Technology Strategy Board’s objectives should include advancing national strategic economic priorities so that its contribution to the Industrial Strategy, to Arrow Projects and to the growth priorities of the devolved administrations is central to its accountability for its performance. This role should include:
- Supporting and advising on the development of Arrow proposals
- Identifying and taking opportunities to ensure its programmes benefit Arrow Projects
- Contributing to the assessment of bids for Arrow status
- Building awareness on innovative capability within each LEP area and sharing its knowledge to help make LEP local economic plans as strong as possible.
UK Trade & Investment
10. UKTI objectives to include Industrial Strategy plus
UKTI’s objectives should include advancing national strategic economic priorities so that its contributions to our national SME export performance, to the Industrial Strategy, to Arrow Projects and to the growth priorities of the devolved administrations are central to its accountability for its performance, with associated metrics relating to exports and/or overseas investment. It should assign dedicated resources to these priorities, in each case located so as best to work alongside the key businesses and universities.
- 2012 is a year of growth for SMEs (hiscox.co.uk)
- Universities ‘can drive economy’ (bbc.co.uk)
- Call for universities to work together (thetimes.co.uk)
- GlaxoSmithKline boss calls for £1bn university fund to back invention (theguardian.com)
- Summary Of Sir Andrew Witty’s report . Universities to co-chair LEPs? @The39LEPs @TheLEPNetwork #witty #LEPs (jasonijsmith.com)
- Should universities lead innovation? (universityworldnews.com)
- In with the new (telegraph.co.uk)
- How UK business can succeed in the global marketplace (telegraph.co.uk)
- Call for £1bn university fund to back invention (universityworldnews.com)
- GlaxoSmithKline Chief Calls for ??1 Billion University Fund to Back Innovation (biospace.com)