From the TUC

Productivity and the 2016 Autumn Statement: an antidote to Brexit?

23 Nov 2016, by in Economics

Philip Hammond committed to raising productivity in today’s Autumn Statement. A National Productivity Investment Fund worth £23bn will focus on infrastructure, including digital communications, and research and development. £23bn sounds like a lot of money; as Geoff has blogged elsewhere, it is actually less than it sounds, but it is a step in the right direction and so it should be welcomed.

Within the National Productivity Investment Fund, the government is providing an additional £4.7bn for research and development funding by 2020-21. This is described in the Autumn Statement report, the publication that accompanies the Chancellor’s statement to Parliament, as “an increase of around 20% to total government R&D spending, and more than any increase in any Parliament since 1979”. It includes:

  • An Industrial Strategy Challenge Fund, to support collaborations between business and the UK’s science base, which will set identifiable challenges for UK researchers to tackle. Modelled on the US’s Defence Advanced Research Projects Agency (DARPA) programme, it will cover a broad range of technologies, to be decided by an evidence-based process;
  • Additional funding to increase innovation, applied science and research. Once established, the new UK Research and Innovation (UKRI) body, which will bring together the seven existing research councils, will award funding on the basis of national excellence.

Today’s announcement is undeniably good news. DARPA has long been admired for its scope and its innovative potential. In the last months of the previous Labour Government, and taken up by the Coalition, the UK borrowed the idea of the German Fraunhofer Institutes to create its own version, known as Catapult Centres. Having taken a short while to get off the ground, Catapults are now universally recognised as being vital to future innovative development. Let’s hope the Industrial Strategy Challenge Fund enjoys the same success.

Two things should be borne in mind, however. First, whilst more money for infrastructure and R&D is vital, there is more to productivity improvements than funding. The TUC has highlighted the role of work organisation and high performance management systems, which have been shown to improve performance. We are also very keen on the role that a workers voice has to play in improving productivity. Moves by the Prime Minister to water down her previously-promised workers on boards proposal this week bodes ill for boosting productivity in this way.

Second, the shadow looming over today’s Autumn Statement is, of course, Brexit. At the launch of the IPPR’s Commission on Economic Justice last week, the industrialist Juergen Maier, who is the Managing Director of Siemens UK, said that industrial strategy is a powerful antidote to Brexit. I suspect today’s announcements were made, at least in part, to show the UK is open for business following the vote to leave the EU.

With this in mind, the two most important issues facing UK science are adequate funding, which the Autumn Statement addresses, and UK access to European science funding, which it doesn’t (and can’t). So I welcome today’s funding for research, development and science, but the TUC will keep pushing for Brexit negotiations to guarantee that whatever follows Horizon 2020, the EU’s flagship research and innovation programme which ends in four years, will cover UK science and UK scientists. Failure to achieve this outcome will seriously undermine UK attempts to remain at the cutting edge of science and innovation in the decades to come.

One Response to Productivity and the 2016 Autumn Statement: an antidote to Brexit?

  1. An Autumn Statement for Everyone? Looks like we’ll have to wait for spring
    Nov 23rd 2016, 5:42 pm

    […] little to see yet. More Research and Development spending is welcome (as Tim Page sets out here), though we need to do more to make sure this is concentrated on jobs across the country – at the […]