"The creation of DIUS is an exciting opportunity – bringing together skills and higher education with science and innovation"
FT Innovate 2007
12 November 2007
A lot has happened in the last 12 months since your last conference - not just new Prime Minister, but a new Department for Innovation Universities and Skills, the launch of the Technology Strategy Board and the creation of the Energy Technologies Institute.
I believe that these changes demonstrate a real commitment to transforming our innovation capability and performance.
The context
Why innovate? One word: change. A global economy. Climate change.
Extraordinary new technologies. People, money and knowledge ever more mobile. Huge emerging nations with justifiably great ambitions.
These are powerful forces; enough to make anyone feel insecure. And they can have the harshest impact on those least equipped to respond.
But what I know is that together we can respond. Today's changes can be tomorrow's opportunities.
The creation of DIUS is an exciting opportunity - bringing together skills and higher education with science and innovation...
- But only if we make the most of the talent and ability of every individual.
- Only if we carry out world class science, research and scholarship.
- Only if we turn fundamental research into world beating products and services.
Not just things to sell, but bringing the world solutions to sustainable energy, cures for diseases, answers to an ageing society.
That's how change becomes an opportunity.
Innovation in the UK
Let's not forget, we are in a strong position to rise to these challenges. We have strong economy, a healthy business sector, first class universities and a talented workforce.
I am delighted to report that investment is rising - according to the R&D scoreboard - which we published yesterday - there was 9% increase in R&D investment by leading UK firms - an investment totalling £21billion.
And R&D isn't the whole story - far from it.
According to a recent NESTA report, much of the innovation that takes place is not formally recorded in statistics. Despite not being measured, hidden innovation often represents the innovation that matters - the innovation that most directly contributes to the real practice and performance of a sector. For instance, it includes the development of new drilling techniques in oil production, back-office technologies in financial services, or new, more successful programmes for the rehabilitation of offenders.
Role of government
So, where does government fit it in? Picking winners? Second guessing business? Specifying what each sector of the economy should plan for?
Well before you head for the door, I can tell you we won't be doing that!
I want to work with business to create the right conditions for Innovation to flourish-:
- that's why we have already provided over £1.8billion in tax credits to companies who invest in R&D.
- that's why this year we are spending £3.4billion on science research
- that's why we have set up the new business led Technology Strategy Board
And...
- that's why we are working across government to make sure government spending really drives innovation
There is a clear role for public investment and that's why we have set up and are funding the Technology Strategy Board. But this isn't a government agency as you know it! It is fully business led.
The Board is strongly business focused. Both the Chairman and the newly appointed CEO are high profile appointments from the private sector.
We need to involve business to make sure that, we will maximise the impact of our investment. The Board will use their expertise to drive forward projects that will make a real difference to our economy and our quality of life.
It will deliver a programme of Government financial support through collaborative R&D and knowledge transfer to encourage business investment in technology across all sectors of the UK economy.
Their Innovation Platforms represent a new way of working for both Government and business. They provide an opportunity to bring business and Government closer together to generate more innovative solutions to major policy and societal challenges.
Open innovation
I am determined that, DIUS will be the primary advocate of innovation in Government. I want DIUS to lead thinking and policy-making on innovation across Government.
If we are to succeed, we need to look again at how develop policy. We are the Department for Innovation so we had better be innovative!
We have made a clear commitment to publishing a Science and Innovation Strategy in the Spring 2008. I regard this as a key priority. It will be a major opportunity to set out our direction and to reach out for new ideas.
So, how are we going to do this?
Another dry consultation paper? Not if I have anything to do it with it! This process will be different - it will feel different, it will look different, it will be different.
I'm determined that the internet needs to be a key part of this process. I'm not promising to invite you as my friend on Facebook just yet, - but I do want to engage with you through our website, through other websites, through the media and face to face at events and workshops.
I don't need to tell you that business has a long tradition of involving others in developing products and services. I believe we can learn from 'Open innovation' - the business model of the firm that determines what external information to bring inside, and what internal information to take outside.
Proctor & Gamble's open source model for innovation now generates 35% of the company's innovations - a figure they want to see rise to 50%. They are currently looking for products, packaging, technologies, processes and commercial connections that will result in game-changing innovation to address unmet consumer needs.
I am delighted that Proctor and Gamble are working with one of our delivery partners - NESTA - on their ground breaking 'Open Innovation Challenge'. This project aims to draw in exciting new ideas, whilst avoiding concerns over IP.
I want government to learn from this. I want to reach out to key partners, to businesses, to economists, to academics, to anyone who can inform our thinking and enhance our policy making.
If you have something to contribute, ideas to discuss, something to say to me - assuming it's not offensive! - I want to hear it!
That is the way I want to work and to develop our policy.
Skills
In order to innovate successfully, we need skills and expertise. It is clear to me that we will never realise the full potential of innovation without a workforce that has the skills it needs to rise to the challenge.
To compete in the global economy of the 21st century, we need a workforce with the skills to match the best in the world. A highly skilled workforce is a more productive one, a more adaptable one, and a more innovative one.
That is why we are investing so heavily in world class skills. We are investing more than £4.5bn a year in further education and training for adults.
Science and Society
But isn't just the workforce that we need to think about. I believe we need a society that is both enthused and excited by science, one where the public understands the value of science and its applications in today's society and can feel confident about how scientists are operating - where the public has a higher degree of scientific literacy.
My department is already active in this area - we support the Science Wise project, we support the National Science and Engineering Week but I recognise we need to more. I believe that now is the right time to review this with a view to doing more to communicate the value of science and innovation.
Meeting the toughest challenges we face
The challenges of climate change, economic stability, globalisation and the knowledge economy can seem overwhelming, but we need to recognise that Innovation is one of the best ways of tacking them.
My department is making £100 million available for collaborative research and development in a call for proposals in eight key technology areas opening this month. The investment will help combat climate change, it will boost our competitiveness and it will improve our healthcare.
- Low Carbon Technologies could help the development of systems to enable national grids to make the best use of local, small scale energy production and intermittent power sources.
- The Creative industries call will help to maintain the UK's position as a global leader in this area, it could help ensure that we are well placed to develop and produce future generations of video games and films.
- The Cell Therapies call has potential to make it easier to treat problems such as chronic wounds and possibly laying the foundations for new techniques that could in future help repair damaged organs.
Other calls include Technologies for Health; Advanced Lighting, Lasers and Displays; High Value Manufacturing; and Gathering Data in Complex Environments.
Growing investment
I recognise that we also need to continue to invest heavily in science research. Since 1997, we have increased the science budget dramatically - it has more than doubled to £3.4 billion in this financial year.
This research has improved the lives of people in the UK and abroad, boosting our prosperity, health and quality of life:
- It has helped uncover the structure and function of DNA that has since transformed the nature of forensic science.
- It has led to pioneering work on mobile communications and medical imaging.
- And it has also achieved major advances in our knowledge of environmental change.
Driving innovation across government
What else can we do? We can ensure Government procurement acts as a powerful stimulant to innovation. It is worth over £125 billion per year.
I want my Department to take a key role in ensuring that we use this position as a key customer to drive innovation in the goods and services that the public sector buys.
I realise we have to forge a new partnership with business. Both parties need to play their part: Business must provide the very best solutions and we need to design procurement so that it actually allows for innovative solutions.
This means change. It means involving business at every stage. We need involve business right at the start of the specification stage so that our eventual requirements promote and not stifle innovation.
My department is already working with the Office for Government Commerce, and has published guidance for policy makers and procurers on Finding and Procuring Innovative Solutions.
The future
I hope you'll agree, we are doing a great deal, but we have to do even more. That's why Science investment will increase to nearly £4 billion a year by 2010-11, triple what it was a decade ago.
We have announced a new package of support for technology and innovation in business, with £1 billion to support the Technology Strategy Board over the next three years. The Technology Strategy Board's Assisted Living Innovation Platform, launched last week will be funded from this. It is aimed at significantly advancing technology to meet society's increasing demand for independent living amongst those with long term conditions.
And the next couple of months will see the launch of a Low Impact Buildings Innovation Platform, focusing on improvements to the energy efficiency of new and existing build. This has been developed in close partnership with stakeholders including business, and government departments.
We are also committed to doubling the number of Knowledge Transfer Partnerships. These partnerships - business, working together with universities to generate new thinking are already a huge success. I am determined to get even more highly qualified science and technology graduates working with businesses to develop new products, services, and processes.
Conclusion
Innovation will be one of the key drivers of our prosperity in years and decades to come.
Without it, our industries will not be able to compete with the growing economic powers of East Asia.
Without that prosperity, it is hard to see how we will be able to achieve a more cohesive society and the wealth of aspiration that we all want to see.
We need to work together - government and business. Together we can meet the challenges and grasp the opportunities.
In the weeks and months ahead, I look forward to meeting and talking to many of you, either face to face or perhaps online as we implement the Sainsbury Review and take the debate beyond it. I want us to have the world's best innovation ecosystem. Together we can make it happen.
