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the government’s ambitions for an favour rapid returns and lower risk
innovation-led low carbon economy. ventures. Government should develop
A focus on late-stage R&D will reap new mechanisms targeted to help
the returns from our investment in promising companies manage the
research, as long as the UK’s research financial risk associated with late-
base continues to thrive. Innovation stage R&D and leverage business
will happen irrespective of the UK’s investment, taking prototypes through
policies; what is at risk is the UK’s to commercial application.
ability to drive and benefit from it.
PEOPLE: access and availability of
HOW IS LATE-STAGE R&D CONDUCTED AND diverse people with the experience
WHERE CAN GOVERNMENT PLAY A ROLE? and expertise to deliver technical
Understanding the activities that and challenging projects to market.
underpin late-stage R&D and the Businesses will want to assemble the
motivations, incentives, resources best team to deliver their R&D projects.
and barriers, including policy levers Where large businesses may be able to
at government’s disposal, will help invest and build their own pipeline of
identify what actions can be taken to talent, sometimes despite government
ensure more late-stage R&D takes place policy, that option is not open to all.
in the UK. The report uses real-world The UK talent pool and pipeline,
examples to illustrate how different from early age education through to
businesses conduct late-stage R&D, the vocational learning, higher education
range of activities and the resources and lifelong adult learning, as well as
they draw upon. From interviews visa conditions for international talent,
with engineering businesses, five must compete internationally to attract
key common resources essential for R&D from multinationals and SMEs
conducting and managing the risks into the UK. It must also meet the
associated with late-stage R&D were needs of UK SMEs to incentivise them
identified. Government can influence to grow to scale in the UK.
each of these resources to encourage
business investment in late-stage R&D. PARTNERSHIPS: the relationships,
Access to shared and world class networks and collaborations that
public R&D infrastructures, as well enable access to skills, infrastructure,
THE DEVELOPMENT STAGE friendly regulatory and public sector reducing the burden placed on a
as a cooperative and innovation-
investment and customers,
environment, can support companies
single company through sharing
resources and expertise with others.
to demonstrate new products in use,
helping generate investment and
changing opportunities for companies
providing risk mitigation and certainty. Partnerships can provide game-
The UK should utilise infrastructure that lead to long-term growth in R&D
across the whole of the UK in a more investment in the UK. Government has
on support for late-stage R&D, an area creative way to test innovations, and a key role in building partnerships,
identified as a UK weakness. also to support innovation more widely particularly through public R&D
including through skills development, infrastructures. Government’s key
WHERE ARE WE NOW? regulation and public engagement. role in building networks should be
Many businesses choose global valued and incentivised by their KPIs.
locations for these high value late-stage INVESTMENT: the availability of Government-initiated, but industry-
R&D activities, from multinationals with funds and fiscal measures that enable led, activities and organisations, such
multiple R&D sites to mobile innovative businesses to allocate funding for late- as the Advanced Propulsion Centre
SMEs with growth ambitions. But stage R&D activities. It is appropriate and Aerospace Technology Institute,
existing UK support for late-stage that businesses assume significant support strategic R&D partnerships,
R&D is not meeting businesses’ needs financial risk for late-stage R&D, reaching out across supply chains to
and is considered poor compared to however due to significant ‘spill-over’ innovate and respond to the challenges
competitor countries. effects and global competition, there of the sector.
There is a choice to be made – enable is a compelling case for government
companies to take bold risks here, or involvement. Furthermore, a MARKET ENVIRONMENT: the
they will go elsewhere. With severe substantial body of evidence has policies and frameworks influencing
pressures on public finances, the shown that public investment in and producing opportunity or
impact of the Covid-19 pandemic on R&D ‘crowds-in’ private investment. challenge for companies conducting
businesses putting R&D investment at Funding support for late-stage R&D late-stage R&D and commercialising
risk and growing global competition, is viewed as a gap, with fewer public innovation, including regulation,
supporting businesses to manage the funding opportunities than for the trade policy, intellectual property, and
risks associated with late-stage R&D is earlier stages of R&D. The UK is government strategies.
a way of securing our future growth, also a challenging environment to The ecosystem in which businesses
as well as reaping the returns from our finance and raise private investment conduct R&D is broad and complex.
investment in research and delivering for late-stage R&D as investors often Government sets the tone and direction

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