NCUB Calls for Increased Government Support to Strengthen University-Business Collaboration

Decline in Private Sector R&D Investment Raises Concerns Over Innovation Growth

For decades, the United Kingdom has been a global leader in scientific discovery and technological innovation, building a reputation for excellence in research and development. However, this position is now under threat due to mounting challenges that hinder the scaling and retention of science and technology businesses. In light of these concerns, the House of Lords Science and Technology Committee has initiated an inquiry to investigate the root causes of these struggles. Responding to this call for evidence, the National Centre for Universities and Business (NCUB) has provided a comprehensive analysis, outlining key barriers to growth and recommending strategies to secure the UK's future as an innovation hub.

In its submission, NCUB underscored the vital role of collaboration between universities and businesses in advancing science and technology. Universities not only lead pioneering research but also play a crucial role in commercialising it through patents, licensing, and spinouts. Such partnerships are essential in transforming early-stage research into market-ready innovations, thereby driving progress across various sectors. Nevertheless, both universities and businesses are increasingly encountering difficulties in sustaining these collaborations. NCUB highlighted a 6% decline in real-terms private sector R&D investment between 2021 and 2023, amounting to £3.4 billion. This reduction signals inadequate government support for fostering innovation, which could ultimately impede national growth and technological advancement.

Further evidence of challenges within the UK’s innovation ecosystem was presented in the Department for Business and Trade’s 2023 Innovation Survey, which recorded a drop in 'innovation-active' firms from 45% (2018–2020) to 36% (2020–2022). Access to finance continues to be a major obstacle, particularly for small and medium-sized enterprises (SMEs). According to NCUB, citing the Scale Up Institute and its R&D taskforce led by Sir John Manzoni, many SMEs still struggle to obtain external R&D funding, with further insights expected soon.

Beyond investment concerns, the UK is also grappling with critical skills shortages. Data from the British Chambers of Commerce and the Open University in 2024 revealed that more than half of UK firms reported workforce gaps. The University of Birmingham projected that the cost of digital skills shortages could escalate from £4.4 billion in 2024 to £28 billion by 2030, potentially resulting in the loss of up to 385,000 full-time equivalent jobs.
Moreover, stricter policies on international students and immigration are exacerbating the skills crisis, making it increasingly difficult for businesses to attract and retain the talent necessary for expansion. Concurrently, universities face financial pressure, leading many to resort to contingency and redundancy measures. Although the recent tuition fee hike was perceived as a positive development, it remains a temporary solution rather than a long-term fix to persistent funding challenges. Stable institutional support is essential to sustain the foundational research required for effective scale-up in science and technology.

To address these pressing concerns, NCUB presented a range of recommendations aimed at enhancing the UK’s capacity to scale domestic businesses. Central to its proposals was the call for increased Government support for university-business collaboration, particularly through additional Higher Education Innovation Funding (HEIF) to counterbalance the loss of European Structural Investment Funding (ESIF). Strengthening such partnerships would bolster innovation capabilities and accelerate research commercialisation.

Furthermore, NCUB urged the Government to confront structural financial issues in higher education, highlighting the indispensable role of universities in research and talent development. While long-term strategic plans for the sector are anticipated this summer, the prevailing uncertainty is damaging confidence and disrupting planning. Swift and decisive governmental action is therefore imperative. Additionally, NCUB recommended streamlining the UK’s R&D ecosystem to enable businesses to more efficiently access resources and navigate funding opportunities. Regarding financial support, they welcomed the Government’s Mansion House reforms aimed at unlocking pension fund investment and advocated for bold and comprehensive measures to enhance public and private investment in scaling UK businesses.

Lastly, NCUB emphasised the importance of policies that facilitate talent mobility, urging the Government to maintain accessible pathways for international students and workers while fostering industry-academia exchanges. Such measures, they argued, are essential for innovators to access the expertise required for sustainable growth. Although immediate results may be elusive, NCUB acknowledged that political instability has shaken private investment confidence. However, they commended the Government’s new industrial strategy and 10-year R&D budgets for providing the long-term policy stability that businesses need. Addressing these barriers will be pivotal in ensuring the UK's continued global leadership in science and technology.

Editor’s Note:

The UK has long been known as a leader in science and technology, thanks to its top universities, advanced research, and strong innovation. But now, many problems are holding the country back. A recent inquiry by the House of Lords has revealed serious challenges that have been ignored for too long. It is worrying that private investment in research and development (R&D) has fallen by £3.4 billion, and fewer companies are actively innovating. Small businesses are finding it harder to get the funding they need for R&D, and universities are struggling with financial pressures. The main issue is that the UK is not providing a steady and supportive environment to turn research into real-world products and businesses. Complex rules, unclear government plans, and strict policies on international talent are all slowing down progress. If the UK wants to keep its place as a leader in innovation, it needs to take strong action. The Government should increase support for partnerships between universities and businesses, make it easier for companies to get R&D funding, and give clear, long-term plans for funding universities. It also needs to rethink how it attracts and keeps skilled workers from around the world; without the right talent, innovation will stop.

As per Skoobuzz, NCUB has given good ideas for how to fix these problems. The big question is whether the Government will be bold enough to make real changes, or if the UK will lose its edge in innovation.