20p for every pound: the value of the UK’s science base

Where’s the evidence? A common challenge laid down by scientists and skeptics to politicians who open their mouths and proclaim the latest ill thought out policy.

But the same challenge can also be made to those of us in the science community who call on the government to increase research funding because of our belief that it is critical for the economy. Aware of the need to back up claims with hard evidence, the Campaign for Science & Engineering (CaSE) and several learned societies have commissioned a report to investigate what economic benefits research funding leads to.

The Economic Significance of the UK Science Base”,  released last week, and authored by the leading economists, Jonathan Haskel (Imperial College),  Alan Hughes and Elif Bascavusoglu-Moreau (both University of Cambridge), makes the case that public research funding encourages private R&D investment and increases industrial productivity.  The report’s findings counter the arguments of those who claim that it is primarily private sector investment that leads to productive R&D.  It needn’t be a zero-sum game.  Public and private investment can be and often are complimentary and creating publicly-funded centres of excellence “crowds-in” private R&D by encouraging companies to relocate their labs nearby.

The headline figure is that (on average) every pound spent on research leads to an annual return of 20p, an encouraging amount. If public spending on science is compared to public spending on other infrastructure projects, then a 20% return is favourable indeed, and the authors stressed they considered this figure only a baseline amount. If public spending leads to greater private investment, then the rate of return would be higher still.

The demonstration of an economic return from science funding will be seen as a victory for science campaigners. There are, however, several policy implications that arise from the direct link between money spent and a rate of return due to increased productivity. The reports’ authors are silent on how this money should be spent and the calculations used were relatively blind to the nuances of the funding landscape.

If the 20% is only a baseline estimate, it is reasonable to ponder how it could be raised by pulling certain policy levers. Would the return vary much if funding was, for example, concentrated into a small number of Universities or technological “grand challenges” or weighted more to applied, rather than fundamental, research? An even more compelling result would be that the rate of return varies only slightly, or not at all, with how or where the money is used, just that the money is spent on science in the first place.

Beyond the economic arguments, the report dispels a number of myths about how universities engage with industry. There is something of a received wisdom that our academics remain aloof from commercial research and if only they stepped down from their ivory towers and became a bit more entrepreneurial then things would be better.

The data show otherwise. Most academics engage external groups with their research in one way or another (see Section 7 of this BIS report). Far from being averse to commercially-focused projects, nearly half are involved in joint research with industry or other external partners, with a similar number acting as consultants. Furthermore, university income from both activities and from others sources such as offering professional training continues to grow.

Fewer academics are involved licensing deals and spin-outs, and the income generated through the resulting revenue streams is dwarfed by industry funding for collaborative projects. Does this suggest the great push to create entrepreneurial academics has failed because of an unwillingness to get one’s hands dirty by commercialising research? No, rather that academics and businesses realise working together on a problem from the beginning is often better than Universities trying to sell their intellectual property to industry down the line.

Finally, the ability of our science base to drive economic growth depends on the capacity of industry to absorb and use the knowledge generated.  The fragility of our science industry has been put in the spotlight again recently with Pfizer’s approach to buy AstraZeneca.  Although the UK’s pharmaceutical industry remains one of our strongest industry sectors , it has already been rocked by (less publicised) closures to several major R&D facilities. Upstream, our manufacturing supply chain has, in parts, been “hollowed out” over the past two decades by plant shutdowns and company pull-outs. The risk is compounded by the fact that the UK has an exceptionally high level of foreign-owned research-active business compared to our competitor nations.  Although public funding can and does attract private investment, the damage from losing an AstraZeneca or an Ineos would take years to repair no matter how much we spend.

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One Response to 20p for every pound: the value of the UK’s science base

  1. Pingback: Record of the Week (Week of 5 May 2014) « STS Turntable

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