Paradigm shift: Unlocking the power of physics innovation for a new industrial era

It would be hard to overstate the importance of innovation for tackling the COVID-19 pandemic—without the acceleration in scientific research, vaccine development, testing and production, we might very well be contemplating another winter spent in lockdown.

The remarkable success of the vaccine programme raises an interesting question. If the research community, business and government can come together so effectively to tackle COVID-19, would it be possible to make similarly rapid progress in tackling other economic and social challenges facing the UK over the coming years?

Earlier this year, the Institute of Physics* commissioned CBI Economics to explore the extent of innovation among businesses using physics-based technologies or research, to understand their motivations and the obstacles they face. The research sought to highlight how stimulating investment in ground-breaking physics research and innovation could help achieve the government’s target to raise public and private investment in R&D to 2.4% of GDP.

Physics-based technologies hold the answer to many of societies’ most pressing challenges. Just as physics was the driver of many of the greatest inventions of the 20^th century—such as nuclear energy, aviation, space & satellite technologies, or medical imaging—advances in physics are expected to drive many future innovations: zero-carbon energy generation and storage, materials recycling, autonomous transport, advanced robotics, digital twins, to name but a few.

To understand how firms that are developing such technologies see the innovation landscape, CBI Economics carried out a survey of over 300 innovative physics-based businesses across the UK and Ireland (with the support of Ibec, the Irish Business and Employers’ Confederation). The survey was supplemented by 10 case studies.

The research highlights some real success stories; companies that are doing truly amazing things, such as designing satellites to monitor the impact of climate change, using nanotechnology to build ever more powerful computers, or breaking new boundaries in cancer diagnostics and treatments.

Evidently, the UK is already home to some of the world’s most innovative and commercially successful businesses. But we can do even better. The UK simply does not do enough R&D and it lags behind on the successful commercialisation of ideas. The survey offers insights into why this might be the case.

• The biggest challenges were found to be the high direct costs associated with undertaking R&D/innovation activity, along with the inherent risks of doing so for businesses that are by their nature capital intensive, with long-term financing needs.
• The survey provides evidence of the high value placed on public support for facilitating physics-based R&D/innovation activity, particularly during the early stages when future returns are hard to demonstrate.
• With Covid-19 having disrupted R&D/innovation, direct public support is more important now than ever. Firms that have received public funding over the past five years were more likely to be planning to raise investment in R&D/innovation in the next five years than those that have received no public funding.
• The survey suggests setting out more long-term plans for public R&D spending could be an effective way for the government to give businesses the confidence they need to invest. Smarter taxation that rewards private sector investment and R&D would also help.
• Investing in the broader innovation system will be vital too, notably to address skills shortages, which were found to cause delays to projects, missed targets and missed opportunities.
• The research pinpoints future vulnerabilities for the economy, suggesting a lack of sufficient talent and funding at the manufacturing/commercialisation end of the innovation pipeline, which could mean missed opportunities for growth and exports.
• But the survey also delivered an encouraging message on the strength of collaboration within the innovation ecosystem, particularly outside the Greater South East. Firms in northern English regions, Scotland and the South West were more likely to face barriers to R&D/innovation activity, but they were also more likely to seek partnerships as a means of accessing the necessary skills, facilities and equipment.

These are important findings given the government’s recently published Innovation Strategy, which sends a message to businesses to make innovation central to everything they do and invites them to tell government what further steps are needed to help them do so. The research makes a good starting point for this conversation. By working together, government, businesses and the physics research and innovation community can help the UK realise the full societal and economic benefits of the new industrial era.

To read the full report, please follow this link.

* The Institute of Physics is the professional body and learned society for physics in the UK and Republic of Ireland. The IOP commissioned CBI Economics to conduct the research by surveying businesses that were actively engaged with physics technologies or research areas and that had undertaken innovation during the previous five years. The survey included both members and non-members of the CBI and Ibec.

CBI Economics’ unique blend of policy awareness, business insight and economics expertise allows us to produce work that resonates with both government and business. If you are interested in commissioning a piece of economic analysis, within innovation or another policy area, please contact us at [email protected].