Russell Group urges Government to maintain R&D investment to protect flow of new business and jobs

15 November 2022

Multi-million pound businesses that create jobs, grow the economy and make life-changing innovations a reality must be protected in the Autumn Statement, the Russell Group has said today (15 November 2022).

Wireless foetal heart rate monitors that are used around the world, pothole-repairing robots or greener washing machines that use less water and energy are just a few of the innovations developed by research at Russell Group universities and ‘spun out’ into successful businesses.

Companies like these are just one of the ways the UK’s world class R&D sector helps to boost growth, with many of them raising millions of pounds of private investment. They also create high-value, high skilled jobs as well as developing new products that help to improve people’s lives.

Ahead of the Autumn Statement, the Russell Group has urged the Government not to undermine this pipeline of new businesses by recommitting to its ambition to raise investment in R&D to £20bn by 2024/25 to help grow the economy, create jobs and build a resilient, ideas-driven, innovation nation that is ready to thrive no matter what challenges lie ahead

It is estimated that every pound of public investment crowds in between £2 and £2.34 of private investment, so the current target could crowd in £40 to £50bn of private investment.

By the same token, if Government were to reduce its £20bn commitment, or push the date for meeting it beyond 2024/25, billions of pounds of private investment could be lost – potentially over £2bn for every £1bn of public funding that is held back. In turn, this would also mean thousands of high value jobs not being created. Where companies have a choice to invest in the UK or overseas, even a delay to the public commitment rather than a cut could mean jobs being lost to the UK forever.

Alongside this, businesses spun out of research at Russell Group universities in 2021/22 created more than 30,000 jobs and almost £5bn of private investment in towns and cities across the UK.

Tim Bradshaw, Chief Executive of the group which represents 24 of the UK’s most research-intensive universities, said:

“Nobody is under any illusions about the difficult choices facing the Government right now but we can all agree that growth is the priority. 

“This is where the UK’s R&D sector is ready to play its part. Investment in our sector has been shown to deliver proven returns for the economy, crowding in billions of pounds of private investment and creating tens of thousands of highly skilled jobs.

“In recent months we have seen how investors can respond to decisions on public funding, which is why we are urging Government to maintain its R&D plans. Doing so not only underlines our ambitions to be a science superpower but shows investors that the UK is a stable place in which to do business and avoids damaging the long-term growth we need.”

Britain is a world leader in turning university research and academic ingenuity into commercial ventures. University spinouts are also more likely to succeed than other new businesses with only one in ten failing within five years, compared to over half of start-ups as a whole.

Many of these ventures are built on research that has been carried out over a number of years but because of the long-term approach universities can take and the unique ecosystem they provide for innovators and entrepreneurs, the rewards can be substantial.

Successful Russell Group spinouts include:

• Monicare Healthcare was started at the University of Nottingham, where researchers developed a new wireless foetal monitoring patch that is helping expectant mothers at more than 1,000 sites across Europe, Asia and America. Around 100,000 patients have benefited from the innovation. The research that would eventually lead to this breakthrough began in 1987 with patents filed in 1999 and 2003 before the tech was trialled and refined over a number of years before being sold to a healthcare company on 2017.
• At the University of Liverpool, researchers from its school of engineering are developing autonomous robotic platforms that can detect damage on the roads and perform repairs at lower cost and without the need to endanger maintenance crews. The project has attracted more than £1.2million of private investment in 18 months.
• Building on 30 years of research, an academic at the University of Leeds developed new technology for washing machines that saves 80% of water and up to 50% of energy. Xeros, the company formed to commercialise this breakthrough, raised £30m when it was floated on the London stock market. 
• At the University of Bristol, researchers developed a new technology platform to support the next generation of ‘smart insulin’ able to react and adapt to glucose levels, eliminating the risk of hypoglycaemia in diabetics. The company was sold in 2018 in a deal that could be worth around $800million – one of the biggest deals in the university’s history. 

Professor Neil Crout, interim Pro-Vice-Chancellor for Research and Knowledge Exchange, the University of Nottingham“, said:

Our mission is to have transformational impact on society and spinouts such as Monica Healthcare accelerate and deepen such impact. Research across the faculties of Engineering and Medicine into novel ways of electronically detecting foetal heartbeats began in 1987;  12 patents and decades later, many thousands of women around the world are experiencing safer childbirth. This journey underlines the essential role of R&D investment in nurturing discoveries and in turn attracting venture funding to scale up innovative technologies that change lives. “

Another successful Russell Group spinout is PsiQ. One of the University of Bristol’s first quantum spin-outs, it aimed to produce a commercial quantum computer that encoded information in photons, rather than electrons. However, it relocated to California because of the investment opportunities in the USA and its struggle to access infrastructure and funding here in the UK. It has subsequently raised $665m, with Microsoft a key investor.

In an attempt to prevent valuable quantum innovation businesses going elsewhere to seek the right infrastructure and more conducive ecosystem for start-ups, Bristol set up QTIC+, its own quantum technology innovation centre, which has subsequently supported around a third of all UK quantum start-ups since 2019.

The decision by Bristol shows the importance of having the right environment to encourage new start-ups, attract investors and ensure that the UK remains a global leader in science and innovation.

Jon Hunt, Executive Director of Research & Enterprise at the University of Bristol, said:

“We are living a very challenging economic environment but if the UK is serious about growth, it needs to invest, alongside the private sector, in ‘deep tech’. UK universities have a long track record in turning world-leading research into successful commercial ventures which can benefit global society and the UK economy.”