Business innovators ′essential ingredient′ to the north east economic success

20 March 2017

CBI calls for higher R&D spending from business and Government

Innovative businesses in the North East must be given a greater opportunity to thrive and the UK Government must commit itself to spending more on research and development to deliver an economy fit for the 21st century. Evolving innovations, new technologies and developing expertise can help tackle many of today’s greatest challenges, while delivering more jobs and prosperity in the North East.

A new report from the CBI calls for a commitment to spending 3% of GDP on R&D by 2025 – a joint target to be met by the private sector and government. UK innovation spending is currently at 1.7% of GDP, well below the spending of many international rivals.

Sarah Glendinning, CBI North East Director, said:

“With Article 50 just around the corner and international competition catching us up, now is the time for firms to get innovating and get ahead.

“So UK business and government must start thinking what our economy needs to look like in the years ahead and set us on the road to higher spending in R&D.

“From self-driving vehicles and medical advances to the next generation of long-life battery energy storage, new technologies will shape the course of the next decade.

“Our business innovators are an essential ingredient to the future success of the North East.”

Businesses want to see the new Industrial Strategy Challenge Fund help spur greater collaboration between different sectors, supply chains, universities and firms of all sizes in the North East. Investing in innovation brings economic and social benefits that help improve lives and communities, meaning more first-rate firms, more jobs and attracting foreign investment.

North East businesses have their role to play and while 41% consider themselves as ‘innovation pioneers’, less than a tenth (8%) consider UK Government support for firms who want to innovate, as world-class.

Sarah Glendinning, CBI North East Director, said:

“We have a proud tradition of innovation and it’s essential that they continue to get on and show resilience as we strike a new relationship with the EU in the coming years.

“UK innovation has some great strengths – including ground-breaking research at our universities, but we need to get better at turning these into final products.

“For years, the UK has under-invested and this country’s spending on R&D has stagnated as more countries race ahead. We want to see a long-term commitment to business and government spending 3% of GDP on R&D.

“We want to see the Government and business community putting innovation at the very heart of our economic future. The Government has already taken positive steps and the new Industrial Strategy will provide a genuine opportunity to take a leap forward.”

Local case study
Northumbrian Water Group supplies 2.7 million customers in the North East with both water and sewerage services.
An industry-leading, innovative partnership between Northumbrian Water and data management specialists 1Spatial, will help to enhance response times for customers who experience problems with the sewer network in and around their properties.

The key benefits are:
• £8.75 million saved on survey costs for transferred networks, representing an 87% saving
• Mapping completed in 1/8 of the time originally planned
• Better data ensures better customer service and improved investment plans

Northumbrian Water (NWL) assumed responsibility for an estimated 13,500km of private drains and sewers when the law changed to transfer ownership from property owners to local water companies. However, only 5% of the inherited network was mapped. The partnership developed a series of rules to infer the missing information, based on limited records available and the expertise of staff.

Northumbrian Water estimated that using a traditional surveying process would have cost £10m in the first five years alone but the innovative partnership dramatically reduced both the time and cost of the project.

Heidi Mottram, Chief Executive of Northumbrian Water Group, said: “Research, development and innovation drive good practice and, as a company that prides itself on industry-leading levels of customer service, we constantly look to find new ways of doing things that are better, more efficient and provide great value.

“There are opportunities to innovate in all areas of any business. For us, the aim is always about how we can improve things for our customers, in terms of the services we provide, how we impact upon or even help to improve people’s finances through such measures as social tariffs, or how we work near their homes.

“Our work to digitally map the parts of the network that have come into our ownership in recent years means that we can react to and resolve issues close to our customers’ homes much more quickly. The added benefit of this innovation is that we are able to map the network in a fraction of the time and at a significantly reduced cost. This is great news for our customers and an example of the way we can do things differently and more effectively for the good of the people we serve.”

On the next steps to bolster the science and innovation ecosystem, the CBI is also calling for:
• The Government to explore what long-term incentives could be used to draw and retain science, technology, engineering and maths (STEM) graduates into teaching
• Ensure regulations are fit-for-purpose in sectors where disruptive firms and technologies are situated (e.g. travel and tech) to provide greater clarity for start-ups and offer a level playing field
• Improvements in public service procurement to allow businesses to help Government achieve their aims of improving outcomes and support sustainable public services
• The Government to work with partners across the North East to ensure that the new Industrial Strategy Challenge Fund complements existing initiatives and meets the needs of firms on the ground.

Across the UK, the CBI speaks on behalf of 190,000 businesses of all sizes and sectors. The CBI’s corporate members together employ nearly 7 million people, about one third of private sector-employees. With offices in the UK as well as representation in Brussels, Washington, Beijing and Delhi, the CBI communicates the British business voice around the world.

CBI Press Office is available 24 hours a day on 0207 395 8239, or email: press.office@cbi.org.uk. Follow the CBI (@CBItweets) and CBI Economics (@CBI_Economics) on Twitter.

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