Taxpayers, civil service and government – the real machinery of innovation?

The taxpayers, civil service and government – the real machinery of innovation?

If one was to believe Peter Thiel’s version of where innovation comes from, you’d think public sector-driven innovation has flat-lined whilst the private sector has been, and is, leading the charge to make ‘real’ things happen.

This was my take away when, as a civil servant, I was sitting in the Cabinet Office listening to Peter Thiel’s address on how we can unlock innovation in the economy. This took place in Spring 2015 as civil servants began evaluating their operations in preparation for the Spending Review.

It has been no surprise that this government has concentrated its efforts on reducing spending, but in its attempt to stimulate growth it is also narrowing the role of government itself. This ‘narrowing of government’ isn’t a by-product or accident but a deliberate course of action, taking us closer to a new paradigm where the state is reduced to acting only in the event of market failure with no positive role of its own.

This line of thinking could have major repercussions for the world of science and technology as we know it. Take the Research Excellence Framework (REF), an assessment of UK research that is conducted every six years, by which research funding is allocated to universities. In the eyes of many, this is a monolithic and bureaucratic system and costs the taxpayer £246million, against £10.2billion in funding which is allocated using the framework results.

It is exactly activities like these that are under scrutiny, with some labelling the REF as a cloak of inefficiencies in the sector. If the government backed away would this lead to better models of self-financed research at universities? Could private sector organisations fill the gap on the research the economy needs?

The theory is that if government no longer engages in long-term meddling but reacts only as a corrective force, the country as a whole can operate with greater efficiency, prosperity and spend less of the taxpayers’ money.

Sounds good, right? But this isn’t how states function. Innovation does not come from not investing. The “new normal” will have a direct impact on the future of science, technology and our potential economic upside.

Mariana Muzzcato addresses this in her book The Entrepreneurial State, where she cites many examples in sectors as diverse as biotech, green tech, pharmaceuticals, where governments have led the way in making risky investments that the private sector has otherwise shied away from. One of the most well-known of those is Siri, the voice interface technology used in Apple’s iPhone, an innovation that was funded by the US government.

Far from the traditional picture that is too often painted, Muzzcato argues that it is government, rather than the private sector, that is most likely to take a ‘leap of faith’ and stimulate the growth of new industries and sectors.

What technologists such as Peter Thiel, Eric Schmidt and others forget is that they are beneficiaries of knowledge spillover – whereby government investments in universities and other institutions has led to the creation of new ideas and knowledge that have then been commercialised, give birth to the likes of Google.

It should worry us then, that as the government works to meet its deficit reduction targets major channels of research funding, such as the core Science Budget, which supports university-based research, may not be immune. We will learn more on 25 November, but in the meanwhile there are other questions for the research community and policy-makers to consider that may explain how we arrived at this state.

The private sector has always been notoriously good at lobbying government in support of narrow interests. It is commonplace for industries to achieve tax exemptions, subsides on new products and support for dying industries such as heavy steel manufacturing. In contrast, the research community is seen less frequently within Whitehall to press upon issues that most affect them.

It is also well documented that our elected representatives within Parliament often come from private sector backgrounds, including lawyers, corporate professionals and investors with little to no representation from the research and science professions. George Osbourne says that the public sector is ‘crowding out’ the private sector, but, ironically, it is perhaps the voice of publically funded scientists and researchers that are least heard today. What’s more, with the ongoing cuts in government departments, the civil service may not have the capacity to think critically about the needs of science and enterprise.

The story of innovation and its relationship to state funding is increasingly told by private sector technologists. At a time when the civil service is being shrunk and state spending is under review the scientific community need to have a proactive and authoritative voice in describing their achievements and visions for the future of research.


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