UKRI’s theory of growth is not what we think
A decade of political upheaval has seen one economic responsibility after another parked at UKRI’s door. And Burnham’s devolution agenda might be an even more radical transformation
One of the noticeable things about the Burnham government is that it has a theory of the economy absent from many of its predecessors. The coalition government of Cameron and Clegg had austerity; Theresa May had something about people just about managing; Boris Johnson had levelling up, which became so broad as to mean nothing; Liz Truss had an idea of such wild execution it decapitated the economy; Rishi Sunak had some stuff about deregulation and growth; and Keir Starmer had missions until he got bored of them and the country got bored of him.
From the end of the Cameron years to the start of the Burnham era there has been this kind of flat mass of nothingness occasionally punctuated by the odd slogan masquerading as policy. It’s not just that policymaking in these governments was incoherent or dull – though Starmer’s five missions and three pillars were particularly dull – it’s that without direction the arms of the state are left flailing to hold on to the next idea to build an agenda around.
These arms are then allowed to pull in opposite directions, and before you know it Britain is going to level up the economy, kick woke out of research, be a science superpower, or whatever else can move a headline on until the next ideas come along.
This frenetic approach to policymaking is bad generally – but it is particularly bad for research. The nature of R&D is that it depends on spending significant amounts of money today to realise uncertain benefits in the future. It isn’t a hose that can easily be redirected toward whichever economic fire needs putting out. It is a dripping tap that with enough time will eventually erode the sediments of society's biggest problems. Without clear direction water leaks everywhere, never achieving much beyond extinguishing the next headline.
The constant change also erodes the confidence of stakeholders within the system. Universities and research institutions respond to the incentives in front of them. Sometimes this is cosmetic, like relabelling existing local research projects as levelling up. Sometimes it is a significant investment into an idea which has had its time.
It is policy coherence which provides the confidence for long-term investment within and outside of government. The internal benefit of clarity cannot be overlooked. Government is not one thing, but rather an ecosystem of people, departments, and arm’s-length bodies working together. If success is about coherence then coherence can only be wrought by clarity of purpose. Starmer’s mission of the UK having the highest growth in the G7 didn’t work rhetorically as it was unclear how each component of government would contribute to that mission. Austerity under the coalition will be remembered long after Starmer, since cutting public spending is a much easier message to digest.
Burnham’s economic theory is indistinguishable from his governing one: devolve power, reindustrialise the economy, and generate growth in every postcode. It clearly has conflicting policy implications – how devolution and directive national spending fit together is unclear – but it has a guiding message behind it. Give power away, let local people make decisions, and from that should come growth. Whether it works remains to be seen, but it gives a framework all parts of government can work in.
An enormous list
The success of this approach will not only depend on the quality of the message but how well it is received and turned into work. As part of Research Agenda’s UKRI transformed event later this week I will be interviewing Stian Westlake, executive chair of the Economic and Social Research Council. There is a lot to chew over regarding UKRI’s new approach, buckets, and how technology will disrupt and enhance the work of the UK’s largest funder of research – but I am particularly interested in how a semi-autonomous funding body responds to shifting government agendas, particularly as this current shift looks so consequential.
One of the frequent criticisms of UKRI, and to be fair of funders generally, is that they try to do too much and spread funding too thinly. This is almost certainly true – but it is also the case that funders respond to the changing whims of elected politicians. Whether by accident or intentionally, UKRI today looks like a body which has a morass of economic objectives. But if you squint hard enough, has a more coherent economic mission than many would give it credit for.
The list of economic outcomes UKRI is trying to achieve is enormous. A canter through its new strategy is instructive: industry gains, creating quality jobs, growth (regionally and nationally), helping innovative companies, tackling regional inequalities, creating new markets, raising living standards, fuelling economic competitiveness, attracting investment, fuelling social impact, growing the cultural economy, and enhancing economic resilience. To examine this enormous list is to see UKRI’s mission as changing everything everywhere – and appreciate how hard it is to keep its multiple stakeholders happy even some of the time.
These are all economic outcomes: the differences which UKRI is trying to achieve in the world. It is interesting, then, that while UKRI is trying to position its work around outcomes, much of the debate over its work often centres on output. Discussion is usually on the kinds of funding that UKRI should distribute. Usually, this is an argument about whether UKRI should focus more on applied or discovery research, or whether too much or too little funding is going to universities, or whether funding should flow to one technology over another. These debates are important – but the application of the funding is different from its purpose.
Although UKRI’s growth to-do list is enormous, it does have a logic to it if viewed as encompassing discrete economic goods. Through its various interventions UKRI is trying to achieve four things.
First, to create markets where a market does not otherwise exist. In the long run UKRI funds researchers and entrepreneurs who will create businesses, which in turn will create demand for other sectors of the economy. Less often, UKRI employs advance market commitments to promise to buy a product before it is launched to market. As in the case with Innovate UK and its commitment to buy low-carbon concrete these mechanisms are particularly helpful where products are not yet commercially viable but hold large potential.
The second economic purpose is that UKRI’s funding helps to consolidate existing gains. QR funding is tied to the number of PhD students, helping to maintain a critical mass of new researchers. Grant funding is often tied to the track record of researchers winning other grants, ensuring that every fund isn’t starting from scratch. UKRI is a national memory bank as well as a national funder and part of its role is to direct more resource into what is working and less into what is not.
The third is that UKRI directly contributes to business growth. Programmes like Knowledge Transfer Partnerships and various kinds of accelerators work more directly to cause growth through developing existing businesses, and willing others into life with wraparound support. And the fourth is at the other end of the spectrum, where UKRI captures value. UKRI helps to generate IP through its investments, and it takes a stake in the companies that are created (the Public Accounts Committee has recently argued it is not taking enough equity – to be fair to UKRI, this is the exact opposite accusation regularly made of universities).
In a new landscape
Creating markets, consolidating gains, contributing to business growth, and capturing value are the four economic parameters of UKRI’s work to spur growth. Different research councils will prioritise different areas, different strands will take prominence at different times, but broadly UKRI is organising its work around these four key economic purposes.
Sometimes they overlap neatly onto geographic concerns like continuing existing pockets of excellence. Sometimes they will have to create new markets and research geographies through research funds. Increasingly, in a landscape where economic growth is the goal, the better question isn’t who is this money for but what it is doing.
It isn’t a design fault that UKRI has so many outputs; it is an accumulation of changing priorities over time. The challenge is that this approach can be maintained while the economic goals of governments are contiguous, if not coherent, with one another.
But Andy Burnham’s plan, as presented, is radically different in a way that UKRI has not been set up to address. Faced with a new governing philosophy based on devolution, UKRI can either continue what it is doing now or it can change its approach to meet government ambitions. It cannot do both this time around.
James Coe is Associate Editor at Research Agenda. This Wednesday James and the Research Agenda team will be discussing what’s been going on inside UKRI and how it has transformed over the next 12 months. Find out more and watch for free.