Science and Technology: Economy

Baroness Greenfield Excerpts

Thursday 31st October 2024 Lords Chamber

[Baroness Greenfield (CB)]

I congratulate the noble Viscount, Lord Stansgate, on drawing attention to this important issue. I declare an interest as CEO and founder of a small biotech company, Neuro-Bio Ltd, pioneering a novel approach to Alzheimer’s disease and spun out originally from Oxford University.

In the light of my experience over the past 10 years, I would like to focus on opportunities for the UK economy to benefit from its science and technology even more than is currently the case. For example, dementia is costing the UK £42 billion this year, rising to £90 billion in 2040, so the value of developing an effective therapeutic intervention would be enormous, and not only for the huge saving. Such a treatment developed in this country would provide an incalculable boost to our national pharma industry.

But there are unnecessary headwinds. SMEs are now losing out by some 50% compared to 2023 for R&D tax credits. If we factor in the significant amount of time required, new administrative rules and the risk of HMRC inquiry, smaller companies may abandon making a claim altogether. The recent changes, including those in subcontracting rules, may provide a negligible uplift in the tax revenue but come at a great cost.

R&D tax credits should be a UK co-investment, hand in hand with the company, into innovation happening on its shores, creating jobs and value immediately, followed by an incredible dividend when resulting in a globally competitive technology. These credits should be restored to at least previous levels. Big multinationals might then expand their footprints in the UK, rather than divesting as they do now.

Today, UK public investment in R&D of 0.44% GDP needs to be 50% higher just to reach the average OECD spend, let alone to be ahead of the competition. It could be argued that, pound for pound, we already outcompete most other countries, but the UK is heavily underinvesting in itself, banking on the high innovation input of our academia and industry—after all, it is an easy short-term win on the budget line.

Why would we not see this as a brilliant reason to invest even more, rather than as an excuse to get away with less? True, there are government loans and schemes and grants, but the former places a stressful burden on repayment within a fixed period while the latter may entail a time-consuming amount of effort that is more than likely to be wasted. The latest Innovate UK competition saw a success rate of a mere 4.5%. As with claims for tax credits, many may feel that applying for a grant is just not worth the time that could otherwise be spent progressing the science itself.

Then there is the question of gender. Less than 2% of total VC funding goes to female founders. Earlier this year, a Women in Innovation grant offered some 50 awards for a very modest £75,000 per project. Less than 4% were funded. Programmes levelling the playing field for women should go a distance towards changing the present blatant inequality, not entrenching it further.

More generally, it is the baked-in and oftentimes biased decision-making that stifles the otherwise great economic impact of our entrepreneurs. It is safer to fund small, transitional technologies, at the cost of truly disruptive innovation, because there is very little in the way of incentives or protections if an investment does not work out. There is much willingness to charge capital gains on investments where success can be shared but no appetite for sharing the consequences of a failure—hence the mindset to back only cautious advances at a cost of truly transformative ways of thinking.

This lack of support often forces disruptive scientists into looking further afield for funding to grow. Once they enter, say, the US ecosystem, it is that economy which will ultimately benefit from the stimulus provided by innovation which the UK has fostered in its infancy. Too often this country is seen as a feeder ecosystem into the US, not giving full rein to its homegrown ingenuity.

STEM innovation is the crown jewel of our economy. It is high time we invest at least as much as others to show the world what the UK science and technology sector can achieve. But without an improved national strategy and support, R&D-stage companies such as mine will have no choice but to consider M&A overseas. It is high time we think of innovators and the Government as partners in building the economy of tomorrow, the foundations of which should be laid today.