PAC: Big push required from government to tackle challenges in commercialising UK research
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- Report on UK Research and Innovation (UKRI) finds insufficient
clarity in how organisation invests its money, calls for clearly
defined objectives Severe challenges lie in the way of
turning UK research into successful commercial ventures. UKRI is an
arm's-length body of government which is the UK's largest single
public funder of research and innovation (R&I). In a report
publishing today, the Public Accounts Committee (PAC) is calling
for more action...Request free trial
- Report on UK Research and Innovation (UKRI) finds insufficient clarity in how organisation invests its money, calls for clearly defined objectives
Severe challenges lie in the way of turning UK research into successful commercial ventures. UKRI is an arm's-length body of government which is the UK's largest single public funder of research and innovation (R&I). In a report publishing today, the Public Accounts Committee (PAC) is calling for more action across government to create a unified picture of and response to the challenges of commercially scaling innovation in the UK. Government considers R&I and the diffusion of new tech to be vital to the UK's future, with huge economic gains possible if universities can commercially scale up their R&I in areas such as engineering, biology and quantum. However, the PAC's report highlights systemic problems, including a lack of the right skills and a tendency for companies to spin out R&I into commercial ventures too early. Against the backdrop of intense international competition, a tight fiscal environment, and the financial challenges faced by UK universities which could limit or curtail their R&I work, the PAC is recommending government assess the impact of the support UKRI provides to new ventures prior to incorporation to help them become more attractive to external investors, as well as exploring where the UK is demonstrating strength in research but failing to scale up innovation. The report finds a lack of clearly defined objectives for UKRI, against which its performance may be judged so it can be held accountable. The PAC heard that private sector investment in the UK's R&I was £46.7bn in 2024, but a lack of data and targets means it cannot be clear on whether UKRI is making sufficient progress in increasing UK private investment. UKRI also does not yet have the IT systems of a modern organisation, with around 15% of UKRI's grants without a full description on its systems. With all parts of government, and industry, subject to large-scale assaults on their cyber security defences, it is crucial that UKRI's updated systems are resilient to cyber threats. UKRI told the PAC's inquiry of its track record of taking high risks in the research it invests in. The report does not discourage high risk, high reward investments, noting the danger of stifling innovation if failure is always castigated. However, the PAC is concerned that UKRI does not actively monitor these kinds of investments, and is recommending that the UKRI and DSIT should work together to further develop their approach to risk when funding R&I. There is also not enough clarity and transparency on where UKRI is investing its money. The report notes that it can be more attractive for investors, and more effective for government, to invest in regions where there are existing clusters of high-quality researchers, essential infrastructure and local skills. These decisions are made easier if investors can easily access clear and comprehensive data on where government is already invested in R&I, but neither government nor UKRI have yet brought together such data on all R&I spending across government. Sir Geoffrey Clifton-Brown MP, Chair of the Public Accounts Committee, said: “The UK has historically been a research superpower. The advancement of learning that is the daily achievement of the UK's research community is not just a source of national pride and potential economic growth, but carries the promise of the advancement of humanity's understanding of itself. Where the UK could improve is in scaling up this extraordinary work from the invention of novel ideas, to becoming a commercially-successful reality. It is of course crucial that government does not take unjustified risks with taxpayers' money, but if it is to harness the scientific brilliance the UK has to offer, UKRI has a responsibility to ensure the right risks are taken at the right time. “Our inquiry found that the environment in which UKRI operates poses significant challenges in translating important research into successful going concerns. There is much more to do if UKRI is to become the focused actor delivering on government's priorities. Government must bring all the support it can muster to bear on the skills gaps identified in our report allowing the UK to more reliably produce startups. UKRI itself must bring up to date its own systems, while embedding better accountability and transparency in its organisations. Whether it is in the areas of engineering, biology or quantum, both government and UKRI must now look to the recommendations in our report if the UK is to maintain its edge in a fiercely competitive world.”
PAC report conclusions and recommendations DSIT has not brought together a cohesive set of cross government priorities for its investment in R&I. In 2023-24 UKRI spent £6.0 billion of its budget on R&I grant funding across its research councils and Innovate UK, excluding block grants to higher education institutions in England. DSIT sets the priorities that steer how UKRI allocates its budget. UKRI's task is to advise on how best to turn these priorities into action, and then to deliver them. UKRI must also work closely with many departments, such as the Department of Health and Social Care and the Department for Energy Security and Net Zero, which have their own priorities for funding R&I. The R&I landscape has lots of points of join-up and linkages, but DSIT has not put that all together into a single place. Over the period 2021 to 2024 there were 105 government policy papers across 13 ministerial departments where UKRI was expected to contribute, for example by funding research or building partnerships. DSIT and UKRI do not rank such activities or even compile them into a single list Recommendation 1. DSIT should set out a cohesive and comprehensive set of government priorities focused on the desired outcome for UK R&I and UKRI's role in supporting delivery. UKRI does not have a set of clearly defined objectives against which to judge its performance and hold it accountable. To articulate the value of public investment in R&I, it is important to monitor progress and performance against specific targets and Key Performance Indicators (KPIs). UKRI lacks specific, measurable, achievable, relevant and time-bound objectives and KPIs, meaning it is difficult to know whether it is making progress against its overall objectives. Instead, UKRI's board tracks progress using an 'annual balanced scorecard' which comprises over 100 metrics across four themes: its impact; stakeholders' experience of UKRI; the health of the UK's R&I system; and the extent to which UKRI is learning and improving as an organisation. This scorecard is shared with DSIT but is not made publicly available. UKRI advised us that private sector investment in UK R&I was £46.7 billion in 2024, but the lack of timeseries data and target means it cannot be clear on whether it is making sufficient progress in increasing UK private investment. DSIT suggested three KPIs for the incoming leadership of UKRI to monitor: overall public and private spend on R&D, UK global rankings on the creation of ideas and, UK global rankings in scale-up growth and application of research. At a macro level, DSIT agreed that it would be appropriate to have around six to ten high level measures for UKRI to be able to provide the whole picture of the R&I system. Recommendation 2. UKRI should set measurable outcomes and 6-10 targets in priority areas, such as private investment in R&I, to help appraise its performance effectively. There is insufficient clarity about, and visibility of, where UKRI is investing its money. Knowing where UKRI invests its money is essential to good financial management, while also helping organisations in the private sector to guide their investment decisions. For example, it can be more attractive for investors, and more effective for government, to invest in geographic regions where there are existing clusters of high-quality researchers, essential infrastructure and local skills. These types of decision are made easier if investors can easily access clear and comprehensive data on where government is already invested in R&I. In the 2024 Autumn Budget, the government said it would spend £20.4 billion on research and development in 2025-26, channelled through both UKRI and the other parts of government that fund research and development. Government intends to better define and justify its allocation of research and innovation funding under three categories: knowledge-driven basic research; targeted research aligned to government ambitions including economic growth; and investment to support innovative businesses including scale-up. But DSIT and UKRI do not yet have a system that brings together the data on all research and innovation spending across government. UKRI is developing its new grants "databank" with the aim of capturing data on research that it manages on behalf of other departments, as well as research that other departments manage directly. UKRI has a long-term ambition of linking up all such the data across government, but did not give us a target date for achieving this aim. Recommendation 3. To provide clear, comprehensive and useful data for government, external investors and the public about the overall R&I funding landscape, once its new data systems are in place, UKRI should:
UKRI does not yet have the IT systems of a modern organisation. UKRI can classify its grants by theme, based on the award title and description and can produce one-off analyses of parts of its portfolio. For example, in 2024 it produced a review of its portfolio of spending on net zero and climate change. Since its establishment, UKRI has, however, grappled with unifying the separate data systems of its predecessor organisations. Despite developing modern IT systems being a priority for UKRI since 2019, the introduction of updated systems has been delayed. Around 15% of UKRI's grants do not have a full description on its system, and in other cases the descriptions are poor quality and consequently spending on these grants cannot be accurately classified automatically. UKRI has the ambition to produce reliable analysis more quickly and use predictive insights to support better decision making and tracking of progress against its key objectives. It expects to have 90% of its data on its updated systems by January 2026. With all parts of Government, and industry, subject to large-scale assaults on their cyber security defences, it is also crucial that UKRI's updated systems are resilient to cyber threats. Recommendation 4. UKRI should provide the Committee with an update in February 2026 on progress with implementing its systems and functionality and a roadmap of further modernisation. This update should include details of the capability the new systems provide and what capability is yet to be delivered. It is unclear how UKRI manages risk across its portfolio and what the different parts of its portfolio are meant to achieve. UKRI has repeatedly referenced the importance of its portfolio approach to funding research and innovation. However, the committee is not convinced that the components of UKRI's portfolio and the objectives they seek to achieve are sufficiently defined and deployed in a tactical way. DSIT highlights the importance of defining the places where government needs to take more risk. UKRI says it has a very long and strong track record of taking high risks in the research it invests in. However, we are concerned that UKRI cannot demonstrate how it manages risk across its portfolio, and does not actively monitor its high risk, high reward investments. However, we are not discouraging investments in this area. If you always castigate failure, innovation is at risk of being stifled. Recommendation 5. DSIT and UKRI should work together to further develop the government's approach to risk when funding research and innovation. This should include defining what is meant by risk in this context for their organisation and what it means for its staff and stakeholders. DSIT and UKRI face severe challenges in helping UK research and innovation to scale up commercially against a backdrop of intense international competition and a tight fiscal environment. The government considers research and innovation and the diffusion of new technologies to be vital to the UK's future and to achieving its long-term goals, including growing the UK economy. Huge economic gains are possible if UK universities can spin out their research and innovation into successful commercial ventures. For example, DSIT believes that there is great economic potential if the UK can build commercially on its academic leadership in fields such as engineering biology and quantum technologies. DSIT and UKRI are aware of such potential, but also note systemic problems such as not having the right skills and a tendency for companies to spin out too early. They have work underway to help increase the chances of commercial success. For example, UKRI has started a Proof-of-Concept fund to assist new ventures prior to incorporation so that they can become more attractive to external investors. Similarly, Innovate UK which sits within UKRI, aims to support innovative businesses to grow and scale. However, the financial challenges faced by UK universities may limit or curtail their research and innovation work. Recommendation 6. DSIT and UKRI, with other government departments, should do more to bring together a unified picture and response to the challenges of commercially scaling innovation in the UK. This should include:
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