The state of UK innovation: Ayming’s UK Innovation Barometer 2023

The UK’s innovation landscape has been steadily maturing since the launch of the R&D scheme more than two decades ago. But after a challenging few years, innovation teams face new obstacles as economic turbulence undermines already-squeezed budgets.

Ayming has recently launched its inaugural UK Innovation Barometer 2023, where we examine the current state of the UK’s innovation landscape, as well as considering the various reforms that have the potential to influence businesses operating across a number of sectors, including food and beverage and manufacturing.

In order to stimulate greater innovation across the UK’s landscape and compete at the highest level globally, the Government must adopt a coordinated approach that addresses innovation, productivity and sustainability together.

There are a number of key insights, but some headline messages from the survey include:

Budgets are up, and due to increase further: Despite challenging economic conditions, 54% of respondents report an increase in R&D budgets in the last year while 66% of firms plan to increase budgets next year.

Artificial intelligence now most popular R&D resource: When it comes to the resources and partners used to carry out R&D, the most popular option is artificial intelligence, selected by 39% of respondents, followed by collaborating with partner organisations, at 37%, and working with universities, at 33%.

Exodus of R&D activity from UK: 69% of businesses have moved R&D activity abroad in the last year and 70% plan to move activity abroad next year. The US and Germany are the most popular destinations for moving R&D, selected by 28% and 27% of businesses respectively.

UK must create more competitive R&D environment: The most popular reason why firms are moving activity abroad is private funding opportunities at 37%, followed closely by more favourable R&D tax credit schemes at 36%, and better access to talent at 35%.

Majority have faith in UK Innovation Strategy: 69% of respondents believe the Innovation Strategy will be enough to reverse the UK’s relative decline in international R&D activity and spending. 30% can increase claims due to recent expansion to cloud, data and pure maths while 26% have used UK’s new high-skilled visa. HMRC fraud clampdown causing problems: 35% per cent of respondents reported that HMRC’s clampdown has delayed payments of R&D tax credits, 24% share that these delays have forced them to reduce their R&D budget, and 19% say that the delays have held up R&D activity.

Government must back up Horizon funding: 75% of respondents agreed that establishing back-up funding to Horizon was at least very important, with over one-in-five citing it as absolutely critical.

ARIA seen as critical to future of UK innovation: Businesses eager to see ARIA come to fruition, with 48% believing ARIA to be very important to the future of UK Innovation, and 20% consider it to be absolutely critical.

Overwhelming support for new green R&D tax credit: There is significant support for a supercharged tax incentive for sustainable R&D activity. 95% said it was important, with half of total respondents saying it is very important.

UK businesses failing on green R&D: 80% of businesses are not investing in sustainable/green R&D projects. As for why, 43% are prioritising other R&D activity, 24% have insufficient funding, while 22% say they don’t know how to apply for funding.

You can download a copy of Ayming’s 2023 UK Innovation Barometer here to get all of the insights.