- Industrial Strategy Challenge Fund has brought government, business and researchers together at scale and at pace, supporting over 1,600 innovation projects, including Coventry’s UK Battery Industrialisation Centre

- NAO right to support streamlining start-up and approvals processes of up to 72 weeks, which can deter bids, especially among smaller businesses

- Longer term visibility of funding will be needed to give investment confidence to businesses and academia

- Mechanisms to engage private sector finance should be considered – especially as innovations become ready for market

- As industry faces challenges of the pandemic, flexibility in financing bids, especially to support smaller businesses, should be considered

- Regional and Skills strategies should be a key part of innovation funding approach

- The Catapult network provides an established and successful platform for innovation, and its geographic locations also suggest it could play a big role in regional levelling-up

- Skills must be developed alongside innovation to give the UK the ability to exploit our ISFC investments. WMG, at the University of Warwick, have been pioneers in developing skills programmes alongside innovation and industrialisation

WMG at the University of Warwick has welcomed today’s National Audit Office report on the Industrial Strategy Challenge Fund, supporting their positive assessment of the fund, and backed their calls for a more streamlined approach to innovation funding, alongside a greater emphasis on the importance of innovation for regional development and skills growth.

Professor Dave Greenwood, Director of Industrial Engagement at WMG, University of Warwick and Chief Executive of the WMG High Value Manufacturing Catapult said:

“The Industrial Strategy Challenge Fund (ISCF) has been a powerful tool to support innovation that meets the most pressing national challenges.

“The ISCF has bought government, business and researchers together at scale, and at pace, to help our transport industry decarbonise through the Faraday Battery Challenge, and is delivering vital vaccine capacity through the Vaccine Manufacturing and Innovation Centre. It has supported over 1,600 projects, including the new UK Battery Industrialisation Centre in Coventry, with over forty per cent of support in the first two waves going to small and Micro companies.

“These projects are making a difference to UK innovation, skills and industrial growth, and these successes should be celebrated.

“As the report says, however, there are always opportunities to improve how the Fund operates.

“First, we need to make the funding process faster and more agile – especially given rapid changes in the external Business and social environment, from Brexit to the Pandemic. Lengthy Approvals processes of up to 72 weeks for selecting challenges and awarding projects can deter bids, especially among smaller businesses.

“Alongside this, with much of industry dealing with financial pressures from the pandemic, government should consider relaxing some of the funding constraints on the programmes – especially where they fall significantly short of what state aid would allow, such as in the co-investment requirement from Industry, which was increased in Wave 3 of the Fund.

“Together, these steps would help position the UK for clean growth post-COVID and deliver on opportunities created for the UK supply chain by the UK/EU trade agreement.

“Looking forward, it’s essential that there is a long-term funding package in place to support the Industrial Strategy Challenges. As the report notes “The Fund was part of a one-year settlement in the spending review in November 2020.” Short term spending decisions will ultimately be detrimental to large scale industrial and academic investments – a 5 year rolling funding horizon is needed for full confidence from Industry partners. To help deliver this, we should consider the role of private finance in these programmes, and what mechanisms might de-risk industry investments to support clean growth.

“It’s also crucial that the ISCF supports regional development as part of the Government’s ‘levelling up’ agenda. Currently, almost half of funding has gone to projects in London and the South East, and while we in the West Midlands have secured significant investment, the ISCF should reflect the regional profile of Industrial R&D more closely. It is notable that government funding relative to private sector investment is much lower in the Midlands than in the South East for instance.

The Catapult network, with centres of excellence across the country, strong links to regional industries, and good networking between them, is an exemplar of how levelling up should be delivered. This established and successful platform could provide an efficient and effective means to boost R&D in under-represented regions in accordance with the recommendations of this report.

“We also need to link innovation spending to the education and skills agenda. The UK needs not just the best technologies but also the people to develop, manufacture and support them. These cannot be developed in isolation. Here, WMGs approach of delivering innovation and skills programmes together and in partnership with industry is an established model, allowing degree apprenticeships, re-training, lifelong learning to support industry innovation programmes. As the Government considers responses to the skills white paper, it should consider how future industry skills needs will be shaped by the innovations being delivered by the challenge fund, from transport electrification to digital skills.