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UK seeks IT innovation through £200m public / private investment

The government is to part-fund the £200 million Technology and Innovation Centres (TICs) scheme, while also seeking investment from UK business.

When the chancellor announced £95 million in IT spending cuts last October, the outlook didn't look all too bright for public technology investment. But with budget cuts being enforced across Whitehall, it was no surprise that some IT initiatives were scaled back or scrapped altogether. These are difficult economic times, and clearly every department is having to play its part in repairing the hole in the UK finances. IT spending is sadly just one of many casualties.

But to its credit, the Con-Lib coalition has done its best to promote technological progress, albeit with greater restraint than witnessed before the recession. While up to 300 IT initiatives are believed to have been affected by the cuts, the government has signalled its intention to push the boundaries in other areas. For instance, it has pressed ahead with its G-Cloud project, aiming to encourage the use of hosted services within public organisations, and it has also made £830 million available for the rollout of high-speed broadband in rural areas. It is also looking to deliver national projects in partnership with the private sector - supporting the pursuit of ambitious targets without applying further pressure on the public purse.

One such scheme is the £200 million Technology and Innovation Centres (TICs) project, initially announced by David Cameron last October. The scheme - which was launched in the same week as George Osborne's Comprehensive Spending Review - is geared toward encouraging growth in the UK's high-tech industries, which include networking, software and consumer IT. The prime minister said the project would help to bridge the gap between universities and businesses, helping to "commercialise the output of Britain's world-class research base" - commendable goals indeed. Business secretary Vince Cable added that the centres - of which there will be between six and eight initially - will help take ideas "from the drawing board to the market place". "They will play a key role in helping firms develop new products and processes so they can grow and prosper," he stated.

There may be some truth in Dr Cable's prophecy that this "major investment" will position British companies at the forefront of innovation. But if that is to be the case, it will not be solely as a result of public funding. Latest details of the scheme, released in mid-February, revealed that a combination of government, public/private and private finance will contribute to the £200 million pot on a 1:1:1 basis. This follows the example of the hugely successful Fraunhofer Institutes funding scheme in Germany, where private sector sponsors were found to back the government's IT innovation plan, matching the available public funding.

Andrew Miller MP, chairman of the Science and Technology Select Committee, which published a report on funding for the TICs, said it was vital for businesses of all sizes to back the project, and in doing so, support high-tech industry in the UK. "We hope that small companies get involved and that this will strengthen their financial base and increase lenders' and financiers' confidence in their commercial prospects," he stated. The initial signs are positive, suggesting that UK business is willing to buy into the TICs initiative. Leading business lobby group the Confederation of British Industry (CBI) has welcomed the decision to seek long-term funding for the project from a range of streams. If anything, the organisation believes the private sector should play a larger role in funding the TICs, potentially sharpening the focus on business growth.

Tim Bradshaw, the CBI's head of enterprise and innovation, said the creation of a series of growth-focused TICs could help UK businesses work together more effectively as a collective. "This will mean that existing resources are fully mobilised, will avoid duplication, delivering maximum benefit for the economy," he stated. But Mr Bradshaw claimed that the one-third cap on funding from the private sector is "too rigid". He expressed the view that opening up the possibility of more funding from the private sector, to constitute 25-55 per cent of the total, would drive greater innovation and growth.

It remains to be seen whether strong interest from the private sector materialises, and what incentives the government will need to provide to encourage participation. UK businesses are already set to benefit from a reduction in corporation tax, which is scheduled to fall from 28 per cent to 24 per cent over the next four years, but further perks could be on offer. Whether the government will be willing to scale back its own involvement in the TICs scheme any further is debatable, however. Ministers are perhaps mindful of the need to both promote IT innovation through practical action and, in times of greater austerity, be seen to do so ably and willingly.

The coalition certainly appears to be approaching the challenge with enthusiasm, as can be said for its broadband and cloud computing agendas. As business secretary Vince Cable confirmed recently, the government readily acknowledges that high-tech industries "are the future of the British economy". Looking at the bigger picture, the business secretary claimed that growing sectors which exploit new and emerging technologies will help re-balance the economy. Not only this, but they will help provide highly skilled, well-paid jobs – something the UK needs in no short supply. But regardless of whether the money comes from the taxpayer, or from private sector investors, the vision to drive UK technology forward during testing economic times must be applauded.