There is no doubt that proposed changes to innovation funding has been influenced by the 17% cuts imposed upon Innovate UK’s budget, according to specialist advisors, Sheffield based MSC R&D.
Market research for the new innovation support programmes – which will be entirely loan-based –has begun with details of pilots being announced by the end of the year.
“It’s expected that £165m of spending will be given over to the new loans system by 2019-2020,” says a spokesman for MSC R&D.
Innovate UK announced it will be undertaking market research and an independent evaluation of piloting of any new innovation products, so it can understand the demand for various types of support, provide innovators with the products they need, improve delivery and implementation of the products and understand the impact of the products on innovation.
Furthermore, the organisation says, competitions are consistently over-subscribed, which demonstrates there is clear demand for innovation finance.
A spokesperson for MSC R&D commented: “The mantra within Innovate UK is now to help public money go further and work harder. However, there is no doubt that this initiative has been influenced by the 17% cuts imposed upon Innovate UK’s budget.
“The headline-grabbing total of £561m to support business R&D in the 2016-2017 financial year masks significant changes in the allocation of that spend.
“With the demise of Smart grant competitions, SMEs will now have to take their chances along with large enterprises in the sector and open group grant competitions.”
“Innovate’s own statistics indicate that every £1 invested in grants such as Collaborative R&D, Smart awards and KTP, returns £7.30 back into the economy. Our concern is that the increases in funding for Catapult Centres* is reducing the levels of direct support, which may impact on the innovation economy”.
“It is also concerning that it is as yet unclear as to whether SMEs will be able to claim R&D tax credits under the SME scheme for projects that have been supported by a loan.
“If the answer is no, then on the face of it, it will not make commercial sense for an entrepreneur to forgo their R&D tax credits in order to obtain an interest-bearing, repayable loan” added the spokesperson.