Mission Possible: The role of challenge prizes in a revitalised UK Innovation Strategy
References Department for Business, Energy & Industrial Strategy, ‘UK Innovation Strategy: Leading the future by creating it.’ July 2021.
National Audit Office, ‘UK Research and Innovation’s management of the Industrial Strategy Challenge Fund.’ February 2021.
Industrial Strategy Council, ‘Lessons for industrial policy from development of the Oxford/AstraZeneca COVID-19 vaccine’, February 2021.
Nesta Challenges, ‘The Great Innovation Challenge: How challenge prizes can kickstart the British economy.’ July 2020.
Endnotes 1. Department for Business, Energy & Industrial Strategy (BEIS), 2021, p.18. 2. In 2019 UK domestic spending on R&D was 1.8 per cent of GDP, and the average across the OECD was 2.5 per cent of GDP. Source: https://data.oecd.org 3. The Prime Minister has stressed the need for Government to play a more strategic role in innovation policy: “It is also the moment to abandon any notion that government can be strategically indifferent, or treat research as a matter of abstract academic speculation.” Source: https://www.gov.uk/government/ speeches/prime-ministers-article-in-the-daily-telegraph-21june-2021 4. Data as of January 2021, from National Audit Office, 2021. 5. BEIS, 2021, p.19. 6. Source: https://www.gov.uk/government/publications/thevaccine-taskforce-objectives-and-membership-of-steeringgroup/vtf-objectives-and-membership-of-the-steering-group 7. BEIS, 2021, p.83. 8. Source: https://www.gov.uk/government/publications/ beis-research-and-development-rd-budget-allocations2021-to-2022/beis-research-and-development-rd-budgetallocations-2021-to-2022 9. See e.g. Bloom, Nicholas, Schankerman, Mark, & Van Reenen, John, 2013, ‘Identifying Technology Spillovers and Product Market Rivalry.’ Econometrica, 81(4). 10. Grants programmes can include match funding requirements for the private partner(s) to address this risk. But apart from the practical difficulties of monitoring compliance with a match funding requirement, there is no robust way of calibrating what an appropriate match funding requirement should be for any given project.
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11. The Missions are intended to drive “transformative spill-over benefits for industry and the wider economy by strengthening the innovation cycle from research through to commercialisation and adoption.” BEIS, 2021, p.81. 12. Other instruments not considered here include advance market commitments and R&D loans. 13. Nesta Challenges, 2020. 14. ‘Innovation investment’ is used here to mean a situation where Government makes a discretionary decision to commit resources at risk with the aim of achieving a more or less specifically defined innovation outcome. Such investments may be made using various instruments or methods, including challenge prizes, grants, advance market commitments and R&D loans. 15. BEIS, 2021, p.19. Industrial Strategy Council, 2021 also highlights the portfolio diversification strategy taken by the Taskforce, and the use of different instruments including advance market commitments (p.18). 16. The Government has commissioned an independent Review of Research Bureaucracy led by Professor Adam Tickell, to “advise on a substantial reduction in unnecessary research bureaucracy in government and the wider sector.” 17. For grants the ‘repeated game’ quality of grant funding is key – grant recipients have to account to prospective funders for how they have used previous grant funds. Alternatively postgrant monitoring is used – but this can become a bureaucratic exercise focussed on the ‘letter’ of a grant rather than the ‘spirit’ in which it was provided. For challenge prizes, pre-launch research and stakeholder engagement can help mitigate the risk of misspecifying the targeted outcome and rewards.
