Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Accepted
Develop unified response to commercially scaling UK innovation, assessing strengths and optimising funding.
Conclusion
DSIT and UKRI face severe challenges in helping UK research and innovation to scale up commercially against a backdrop of intense international competition and a tight fiscal environment. The government considers research and innovation and the diffusion of new technologies to be vital to the UK’s future and to achieving its long-term goals, including growing the UK economy. Huge economic gains are possible if UK universities can spin out their research and innovation into successful commercial ventures. For example, DSIT believes that there is great economic potential if the UK can build commercially on its academic leadership in fields such as engineering biology and quantum technologies. DSIT and UKRI are aware of such potential, but also note systemic problems such as not having the right skills and a tendency for companies to spin out too early. They have work underway to help increase the chances of commercial success. For example, UKRI has started a Proof-of-Concept fund to assist new ventures prior to incorporation so that they can become more attractive to external investors. Similarly, Innovate UK which sits within UKRI, aims to support innovative businesses to grow and scale. However, the financial challenges faced by UK universities may limit or curtail their research and innovation work. recommendation DSIT and UKRI, with other government departments, should do more to bring together a unified picture and response to the challenges of commercially scaling innovation in the UK. This should include: • an assessment of where the UK is demonstrating strength in research but failing to scale innovation, with specific reference to the impact of the Proof-of-Concept fund; and • the setting out of plans to optimise its use of funding while monitoring any changes in research activity at UK universities resulting from ongoing financial challenges. 6 1 Strategic direction Introduction
Government Response Summary
The government agreed and committed to publishing an assessment by Spring 2026, using various data sources to identify areas for scaling innovation. While specific evaluation dates for the Proof-of-Concept fund are pending, early insights will inform allocation decisions, and DSIT will monitor the financial impact on universities using existing data.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. published by Spring 2026. DSIT and UKRI will draw on a variety of data sources to understand where to have the greatest impact on scaling innovation domestically. This involves not only assessing where there is strength in research, but also where there are existing or nascent industry strengths, absorption capacity and identifiable market failures. UKRI has recently launched the first round of the new discipline agnostic Proof-of- Concept funding opportunity. Understanding the full impact will only be possible after the first rounds of projects conclude and are evaluated (evaluation dates not yet confirmed). Early insights will contribute to allocation decisions. Scaling innovation is not a linear pipeline from research to scale-up but instead requires an integrated approach across different actors (both private and public) that provides the right policy environment for innovative firms at every stage of their growth journeys. The government’s Industrial Strategy set out how we plan to achieve this. This includes better engagement and alignment between UKRI, the British Business Bank, the National Wealth Fund and other public finance institutions through the new Strategic Public Investment Forum, plus more effective use of public procurement to buy from innovative suppliers, and removing regulatory barriers to scaling. In deciding the aforementioned allocations, DSIT will consider the impact on the financial sustainability of university research. DSIT uses analyses of Transparent Approach to Costing data, as well as insights and analyses provided by UKRI, to understand the financial challenges universities face within the R&I system.