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Small Business Research Initiative gets major boost in Budget

The Small Business Research Initiative, which uses government procurement to drive innovation, is to receive at least a five-fold funding increase, Chancellor George Osborne has announced in his 2013 Budget.

The SBRI, run by the Technology Strategy Board, will be expanded across “key departments" within government. So far, activity has been mainly limited to the Department of Health, the Ministry of Defence and the NHS, who use the funding to procure pre-commercial technologies from small businesses through targeted competitions.

According to the Budget, expanding the initiative will increase the value of contracts available to small businesses from £40 million in 2012-13 to £100m in 2013-14 and more than £200m in 2014-15.

An evaluation will be carried out to determine whether the scheme could be expanded even further, with an interim report published in autumn 2014 and a final report in February 2015.

The innovation charity Nesta has welcomed the announcement. In an interview with Research Fortnight, its head of innovation and economic growth, Louise Marston, said that the departments involved would now need to increase their skills to engage with the process.

“It requires you to think a bit differently about how you procure the services in the first place—it will take a little time to get the departments up to speed, but it should be very doable,” she says. “Plenty of people in departments are thinking about big challenges, but they may not be the same people currently engaging with the process”.

David Connell, a senior research fellow at the Centre for Business Research at the University of Cambridge, told Research Fortnight that the announcement is “really excellent news” but warned that the “devil is in the detail”.

“In scaling up the programme, it will be necessary for departments to plan very carefully the competitions they’re going to run to ensure they cover a range of technologies and times to market,” said Connell, adding that the key issue will be to “ensure that that is spent through defined competitions and reported transparently through the TSB”.

Osborne has also confirmed a £1.6 billion investment for areas in the business secretary Vince Cable’s industrial strategy, announced on 18 March. This includes a £1.05bn government investment in a UK Aerospace Technology Institute. The investment, to be matched by £1.05bn funding from industry, is to support the UK’s aerospace sector over seven years. Osborne also confirmed that a further £500m will go to agricultural and automotive technologies, with funding for other sectors to be announced later in 2013.

Among the losers in the Budget are private providers of higher education, who have learned that they are not in line for a VAT exemption, following a consultation on a proposal to offer them the same deal as other institutions. The document says the government has “listened to those who have responded [to the consultation] and as a result will look to develop alternative options, including possible changes to the exemption for further education and will consult on these later in the year.”

The announcement was welcomed by the University and College Union.

The Budget also reveals that a £15m fund for the digital content production industry will be set up and run by the TSB.

However, Ian Brinkley, director of The Work Foundation, was not impressed by the announcements. He said the Chancellor’s plans “will have no measurable impact on economic prospects” and that Osborne should have included “significant new investment in science, technology and innovation” in the Budget.

Other announcements include increasing the minimum rate for the R&D tax credit to 10 per cent before tax, rather than 9.1 per cent as suggested in last year’s Budget, and support for shale gas and carbon capture and storage. Two CCS projects will be taken forward to the detailed planning and design stage as part of the Department of Energy and Climate Change’s £1bn CCS commercialisation programme competition. DECC said in statement that the two projects are the Peterhead Project in Aberdeenshire, Scotland, and the White Rose Project in Yorkshire.