In the past, power was often a function of capabilities – long boats, for example, which allowed the Vikings to reach modern-day Britain. Or windmills, which helped the Netherlands during the seventeenth century to harness wind power; the invention of the wind powered sawmill enabled the construction of a massive fleet of ships for worldwide trading and for military defence of the republic’s economic interests.
Then power became a function of assets – people, land, resources – as the United States (US), Russia and then eventually China brought a new magnitude of force to battlefields. The ability of the US to marshall what Winston Churchill called ‘overwhelming force’ or Josef Stalin’s capacity to withstand 26 million deaths during the Second World War correlated directly, if brutally, to each nation’s power. What happened after 1945 – including the space race – was arguably also largely a contest of resources. Who could spend the most to achieve greater scientific progress.
In the twenty-first century, however, the power equation has arguably reverted to that of an earlier pre-industrial era. Some things are still a question of quantum – for example a country’s investment in supercomputing; below a certain amount of expenditure it is not really possible to compete globally. Scientific breakthroughs are also much harder, less likely to happen as a result of one brilliant scientist working in their study or laboratory but now often require large machines and many different teams from many different disciplines. Richard Feynman, the theoretical physicist known for his work in the path integral formulation of quantum mechanics and the theory of quantum electrodynamics, could in the 1950s, advance the field of fluid mechanics alone and in long form; today progress in fluid mechanics requires interdisciplinary working across multiple teams and considerable computing power, large data sets as well as new algorithms and software for exascale computing. All of which costs.
At the same time, as the price of technologies has collapsed, and more people and businesses can create world-changing innovation from anywhere – and for smaller amounts of money – there has in a sense been a re-localisation of the sources of power. Sweden, home to Spotify, a music streaming service used by 345 million people globally, has a potential reach and influence which a smaller country could only have dreamt of in the past. Israel’s innovation ecosystem has made the tiny country a much sought after partner for the US, India and China alike. Estonia’s various digital initiatives – such as citizen ID and X-roads as well as companies like Skype and Taxify – has allowed it to engage in global discussions on equal footing with much larger countries.
What then does that mean for decision-makers in the United Kingdom (UK)?
The most important point is that spending on research and development is now a strategic issue. Having set a research and development spending target of 2.4% GDP by 2027, Britain has unfortunately been falling behind other world powers. The target sits in marked contrast for example to President Biden’s commitments in the US but it is also, more concerningly, at odds with China. America’s spend on research and development is equivalent to 2.89% of GDP; for China, it recently reached 2.4% – a figure equivalent to that of the UK’s 2027 target, but one which China’s leaders are reported to have deemed disappointing.
Britain’s record in scientific and technological innovation belies this lack of competition. It has an enviable history of scientific achievement and is home to some of the world’s most innovative companies. It has, however, slowly been overtaken. To remain competitive, it must take a new approach to funding research and development around key challenges that will shape priorities over the next few decades. It will be important however to focus this approach not solely on the levels of funding given, but also on the means and strategy by which it is targeted, allocated, and coordinated.
Spending on research and development has continued to increase over the last few decades, and nowhere has this been more evident than in defence and security. With current geopolitical concerns, defence and security spending must be an ongoing debate in the coming years, as policy makers are forced to consider the changing nature of warfare over the last twenty years.
The upcoming Integrated Review will likely conclude that the government must continue to fund innovative projects that ensure Britain’s defence capability remains globally competitive and able to respond to new threats such as cyberwarfare and other technologically enabled challenges. An alphabet soup of defence and security innovation agencies – the jHub, DSTL, DASA, ACE – populate this landscape, serving not only to drive forward defence innovation but to demonstrate the government’s commitment in this area. Over the last five years, nearly £500m in funding has been committed through the Transformation Fund, part of the Modernising Defence Programme.
There are other policy areas in which funding will likely need to increase, too, not least due to their impact on UK security and prosperity. Tackling climate change must continue to be a priority. Governments globally have now acknowledged climate change is as much a national security issue as it is a green concern. In a post written for the United Nations (UN), Emyr Jones Parry, then the UK’s Ambassador to the UN, wrote of the threat that climate change poses to countries’ security – including in terms of access to resources, supply chains and the increased likelihood of conflict as a result. Investment in research and development to tackle this issue will be a long-term priority for all countries.
The UK’s ambition for net-zero by 2050 has driven equally ambitious funding commitments to help secure these targets. The Department for Business, Energy and Industrial Strategy has set aside a £1bn package of funding to deliver cutting-edge technology and innovation in this area as part of its Net-Zero Innovation Portfolio (NZIP). This package will see rounds of funding released around the ten areas identified in the government’s whitepaper, published at the end of last year.
With levels of research and development funding in the UK lagging so far behind, it could be tempting to focus too closely on the bottom line alone. Surely, with its track record of innovative projects, all it would take to put the UK on a level playing field would be to move up the timeframe for matching other countries’ investment.
Unfortunately, the reality is more complex. Research and development spending is a factor in why the UK has at times struggled to harness innovation in a coherent way, but it is not the only one at play. Even where spending on research and development has been strong, it has been disjointed. While that alphabet soup of defence innovation agencies mentioned previously may be leading the way, there remain considerable barriers that projects in this area run into time and again.
There are, however, possible opportunities to unify existing approaches and deliver a more coherent strategy that would support more effective delivery of increased funding.
The first of which – the portfolio approach deployed by the Department for Business, Energy and Industrial Strategy in the net-zero space – is a novel one for the UK, but not so in other areas. The US Defence Advanced Research Project Agency’s (DARPA) approach – which sees project managers bring together portfolios of related projects focused around set missions – is an example of where this has worked effectively elsewhere.
Not only does it ensure a joined-up strategic approach to the commissioning and funding of new projects, it helps those involved to accept greater risk when choosing what to fund – safer in the knowledge that even a failed project will have contributed in some way to the achievement of the portfolio’s greater goal.
With the Department for Business, Energy and Industrial Strategy pioneering this approach in funding around its net-zero ambitions there is little good reason why mission-driven, portfolio approaches to other overarching policy or societal goals should not be implemented – particularly where it strengthens Britain’s place on the international stage. If it is endowed with the operating model to do so, the new Advanced Research and Invention Agency (ARIA) should be uniquely well-positioned to drive this kind of purpose-led model of research and development funding.
Then, there should be a requirement to better control for the tendency toward funding for early stage projects. Many innovative defence projects find themselves awash with funding at an early stage, only to struggle to keep themselves afloat further down the line as the cash flow dries up. As a result, too few of the innovators in this space selected for early stage funding reach a stage where they are adopted and deployed in a real world setting. While funding bodies should no doubt continue to take a ‘test-and-learn’ approach, there should be sufficient capital reserved for those innovations which show the potential to scale.
Finally, to address some systemic challenges it has faced in effectively allocating funding, the government should consider whether the traditional model of public-sector partnerships – that of large private contractors providing staffing and services – is serving it effectively. In designing and developing new funding routes, the government will need to consider what opportunities exist to partner with the most innovative in society and, as a result, harness the innovation within the startup sector or in academia. The UK’s tech startup sector has become one of its most valuable and has shown it can weather the storm better than most expected a year ago. It is time for the government to consider the sector as a priority for investment toward the achievement of strategic goals.
Power in the twenty-first century is more a function of laboratories in Cambridge and Manchester than ship-building on the Clyde or warships in Portsmouth harbour. But it will require serious levels of investment to ensure they produce the innovative gunpowder for today’s conflicts. The areas to which the UK has allocated its funding are the correct ones, but to remain competitive it will need to take a more strategic approach to achieving them – one which will require adequate funding, and a plan to deliver it. From that will likely flow an increase in Britain’s global power, hard and soft.
Daniel Korski is the Chief Executive Officer at technology firm PUBLIC and has twenty years of experience in senior positions in government. He currently sits on the Government’s Digital Economy Council. Daniel was most recently Deputy Head of Policy at No. 10 Downing Street and Special Advisor to Prime Minister David Cameron.
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