Research shows UK productivity gap could be closed with more innovation in services
02/05/2008
"The UK should aim to be the best business environment in the world for high value services by 2014. Services account for 75 per cent of our economy yet until now they are not taken as seriously as the manufacturing sector"
Innovation in parts of the UK’s services sector has to improve to close the productivity gap with other nations, according to new research from NESTA and the University of Cambridge.
The research, based on a survey of 16,000 firms, shows that services firms struggle to be more innovative because they lack expertise, resources and support.
The biggest barriers to innovation are risk, uncertainty, regulation, a lack of skilled workers and a lack of information on technology and markets.
A third of all services firms find it too expensive to innovate and struggle to access finance to support innovation.
Services are vital to our economy yet only 24 per cent of services firms introduce new products or services to the market, compared with 36 per cent among manufacturing firms.
The research concluded that government policy needs to take services more seriously and invest in high value skills and knowledge transfer.
That involves recognising that services firms innovate differently from advanced manufacturing and that we need policies to support increased training and development, and the effective exploitation of technology.
The government must therefore incentivise training and staff development and look at a new Learning Tax Credit for small firms. Universities and colleges should be encouraged to develop courses that combine business and management with technical expertise.
And firms that want to innovate should have access to better advice and expertise on ICT and other technology. This requires a UK-wide Innovation Advisory Service that would be comparable to the service available to firms in the manufacturing sector.
Commenting on the research, NESTA CEO Jonathan Kestenbaum said;
“The UK should aim to be the best business environment in the world for high value services by 2014. Services account for 75 per cent of our economy yet until now they are not taken as seriously as the manufacturing sector.
“We need to have a stimulating and supportive environment for both high value services and high value manufacturing. Rather than being mutually-exclusive, both represent the kind of high-value, dynamic, creative economy that the UK needs if it is to be as productive as other leading nations.”
NESTA spokespeople are available for comment and interview. To arrange to speak to someone from NESTA please contact Catherine Anderson on 02074382609 or catherine.anderson@nesta.org.uk.
Notes to editors:
NESTA
NESTA is the National Endowment for Science, Technology and the Arts - a unique and independent body with a mission to make the UK more innovative. It invests in early-stage companies, informs and shapes policy, and delivers practical programmes that inspire others to solve the big challenges of the future.