The key to growth is innovation says prime minster at CBI conference in Birmingham

“I’m not just here to solve problems, I want to build a better country.”

Rishi Sunak’s speech to this year’s CBI conference in Birmingham focused on his belief in the power of innovation to drive growth, which he declared the “defining focus of this government."

It was all a long way from Boris Johnson’s rambling speech about Peppa Pig which went down badly at last year’s CBI conference, and Rishi got an appreciative, if not long and resounding, applause from the audience.

Rishi said: “I want to lead a country where that an innovation mindset and culture permeates every area of what we do.”

So how do we do that Rishi?

“First, we need to harness innovation to drive economic growth. Second, we need to embed innovation in our public services. Third, we need to teach people the skills to become great innovators.”

For around 50 years Innovation was responsible for around half of the UK’s productivity increases. But the rate has slowed significantly since the financial crisis. The Prime Minister said this difference explains almost all of the UK’s productivity gap with the USA.

Firing up the innovation engine starts with government investment in basic science and research, said Mr Sunak.

“In our Autumn Statement we announced the budget for research and development of £20 billion, that’s almost a fifth of our entire capital budget – the highest level of R&D spending this country has ever seen.

“But it’s the private sector innovations that really drive growth. So the autumn statement cut taxes to encourage more companies to invest more in R&D and we want more businesses to claim R&D tax credits”.

He added that the government is absolutely committed to using its new Brexit freedoms to create the most “pro-innovation regulatory environment in the world.”

And its ambitions aren’t just targeted at big businesses, he said. “We want to support small businesses too, on every high street and business park. The real prize is to help them innovate through government initiatives such as Made Smarter and Help to Grow.

But there can be no new innovation without people with the skills to innovate, he said. “We have to give every child the best chance in life.

“We are asking ourselves about the curriculum and technology. And we need to end once and for all the idea that learning ends at 19. I believe that education is the closest thing we have to a silver bullet in public policy. It is the most transformative thing we can do in public policy and I am determined to get this right.

“Innovation matters because it creates more jobs and better opportunities. And over the long term, boosting growth and creating better public services, innovation is how we will cut taxes for people and businesses, which is why I am placing innovation at the heart of our government agenda.”

So what did the audience make of his speech? Director of the CBI, Tony Danker, said: “It was great to hear the Prime Minister’s deeply held convictions and passion for innovation, and the role it can play as one of the most important drivers of the UK’s future economic growth.

“The Prime Minister started to lay out a vision for a new approach. But what we didn’t get today are the details of the measures to achieve it. Businesses are making investment decisions now and need to hear more on this agenda as soon as possible.

Speaking to Nicky Godding, print editor at Black Ox Media, later on he said: “Business investment is tomorrow’s growth today. Investing now is not inflationary, because none of it will come on stream for a year and I think the government has missed a trick in not having investment incentives in the mix now.

The Annual Investment Allowance will be useful for small businesses, which can discount expenditure on plant and equipment off their tax bill up to £1 million. Rishi Sunak said that this suits 99 per cent of businesses, but that’s because most of the UK’s businesses are SMEs. It misses out that the lion’s share of business investment to really get the economy going comes in really big investments.

He added: “If you look at the OBR forecast, business investment is going down and that is a worry for the next few years. I hope the government will get behind the net zero and clean energy markets and the life sciences market which is where government can make a real different to turbo charge the industry success, and then that drives the supply chain.

Kath Shimmin, Chair at Blake Morgan added: “Businesses are facing all sorts of difficulties and many are finding it really hard, particularly in the south east where they are competing for talent, in a world where they can’t match the pay regimes of other countries such as the USA, or even London.

"These companies are very focussed on making their businesses as attractive as they can to prospective employees and working out how you do all those things.

“These businesses are amazing because they’re not giving up, they’re figuring it out. That’s what Blake Morgan tries to support them through the challenges, of people, growth, technology.”