Funding innovation in the spotlight

After the initial introduction and coffee the group quickly moved on to the subject of how food producers, and machine builders and integrators working in the food and beverage industry, can drive forward their ideas to increase productivity and efficiency through the use of greater automation and how these ideas can be turned into reality.

The discussion mainly focussed around the opportunities provided by Innovate UK and also the R&D Tax Credit scheme, which appears to be surprisingly under-utilised as an opportunity to fund innovation projects.

Innovate UK is a Government agency that handles funding for innovation and technology. It is responsible for investing in high-potential innovation projects which have the potential to accelerate UK industry growth. It runs regular funding competitions with a changing focus. The competitions are open to projects led by UK-based businesses or research and technology organisations, with funding being awarded to the winners – those whose projects most closely meet the criteria set for a specific competition.

R&D Tax Credits are a UK tax incentive scheme designed to encourage investment in R&D. Claimed costs are offset against corporation taxes. Government guidance on what is covered by the scheme says it relates to ‘Work that advances overall knowledge or capability in a field of science or technology, and projects and activities that help resolve scientific or technological uncertainties, may qualify for R&D relief’. The scheme can cover internal labour cost for time spent on development projects. It also covers energy, consumables and wasted material or ingredients used up as part of the development process. A portion of relevant costs associated with hiring contractors or test facilities and agency staff to help with development projects can also be claimed for. 

Manufacturers have, traditionally, been more comfortable buying the same equipment that they have always bought to help increase outputs. So the majority of suppliers are also happy to continue to supply the same equipment all the while this is what they are being asked for. Most companies are risk and change averse which is why industry moves forward with innovative solutions at such a slow pace and this is the mindset that Innovate UK funding was set up to change. It is the highly innovative but risky and disruptive project ideas that, if successful, can offer the biggest opportunities for improving productivity, and production processes. 

I wanted to know more about how companies can access Innovate UK funding. OAL has attracted four Innovation UK projects over the last five years so is an expert on the subject. Jake Norman said: “Once you have the contacts and understand how the different funding programmes work, it is really quite simple, but taking the first steps can be daunting.” Explaining how OAL has achieved these successes, Norman explained that the company works with a consultant who helps pull together the projects and handles the grant applications and who is also responsible for the administration work around the projects, to ensure that the projects deliver what is required.

OAL also leverages its links with its local University – Lincoln - its local Knowledge Transfer Network (KTN), and Innovate UK itself, to ensure that its grant applications are as strong as possible. “We also use our commercial links to ensure that we have backing from the supply chain and retailers in place before we put in any application,” said Norman. 

Gray pointed out that one of the reasons for the relatively low take up of applications for funding among SMEs in the food industry is a hatred of filling in forms which resulted in low-take up relating to innovation projects. Simon Baty explained that the KTN is always available to help companies with their proposals and urged anyone considering putting together a proposal for an Innovate UK grant to contact their local KTN. He said: “We can review a bid to ensure it is as strong as possible and can collaborate with companies and consultants, academic partners to help bring the most suitable partners together for projects.” This is good advice, in light of the evidence which shows that companies working with KTN are twice as likely to have a successful funding application.  

The roundtable discussion moved on to consider what the first steps should be for those considering entering an Innovate UK funding competition. Funding calls are announced regularly but waiting for a suitable project to appear is not a good move as it will not leave enough time pull together a strong proposal within the designated six-week window of opportunity given by Innovate UK to do so. 

Mat Rayment has worked on many projects with food industry partners, so is in a good position to offer advice. He said: “It is vital to have a clear pipeline of innovation and automation projects – both those which can be internally funded and those that you would like to fund but which are considered to be too risky – as it these risky projects that Innovate UK competitions are usually aimed at.

“To get a proposal together within the allocated timeframe requires a consortium of people willing to work together on a project to have been put together in advance. The consortium should have already agreed upon what success would look like at the end of the project journey. It is also vital to have a clear idea about how a project’s success could help to improve productivity and it is really important to have a strong business case. 

The most successful projects will be those that either hit a very strong governmental target or have more cross-industry appeal. Where it could offer benefits in a wide range of food industry applications. One vital element of any proposal is to have a sound business case.

Bringing consortiums together takes some thought. If you are a machine builder looking to get end users on board you really need to understand what they are looking to achieve. Most often this will revolve about a need for greater flexibility and more adaptable processes. 

While the UK Government seems to have woken up to the fact that the food industry is important the roundtable group were agreed about the fact that this is not borne out by the Innovate UK funding calls and shoehorning food production innovations into the funding calls can be tricky. Food engineers are therefore advised to look most closely at general manufacturing calls.

Steve Butterworth explained that Cargill Meats Europe has only recently become aware of the funding opportunities for automation projects, and this is due to the support received from the MTC. In addition to winning funding from Innovate UK for a project, Cargill Meats Europe has also been successful in gaining funding from the European Region Development Funding (ERDF). Butterworth’s advice for other food producers is to look into this area too. The ERDF funds projects that strengthen economic and social cohesion in the EU by correcting imbalances between its regions. Its funding areas include innovation and research; the digital agenda; support for SMEs and the low-carbon economy.

For less risky projects companies should be looking at the R&D Tax Credit scheme which offers corporation tax relief for costs relating to R&D projects.  

Canice O’Reilly believes that many companies wrongly believe that their work does not quality for R&D Tax credit relief. He speaks from experience as LAC Conveyors fell into this category. He said: “We only recently started claiming for R&D Tax Credits when a new banking relationship manager from Lloyds Bank explained exactly what we could claim for. The often bespoke development work associated with automation projects takes up the time of some very costly members of staff and R&D tax credits helps us to fund this time. It has allowed us to take more risks and to become more innovative.” 

Cargill Meats Europe fell into the same category, as Butterworth explained: “The company had ignored R&D Tax Credits for many years until someone with experience came on board and explained it properly. The scheme has provided us with huge benefits. R&D tax credits can provide greater security for R&D departments and when it comes to profit-margins it can significantly affect the bottom line.”

So, for the majority of food manufacturers and machine builders serving the industry it looks like R&D Tax credits could provide a regular funding solution to help drive innovation. It can massively reduce the costs associated with delivering new product developments, allowing companies to be more innovative and to take more risks. Essentially it can de-risk innovation.

A google search for ‘Funding for innovation projects’ also brought up ‘Shell Springboard,’ a project which provides no-strings attached funding for UK-based SMEs with innovative, low-carbon business ideas. Every year the programme awards a national winner with £150,000, with a further five regional winners who each get £40,000 of equity-free funding to help grow their low-carbon businesses.

Another funding opportunity was mentioned - Newton funding - which aims to address the well-being of communities by strengthening partner country science and innovation capacity. Activities covered by the funding must be able to demonstrate that they are aiming to contribute to a reduction in poverty or improve the welfare of the population of Newton Fund countries.  

 

As the roundtable event came to a close, the group concluded that there are many different avenues available for those looking or fund their innovation projects. However, opportunities can be difficult to identify for the uninitiated. Norman urged food companies to become more involved. He said: “It is important that SMEs in the food sector look more closely at the funding opportunities available as they do offer the best route to potentially achieving those productivity improvements.” Keith Willetts added that it is important to take a step back and to carefully consider what might transform a business and to look at where improvements are really needed. 

It was agreed that it is best to start the search for help and partners locally. Regional KTNs, for example, run regular regional networking events designed to bring people and companies together. The networks were set up to do just this - to create consortiums for funding bids - so do make use of them. They also have experts available who can review bids to make sure they are as strong as possible. 

Catapult Centres and the MTC can also offer a great deal of help, support and guidance. They were created to transform the UK’s capability for innovation in a number of specific areas and to help drive future economic growth. The Science and Technology Facilities Council (SFTC) and many of the Universities are also good places to go for advice and assistance. 

Colin Burnett pointed out that SMC actively works with UK University research departments and with the MTC and so the company is able to point its customers in the direction of relevant research and innovation specialists. He said: “This is a service that we are keen to develop and would be very pleased to hear from our customers who might need help or guidance in finding the right funding solution for their innovation projects.”

In today’s increasingly competitive business environment it is important to look out for any opportunity to gain an advantage so do take the time to consider how process innovation might help your company to do this. There are many funding opportunities that can help you achieve your goals and this article offers some advice on where to get help to access this so there is no excuse to get left behind!