Innovation needs some fresh ideas

DIUS offers Whitehall a real chance to make changes for the better, says James Wilsdon

It is easy to exaggerate the significance of changes to the machinery of government. Novel acronyms and fresh ministerial line-ups tend to unleash flurries of media speculation, but for the majority of those who work in Whitehall, life continues much as before. As one senior official from the Department for Innovation, Universities and Skills admitted at a seminar last week: "We're still sitting at the same desks, doing the same jobs. Only the name plates on the building are new."

Of course, many outside Government are hoping that the creation of DIUS represents more than a cosmetic makeover. Across the research and higher education community, there has been a broad welcome for the new department. There is an appealing logic to bringing both wings of the dual-support system under one roof. And the focus on skills signals a serious intent to implement the findings of the Leitch review.

But the most intriguing of John Denham's trinity of responsibilities is innovation. In the months leading up to the Blair-Brown handover, there was talk of a new ministry for science. By opting instead to emphasise innovation, the Government now has a long-overdue opportunity to give a clear account of what innovation is, where it comes from, and what its role is in supporting it.

Traditional policies for innovation have been dominated by a "pipeline" view of basic science flowing into new products and applications. But this model is outdated and often irrelevant to how innovation occurs within the British economy. It emphasises products at the expense of services and processes. And it prioritises manufacturing over other significant areas of innovation: in financial services, the creative industries, retailing, consultancy and the public sector.

Over the past year, the National Endowment for Science, Technology and the Arts has been making the case for this broader understanding of innovation to be better reflected in public policy. Its latest report unearths patterns of "hidden innovation" across six sectors that - because they do not invest heavily in formal research or produce many patents - operate beneath the radar of mainstream innovation policy. Richard Halkett, executive director of policy and research at Nesta, acknowledges they are not the first people to say that innovation is about more than just science and technology, but he insists: "This needs to be restated in the new political climate."

So Mr Denham's challenge will be to ensure that science and innovation are no longer treated as interchangeable elements of the same policy discussion. This is not to diminish the importance of science. Investment in basic research and a skilled scientific workforce remains vital. But DIUS should not allow the science lobby to distract it from the larger task of developing the foundational skills for innovation - analysis, problem-solving, creativity and resourcefulness - across the school and university curriculum.

A second challenge will be to avoid replacing one pipeline model with another, by implying that most innovation flows from universities. According to the latest figures from Eurostat, 90 per cent of the UK's innovative businesses have little or no interaction with universities. This is one drawback of the post-Department of Trade and Industry separation of innovation policy from enterprise and business, and DIUS must resist the temptation to simplify the linkages between its component parts. Just as with debates over the science base, a healthy and dynamic university sector is a key part of the overall innovation mix. But its significance should not be overplayed.

If it is to become a true champion of innovation, DIUS will have to make its case across Government: in health, transport, environment and defence. There is a lot that Government can do to stimulate innovation through demand-side factors. It will also need to influence the wider economic, tax and regulatory factors that lie under the control of the Treasury and the Department for Business, Enterprise and Regulatory Reform. Mr Halkett argues: "There needs to be a well-worn path between DIUS and the rest of Whitehall. Mr Denham will have to spend time making the case for innovation with his colleagues."

For the first time, innovation policy has a seat at the Cabinet table. This is an enormous opportunity. But the development of intelligent innovation policy requires a sustained and informed engagement with business as well as universities and the research base. A lot will depend on whether Mr Denham is willing to challenge received wisdoms and offer a more sophisticated account of how and where innovation occurs in Britain.

James Wilsdon is head of science and innovation at the think-tank Demos and a senior research fellow at Lancaster University.