How public sector knowledge assets can contribute to economic growth

In April 2021, HM Treasury published a new report (‘Getting smarter: a strategy for knowledge & innovation assets in the public sector’) to support the effective management of public sector knowledge and innovation assets. The key deliverables included £17m to establish a new strategic capability unit (The Government Office for Technology Transfer) and funding (managed by UKI2S) to help public sector knowledge assets translate into new high-tech jobs, businesses and economic growth.

Dr Andrew Mackintosh, now Chair of UKI2S, authored the 2021 report and we spoke to him about knowledge assets and how their value can translate into economic benefit.

What are public sector knowledge assets?

Work on knowledge assets (KAs) started as a broader piece of work that the Treasury was doing to understand all its assets. It started with easier-to-understand areas, ‘how many buildings do we have, how much land do we own, is it being used properly’ etc. More recently the work moved on to KAs, which covers things that you can’t necessarily touch and feel. The obvious example is intellectual property. But it’s not just the sort of intellectual property that you can register. Knowledge Asset is a collective term for a whole range of capabilities, including understanding data and know-how that an organisation accumulates just by carrying out its day-to-day business. The report estimated that the government stock of KAs (excluding universities) was £104bn!

How can the UK unlock the hidden value of public sector knowledge assets?

Identification of opportunities is the first challenge, especially if you’re not used to thinking about the broader uses for knowledge assets. The second challenge is knowing what to do with it once you’ve decided you may have something.  Have you got a mechanism and the management expertise to deal with it? And in general, most government departments don’t because they haven’t yet gone far down this track. The third area is infrastructure, is there access to support for creating value from KAs, while the fourth area is incentives. If you’re a hard-pressed government department, if you’re running the NHS or the National Archives, why bother? The final one is funding and where does it come from?

Given these challenges, how does one provide an escalator for ideas to reach escape velocity out of the department and give them an opportunity to compete in the broader marketplace? Once you’ve done that, how does that become new jobs, new businesses, new growth, how do you find external investment?

Assuming you can get to a point where you’ve started to create some shape around an idea which may have commercial potential, and you’ve spoken to people outside the organisation to validate this, you need a mixture of support – like you do in any start-up. These include access to funds (often not very much at the beginning) and expertise to understand new markets, possibly leading to new partnerships for example.

That starts to create jobs and economic activity.

Which government departments have the most knowledge assets?

Healthcare is probably the largest, of which the NHS is the biggest subgroup. It’s clearly about data and human capital. The NHS is a massive employer and the skills and expertise and the human capital in the NHS is enormous.

Another big one is the Ministry of Defence and a third big area is BEIS, the department that looks after strategy, enterprise, industry and skills.  This includes the public sector research establishments, as well as dozens of ‘arm’s length bodies’ of government such as the Met Office and the Intellectual Property Office, which themselves are potentially rich sources of knowledge assets.

What role is there for UKI2S in relation to knowledge assets?

Since the report was published, a Government Office for Technology Transfer (GOTT) has been set up to support the transfer of knowledge into economic gains. GOTT will work with government departments to help identify the opportunities to realise value from knowledge assets and help them overcome challenges by making this sort of work part of the day job rather than something peripheral.

As part of this support, UKI2S will manage the funds allocated to helping accelerate the commercialisation of KAs. UKI2S will start to engage as a possible source of equity investment once the idea becomes a business opportunity. UKI2S can invest these funds in public sector knowledge assets that will translate into new high-tech jobs, businesses and economic growth.

With its 20-year history of connecting with commercial opportunities from public sector research establishments, UKI2S is a logical equity funding vehicle to accelerate the exploitation of public sector knowledge assets from other departments. This marks a significant broadening of the UKI2S remit and will support further opportunities for the UK to capitalise on existing knowledge arising from the activities of government.