The head of Innovate UK has thrown support behind proposals to move the innovation agency into the Department for Business and Trade, arguing that the change would put the organisation closer to the daily realities of helping businesses grow.
The remarks, reported during a discussion about the future of the UK's innovation funding landscape, mark the first time the agency's chief executive has publicly addressed the expected machinery-of-government change. “Innovate UK is not a pure research body. We are here to make innovation happen in the economy. If you want to do that effectively, you need to be where business policy is made. Joining the Business Department very much makes sense,” the executive said.
What could change
At present, Innovate UK sits within UK Research and Innovation, the umbrella funding organisation that also contains the seven research councils and Research England. UKRI is sponsored by the Department for Science, Innovation and Technology, which was given overarching responsibility for the UK's research and innovation system when it was established in 2023.
A move to the Department for Business and Trade would represent a significant redrawing of the innovation landscape. It would place the agency alongside teams responsible for sectors such as aerospace, automotive, financial services and advanced manufacturing, and closer to the industrial strategy machinery that has gained renewed importance in Westminster. It would also change the daily line of accountability: instead of reporting to the science secretary, Innovate UK's leadership would report to the business secretary.
Supporters of the change argue that it would solve a puzzle that has existed for years. While the science department looks after research and frontier technology, the business department holds most of the policy levers for growing enterprises: trade, access to finance, regulation, procurement and skills. Innovate UK's portfolio spans both cutting-edge research and commercial application, so locating it in a department focused on growth is seen by many as a natural fit.
A return to its roots
The proposed move would, in some respects, be a return home. Innovate UK's predecessor body, the Technology Strategy Board, was set up in 2007 under the then Department for Innovation, Universities and Skills, and was later sponsored by the Department for Business, Innovation and Skills. It was only in 2018 that the newly created UKRI absorbed Innovate UK, aligning it more closely with the science base.
That integration was intended to improve collaboration between researchers and business. It led to successful programmes such as Knowledge Transfer Partnerships and the Industrial Strategy Challenge Fund, which directed funding towards pressing challenges like battery technology, healthy ageing and sustainable construction. It also created the network of Catapult innovation centres, which help companies test cutting-edge technologies and keep the UK at the forefront of advanced manufacturing.
Yet some in the business community always felt that Innovate UK had become too isolated from mainstream industrial policy. The creation of the science department in 2023 gave science and innovation a cabinet-level presence, but it also created a new divide. Companies seeking a single innovation grant often found themselves navigating both the science department and the business department, depending on whether a programme was framed as scientific research or economic growth.
Why the boss supports it
The Innovate UK chief argued that the shift would improve access to finance, reduce duplication and strengthen the agency's ability to speak directly to company boards. The official specifically pointed to opportunities to align with the business department's sector strategies and trade teams, which are increasingly focused on advanced manufacturing, clean energy and life sciences.
“If we are serious about making advanced manufacturing, clean energy and life sciences the engines of the British economy, we have to connect every pound we invest to the wider business environment,” the official added. “Being part of a department whose job is to make markets work better gives us a stronger platform to do that.”
The official also noted that the move could help position Innovate UK when the government finalises its next spending review. With budgets expected to be tight, being part of a department that can demonstrate a direct impact on growth and productivity could protect the agency from cuts and support new, targeted commitments. In contrast, the science department has to balance the needs of the research councils, a much broader research ecosystem and several other public bodies.
There is also a branding argument. Many small business owners do not realise that Innovate UK is the public body they should approach for innovation funding. Being part of the business department could raise awareness and make the organisation feel more approachable to executives who see themselves as businesspeople, not researchers. That might increase demand for grants and widen the pool of applicants beyond the usual innovative technology companies.
What some researchers fear
Business groups have largely responded positively to the possibility. The idea has been floated in policy discussions for several months, and many industry bodies have told officials that innovation support needs to be easier to find and simpler to apply for. They also point out that a clear link between grants and business support could help companies scale up and export more quickly.
One major concern, however, is that moving Innovate UK could weaken the UK's commitment to long-range, high-risk research. Some scientists worry that the business department will demand near-term commercial returns from grants that may take more than a decade to bear fruit. The research councils fund basic science, while Innovate UK pays for applied research and development. The two activities are often deliberately coordinated through joint calls and shared programmes.
If Innovate UK is pulled into a department whose primary brief is growth, mission directors may prioritise projects with a clear route to commercialisation over those with more speculative potential. That would, in the eyes of many academics, undermine the UK's comparative advantage in discovery-led research. They note that some of the most successful innovations in recent years, from mRNA vaccines to modern batteries, took years of uncertain research before industry could see a clear use.
The structural question
There is also a question about the rest of UKRI. The business department has not expressed interest in the research councils, which are dedicated to university-backed curiosity-driven research. If Innovate UK is detached from UKRI, the link between fundamental and applied research could be broken. One option is to keep Innovate UK within UKRI while changing its sponsoring department. Under that model, the line of accountability to ministers would shift, but its formal relationship with the research councils would remain intact.
Another option is to transfer Innovate UK wholesale to the business department, leaving it as a standalone executive body outside UKRI. That would give the business secretary direct control of grant strategy and allow closer alignment with industrial support. But it also carries practical risks. Cross-council calls, shared digital infrastructure and common evaluation frameworks would become much harder to manage across two separate organisations.
The choice matters because it determines whether Innovate UK can continue to run joint funding calls with the research councils. Such calls support the translation of early discoveries into commercial products and are particularly important in sectors such as quantum computing, synthetic biology and clean energy. Academics fear that full separation would fragment the support system and make mission-led research harder to deliver.
International comparisons
International counterparts will be watching carefully. Several countries have experimented with placing innovation agencies under their ministries of industry, finance or economy. France maintains Bpifrance, a public investment and innovation bank tied closely to the state's economic strategy. Germany manages research and innovation support through a mix of federal ministries, with the Federal Ministry for Economic Affairs and Climate Action playing a major
Source:UKTN News