Innovate UK has temporarily halted its Smart Grants programme—worth £25 million a year—to overhaul how it supports small and medium-sized enterprises (SMEs).
The pause aims to address oversubscription issues, with success rates reportedly falling below 10 per cent for applicants, and possibly as low as 2 per cent according to some.
Under the existing scheme, SMEs could claim up to 70 per cent of costs for commercially viable research projects. The latest round of successful recipients have already been informed, but no further awards will be made until a revamped initiative is unveiled—anticipated before the summer.
A spokesperson from Innovate UK said the review is partly a response to “incredibly low” success rates. “We know the effort and often the cost that goes into these applications,” she added. “We want to ensure our support is going to businesses with genuine growth potential, while also making it easier for them to apply.”
The review also aligns with government directives to focus on companies with strong prospects for scaling and creating jobs. Currently, applicants do not have to demonstrate their potential for future growth. This may change when the new-look scheme is rolled out, although Innovate UK insists the pause is not driven by any Treasury-led funding cuts.
Businesses have increasingly turned to specialist consultants to improve their grant applications, a trend that Innovate UK acknowledges can drain resources. Some industry figures, including venture capital chair Ewan Kirk, label the practice a “tax on innovation”. The agency aims to make future application processes “more accessible and inclusive” to mitigate these extra costs.
Innovate UK manages a budget of £1.1 billion, backing more than 450,000 “innovators” annually, including over 10,600 tech businesses through its Business Growth programme. However, lower-than-expected success rates led to online criticism recently when the organisation initially awarded only 25 grants in its £4 million Women in Innovation scheme; it later increased the total to 50.
The agency is now gathering feedback from SMEs as part of its review. Interested businesses can take part in a survey accessible via Innovate UK’s website.
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Innovate UK pauses flagship grants scheme for SMEs amid major review