Fixing barriers to SME innovation key to unlocking regional growth, according to new report
Added by Love Business East Midlands | 10 June 2025
UPDATED: 10 June 2025
Oxford Innovation Advice calls for overhaul of complex business support system holding back SME innovation and UK competitiveness
A report released today by Oxford Innovation Advice (OIA) reveals that UK SMEs are innovating every day - but too often, their efforts are invisible, informal, and unsupported by the current business support landscape.
Drawing from in-depth interviews with experienced business advisers and data from over 3000 SME interactions, ‘Unlocking SME Innovation’ provides a rare management-led perspective on the real conditions for innovation across the country.
The findings come at a pivotal moment, as the UK government prepares to launch its Business Growth Service and ramp up regional innovation spending under the next round of devolution deals and the UK Shared Prosperity Fund (UKSPF) allocations.
“SMEs aren’t lacking innovation - they’re being held back by a system that doesn’t do a good job of supporting them,”
said Jane Galsworthy, Managing Director at Oxford Innovation Advice.
“Our advisers repeatedly encounter ambitious ideas stalled by funding gaps, stretched leadership capacity, and a confusing, fragmented support landscape with bosses frustrated at where to go for help.”
Key Findings of the report, include:
• Innovation is widespread but informal: Most SMEs innovate instinctively but lack strategy, funding, or language to engage with formal support.
• Access to finance is a systemic blocker: Confusion, complexity, and confidence gaps - not funding availability - are the dominant barriers to innovation investment.
• IP and sustainability are sidelined: Seen as ‘nice-to-haves’ rather than core growth enablers, these are often underused until risk arises.
• Leadership and time constraints limit scale: Innovation often lives solely in the founder’s head, with limited organisational capacity to scale or embed change.
• The support system is fragmented: SMEs are overwhelmed by competing programmes, inconsistent messaging, and inaccessible processes.
The report makes five bold, evidence-based recommendations for government departments (such as Ministry pf Housing, Communities and Local Government and the Department for Business and Trade), regional growth bodies, and innovation funders.
These start with designing support around lived SME realities and not abstract policy goals, and simplifying access to innovation finance through phased funding and clearer pathways.
Oxford Innovation then calls for investment in strategic SME capabilities (particularly leadership and planning), integration of IP and sustainability into mainstream support and, finally, embedding the voices of specialist business support and management teams into programme and policy design.
The report arrives as pressure mounts on central government to deliver a more responsive, regionally balanced innovation ecosystem.
“Removing the barriers that hold back the UK’s brilliant SMEs is crucial to achieving the UK’s innovation and economic ambitions,” added Jane.
“We urge policy makers to build systems that are simpler, smarter, and shaped by those who work with SMEs daily.”
Oxford Innovation Advice works closely with policymakers and funders to design, mobilise, and deliver high quality business support services that achieve sustainable economic development and inclusive growth locally, regionally and nationally.
With the Treasury set to review SME tax relief schemes and the Department for Business and Trade (DBT) planning new regional innovation accelerators later this year, the Unlocking SME Innovation report offers timely intelligence to inform future strategy and spending.
Download the full report: Insight Report: Unlocking SME Innovation
