Science, Innovation and Technology Committee
Oral evidence: Innovation, growth and the regions, HC 538
Tuesday 1 April 2025
Ordered by the House of Commons to be published on 1 April 2025.
Members present: Chi Onwurah (Chair); Emily Darlington; George Freeman; Dr Allison Gardner; Kit Malthouse; Jon Pearce; Steve Race; Adam Thompson.
Questions 128 - 186
Witnesses
I: Dan Norris MP, Mayor of the West of England, Mayoral Combined Authority; Kim McGuinness, Mayor of the North East of England, North East Combined Authority; and Councillor Mary Ann Brocklesby, Cardiff Capital Region Chair and Leader, Monmouthshire County Council.
II: The right hon. Greg Clark, Chair, Warwick Innovation District; Dan Cathie, CEO, Silveray; and Dr Natasha Boulding, CEO, Low Carbon Materials.
Written evidence from witnesses:
Witnesses: Dan Norris, Mayor McGuinness and Councillor Brocklesby.
Q128 Chair: Welcome to the Committee’s third session in our inquiry into regional growth and innovation. I welcome our first panel. I will ask them to introduce themselves as I pose my first question to them. We will then hand over to the rest of the Committee.
Growth is this Government’s key mission. We have been hearing about the challenges of achieving the kind of innovation-led growth outside the golden triangle. I want to start by asking Dan Norris and Kim McGuinness to give the Committee their views on the key challenges for driving innovation today in the regions.
Mayor McGuinness: Thank you, Chair. I am Kim McGuinness, North East Mayor. Innovation is absolutely critical for growth. It is a critical component of our regional growth plan in the north-east. We are out to consultation on a draft version now.
Some of the challenges relate to the unequal distribution of funding for innovation. What we see in the north-east is the lowest level of innovation R&D funding through our universities anywhere in the country. It is disproportionate. We do not think that the current funding model works to drive growth in all parts of the country. That is despite the fact that in our region we excel in the development of new technology, particularly in pharmaceuticals, digital, tech and offshore wind, which is a key driver. Despite the lack of funding, we punch above our weight. If we had the funding behind us in a more equally distributed way, you would start to see significant growth in jobs and so on.
On top of that we have made decisions in our region to pump-prime where we can with funding for university spin-outs. We have made the decision to look at innovation funding, along with MADE UK, with Nissan on battery technology, but that only goes so far through what we have available to us. The unequal distribution and a difficulty in attracting capital for budding and start-up businesses in those sectors in innovation makes it quite difficult for us in comparison to, for example, the golden triangle.
Q129 Chair: Thank you very much. I should perhaps mention that Kim is my Mayor, being the Mayor of the North East. It is an area I am very familiar with. Dan Norris, what is your experience?
Dan Norris: First of all, thank you very much for inviting me to be here today. It is great to see you all. Obviously, I see some of you as an MP, but I am also the regional Mayor until May for the West of England.
There are, frankly, a lot of challenges. Having been a Mayor for the last four years, one of the things I have found is that it sometimes feels like we are competing with one another as regions. I think that is a big error. What we should be doing, rather than competing with each other, is for the West of England to be competing with California, say, rather than with Bolton or Manchester. We need to get our heads around that.
In terms of funding, multi-year settlements are something that we have asked the Government for. They have rightly been prioritising by providing that and looking to do that. That is important. However, we also need to look at some examples of best practice in the rest of the world where resources are made available in a regional way. Europe does some of that very well. What is difficult is that you can suddenly find that you get some fantastic challenge that you want to rise to, and you want to know that there is a proper resource that you can turn to very quickly to grab that moment. Everything is quite slow, and I have seen it happen quite a lot in my region. For example, we are very good at quantum. We lead the world, and Bristol University in particular is part of that. It is us in the UK, America of course, China and Israel who are the big players. It is very important, not just for the obvious reasons but for our own security because quantum computers will be able to break every code very quickly, so we have to be ahead of that curve.
Some global companies wanted to come to my region, but the previous Government were not able to provide the funding quickly in order to allow that to happen, so they have gone to other countries that will get all the benefits of that. What is needed is a resource that you can define, maybe as a quantum fund or something like that, that you can immediately access very quickly to take advantage of the opportunity, otherwise the opportunity is lost to somewhere else in the world. It is about the country and not just our regions. Our regions are obviously important, and we want to see fairness and balance where we possibly can, but if we miss out on global opportunities nothing comes to our country, and it doesn’t help any region. That troubles me.
Q130 Chair: Thank you very much. The landscape of funding for growth in the regions, and for innovation, is quite complicated. I have a list of funds here: the levelling-up fund; the towns fund; the community renewal fund; the shared prosperity fund; investment zones and the long-term plan for towns. The Government announced that they would be working with the Office for Investment to develop investment pipelines. There is also the role of the national wealth fund. Kim and Dan, what funding is available? Do you see that the devolution White Paper changes the situation for the better or for the worse?
Mayor McGuinness: I don’t think I can run through every type of funding available. Obviously, the big ones are Innovate UK and UKRI, and those are the ones that are unequally distributed. Sometimes there is a feeling that there is a lack of transparency around the distribution of some of those funding elements. Similarly—picking up on what Dan has already said—there are often layers of competition that pit us against each other. They do not necessarily fit with the priorities that are already determined by the regions. The growth plans will show the sectors of strength. As I have already said, for us that is digital and tech. It is manufacturing. It is foundation economy and culture, space, defence and so on. It is not necessarily crowded in that way.
The devolution White Paper is a step forward. We are talking about more devolution of some funding pots. We are also moving in some areas to a single settlement. For example, in the north-east we will have a single settlement as of the next financial year, 2026-27. That will give us greater freedom with the money that we have to make regional interventions, but without more devolution and local decision making, and a more even distribution of the funding streams that already look at innovation and business support, we won’t be able to grow what we do. We need to look at the distribution.
My view is that it should be put much more evenly into the regions. A region like ours, with four universities that all excel in different areas of research and development and have really successful spin-out programmes where we have some incredible budding businesses making waves internationally, should not have the lowest level of funding in the country on any measurement. Whether you look at it per capita, the expertise that exists or the output—it doesn’t matter which measure you use—it very clearly is an uneven distribution. I would like to see that resolved in the legislation. I think the White Paper goes some way to improving it.
Q131 Chair: Thank you very much, Kim McGuinness. I think you are talking there primarily about public sector funding.
Mayor McGuinness: Yes.
Q132 Chair: Dan Norris, would you echo that? Could you also say a word about private sector funding?
Dan Norris: Yes; I am happy to. I agree with what Kim said. You clearly need private investment. It is going to be hugely important. The challenges of the world on all Governments now mean it is going to be even more so; that is self-evidently true.
In terms of mayoral combined authorities, please don’t assume that they are all the same. They are different, and it is a mistake to see them all through the same prism. I don’t know Kim’s terribly well, but I can certainly say that mine has a fine political balance. All the parties are roughly the same and, as Mayor, I have to get agreement from other council leaders. That is problematic because your constitution determines how you can function.
What the Government could do that would be really helpful is basically to say that Mayors have the responsibility so they make the decisions, and the electorate decide every four years. You are then held to account rather than sometimes being held up by petty party political bickering, which means that you go at the slowest pace of the slowest person all the time and miss fantastic opportunities, including private investment. When private investors want to put money in, as well as other support, they look at how capable you are at moving at pace. You are always competing with the best in the world. You miss out if you are not able to show that you can be spontaneous, quick and make those calls. It comes back to my point about having that fund.
That does not mean to say you could not work as a mayoral combined authority in co-operation with other mayoralties. For example, I am in the West of England. Wales is just the other side of the River Severn, which has the second largest tidal range in the whole world. Clearly there is a great opportunity to create sustainable energy. They are doing something similar with Steve Rotheram in the Liverpool area. I think I am right in saying that there are other things going on in the north-east as well. We should be working together, and the Government should be helping us to get all the commonality and all the common issues we have about creating energy sustainably from tidal and working together, rather than us each replicating. I don’t know what Kim does, but I suspect she is replicating stuff I am doing. I am sure that Steve is doing the same on Merseyside. That is not sensible. That is where Government could really make a difference.
At the end of the day it is the old adage: you want the right thing in the right place at the right time and in the right quantity. That is pretty much a metaphor for life. As Mayors and Governments, we need all the things that create growth as quickly as we can. While I am for there being fairness in growth and wealth creation, I also recognise that some places are better positioned to create that growth quickly and as required by the Government.
I am not competing with other regions, as I said, but my region for example is the only major city region outside London that contributes to net GDP. If you want growth for the nation, you are probably wise to sequence it in a certain way that allows for that advantage to be fully utilised to benefit other regions and order it. You have to create wealth to share it and distribute it. If you do it unequally, you will slow it up for the nation. That is a challenge for us as politicians. We have to work that out. It is not one size fits all, and not all mayoralties are exactly the same.
Q133 Chair: Kim, do you want to come back on that?
Mayor McGuinness: Yes. There is something about how we sequence investment in order to get the best bang for our buck. For different topics it will be different. The competitive bidding between combined authorities and regions is a non-starter. It has not worked for a long time because it does not get us the growth that we want to see. We could all argue that you would get more growth by putting investment into our own region. For example, we have a really high percentage in comparison to the national average of research-intensive businesses and we know that they struggle to access capital. Obviously, I talked about public sector capital, but they struggle to access venture capital funding as well. Not very much of that makes its way north of the M25. That is a problem.
I know that you are going to hear from Dr Boulding later on. Even less of that funding makes its way to female founders and innovators. We have to work to do something. We need proactive intervention in order to resolve that. We need to do it in both the public sector funding pots, with more devolution to our areas in order for us to be able to support those sectors, and to encourage private investment into the UK and truly showcase what we have outside the very centralised system that runs currently.
Chair: We are looking at private sector investment.
Q134 Steve Race: The Government clearly have two preferences. One is for strategic Mayors over council leaders. The second is for strategic authorities to take economic innovation and policy away from pan-regional partnerships or whatever else existed there before. I want to know about the role of the strategic Mayor and how you use that, if you are one, or Council Brocklesby how you experience that in the area compared to a PRP. Does the system embed the role of Mayor to help you to drive innovation and growth? Does it need to do better, or is it to do with individuals who take the role and who can lean on the soft power of being a Mayor? How will that differentiate from PRPs, for example? Councillor Brocklesby, will you kick off on that one?
Councillor Brocklesby: I am Mary Ann Brocklesby. I am the chair of Cardiff Capital Region. I am also leader of Monmouthshire County Council in Wales.
Wales is a devolved nation. It does not have Mayors. What we have are CJCs: corporate joint committees. The South East Wales Corporate Joint Committee comprises 10 local authorities, which range from Cardiff and Newport as cities, the Valleys, the local authorities of Merthyr and Blaenau Gwent, and two largely rural but very connected local authorities, of which Monmouthshire is one and the other is Vale of Glamorgan. We came together as a collective in 2017-18 for a city deal. In 2022 that became a corporate joint committee. I am explaining this to you because that CJC gives us the levers to operate like a Mayor. We have a regional transport plan in the making. We are responsible for strategic development planning and regional energy planning. That makes us a very strategic body.
The fact that we are local authorities making a decision together is a benefit. Of course, there are political differences, but you have that with a Mayor as well. Politics does not leave the door just because you have a different structure. We have been able to do a few things that are innovative in the structure of thinking about innovation, entrepreneurship and growth. We think about good growth, good innovation, failing well and really considering the ecosystem, with building blocks that are an overlap between entrepreneurship and intrapreneurship, as well as innovation. Those are building blocks of connectivity through transport, digital and data and energy.
To give you one example, we had £1.4 billion under our city deal. Just under half a billion was given to what we called our wider investment fund. As there is a city deal, Cardiff Capital Region operated with the ability to take risks and to allow the private sector to step in, using equity and debt as instruments, not grants, working in collaboration with the private sector and with our universities. We were focused on clusters, but really thinking through what life sciences meant to us, so there was medical diagnostics, and with fintech it was insurance, for example.
There are only two of us in the UK, and we were the only city deal to do this. We set up what we called an evergreen fund, with the expectation that 50% of our investments would come back and could be reinvested—precisely to your point—in a flexible, organic way so that when opportunities arose, we could step in and support. We already have over £20 million coming back to us. We are now looking at our second phase of reinvestment.
Dan Norris: I slightly disagree, in the sense that I do not necessarily agree with pan-regional partnerships because I think they end up being talking shops. What I think is great about the mayoral model for London—it was the reason why I supported it when I was last in this place—and the expansion I welcomed is that I think having a face and a person for a place is a huge advantage.
Let’s be clear: it is understood in other parts of the world. America really gets Mayors and so does Europe. We disadvantage ourselves. When I am doing deals, or trying to do deals, to secure things for my region—no doubt when Kim does it for her region and the other Metro Mayors do the same—the foreign investors get who they are speaking to, the nature of that relationship and the importance of that relationship. Our existing structures are not the same. We do not fully appreciate what that message is or what that individual means to foreign investors. We lose out if we turn away from it. I think we should embrace it.
I am keen that devolution is really devolution, so that it is not still Westminster and Whitehall meddling a bit, which I am afraid does happen and slows everything down hugely. It is a real problem. I don’t know if you have experienced that too, Kim, but I certainly find it a huge frustration. Hold us to account but do it subsequently and say, “Look, that didn’t go so well so you need to modify,” rather than blocking us at the beginning. It comes back to the thing about spontaneity. We are in a hugely competitive world which is speeding up. We are too slow. We are a half yard off the pace, and we need to do that.
Chair: Thank you; we need to move on. We do not want to rerun the argument about whether there should or should not be Mayors. I think we know that there are Mayors and there are going to be Mayors. What we are looking at is how we can ensure, whatever the patchwork of different authorities, that we can drive innovation across the country.
Kit has been trying to catch my eye for a while.
Q135 Kit Malthouse: I want to take you back to this notion of collaboration. Forgive me if I slightly characterise it as a sort of “Kumbaya, let’s all get together” approach to competition, but I thought the whole point of devolution was about competition and that devolved regions could take control of their own destiny and therefore move ahead. I get slightly nervous about a committee of Mayors getting together to allocate investment and subsidy rather than a committee of Ministers or MPs. Where is the balance between the West of England deciding, “We want to win on this over the north-east and make it our thing,” rather than recreating a national structure that allocates?
Mayor McGuinness: Will you allow me a comment on the previous question as well?
Chair: Very briefly.
Mayor McGuinness: I am not going to re-rehearse an argument, but I think one of the cruxes of that question—it starts to answer the next one—was almost hard versus soft power. The honest truth is that you need an element of both. You need the hard and fast interventions and the devolved cash in order to be able to move a market. The biggest tool that a Mayor will ever have is soft power and the ability to convene and represent a region.
To your question, Kit, it is not about us competing with each other. There should be transparency. What we will have is a series of regional growth plans, which will be incorporated into the national industrial strategy. That will give us a clear indication of where everyone is setting their stall. To me, that gives us the strength to start to compete internationally and globally and to say that, for example, in my region, the region that has the offshore wind Catapult, the region that can do everything from research and development through to servicing in the offshore wind industry, we are a global competitor in a way that somewhere that does not have access to the sea would not be. We should not be competing internally within Britain for little pots of funding here and there, when you have these strategic authorities which are designed to be fast, nimble, fleet of foot and able to make those investments in a way that we have not been able to do from the centre because the Government are a behemoth—they are an oil tanker by their very nature. That is not a criticism; it is just a fact. It is being able to make regional interventions and taking the competition out of our internal process and saying, “Right, we’ll go after that.”
Again, to bridge the two questions on pan-regional partnerships, across the north we are coming together to say that we want to be a great north. The reason we are doing that is that, when we go global and we want to attract investment from around the world, sometimes we need that scale. That is something we can offer. With the transparency through growth plans, you can see that if you look, for example, right across the north—the south-west will have similar propositions in different things and the south-east the same—we can do the whole picture of green energy. We can then start to compete with a state of America or a part of China in a way that a smaller region possibly cannot. It is not about recreating centralised structures. It is about using our competitive advantage together by removing that competition and hunting as a pack.
Q136 Kit Malthouse: Understood. Maybe I am a crusty old Tory and think that competition creates desire, hunger, ambition and those sorts of things.
Mayor McGuinness: I don’t have a problem—
Q137 Kit Malthouse: That works inside. I have a second question, which is about the role of academic institutions—large universities at the heart of successful science and technology clusters. Do you all have a concern about the health—financial, intellectual and scientific—of the institutions at the heart of it? Would it be possible—we couldn’t think of one—to sustain a cluster that does not have an academic institution at its heart?
Mayor McGuinness: I think we are all concerned about the financial health of our universities. By the way, I don’t disapprove of competition. It is absolutely fine. I just don’t think different parts of the same country should be competing with each other when we all want growth. We should compete on a global scale for the best for the whole country, and of course my region.
We are all concerned about the financial health of our universities, but they are absolutely crucial to this, particularly in the cluster environments. I will stick with the green energy example because it is nice and easy. The partnership between the offshore wind Catapult and the universities of our region is absolutely crucial. It provides the research and development that allows us to do the whole picture. That will definitely be the same in other areas in different clusters. For example, we also have a very strong space in the defence cluster. Again, that is very much supported by universities.
I am not sure it would work, but you will also find parts of the country that have healthy clusters of industry and who need to work beyond their own boundaries to access that intellectual property. I think that is fine too. Having them in the region is a key strength. I feel very lucky to have four very good universities. At the same time, some areas simply will not have that.
Chair: On that point, Jon has a question.
Q138 Jon Pearce: I want to pick up what you have been saying, Kim. You mentioned the advantages of combined authorities coming together for the size. What I am interested in—it picks up on your second point about universities—is that my own constituency of High Peak in the very north of Derbyshire is in the East Midlands Combined Authority but is connected on either side by two of the major universities and the major core towns in Sheffield and Greater Manchester. How should we be looking for, in effect, three regions—three combined authorities—to work together to enable innovators and investment in areas like that which otherwise, if it was purely done on a combined authority basis with hard borders, would never progress?
Dan Norris: I used to work for the Russell Group universities at one point. What I think is needed is collaboration. That is where Government can come in because they can help build the bridges. A lot of institutions are doing that, not just geographically but because they have a common purpose, interest, expertise, knowledge and research. That is the way you do it. Government need to be doing that dovetailing. That is not a new thing. It has gone on for a long time.
The real challenge is more about how you get the pace of university decision making to align with business decision-making timescales. Historically, universities have been somewhat slow, to be fair, and you need to get those joined up. I think that is where Government could really make a difference. They could set the dialogue, the discussion or the forums in order to make sure that everybody is dovetailing closely together for the benefit of the country and, then consequently, the regions.
Coming back to Kit’s point, while I think there is competition, Kim is never not going to root really hard for her region, as am I for mine or all the other Mayors. However, what comes from Mayors being local is a confidence in what you know you are good at, as well as where you need to be stronger and where you need to co-operate. Co-operation is key. It is not all competition, and it is not all co-operation. It is the right thing for the right situation. Mayors, because they work together so well and understand quite a lot about each other’s regions, can find commonality, which is important. It is bigger than the sum of the parts. That is why Kim talked about things that are going on in the north.
The only thing I would say is that devolution is not just north-south. It is east-west as well. My region is often dismissed because it is not the north-south battle: London versus the north. I know why that happens and I don’t blame people for doing it, but actually devolution is across all the country—east-west, north-south and all the other compass points. What matters is that we get the best from each of our regions, wherever they happen to be. That is important if we are to be successful as a nation. We have to get all of the talents of all of our people in all of the country to max out in order to be competitive and successful globally.
Q139 Chair: Mary Ann Brocklesby.
Councillor Brocklesby: I absolutely agree. I want to pick up on two points. We recognise that it is not enough to connect academia with the commercial private sector. There has to be more. The way we have been thinking about it is that the innovation pipeline and the innovation ecosystem need to fit. To illustrate that, I want to talk about a pan-national Wales/England, and a pan-regional CCR and WECA. In the creative industries, Bristol, Cardiff and the hinterlands of the two are the only area of the UK that can compete globally, not just with the greater south-east, around the creative industries, particularly around gaming, video production, virtual production, film locations and all the pipelines involved in that.
As you know, Dan, we are already developing a super cluster that flows through the fact there are two combined authorities. One is Mayor-led and one is a CJC. Nevertheless, our industries are connecting and so are our universities and FE colleges because of the type of skill pipelines you need. The points that you are thinking of so that you can connect academia were done through two UKRI grants: for south-west media and for Media Cymru. You had academia in place, but you also had the money, the networks, the mentoring and the support. You had soft play areas where start-ups could fail, develop and go further into scale-up in a controlled environment, which meant that we did no harm to the individuals or to the economy. We did good.
We also thought about mechanisms for spin-out and the follow-up funds that you would need. Catalyst funding, seed corn funding and follow-up funding was on a progress of pipelines, so you could move through from an idea—this is ongoing and organic—to becoming a successful start-up and going up to scale. We are on that journey, but we need resources to enable that to happen and mechanisms that enable us to work cross-regionally when two nations are involved.
Chair: Thank you. I think what you are saying is that this is an example of best practice. George, as one of the leading drivers on clustering do you have a question?
George Freeman: Thank you all for coming in. Having worked in the sector for 30 years, I think there are three things that are really problematic. I want to ask two questions. It seems to me that there is an academic problem in that academic funding tends to go to places where we are already excellent. That is a self-fulfilling defence of entrenched academic interests, and it makes it harder for insurgents. Secondly, there is a venture capital problem and, thirdly, there is a leadership problem. Basically, successive treasuries have been vandalised for regions, not giving you the power and the freedom. I am a huge believer in mayoral devolution. That is why, as Minister, I made this the focus of my work. We are never going to build an innovation economy just in the Oxford/Cambridge golden triangle. We have to harness R&D for reindustrialisation, prosperity and innovation. Kim and Dan, on the academic side how much emphasis do you think UKRI, as the mothership of UK research investment, is putting on place? I used to push them quite hard and say, “You’re not thinking enough about clusters. You’re thinking in verticals too much.” That is my first question.
My second question is on investment. As a UK trade envoy in Asia Pacific, I am telling a story about south Wales semiconductors, the Bristol gateway in clean tech, and in the north-east, Newcastle Data and the Newcastle digital city. We have to be able to tell people that the UK has a network of clusters, but to access them you go to a place which is networked. Kim and Dan, what is the private investment number in your cluster and the private-public ratio? Do you know?
Mayor McGuinness: I couldn’t give you that.
Dan Norris: I couldn’t either and that probably says quite a lot, doesn’t it? What is significant is that there are already things where people are working together in universities and institutions. I was just thinking, because of your Cardiff reference, Mary Ann, of lots of links between Cardiff, Bristol, Exeter and Bath universities working on things like AI and so on.
I am amazed sometimes to hear that some Metro Mayors have gone on foreign tours to drum up business and that my organisation has not been involved and I have not been aware of that. I think, and I made this point when you were in government to you and your colleagues, that it would be helpful if that was co-ordinated by Government and there was a better handle on all the things we were doing. It all seems very siloed. There are fantastic things going on that I discover all the time, and I think after the event, “Wow, I wish I’d known that because that needed to be co-ordinated.” That is where Government have a key role.
I want devolution to happen to let Mayors make decisions, as well as take the responsibility. There have to be both those things—the power and the resources to do that and the responsibility and be held to account—but I want Government to play a role, where they co-ordinate everything that is going on outside the country so that we can do an effective job. If that is what you are asking, and if that is what you are saying is important, I agree with you.
Q140 George Freeman: I hope you have the freedom to set up the Western Gateway investment fund. Have you? I think you have. If not, what is getting in your way and stopping you going round the world, saying, “Come into the greater west. We’ve got amazing stuff to invest in”?
Dan Norris: The Western Gateway is slightly contentious; there are issues that I won’t go into, but what I would say is that Government have to drive this. Government are making very clear objectives and goals for growth and other things, which I think is important and I completely agree with, and you will not be surprised to hear me say that. There also has to be tangible support—not just words but something that drives it and makes it easier so that Mayors can do the Mayor bit, supported by what only Government can do. At the moment, it needs to be sorted; it needs to be better.
Mayor McGuinness: I can answer the question, with this snazzy device that helps me to do that. We get 48% from private sources. We punch above our weight in the region with inward investment, but we have to work very hard for that. To go to your earlier point in the first question about whether I think UKRI takes a place-based approach, the answer is no, because, despite the fact that we get the third lowest level of investment, we have a lot of innovation in terms of businesses and innovation-intensive universities. We are out there doing it and bringing it in, but that is not matched by the current mechanism in this country to prime it.
Q141 George Freeman: We have the head of Innovate coming next week. We may ask him about that. I highlight the north-east as a really good example. While I was Minister, but nothing to do with me, Northumbria University shot up from 40th to 16th place in the league table, doing really great work and driving industrial collaborations. If you look at the north-east cluster, when I set out the change that 40% of Government R&D would go outside the greater south-east by 2030 and 55% of DSIT funding would go outside the greater south-east, which is, I hope, a target this Government will stick to, I was thinking particularly of the north-east as an area that leverages more than most into industrial money.
Mayor McGuinness: Yes. Obviously, I would argue for those targets to be bigger and more evenly distributed than that, but, yes, we punch above our weight in that sense. On Dan’s point on doing things together—I think you mentioned that you are a trade envoy—we should be doing this together; we should be having those conversations. We accompanied the Prime Minister on a trade mission to Saudi Arabia. Some of the Mayors, or their teams, collectively went to China only in the past two weeks. We are getting better at it, but we need to be even better. As Dan said earlier, Mayors are the recognisable front door for investment in place. Again, it is one of the greatest powers at our disposal. Therefore, Government need to learn to put us in other places and support us to do that, and to do it alongside us if we want to get the best return. Some of that is building trust in the system. We are pretty new; we are the new thing in town.
Q142 George Freeman: The north-east?
Mayor McGuinness: No, Mayors, although a united north-east is a lovely new thing; mayors in general. Sometimes there is a bit of the system does what the system does, and what it’s always done, and you do not necessarily think about this new kind of place-based set of institutions. I think we should be doing more of that. We are really good at selling these places. If we had time I could give you chapter and verse. Chi would enjoy it the most.
Chair: I’m afraid we don’t have time. It is very rare for me to want to move on from the north-east, but we need to do so. Officially, we have only three minutes left. I think we can go on for another 10 minutes. We need to hear from Allison, Emily and Adam.
Q143 Dr Gardner: We have talked a lot about mayoralties. I am quite interested in the fact that you see differences between mayoralties, but there are huge swathes of the country in the English devolution framework that are not mayoralties. My own area of Stoke-on-Trent, north Staffordshire and Staffordshire are a long way from that approach. Different levels of strategic authority get different levels of investment and powers. Do you think that in the English devolution framework mayoral or strategic authorities will have more powers over innovation policy than others? Considering those that do not have that, should the Government take steps to ensure that businesses in all authorities get the same opportunities? Do we run the risk that Government policies could unintentionally entrench regional disparities based on regions’ devolution status? I am concerned that we do not create left-behind areas again because of lack of investment.
Dan Norris: There is that risk. There is an equal opportunity, but the pace of being able take advantage of that opportunity is different. Mayors accelerate that. That is why in my view they are a good thing and why they should be made open to everybody, and in due course they will.
Let me give you some encouragement. My mayoralty is fairly new; it has only been around for seven or eight years. We are still learning lots of things. We have a constitution that is not fit for us to make quick decisions. We need the Government to sort that out, because where you have a very fine political balance it can be really hard because basically you have to vote for those changes yourself and that is never going to happen. In my view, Government need to step in to change that to allow Mayors to have consistent powers right across the country.
Q144 Dr Gardner: What about areas that do not have Mayors?
Dan Norris: They can bid in to have mayoralties and they need to be part of that process.
Q145 Chair: Shall we ask Mary Ann Brocklesby, representing an area that does not have mayors, to speak to that, in particular the issue of rural businesses?
Councillor Brocklesby: There are three things. When you talk about innovation, I don’t think you can be entirely equitable in terms of who you back and how. Talking about businesses is separate from talking about innovation and an innovation ecosystem that you want to develop. If you get the ecosystem and the structure of innovation right, it should help other businesses through supply chain development, skills pipelines and wider clustering to do with goods and services. It is about your strategic intervention. You need a structure. Whether it is called a Mayor, a CJC or whatever, you need a structure with regional strategic levers that it can use to support change and to think about growth in terms of sustainability and growth in terms of equity and inclusion. Economic wellbeing is a very strong characteristic of our region, because we are one of the most unequal regions in the UK. If you focus on the Cardiff M4 corridor, you absolutely risk further reducing the economic wellbeing of the Welsh valleys. I do not need to go into the levels of deprivation there.
We have particular seed funds. The Northern Valleys initiative is about developing our innovative businesses there. We have a firm involved in packaging up in the valleys, which competes globally. It never even started by competing within Wales or the UK; it competes globally. That is attracting people in. What is important is that transport, data and digital connectivity is absolutely essential to ensure that you do not leave behind different parts. I believe we can learn from Ireland on that in the way they have developed rural innovation hubs as part of their innovation and business structure. I come from a rural county—
Q146 Dr Gardner: I hear what you say; I am just concerned about the differential powers to make those decisions and get and control the additional funding if you are not a mayoralty. Dan, you tell me you have taken seven years and you are still making mistakes. Stoke-on-Trent and Staffordshire are several years away from even getting to the point you are at and then we will be entering that learning curve as well, so there is a concern. How would you suggest we try to protect regions that are very early in their journey?
Dan Norris: I would take comfort from the fact that the mistakes my mayoralty and others are making you can learn from very quickly, so you should not take as long when you get on to that path.
Q147 Emily Darlington: I want to explore unitary authorities a bit more. I represent Milton Keynes. We are a unitary. We have the seventh biggest economy in the UK. We do not have one of the big research-intensive Russell Group universities, yet one in three jobs is based on tech. The unitary, despite putting forward for a mayoral combined authority, was refused, so it is not available to anybody who wants it. We will not have access to the funds that mayoral combined authorities have. Obviously, it is different in Wales and your relationship with the Welsh Government. How do these become successful and play their role? I appreciate that none of you represents a unitary. It is potentially a mistake by us in not getting a unitary authority leader here. Clearly they are the only game in town. As you said, Kim, Mayors are a bright shiny thing, but how do those who wanted them and did not get them make sure that they get an equitable bit of funding? How do we make sure they access the pots that are available only to Mayors at the moment?
Mayor McGuinness: Is it appropriate to ask you a question? I don’t know anything about the deal for Milton Keynes; I don’t know why it was refused, but maybe some of it is about scale. I do not know how many people are in that unitary. I think some of it is about scale.
Q148 Emily Darlington: We were going in with other unitary councils, but we were all refused. We were not the only deal that was refused.
Mayor McGuinness: But is it not just in this current round? It is not a forever refusal, right?
Q149 Emily Darlington: We don’t know when the next round will be.
Mayor McGuinness: I am not here to speak for Government, but I believe they have their name around a fully devolved England and, therefore, it is just a case of what the system can manage at any one time. It took a very long time for us to get to this point because of some of the internal politics in the region. It is about preparation as a group to think about what you want devolved.
Going back to the previous question, some of this is in the negotiation of the deal itself and what components regions want to bring forward for themselves as the things they want to excel at. I understand your concern about whether, if you were not given those powers, it would put you at a disadvantage, but it is negotiated on the basis of regional strength. You get two Mayors on the panel and we are going to say that you should get a Mayor. You are never going to have it any other way. I hope that you do over the course of the Parliament.
Dan Norris: We did not get there quickly either and it is a door that remains open; you just have to keep trying.
Q150 Emily Darlington: Whether or not Milton Keynes should have gotten a deal is not part of this. You and I have been on panels before when I was deputy leader of Milton Keynes and we talked about their role in economic and regional innovation. I hear some of the things you are saying, that there should be more equitable funding and more of this or that. Some people would say that Milton Keynes has proximity to Oxford and Cambridge, but it has had none of that and it has become the seventh biggest economy in the country, and it is growing. Its economy is twice the size of Oxford’s and twice the size of Cambridge’s. Sometimes it is not about university funding or proximity to many research-intensive universities. Sometimes it is literally about a single unitary authority saying, “We’re going to become a living lab and track that investment, and we’re going to do that whether we have the powers or not.”
I want to push back a bit. Yes, Mayors are super-important and we want one. I am not saying otherwise, but I am saying that there is a bit of you needing to get in there and fight your corner rather than just saying there should be a target that that money comes to you because you happen to be in a particular region.
Dan Norris: You have made a perfect case for why it is more complicated. There are other things going on in your success, but you have forgotten the most important success: the Open University. That was one of Labour’s and Harold Wilson’s greatest achievements, so Milton Keynes can be very proud of that.
Councillor Brocklesby: Jenny Lee, actually.
Emily Darlington: But it is not listed as a research-intensive university and that is often how we make these distinctions.
Q151 Chair: Can we hear from Mary Ann Brocklesby?
Councillor Brocklesby: I represent a unitary authority. In my region, there are only two local authorities in the top 100 competitive index: my local authority, a rural local authority in Monmouthshire, and Cardiff. The rest are nowhere near and some of them are, sadly, near the bottom, which absolutely illustrates the economic inequalities in our region.
What I think we are learning in Wales, and I am sure is going to be learnt here, is what level of government does best for whom. These are being set up to have the greatest economic and social impact on the people of the UK in one way or another. They are not set up just to grow for the sake of growth. The outcomes we want to see are greater wellbeing, prosperity and fairness across the country. When we are thinking about what level works best, we are thinking in those terms, not necessarily about the connectors. We are all feeling our way on this one. There are things to be learnt from Wales, Scotland and England as they feel their way through their particular devolution structure.
As a CJC, we have a bit of leeway that Mayors don’t—I take your point absolutely about Mayors being seen globally and so forth—in that we can determine what works in collaboration that really has social as well as economic value by working strategically at that level, and what is better done by remaining at local authority level. It is not as easy as saying that local authorities do their service delivery on behalf of Mayors. It is far more complicated and that is where place absolutely comes in.
To go back to UKRI and the way they support regions, Wales gets far less than it should do in its share of funding. While it is said that if you come up with the right proposal you get the money, research ecosystems—I used to be in academia—are far more complicated than cause and effect. It is who is on committees, who is making decisions and who is doing the assessment. We are not represented. We need to be represented more because, as you pointed out, we have one of the global sectors in compound semiconductors. That is to do with our connections between academia, business and the public sector.
Chair: I think you are advertising not only the complexity of the governmental structures but how they relate to the funding structures as well. I am going to ask Adam to finish this session. You can make any remaining comments that you have in response to Adam’s excellent point, which he is going to make now.
Q152 Adam Thompson: I want to focus finally on infrastructure and the disparities between areas that do or do not have Mayors and how that affects infrastructure. In my patch in the east midlands we have a large industrial regeneration programme going on at the moment. Residents in the area are quite excited about new jobs, but they are worried about the additional traffic and are now asking for an extra junction on the M1 in this particular case to support the infrastructure. I know that the mayoralties have a lot of power in improving infrastructure, but, specifically, starting with Mary Ann, given that access to transport and local skills are often quite big barriers to building innovation clusters, has that been a challenge in your region, and, as someone without a Mayor, how are you tackling that?
Councillor Brocklesby: Yes, of course it has. The Welsh brain drain is well-known. I would be foolish to pretend it was not there. It was something we needed to think about very early in our journey, which was about the same length of time as WECA, I think. We had a graduate venture scheme, but we also started to think about the whole ecosystem for a skills pipeline. Apprenticeships are a really important part of that, particularly in STEM, and particularly in technology. I was interested in a point made by an earlier speaker. Businesses that are off the scale in terms of innovation in our creative industries and also our compound semiconductors, fintech and meditech say to me that it is about flexibility, not necessarily apprenticeship, but flexibility in skills, support and funding for the pipeline of talent coming through that could either go down the apprenticeship model, as it stands now, or be able to train in-house, nurture talent, use different pots of money for group development or learning, as well as individual learning packages related to what is happening in the sector, not necessarily in the business. As a CJC now probably taking on the mantle for regional skills, we can start thinking in a regional way about how we do it. We cannot do that without thinking about connectivity. How do you make sure that a 16 or 17-year-old in the valleys can capitalise on that kind of support to be able to work in industries based in Cardiff or Newport?
Q153 Adam Thompson: Are there any brief final comments from Kim and Dan respectively?
Mayor McGuinness: I think George said that academic funding goes where it has already been successful. Quite often, infrastructure proves to be the same. Essentially, we need over-investment in places that have been under-invested in, to equalise that. I do not think you will get the growth you want to see in the regions without some of that. We are doing everything we can. To resolve that, we have just signed off a £200 million package of investment in transport up until 2027 as part of a wider nearly £1 billion investment for the next 15 years. That will go only so far without Government intervention in putting resources into transport and connecting up places; for example, better east-west across the north—probably east-west across the country—relieving capacity on the east coast main line and looking at major motorway networks. We need to be thinking strategically and long term about how that fits with our goals for growth in all parts of the country. I do not think it escapes anyone’s attention that lack of investment there would lead to lack of growth and make it more difficult to attract other investment.
Q154 Adam Thompson: Thank you Kim. Finally, and very briefly, Dan.
Dan Norris: Adam, is Claire Ward your Metro Mayor?
Adam Thompson: Yes.
Dan Norris: You are halfway there. You have a fantastic Mayor and that really helps. The answer to the question has already been given in a way. There needs to be more co‑operation in terms of training and experience between the national civil service and regional officers and local government. It is really important. They do not understand each other all the time; they sometimes talk at cross-purposes. That is a problem and it needs to be sorted. The use of interim officers at senior level is a big problem, because they move so quickly. Sometimes they make decisions they should not do; they should be made by politicians. They have moved on and they are not held accountable to Nolan rules when they are doing questionable things. That needs to be looked at. There is a lacuna or problem there and the Government need to address it.
Chair: Thank you very much. We have gone over time somewhat, but that highlights the challenges that regional growth driven by innovation and supported by myriad regional government structures present to us.
A huge thank you to our witnesses for the evidence they have given. You have emphasised to us the complexity of the challenges and the existing landscape in terms of local government, innovation funding and the strengths in different places. You have given us a lot to think about, not necessarily answers, so a huge thank you for spending this time with us.
Examination of witnesses
Witnesses: Greg Clark, Dan Cathie and Dr Boulding.
Q155 Chair: Welcome to the second panel of today’s inquiry by the Science, Innovation and Technology Committee into regional innovation and growth. I welcome the panel, in particular the right hon. Greg Clark, my predecessor as Chair of the Science, Innovation and Technology Committee; Dan Cathie, from whom we have already heard as an innovator; and Dr Natasha Boulding from my part of the world, the north-east of England.
Dr Boulding, I want to start by asking you about the challenges facing founders in the science and technology sector, particularly outside the south-east. Could you tell us a little bit about your experience and the challenges you are facing?
Dr Boulding: It is a pleasure to be here. I am Dr Natasha Boulding. I founded and ran a climate tech start-up called Low Carbon Materials. We essentially work with large construction companies to decarbonise concrete and asphalt for roads, cycle paths and so on all around us.
I am quite used to barriers and challenges. We have three state school-educated founders and first generation university-goers, we are female-led and we are based in Durham in the north-east. We have a few barriers and challenges that, hopefully, we have overcome, but many more to come. To give you a flavour of what the challenges are, funding is a key one. As the previous panel said, public and private funding in the north is scarcer than in the south. As a founder, that represents huge challenges. Funding is always the first thing on your mind.
The other thing I want to share is about hiring and talent. Hiring for the C3 and senior leadership team can be quite tricky. As for relocating people to the north-east, it is a beautiful place, but most people have never been there. A lot of people who come for interview are there for the first time and, frankly, are quite shocked by how beautiful it is. It represents a reasonable living. It is not the most expensive place to live, and it is beautiful, but hiring is still a huge challenge.
The way we have mitigated funding and hiring is that we are very intertwined with the start-up ecosystem. We are not necessarily part of a cluster, but we are part of the start-up ecosystem, which is absolutely key and pretty strong in the UK, with organisations such as Tech Nation and Creative Destruction Lab. We have Durham City Incubator, which is a prosperity-funded start-up incubator for people very early in their journey, coming out of university or college with an idea. That was absolutely pivotal in our journey. The north-east where we are based has supported us almost through every part of our journey. We were the first student spin-out from Durham University supported by the Northern Accelerator, which I know previous panel members discussed. The Northern Accelerator is a hugely important programme for the region, with five or six northern universities included. We managed to get funding from them for proof of concept, and then straight into Durham City Incubator to incubate the idea a little bit further, and then straight into seed funding and working with the more national start-up ecosystem. This country has a really strong start-up ecosystem, but the scale-up phase is where the gaps are, as I see it.
Q156 Chair: What was your last funding round? How much did you raise?
Dr Boulding: To date, we have raised £5 million, which has been a mixture of public and private.
Q157 Chair: Thank you. You have partly answered the question about the support that you have received. That comes from different Government policies focused on supporting start-ups. I am going to ask both you and Dan Cathie this. Would you identify a Government policy that has particularly supported your journey and one that you would like to see?
Dr Boulding: There have been a few. The EIS and SEIS have been key. You probably could not speak to a founder who does not say that. Enterprise zones: we are situated right in an enterprise zone, which means we get business rates relief. That makes it much more attractive to have a large facility in an area, which is what we absolutely needed. The SEIS, EIS and Innovate UK funding are the key ones for me. Innovate UK adds a level of due diligence for private investors and floods private investment. We have benefited hugely from the regional angels programme as part of Innovate UK. Our first funding round was an Innovate UK grant matched with regional angel money, and that was really how we got off the ground, because regional angels like supporting start-ups and fledgling companies in their region. Innovate UK has been a key part of that journey as well.
Q158 Chair: It is good to have that feedback. Is there a particular Government policy or initiative that you would like to see, or just more support for existing ones?
Dr Boulding: I would quite like to see more emphasis on public procurement. I see a lot of early-stage funding going to multiple different businesses, but those businesses are going to get to the point where they need follow-on support. In terms of grant funding, absolutely, but we could do something with procurement. Right now, we have customers all across the UK and we decarbonise projects all across the UK, and we have received a lot of Government funding, but we could have, as part of that grant programme, that if you hit X, Y, Z commercial and technical milestones, the Government would commit to maybe a demonstrator, a first-of-a-kind project or something like that. How do we pair up the public procurement piece? If you go to a private investor with a purchase order for a Government Department to carry out a first-of-a-kind project or grant funding, they go for the purchase order every single time. How do we link that up more, where we are not just subsidising science, but we are making sure that we support companies from early stage technical development right into, if they hit the technical milestones, deploying that on a first-of-a-kind project?
Q159 Chair: Thank you very much. Dan Cathie, you have already spoken today in the innovator showcase. Is there anything that you would like to add to that?
Dan Cathie: I completely support what Natasha has just said. Where I see it potentially being built on is in extending the knowledge-intensive SEIS and EIS to larger amounts and levels than they are today. The reason for that is that when you get into the very early pre-seed stage and you need 100 k —something to get going—that is great and you can get that from angels, and they use the SEIS for that. The next round for deep tech and life science businesses tends to be £1 million-plus. You pretty much lose the angels at that point unless they can see the tax advantages of coming in. I would like to see more of a pull-through of the leaders of the previous round being participators in the next round. Largely, that is what we did with Northern Gritstone. They came in at a seed round, which is way earlier than they would normally come in, in order to observe our growth and then lead the following round. Even then, that creates tension because they cannot then price the round itself; they need someone else to come in from outside and price the round and say, “This is what the valuation is,” because they are already an investor.
I see a gap at that point between the early pre-seed stage and the fairly large seed stages for knowledge-intensive, research-intensive businesses that require many rounds till they start getting to revenue. Extending the knowledge-intensive SEIS cap level for particular types of businesses that are going to see a much longer incubation or development period than some, let’s say, tech or software-type businesses is, for me, something that would be really helpful.
The other thing I want to highlight, because it has not been mentioned so far today, is the investor partnership part of the Innovate UK funding. Those were great incentives, and they have been well adopted. They are very popular for start-ups because investors like to know that they have non-dilutive funding coming in alongside their dilutive funding, and, effectively, instead of raising £1 million, you get £2 million. That makes quite a big difference. It lowers the risk for the investors and it increases the chances of success for the start-up. We know that the parts largely run dry on that front. We would like to see the specific investor partnership element, the match funding part of Innovate UK, extended. I am sure we will touch on some other Innovate UK stuff later.
Lastly, the third point that I found challenging is that there are so many grants out there that it is hard to filter what you need and what you want. You have DASA, NIHR, IUK, and a bunch of other stuff as well. It is quite difficult unless you have a dedicated person identified in the team who is just going to go, “I’ll help you do that,” or you outsource it, which at the end of the day means you are paying someone else to do a job that you could do. Some sort of landscape that would help co-ordinate all those different elements makes a lot of sense.
Chair: You would think that would be a perfect candidate for some sort of AI bot interface. Thank you very much. That is very helpful.
Q160 Emily Darlington: We have a question for Greg. It is quite a complicated landscape. You have unitary authorities making their own economic plans. You have mayoralties or CJCs. You have the national infrastructures, the national plans and the industrial strategy. How do you think it works best? Is it bottom-up or top-down? Where do they meet? Do they meet at all? Are they competing with each other, or are they reinforcing each other?
Greg Clark: It is a combination of both. First, let me thank the Committee for inviting me back. It is good to be back. I should perhaps introduce myself. I am now chair of the Warwick Innovation District at the University of Warwick, of which I think there are some alumni around the table. I am also chair of the Society of Chemical Industry—I think Natasha is an award winner of the society—and I am a member of the Government’s Industrial Strategy Advisory Council.
There is clearly a national interest and a local interest in all of these things. The best way is to recognise both. I have always been a great proponent of deals, which is to say that you bring together the national interest and the local interest, and you work together and thresh out a deal so that it gives a return to both. The mayoralties, which are very important and you heard from them in the last panel, make it much easier to do that. The Government have a counterparty, not just someone with an authority with whom they can negotiate, but a person of influence and stature. I speak from experience as a Minister: if the Mayor comes on the phone, you take the call. It is both, but the national interest is important. If there are national funds and national priorities, including the Government’s industrial strategy, you need dialogue, negotiation and to deal with both sides.
Q161 Emily Darlington: How do you then balance that with some of the blue-skies, greater-outlook research funding that gets distributed via universities or by the Government’s own research institutions?
Greg Clark: That is a good illustration of it, where there are two sides. This Committee and its predecessors and Ministers, including one of your members, have always grappled with the question of how you distribute what is always going to be a limited pot of funding. Do you spread it thinly in a completely equal way, or do you reward excellence, which is a contested concept and definition? The truth is that you cannot just spread it completely thinly. Other countries that do that tend not to prosper from it. The fact that our research is so internationally renowned as excellent reflects some rigorous decisions to make sure that the most promising projects are funded.
One of the strengths of our system is that, perhaps more than the rest of the economy, you have around the country excellent institutions, universities and research establishments much more regionally based than, for example, the headquarters of public limited companies and investors. If you back research and universities—by the way, there is excellence all across the country—one should not get too hung up about it, because promoting science and universities is a pro-regional policy rather than choosing to spend on other things.
There are questions as to how that can be done better, and I am sure that there are more possibilities across the country than are being taken advantage of at the moment. There are a number of ways in which you could address that. One is perhaps greater transparency in terms of where the funds go. Sometimes that has been a bit opaque. UKRI has committed to being more explicit about that. Perhaps it is a deal thing. It is about collaboration between institutions. The scientists among you—I know there are many—look at the Nobel prize ceremony every year. Most Nobel prizes are given for collaborations, and not just between individuals, even though they are for individuals, but from different institutions often in different parts of the country and often from different parts of the world, and it shows. It is no surprise to any scientist that creativity comes when you combine people from different institutions and different fields of study, particularly in this day and age. There is a much greater possibility, and my view is that UKRI could well benefit from making that a bit more explicit, in encouraging pairing.
Let me give you one example from the institution that I am proud to represent—Warwick. Some of you know that the Warwick Manufacturing Group always had very deep connections to advanced manufacturing and the west midlands. We are negotiating a joint piece of work with Imperial College London in the automotive sector. That is perfect complementarity. Some excellent research goes on in Imperial. We have a lot of connections with industry and bigger facilities. They are two excellent research-intensive institutions that are highly regarded in this country and around the world. There are great opportunities for them to join together to the benefit of London and the west midlands. I could say more about the arrangements between Cambridge and Manchester. There is more there than has been done to date. It has tended to be a bit atomised. The way that these competitions have been run has been often—I think it came up in the last session—people pitted against each other rather than looking for the returns from complementarity and collaboration.
Emily Darlington: Thank you.
Q162 Chair: Greg Clark, you heard the discussion earlier. You talked about complementarity. We talked about the competition with regard to co-operation. Who should be responsible for identifying and supporting that complementarity? You mentioned the Industrial Strategy Advisory Council, of which you are a member. Does it have a role there, and do you think that it is an effective representative of our industrial policy and guidance?
Greg Clark: First of all, I am a member of the council. It is an advisory council, so it gives advice to Ministers, and it is Ministers who decide. It is working away quite intensively on developing advice that will go to Ministers as they draw up the White Paper. From the deliberations so far, it has been pretty lively, as you might expect from the group of people if you look down it, and pretty intense. It is good that the Government are doing that. I was responsible for drawing up an industrial strategy when I was Secretary of State. The advisory group that I set up, the advisory council, was to mark our homework after we had published the policy. They brought that forward, and that is something I wish I had done in my time. I am very optimistic about it.
In terms of making those connections in complementarity, again, if you take my view that these are deals, it is a bit of both. The Government through the industrial strategy should have a national view, and part of this Committee’s function is to scrutinise an important Department of Government. They should have a view of what technologies we are strong at and can get stronger if we invest in them and where we risk losing an advantage if we do not back them. There should be a national view, but, as your witnesses in the previous panel said, no one knows their place better than the people who live and work and, in many cases, lead it, and they should have a big voice in this. One of your members, George Freeman, when he was a Minister, promoted the idea of innovation clusters. He can correct me if I am wrong, but I think they were not to be determined in Whitehall by saying, “Right, you’re that cluster and you’re this cluster.” They had to make a case and an argument as to what they were strong at, but then it had to go in for scrutiny so that there was some challenge. Ultimately, there was some agreement that was made. Reflecting the national interest and the local interest, you need to come together in that way.
Chair: Brilliant. George, do you want to come in on that in response?
Q163 George Freeman: Thank you. Thank you all for coming in. I know you sat in on the earlier session. The tension between place and sector has been at the heart of industrial strategy globally and in this country particularly. I know, Greg, that, as Minister, in your industrial strategy you were very keen to put place at the heart of it as well as sectors.
As seasoned observers, where do you think the real problem today is? To what extent is it in the academic funding where we tend to entrench the establishments, the sciences, and make it hard for insurgents to come in in VC funding and finance, where the greater south-east is dominant, and to what extent is it in leadership and giving more leadership to local areas? It feels to me as though they are all problems, but if you look at what is happening in a whole range of new sectors—robotics, manufacturing, materials, clean tech, space in Glasgow, clean tech in Aberdeen, Newcastle data city, Leeds Digital Health—the clusters are beginning to take off. What would each of you want to see in the Government’s laudable industrial strategy intention to really support them? What are the one, two or three things that you would really like to see and like us to be pushing?
Greg Clark: One is universities and recognising their place in innovation, creating businesses and, in many cases, propagating them and helping them to grow from an idea into an actuality. I was looking at figures before I came in. In 2023, which I think is the year for which the figures are most recently available, 10% of all equity raised by new British companies was from university spin-outs. That is already a very significant contribution, but it could be higher.
Northern Gritstone was mentioned by Dan. That is a collaboration between universities. It was promoted as a proof of concept apart from anything else. The concept has been proved, and we have heard evidence of that. There are other parts of the country that could benefit from it. There is a proposal in the midlands for a fund called Midlands Mindforge. The clustering of universities and having access to a pot of capital that can then help both the start-ups and, more particularly, scale-ups, is, I guess, my second point. We are not at all complacent, and there is much more that we can do better.
I was in Japan a couple of weeks ago. They look with some admiration at our start-up culture these days. We need to reinforce that and we need to do better, but we could be much better at scale-up. I hope we can get behind things like Northern Gritstone, as we have, Midlands Mindforge and others, perhaps using the British Business Bank and the national wealth fund. There are the reforms that the Chancellor is making about pension fund investment. These are all areas that can, in our national interest and in the interest of prosperity, help as well.
Universities, scale-up, and the third thing would be agility. If I am self-critical in looking back at when I was in office and George was in office—when UKRI was being set up and being established—the Innovate UK part of it was meant to be a source of funds, as we heard in the previous session, such that, if an opportunity arose, a quick decision could be taken. There was a degree of risk that was recognised as being not just permissible but desirable, and matching contributions, where they were necessary, could be made to secure globally mobile investments. To be frank, to be candid, what has happened too much in UKRI since its formation is that in the grant culture of the research councils, you issue a call and it takes months for people to respond to it, often at great length, and then there is a committee of the great and the good that assesses that through peer review. Then, nine months or even longer down the line, you finally get an answer, by which time the investment has been made in the United States or in Asia, and it has slipped through our fingers. That was not the intention. We need to get back to that agility, and I hope new leadership gives an opportunity to do that.
George Freeman: Thank you.
Chair: Can I bring Jon in now because he has to leave soon? Thank you very much for that, Greg Clark.
Q164 Jon Pearce: Thank you, Chair. Greg, you are probably going to get a lot of questions, so I apologise. George raised the tension between sector and place. I would be interested in your reflections on place versus place. I know you were here for some of the earlier discussions. How much of a role do you think central Government should have in a strategic view of where combined authorities should be working together or the extent to which they should be given more freedom to get on with it and innovate and look to build those connections themselves?
Greg Clark: Central Government should have a view of the capability and the potential for regions. I am a bit with Kit Malthouse in the sense that a bit of competition between regions is not bad if it causes people to—a point that Dan made—learn the lessons from what others have done and respond in that way. When I was in office, we created the mayoralty of Liverpool and the Liverpool City Region, and you would not believe the galvanising effect that had on Greater Manchester, where they were absolutely incensed that their rival in the north-west should have the first Mayor. Within hours, Howard Bernstein and Richard Leese were on the phone, and within months they had negotiated what became the Manchester devolution deal, which most people would accept has been a success. Since then, Greater Manchester has been acknowledged to have been a success, West Midlands in many cases, too, and other authorities. They should not be held back to go at the pace of the slowest.
I am always wary. Instinctively, if you have differences across the country, that could feel untidy, and there is sometimes in government a preference for bureaucratic order. That is not consistent with the human condition. It is not consistent with places. You all represent places that are very different. If localism is to mean anything, it must be to give expression to those differences rather than to corral everyone into the same template. It is not a question of dividing into sheep and goats, and some people will never have powers and some people will be blessed. I would encourage and back the places that are most capable, because that is “do a deal”, and it is good for the nation as well as that place, and I would encourage and help, including bilateral help from places that have worked, other people to develop those capabilities so that they can have devolved powers and funding. That is the way I would see it, rather than a constitutional neatness.
Q165 Jon Pearce: That is helpful. Picking up on that point very briefly, is there a way of incentivising combined authorities where we are not asking them to be in competition but where it is helpful to incentivise them to collaborate? The High Peak, where I am, as I mentioned before, is basically the corridor between two of the main core cities of the north. It has two of the major universities in the north. There is very little incentive for all three combined authorities to come together and develop a partnership. Is there something more that could be done to encourage intra-working across authorities?
Greg Clark: A lot of it has to be bottom-up. You are absolutely right. I went to an event last Monday at the Manufacturing Technology Centre, which the predecessor Committee visited and which is close to the border between the east midlands and the west midlands—actually just in the west midlands. That was where Richard Parker, the Mayor of the West Midlands, and Claire Ward, the Mayor of the East Midlands, came together to agree that they would collaborate. There are various institutions that are close to the border, such as the Manufacturing Technology Centre. Warwick Manufacturing Group is not far from the east midlands. It does a lot of work with big companies like Rolls-Royce in the east midlands. Of course it makes sense to reflect that.
I would expect that the leadership of Greater Manchester would recognise that over the border in Derbyshire is part of, in effect, in many cases the travel-to-work area and the transport footprint, so you do not draw artificial boundaries that no local person would express. Going back to the point I made earlier, local people know about local places. Sometimes Whitehall has an attachment to administrative boundaries, and that is how they see the world. It is not how local people do. If you have established leaders to represent their locality, I would be very disappointed if they were pedantic about local borders.
Q166 Kit Malthouse: Sorry, I have to go to Foreign Office questions. I have a very quick question for our two entrepreneurs. Forgive me, Greg. Are you using SEIS and EIS, R&D tax credits and patent box? Are they all too complicated?
Dan Cathie: SEIS and EIS, yes. We used up all of SEIS and most of EIS. Patent box, no; hardly worth it for the effort. R&D tax credits, absolutely, with trepidation, based on the amount of stuff that is going back. I spent probably a full man-week writing the evidence of the R&D paperwork to prove that this is an R&D business despite the fact that we have had £7 million-worth of investment, of which £2 million is Innovate UK. We are not making money. We are not selling products yet. It has to be R&D by default, otherwise we would be selling products.
Dr Boulding: Exactly the same. SEIS and EIS, absolutely. Patent box, no. R&D tax credits—
Q167 Kit Malthouse: You both have proprietary technology—
Dan Cathie: We do.
Kit Malthouse: —and you could both benefit from 10% tax on income that arises from that, yet you are declining to use the patent box because?
Dan Cathie: Because we do not have income yet. Yes, they can defer it and do it in the future, but it is not something for today. That is the bottom line for me.
Q168 Kit Malthouse: Right. Natasha, you have income, right?
Dr Boulding: Very similar. We are income generating, so we are looking into patent box at the moment. Resource is a huge problem for start-ups. R&D tax credits are possibly the most contentious point for most start-ups in trying to convince HMRC that you are innovative. There are lots of examples where people are receiving them who shouldn’t be and people aren’t receiving them who should be.
Kit Malthouse: You both have lever arch files filled with correspondence trying to prove that you do what you do.
Chair: And yet Chelsea football club managed to get £2 million of R&D tax credits.
Q169 Kit Malthouse: Exactly. Should the limits for EIS and SEIS be increased?
Dan Cathie: Yes.
Q170 Adam Thompson: Good morning, everybody. Natasha, in our innovation showcase with Dan at the start, and indeed in some of your opening comments, you talked about the challenges facing you as founders generally in the science and technology sector, particularly those in being outside the south-east. Can you elaborate a bit more on the barriers that you have overcome over the past few years?
Dr Boulding: Yes, sure. To answer your question, I will give you a really good example of something that I think we should replicate. We were part of a programme with the Connected Places Catapult, which was a grant-funded programme that brought together end user, regulator and innovator all in one programme. It was a good programme because you see so much innovation that goes on where they get to the end and the regulation won’t be right or they won’t fit in the right standards, so to put all of the stakeholders together was a really good idea. I do not see many of those programmes around. We should encourage the generation of those programmes.
The reason I answered your question with that is that the barriers are regulatory and funding. We are in the built environment, which is one of the most traditional sectors. To bring together and incentivise from the start your end user—in our case, National Highways—was key. Start-ups having voices and being listened to by big organisations is sometimes difficult. Maybe empowering Catapults or Innovate UK programmes to make sure that we get all those stakeholders together is key.
Q171 Adam Thompson: Cool, thank you. You talked about barriers being regulatory. In the current policy landscape, how do you think the current policy is supporting the journey that you have been on? What would you want to change to make that easier for the next round of innovators in the next few years? Maybe I will bring Dan in on that question as well.
Dr Boulding: I have a couple of points. I completely agree with your points a couple of answers ago, Greg. For us, the university ecosystem and spin-out system was absolutely key. On the question of universities coming together, the Northern Accelerator is the perfect example. Not only does it provide the first level of pre-seed and seed funding, but it also has execs in business programmes. Maybe academic founders who are not cut out to or do not want to go into business—whatever the reason is—can be supported by that programme.
The point about public funding and consolidating public funding is key. I like the idea of an account manager or someone who can guide you through. Dan mentioned it. It is a full-time job keeping on top of the calls that are out there. As a really early-stage start-up, you have to put the time in because investors expect that level of de-risking. When you get to a certain stage the Government have hedged their bets with lots of small innovation funding, but when you get to over £1 million or something let’s assign an account manager so that we are backing the horses that we have already put money into and that are going to scale, because we can no longer pump money into everyone. We need to decide who is going to win and who is going to be world-beating, and then support them. For me, what would make a difference in our start-up and our scale-up journey now is if I could pick up the phone and say to someone, “This is our challenge. Is there a grant funding programme that we could go on?”, because there are so many.
Q172 Adam Thompson: Sure, brilliant. Dan, do you have anything to add?
Dan Cathie: On a similar note, on the funding landscape, we have set as, essentially, a policy that if we are not going to be applying for 100 k a quarter or more let’s not bother, because of the amount of effort that goes into writing the application, combined with the chance of winning it, which is less than 5%. Maybe this is partly what goes on behind closed doors. We would expect that, as Natasha said, if you have had a 100 k grant and then you have won a 500 k grant and then you have won an investor partnership grant, you have a better chance of winning the next one that you need because you have a good track record; you delivered. If it flunked, fair enough; don’t get the next round. Back the right horses. The VCs are doing that. That is why we have raised money. Back the same ones because they have already done a whole bunch of work.
The other thing is that the VCs and the investors tend to look at the team. They put far more effort into looking at the team at the early stage than at the technology. The technology matters and it has to have opportunity and scalability and has to be world-beating and so on but, actually, most VCs do not have the level and the depth of understanding and knowledge to be able to identify whether that tech is going to succeed or not. That is the job of the founders and the team. Let’s figure out if we think we can back these founders or not. That is not really captured in the Innovate UK applications. How strong is the team? There is one question on it usually, but it is not the essence of it. The different stages determine a little bit where the effort should go in on the application and the ease or difficulty of applying for it.
Coming back to your previous question very briefly, there are some other areas where I see that something could be co-ordinated a little more or supported more by Government. If you want to create a regional approach alongside the national one there are so many bodies that are very industry- specific and sector-specific. I am thinking of the Bessemer Society, TechWorks and NMI. Britain has start-ups and deep tech labs. There is a bunch of different things in different areas, but encouraging them to move away from the centre of the hub and towards the regions by part-funding some of the regional activities and not funding the London-based ones—because, to be honest, 80% of the time you have to come down to London for them—would really help. Then you are pushing them into the regions, but it is already in existence.
Q173 Adam Thompson: Thanks, Dan. That is really interesting. I have another question for the two of you. We are hearing a lot of debate generally in Government at the moment about inclusive growth and including your community in your journey as you process forward. How do you two as companies engage with the local communities you operate in, and how can policy help you along that journey?
Dan Cathie: Inclusive growth for me is less about community—I will explain why in a minute—and more about making sure that you end up with the best possible decisions within the business. If you have a bunch of people who look like me in the business, you are going to largely end up with the same sort of answers.
We have Karthieka, whose visa we sponsored to come over from India because she was the only PhD in the world doing something on the topic that was directly relevant for us. It was really painful to get her over, but we did it because it made sense. We have two Iranian immigrants who work for us.
As I said earlier, we have young people and we have experienced scientists with PhDs. It creates tension within the business, because suddenly you have diversity of thought and people doing it this way and that way and, “That’s not how I do it. I want to do it like this.” That in itself is inclusiveness for me. It takes management. It is not easy, but you accept that you are going to get some friction and some tension in order to get to the best outcome. That is the way we look at it. Because they naturally have differences of opinion and in what they do as hobbies and what they like doing outside work, that brings in stuff around the community as well. We have work shadow placements. We have kids coming in to look at what we are doing. We try to support anyone who wants to go out to schools and do STEM learning experiences and stuff like that, just because for us that is what makes sense. If we sponsor football team shirts or something like that, it is all good. That is stuff that we can afford to do—within reason, of course.
Chair: Thank you. We are running out of time. I want to bring in George on skills, and then we have Steve on funding.
Q174 George Freeman: Thank you. This is a hugely helpful conversation. I make the point as the former Minister for Innovate that in the culture that it operates under it can only intervene when there is market failure. One of the things that I would like to see in the industrial strategy is a focus on backing winners, not scattering money where there is failure.
My question is about skills. I wonder whether you think we are doing enough in government to map where the new growth sectors and cluster sectors are creating jobs. It feels to me as though the DFE future skills unit is very blue collar, if I can put it that way. It is very rooted in apprenticeships, and it is a bit disconnected from DSIT. I struggled as Minister to get DFE to think about the fact that apparently 500,000 jobs are coming in these clusters. Can I ask you each to reflect? Do you think we have enough integration with skills projections and future jobs across Government?
Chair: I am going to ask Dr Boulding and Greg Clark to respond on that.
Dr Boulding: We can do a lot more. We are outside a cluster. We are an anomaly. One of the things that could be quite powerful is if we pair up start-ups and large corporates—large corporates who do not necessarily have the risk appetite to join a start-up, and start-ups who like not being part of a corporate. If we could do sabbaticals or year-long programmes from large corporates to start-ups, the start-up would gain a talented person, albeit for a temporary amount of time, and the individual would gain a lot from being in a start-up environment.
On the skills side, there is a lack of understanding of the skills needed in the start-up culture and start-up mentality where you turn your hand to everything and anything at any one time. Is there something we can do that partners that a little bit more? I know odd examples where it happens, but it is not a joined-up approach. Is there something we can do there?
Q175 Chair: Great. Greg.
Greg Clark: I worry a lot about skills. During my time in government—I dare say it persists—for some reason the skills agenda was always rather impervious to the linkages to science and technology and, frankly, business and industry. It is obvious that if we are to succeed in what we all want to do, which is to power up the creation of start-ups and the expansion of firms in areas where we have an advantage, and then we find we do not have the people to do the jobs, that would be appalling.
I hope the Committee—I am sure it will under its Chair—will take an interest in this. To George’s specific point, there should be no cliff edges. We need to upgrade the level of skills we have right across our workforce. The Warwick Manufacturing Group has an academy. I was there last week. It does fantastic work equipping people with scientific and engineering skills at T-level and GCSE level. We also have a degree apprenticeship programme that is transformational in terms of what it does to people. They have to have the recognition and prestige, it seems to me, in the system, and it should not all be focused on just some earlier and lower-level qualifications.
Q176 Chair: Thank you very much. I am going to move to Steve in a moment, but on that point, Greg Clark, you have vast experience. You talk about the lack of a joined-up approach between industrial needs and skills. What are a couple of new things that you would do to address that? You would not want Government to tell Warwick what university degrees it should be offering in five years’ time.
Greg Clark: No, but I would certainly, through the skills system, make the funding available for the degree apprenticeships that are in demand at the moment by employers, given that they need to be sponsored by employers. It is a demonstration of the demand. I sometimes hear talk that actually that is not the priority area; it is the more basic apprenticeship qualifications. Don’t get me wrong, we need those; but not the idea that we can compete internationally without having people who have higher-level technical qualifications. That is important. There is a whole history, going back to individual learning and skills councils and all the rest of the things. Institutionally, there is something in the folk memory in Whitehall that whenever it has tried to be more local and responsive it has got its fingers burnt.
Q177 George Freeman: That was my experience as well. Every cluster I went to told me they were creating thousands of jobs over the next five or 10 years, and I would ask, “Is the local FE/HE sector geared up to provide them? Is DFE aware?” The DFE local skills unit was asking a totally different question. There is a disconnect.
Greg Clark: We have to overcome that. It is one of the most important things.
Q178 Chair: It is interesting that you are both talking about FE and local skills institutions. You are not talking about universities.
Greg Clark: It is both—for example, degree apprenticeships in universities, of which the University of Warwick offers fantastic ones. We know that the careers, not just the jobs, that people have are completely opened up in a way, and the entry requirements are more accessible than—
Q179 Chair: But are you advocating that Government funding should be used to direct future higher education skills as well as further education skills?
Greg Clark: When it comes to degree apprenticeships, which are a combination, they should be part of our national industrial strategy. My view is that the Government, when they make decisions about funding for courses, quite rightly should have an idea as to whether that is in line with what is required and indicated by the industrial strategy. It seems to me literally unstrategic to say, “We’re going to go big in this sector”—
Chair: And not follow that up.
Greg Clark: —and not follow it up with skills, and some of those are from universities.
Dan Cathie: Building on that, in the last session, there was a comment that we have a lot of innovations but we do not have that many innovators. How do you create innovators? It is by giving them breadth, in my view. We have no degrees that give breadth apart from an MBA. An MBA is a breadth degree. If you want breadth in science, what are you going to do? Mechanical? Maths? Physics? It is difficult.
Dr Boulding: I was part of a CDT, which I completely advocate.
Q180 Chair: CDT?
Dr Boulding: Centre for doctoral training. That is where the business was born. It was a STEM-plus group of people together. We had communications training. We did business school. That was a perfect example of collaboration.
Dan Cathie: Yes, like the Shott accelerator.
Chair: That is bringing the multidisciplinary approach at the doctoral level.
Adam Thompson: I also was on a CDT programme when I did my PhD, and the breadth given was excellent. Then I used to teach the engineering degree-level apprenticeships at Nottingham, which competed with the course that Greg is talking about. I know the course very well, and it is very good. I just want to advocate lots of the points the panel had made directly because they are important.
Q181 Chair: Thank you very much. Great discussion on skills.
Greg Clark: I have one point on that responding to what Dan said about teaching innovation. The University of Warwick offers, as I am sure other universities do, short courses and continuing modules whatever the discipline in how to commercialise and how to take ideas and make a success of them. The idea that people should just be, whether in education or in government, in narrow silos is past history; it is not where we should be.
Q182 Chair: It is still the practice generally that the short courses that you refer to are not going to be experienced by large proportions of students. The challenge, given that multidisciplinary understanding and skills are essential to innovation, and yet our universities and further education are based on disciplines, is that I am not sure that the short courses that you are talking about, Greg, can address that.
Greg Clark: Short courses are one part of it. You can do it throughout your university career, and people do, bringing disciplines together. Perhaps as a shout-out to another institution, not Warwick, the Royal College of Art is a place that I commend to the attention of the Committee to see how the various disciplines there have been brought together. It is a hive of innovation. We are doing a similar thing at Warwick. We are bringing all the STEM disciplines together into a single big building where it will all be juxtaposed so that it is much more straightforward to have those interactions. The breakthroughs are at the boundaries between disciplines.
Chair: Exactly. Steve has been very patient.
Q183 Steve Race: I have the final questions. We have talked about funding a little bit already and the difficulties in that. Dan and Dr Boulding, can you talk a bit about where you think the funding environment needs to be improved? If we have already done public sector, maybe the private sector would be particularly interesting, given that the shape of the private sector funding—VC and private equity capital—in the UK is incredibly London and south-east oriented.
Greg, if you don’t mind a slightly separate question, when we look at funding across the country, again, London and the south-east get a lot of public and private funding. In fact, one of the major announcements the Government have made so far is the Oxford-Cambridge arc. My view is that that is, potentially, gilding the lily rather than making sure that you get growth in the other clusters around the country. It would be useful to know from your standpoint what more the Government can do to make sure that we break out. There seems to be a bit of a view that the money should follow where things are already happening, but that tends to be where those people are from, which is Oxford or Cambridge, rather than a wider view of what is happening across the rest of the country. Whether that is subconscious, I do not know.
Dr Boulding: We need more good news stories from the regions. Investors usually follow investors, yes, so maybe it is a huge branding and marketing piece where there are visible good news stories from the regions that then encourage more people at least to visit—maybe some mandatory open days for regions where investors get to experience what the innovators in that region have to offer. I have sometimes struggled at the very last stage of due diligence with private capital where they just cannot make the journey up, and that is hugely frustrating. The transport link from London to Durham is spot-on. It is very quick. Can we get groups of similar investors together with different innovators in each region to do some open days? There is a bit of a cultural piece as well. I spend a bit of time in the States. In this country it is, “What’s the risk of doing it?” We need to turn that into, “What’s the risk of not doing this?” There is a risk appetite cultural piece that goes alongside as well.
Q184 Steve Race: Can I ask a very quick supplementary question? One of the things I have heard is that in the regions you are more likely to get international capital than London-based capital. Have you had any experience of either?
Dr Boulding: We have had a lot of interest. Since the pandemic, it has improved because investors are very used to doing things online. The opportunities open to us have improved, from what I have seen, but we were a very new company before the pandemic.
Dan Cathie: We have had a quarter of our investment from the US. That is partly because one of our early angels is based in California and has a fund, and continued following all the investment, so, instead of doing it personally as an angel, he did it through his fund. Separately, Northern Gritstone brought in a connection, which was a bunch of New York bankers, basically, who have collaboration and invested as well. It was a lot easier to get funds from both of those than from any of the UK investors because of exactly what you said, which is that there is a risk appetite that is completely different, and that is probably just the amount of capital to be deployed as much as anything. They have to fund things, so they are looking to ways to put it into businesses.
They also see the UK as a cheap environment to invest in because the valuations are lower. It is not good for us, but it is good for US investors. Of course, if we are trying to raise funds, we do not mind where the money comes from as long as it is clean. That stage between the seed and the seed-plus is the difficult one. That is the valley of death where you have not quite finished improving the tech or you still have some major risks. PR-wise, it looks bad if you are doing a second seed. It is trying to manage that appetite with investors to see that you have delivered on all your milestones, which we had, but we do not yet have sales and we do not yet have a product, so there is more to come. That is the nature of deep tech and deep science rather than some of the other activities.
It is exactly the same with life science, by the way. It takes a long time until you start seeing funding. How do you get the patient capital? With every investor we have gone to, I always ask the same question: “What is the vintage of the fund, and is it an evergreen one or not?” If it is a traditional VC fund, they have five years to deploy and five years to recoup, and that is not long enough if you are coming in at the back end of the five first years. It is about understanding the funding landscape. Those are things you do not know as a founder when you are first starting up. I was lucky that I had an adviser from Amadeus who knew a bit about it and helped me navigate some of that. Those are the challenges. As a spin-out university founder who has never done it before, you do not have those connections and contacts. I came to it post-40 years old with my first start-up. You have a bit of experience and a bit of a network, so it just changes the picture.
Dr Boulding: Your network is everything in fundraising.
Greg Clark: On the Oxford-Cambridge arc, I am struck that, whenever I am at an event or a function and Andy Burnham, the Mayor of Greater Manchester, is speaking and the question of London comes up, he is always very emphatic that he wants London to succeed. The better London does, the better Greater Manchester does, and the better the country does. That applies to Oxford or Cambridge. These are clusters that are globally successful, and we absolutely want to make the most of them; it is good for the whole country.
The Government are on to something when they talk about, rightly in my view, promoting the Oxford-Cambridge arc. You will be familiar with the theory of agglomeration, which means that the more you can connect people closely, quickly and reliably together, the more people can collaborate and the more they can share. That is the thought behind the Oxford-Cambridge link, but it is not the only one. In fact, there is a certain link that is going to be built between central London and Manchester through Birmingham—HS2. Trains will still go to Manchester and beyond. They will go a bit slower north of Birmingham. We have committed £50 billion to it already. Just as the vision for the Oxford-Cambridge link is to squeeze out all the development and make sure that if you are investing in that you get all the benefits, we should be doing the same for HS2. The Government have been a bit quiet about the huge potential there.
For that matter, across the north, if you are to have a rail link across the Pennines, you would have those same effects. If they are promoting, correctly, the advantages of a link between Oxford and Cambridge, double down on it, especially when you have made big commitments already. If we can do that, if we can join up these important regional powerhouses of science, innovation and technology with the capital as well—we are quite a small country—our ability to compete will be so much greater, and prosperity will follow to regions that have sometimes struggled.
Q185 Chair: Thank you. I would like to follow up on that. Talking about connectivity and the impact of HS2 and potential links and transport links in the north is something that we would certainly advocate. We heard from Dr Natasha Boulding about the difficulty still of getting investors to travel to particular points. We also heard from the ScaleUp Institute which suggested that what was needed was better curation of existing potential investment targets, so that they were better advertised, promoted and prepared to be investment targets. Greg, do you have a view on that? Is it something that we are investing in and that we should be investing in?
Greg Clark: Yes First of all, going back to our earlier discussion about city regions, leaders can make a big difference. When I was in office, if Howard Bernstein, when he was the chief executive of the city of Manchester, heard that an international investor was in London to see some sights, he would be straight down on the train, and by the end of the day he would have lured them to spend an extra day in Manchester and be showing them around the sights. That degree of personal concierge service is available to the regions and they should have it, but the Government should have it as well, especially given what can be silos across Government.
There was a very good report, which you are all probably familiar with, that Lord Harrington wrote for the previous Government, and it has been adopted and backed by the current Government. It looked at other countries. It looked at Ireland and Singapore and places that have been successful in recent years at attracting inward investment. As my colleagues on the panel have said, the idea that you have someone you can ring up who knows your business and knows enough about the wiring of central Government to do that for you rather than you needing to go round yourself is of crucial importance. I am an economist by background. Sometimes these things are irrational. Why should it be the case? If there is a deal to be done and if the market clears, it will happen. The personal relationships are so important. You have heard it from the—
George Freeman: There is a point that has come through from all of you. In my experience, people do deals with people. Scientists collaborate with people. In the end, we have to personalise this so that you have a Howard Bernstein or a Dan or somebody at the end of a phone call. As a trade envoy in the Asia-Pacific, when I persuade people to invest in the north-east, as I look forward to doing, the question they will ask is, “Who do I speak to?” It is no good saying, “UKRI main building.” They need somebody who says, “Good morning. North-east investment office.”
Q186 Chair: That is a very good point. We have an Office for Investment and an investment Minister. We should be asking every regional authority if they have an office for investment or somebody you could call. Maybe that should be the Mayor. We have gone well over time, but it has been a fascinating discussion. Thank you so much each of you for the contributions you have made. Thank you so much, Greg Clark, for coming back to the panel. Thank you, Dr Boulding, for coming from the north-east to Westminster, and thank you, Dan Cathie, for your experience and indeed for moving north.
Dan Cathie: North-west to north-east.
Chair: Exactly. It has been a very interesting discussion. Thank you very much for your contributions.