UK Research and Innovation (LRS0047)
Post-pandemic economic growth: Levelling up - local and regional structures and the delivery of economic growth
Written response from UK Research and Innovation:
- UK Research and Innovation (UKRI) operates across the whole of the UK with a combined budget of more than £8 billion, bringing together the seven research councils, Innovate UK and Research England.
- Our vision is for an outstanding research and innovation system in the UK that gives everyone the opportunity to contribute and to benefit, enriching lives locally, nationally and internationally. Our mission is to convene, catalyse and invest in close collaboration with others to build a thriving inclusive research and innovation system, that connects discovery to prosperity and public good.
- UK Research and Innovation’s (UKRI) response focuses on the role of research and development (R&D) broadly in the government’s ‘levelling up’ ambitions and the part that UKRI can play within this.
- The government has set out a clear ambition to consider the role of R&D in levelling up the UK – this is evident through both the commitment to publish an R&D Place Strategy later this year and in establishing ‘Levelling up R&D across the UK’ as a chapter within the recently published R&D Roadmap. UKRI shares the government’s firm ambitions to ensure a powerful role for R&D as part of the wider efforts to level up the UK.
- Therefore, UKRI is working in partnership with the government to develop the R&D Place Strategy and we welcome the specific ambitions and challenges set out in the ‘Levelling up’ chapter of the R&D Roadmap. UKRI’s response to this challenge will be across our full set of levers, including catalysing R&D growth through targeted ‘place-based’ funding, maximising the local impact of our strategic assets across the country, and building strong partnerships to deliver change.
- R&D is an important component in levelling up the UK and there is a significant opportunity for UKRI to work more closely with UK government departments, the devolved administrations and local civic leadership across the UK to ensure every region and nation can access the public R&D support they need to maximise their potential.
Evidence base on role of R&D in local growth
- The UK’s national strength in research and innovation already underpins significant economic and societal impacts across the UK. In the decade before the global financial crisis, around half of the UK’s productivity growth was driven by innovation – new ideas, science and technology. However – much of the UK’s productive R&D capacity is concentrated in institutions – universities, research institutes and businesses – within London, the South East and the East of England, which together was responsible for 52% of total GERD in 2017-18, compared to 36% of the population.
- While much of the world leading research outputs and cutting-edge innovations that the UK produces result in national and international benefits, there is clear evidence that these three regions benefit significantly from the local economic spillover benefits of the UK’s research and innovation activity. It catalyses the crowding-in of additional private and public investment, creates high value jobs and even entirely new industries centred in these regions. It is also important to recognise that due to the way that R&D activity gather around large anchor institutions or closely knit ‘clusters’ of institutions, many of these benefits are concentrated further, particularly in urban centres within these regions.
- Public funding for R&D is an important factor in maintaining existing levels of regional capacity and if properly targeted it can play an important role in growing capacity. However, the factors behind the regional distribution of R&D capacity in the UK are complex and typically rooted in the specific local context for each region and nation. Many of these underpinning factors are often the same ones that are responsible for wider regional differences in productivity and economic performance and include, for example, the availability of skills, the availability of land and the characteristics of a place’s natural geography, the strengths of local institutions, the quality of local infrastructure (impacting on accessibility and connectivity) and complex social and cultural factors that can affect the desirability of living and working in places.
- The Industrial Strategy Council published an evidence review earlier this year into regional productivity which highlights three key explanations for such regional differences:
- Place-based fundamentals: Geography, local culture, governance and infrastructure are important factors determining the economic activities of a region
- Agglomeration: Places attract clusters of economic activity which become self-sustaining. These agglomeration effects arise because specialised firms benefit from the ability to trade with other firms in their industry and because these firms benefit from sharing the common resources offered by large cities.
- Sorting: Workers, especially highly-skilled workers, also choose to cluster. This means small initial differences between places can generate large disparities in the nature and skills of the workforce, which then shape regions’ industries, attractiveness and productivity.
- The underpinning factors affecting the economic performance of places are therefore complex and often deeply entrenched. The contribution of public R&D investment to enabling Levelling Up must therefore be considered alongside the full range of interventions necessary to address regional and local disparities. The necessary public policy and delivery levers sit across the UK government, devolved administrations and local civic authorities – and so a well-coordinated effort, incorporating a targeted and considered role for the national R&D budget, would be the best approach.
What have we done already?
- UKRI is investing in high impact research and innovation across the UK. See Annex 1 for a small number of case studies that demonstrate the breadth and strength of this research and innovation portfolio.
- While UKRI’s overall offer does result in significant support for every region and nation of the UK – reflecting underlying strengths and opportunities – in aggregate they result in our funding reflecting underlying variations in regional R&D capacity. There is therefore an opportunity for UKRI to introduce specific place-focused programmes that directly consider local impacts and growth opportunities as primary target outcomes.
- As a first step, in 2018, UKRI introduced a new programme – the Strength in Places Fund (SIPF) – which has been designed to fund large scale projects that harness local research and innovation strengths to drive significant local economic growth - principally through jobs and productivity improvements. It invests in regional consortia of research organisations and businesses to undertake collaborative research and innovation projects that demonstrate strong alignment with local economic plans. Earlier this year, the first wave of full project funding was announced – distributing £186m of public investment to 7 projects across the UK. UKRI has also recently announced the shortlist of 17 projects for the second wave of the programme. Details of these projects can be found on the UKRI website. The programme is still at an early stage but UKRI has developed a comprehensive monitoring and evaluation framework to make sure we understand the impact that the programme is having over time.
- The SIPF has been designed to leverage research and innovation strengths and opportunities to drive local growth outcomes in places across the UK. We are working closely with the Department for Business, Energy and Industrial Strategy (BEIS) to explore what role SIPF should play in the future and this is being considered in the context of the Spending Review.
- In 2016, Innovate UK introduced a team of regional managers, covering the three devolved nations and each major region of England. This team is responsible for building strong relationships with local and devolved authorities and regional business leaders to facilitate join up and coherence between the UK national innovation system and systems at the sub-national, regional and local levels. The Engineering and Physical Sciences Research Council (EPSRC) also introduced a small team in 2019 to undertake regional engagement activity to connect local research and business against corporate priorities, and Research England has a team responsible for building institutional relationships with universities across England.
What more could we do in the future?
- UKRI wants to work with our full set of partners to ensure every part of the UK benefits from the national R&D system. We will work closely with BEIS, other UK government departments and Devolved Administrations to ensure the entire research and innovation ecosystem supports every part of the UK to realise its potential. This will look different in different places – not everywhere can or should be a world-class R&D cluster, but people and businesses in every part of the country should be able to benefit from national, regional and local R&D capabilities.
- UKRI is currently in discussions with BEIS and HM Treasury on a future funding settlement through the ongoing Spending Review. This is within the context of a government commitment to a record increase in public R&D expenditure to £22bn by 2024/25. Subject to the outcome of the Spending Review, UKRI would like to increase our place-focused funding offer – building on existing programmes such as the SIPF, and potentially introducing entirely new ones to cover the full breadth of discovery research to business-led innovation. This package would have an important role to play in building on significant R&D strengths across the UK while also identifying and backing promising opportunities to catalyse a growth in R&D capacity and drive strong economic growth at the frontier of each UK region and nation’s economy.
- However, we also need to ensure that our whole offer can evolve over time to meet both the government’s national research and innovation and levelling up policy objectives. For UKRI and its councils this could include a stronger focus on:
- building capacity in places through targeted interventions,
- supporting regional research and innovation networks to develop and flourish,
- working with partners to enhance support for technology and innovation adoption and diffusion across sectors and places,
- developing our strategic engagement with civic leaders across the UK to drive strategic alignment and support partnerships and co-creation,
- leveraging our UK-wide network of strategic research and innovation assets – such as science and innovation campuses, institutes, facilities and Catapult Centres – for local impacts,
- ensuring our funding mechanisms are truly inclusive of the strengths and potential that exist across the UK, and
- applying research and innovation capabilities to address local economic, societal, environmental and health challenges to support a transition to a healthier and fairer society.
- Drawing on a broad set of levers will ensure that the full benefits of the UK’s research and innovation system – economic, societal, health, cultural – are delivered to a fuller range of communities and places across the UK.
Annex 1 – Case studies
Graphene Engineering Innovation Centre
The Graphene Engineering Innovation Centre (GEIC) in Manchester specialises in the rapid development and scale up of graphene and other 2D materials applications. Supported by £20m from Research England and Innovate UK, alongside other investments including the government’s Local Growth Fund, it has directly generated 59 jobs and indirectly created many more by attracting international companies who recruit staff in Manchester. It’s also boosted the city’s industry and is helping to establish north-west England – where graphene was discovered in 2004 – as a world-leading centre for graphene technology.
UK Prevention Research Partnership
A £50m multi-funder initiative, including support from the Medical Research Council (MRC), EPSRC, the Economic and Social Research Council (ESRC) and the Natural Environment Research Council (NERC), the UK Prevention Research Partnership (UKPRP) is supporting novel research into the primary prevention of non-communicable diseases to improve population health and reduce health inequalities. A project funded by this programme, System-science in Public Health and Health Economic Research (SIPHER), is developing systems-based economic evaluation methods and tools to provide a common basis on which to appraise the effectiveness and costs and benefits of policy measures implemented in different sectors. The project leads are partnering with Sheffield City Council, the Greater Manchester Combined Authority and the Scottish Government to explore the differences between implementation systems for four policy priorities: housing, the promotion of mental wellbeing, inclusive economic growth and adverse childhood experiences.
Industrial Strategy Challenge Fund – Prospering from the Energy Revolution
The Industrial Strategy Challenge Fund (ISCF) is a national programme that leverages UK R&D capability to address societal needs. However, several individual challenges are supporting R&D strengths in places across the UK, where they were either focused on optimising parts of the national ecosystem or building out broader national capability to position the UK at the forefront of global markets. For example, ISCF Prospering from the Energy Revolution has focused on local energy systems and their optimisation in the context of the local area’s demands and supplies. Through the investments made, UKRI has funded demonstrators running across the country from Oxford to the Orkneys. UKRI has also invested in a number of design projects for local areas such as E-port energy, which is focused on optimising the flows and markets for energy in the industrial cluster in North Cheshire.
Industrial Strategy Challenge Fund – Creative Industries Clusters Programme
The £55m Creative Industries Clusters Programme (CICP), which is also funded through the Industrial Strategy Challenge Fund and led by the Arts and Humanities Research Council (AHRC), plays a pivotal role in unlocking the innovation and economic potential of regions, via nine clusters distributed across all four UK nations. Channeling R&D investments to researchers and businesses working on the cutting edge of the UK’s fastest-growing economic sector, CICP is set to double in size by 2023 through co-funding commitments from industry and devolved administrations. Future Screens, in Northern Ireland, where >5% of the workforce is employed in the creative industries sector, is a successful example of AHRC’s commitment to realising the region’s levelling-up promise, supporting long-term economic and social prosperity.
Internationally recognised for world-class science, innovation and enterprise - where the world’s first synchrotron radiation X-ray source was developed and home to the world’s first automated accelerator facility - organisations based at Sci-Tech Daresbury are regularly pushing forward the boundaries of what is possible in science and innovation. The Daresbury Campus – a joint venture between the Science and Technology Facilities Council (STFC), Langtree and Halton Borough Council – is a major generator of both gross value added (GVA) and high-quality employment within the Northern Powerhouse. The gross GVA of the operations at Sci-Tech Daresbury to the UK economy is estimated at £163 million in 2014/15, and almost 900 full time employees are on site. In total, directly and indirectly, the Campus supports almost 2,000 jobs across the UK, and the Campus development plan aims to add £660 million to Sci-Tech Daresbury’s gross impact by 2040.
Advanced Manufacturing Innovation District Scotland
Innovate UK has allocated £13m for the Medicines Manufacturing Innovation Centre and £12m through Catapult funding for the National Manufacturing Institute for Scotland, both sited at Inchinan Innovation District at Glasgow International Airport where the Advanced Forming Research Centre has already benefited from over £100m of Catapult funding. The Advanced Manufacturing Innovation District Scotland works with manufacturing businesses of all sizes from across the manufacturing and engineering sectors to:
- Increase productivity by reducing barriers to innovation
- Stimulate investment and increase manufacturing competitiveness
- Drive job creation and strengthen supply chain links
- Inspire and attract talent and equip current and future workforces with the skills they and businesses need
Aberystwyth Innovation and Enterprise Campus
A funding collaboration between the Biotechnology and Biological Sciences Research Council (BBSRC), the Welsh Government and Aberystwyth University, the Aberystwyth Innovation and Enterprise Campus provides a world-leading facility for bio-science research. This new facility, completed in August 2020, will create high quality jobs, provide new opportunities for businesses in Wales and enhance the capacity of the university to undertake world-leading bio-science research. The facility will focus on collaborative research and development within the biotechnology, agri-tech and food and drink sectors and enable entrepreneurs and businesses to collaborate with researchers, access specialist facilities, and benefit from support networks and targeted events.