Written evidence submitted by Dr David Brown (IGR0011)

Innovation, Growth and the Regions

Previously a Board member and deputy Chair of the former regional development agency Advantage West Midlands, I am now an honorary professor at Aston University and an independent consultant.  I specialise in innovation and regional economic development and in interactions between universities, business and the public sector.  I was previously a director at Arthur D. Little Ltd, where I led a programme of some 40 assignments related to those themes, working with all English regions and others.

1. How does the Government drive research and innovation in our regions?

While there are numerous and well-informed policy initiatives implemented through UKRI and others, the landscape of support schemes remains fragmented and complex, making it challenging particularly for SMEs to identify and access appropriate forms of support. Moreover, the short-term nature of much funding – two- or three-year timeframes for example - leads to uncertainty among businesses, supporting organisations and skilled personnel, and compromises effectiveness.  It tends to favour ‘oven-ready’ projects over more radical innovation. The pathway from research to commercial application is not linear and can be lengthy, with extensive interaction between universities/research centres and business.  Greater consistency over time would be a considerable advantage.

Innovation priorities differ significantly from region to region as well as among different types of business and sector. Recent moves to devolve innovation funding are welcome, and further devolution should be encouraged. However, those to whom it is devolved must have the necessary expertise, resources and capacity to best support and develop regional innovation systems and support initiatives.  Since the demise of the regional development agencies (RDAs) and more recently the regrettable loss of ERDF these essentials have often been lacking at local level, including in local authorities.  Furthermore, local authority areas are generally too small for research and innovation policy purposes: devolution to the level of NUTS 1/ITL 1 regions, or at least to the level of combined authorities where they exist, would be more appropriate. Such regions are large enough for real impact, but small enough to bring key players together readily. (It may be significant that some of the most successful national economies are those, such as Singapore, which are broadly comparable in size and/or GDP to one or two UK regions).    

Although priorities differ between regions, shortage of high-level skills remains a limiting factor in many areas, especially in fields such as AI and green skills. Skills policy must therefore be aligned and integrated with innovation policy and business support policy if optimum results are to be achieved. In that context, an explicit focus on innovation in the UK Shared Prosperity Fund (UKSPF) would be desirable.  At the same time, outside the London – Cambridge - Oxford ‘Golden Triangle’ access to capital is a significant limitation, notwithstanding the welcome establishment of regional initiatives such as Midlands Mindforge (https://midlandsmindforge.com/ ).

2. How does research and innovation in our regions drive growth and prosperity in those regions?

Innovation hubs and clusters are a key element in regional innovation systems, bringing together business, research base and public sector expertise to nurture and promote areas of particular local strength, to identify hindrances in the barriers, and to develop ways in which they can be overcome. They should be informed by regional observatory initiatives - which will also serve to feed into central government policy making – and in the case of clusters, must be business-led.

That priorities, strengths and weaknesses differ from region to region means that region- specific innovation and growth policies should be developed, guided by current and emerging business needs and by the research and technology strengths of each region, notably though not entirely in the universities, and with coordination to reduce duplication between regions.  From the early 2000s, the development of region- specific policies and initiatives was informed and steered by regional Science and Industry Councils, a concept devised and implemented by myself and colleagues at Arthur D. Little Ltd.  The Councils, supported by the RDAs and rolled out to all English regions with the backing of the then Minister for Science, Lord Sainsbury, were able to help develop policy, to promote and broker collaborative proposals and initiatives for applied research and innovation, and to address regional challenges. For example, the first such Councils were established in the Northwest (where a result was the first regional science strategy of its kind) and in the North East, each chaired by a senior business leader from an organisation active in research in the region. 

A very positive step would be to re-establish such bodies on a regional level, with membership including business, university and public sector leaders including local authority elected members.

RDAs operated on a sufficient geographic scale, and with sufficient resourcing, to create a number of important and successful parts of the UK’s innovation infrastructure, such as:

- the science and technology cluster around Daresbury

- in the North East, the Centre for Process Innovation, now part of the High Value Manufacturing Catapult and a crucial asset to the UK's process and bioprocess industries,

- also in the North East, the Blyth centre of the (now) Offshore Renewable Energy Catapult.  I

- in the Midlands, the Manufacturing Technology Centre, backed by the East and West Midlands regions working in collaboration

- enabling the creation of the new University of Manchester from two precursor universities, as a northern counterbalance to the ‘Golden Triangle’

Regional support for industry cluster development has proved successful. Strong examples include the Midlands Aerospace Alliance, One Nucleus based in Cambridge; and the North East Process Industries Cluster, NEPIC, bringing together several hundred paying members to encourage and support innovation within the region and to greatly enhance the profile of the region’s process industries across the rest of the UK and internationally.  Cluster coordinating bodies typically benefited from regional setup funding in the 2000s, and while not all have survived the end of that funding, those which have provide a clear, unified and authoritative voice for their respective sectors while also working together to identify areas at the interfaces between industry sectors which often prove fertile grounds for innovation.  Creation and support for cluster coordinating organisations should be encouraged.

3. How is research and innovation diffused or supported to drive productivity and growth in the regions, wherever it may come from?

To translate innovation into commercial success, improved productivity and social benefit, all necessary ingredients must be present. These can be categorised broadly as people and skills; Infrastructure, both physical and digital; intelligence, particularly market information and appraisal; and finance, of an appropriate level and timescale (figure 1).  Schemes that focus on only one component are of optimum value only if aligned with measures to support the others – in other words, a regional innovation policy must ensure all four sets of factors are addressed and that there is effective coordination between them.

Currently, lacunae include access to finance, particularly longer-term finance and in regions outside the South East; skills provision which is not well coordinated with business support or aligned with regional labour market needs; and importantly, the short term nature of many business support programmes such as those under UKSPF.  Government should ensure that regions have the necessary resources and authority to address these gaps.

University-business collaboration in the interests of new product/process creation and productivity improvement is reflected in many excellent examples, such as those regularly published by the National Council for Universities and Business.  But the role of university-business collaboration goes much further than developing and commercialising research. It is essential for meeting future skills needs[1]; it enables the development of well-informed innovation policy, taking account of learning and experience from around the world; and it provides a basis for rigorous evaluation of policy success.  Universities can provide invaluable assistance to businesses, particularly SMEs, through placements and secondments, student entrepreneurship, consultancy, access to specialist equipment, joint R&D facilities where academics and industry personnel work side by side, provision of infrastructure such as innovation centres and laboratory space, or by playing a convening role within their region.  While opportunities for universities to work with business have been adversely affected by the loss of ERDF funding, many successful programmes remain, Knowledge Transfer Partnerships (KTPs) being an outstanding example. 

Support for spin-outs and potential spin-outs is variable: there is a large gap between the extent and sophistication of support available in leading Russell Group institutions and that available to staff in less research-intensive universities.  There would be merit in the former making their spin-out and research commercialisation expertise available to other universities on a regional level, given appropriate funding to enable them to do so.   Leadership in schemes such as KTPs however can be found in non-Russell Group institutions, which often stress their civic mission and local/regional role.  It follows that funding allocation for university-business collaboration must avoid excessive weighting to the most research-intensive or most prestigious universities.  Government should also ensure that all universities are able to recruit and retain staff with the necessary skills and experience in working with businesses.

4. Other points

My only observation here relates to learning lessons from international models for commercialising research and innovation.  As a member of the European Union, UK academics, researchers and other experts participated very fully in studies assessing and comparing aspects of innovation policy and practice across Europe.  It is essential that despite Brexit, they are able to continue active involvement in and cooperation with such studies, along with similar work under the auspices of organisations such as OECD. The UK must learn from successes, and avoid repeating failures, that have been experienced elsewhere.  Equally, the UK has valuable contributions to make to successful innovation policy and practice internationally, in order to address global challenges such as climate change, antibiotic resistance and pandemic preparedness.

Areas for particular attention in international comparisons should be the duration of innovation initiatives and funding schemes and the steps taken to ensure long term continuity of investment and support; and the coordination of innovation policy with policy on skills, infrastructure and education. Successful adaptation of ideas from elsewhere can boost productivity, innovation and growth at both national and regional levels.

David Brown MA PhD CEng FRSC FIChemE

Figure 1 The components of innovative business success

11 January 2025