Written evidence submitted by the Department of Science, Innovation and Technology (IGR0051)

House of Commons Science, Innovation & Technology Committee inquiry: ‘Innovation, growth and the regions’

Summary

This is a response from the Department of Science, Innovation and Technology (DSIT) to the questions posed in the House of Commons Science, Innovation & Technology Committee's inquiry on 'Innovation, growth and the regions'.

It sets out how the government enables research and innovation across the UK's regions, in support of the government’s five missions and to meet the milestones set out in the plan for change. It highlights key government policies supporting the national innovation ecosystem that drives growth across all regions and nations of the UK, including public funding for research and development that is set to rise to a record £20.4 billion in 2025/26, support for start-ups, university spin-outs, and collaboration between universities and businesses.

Unlocking the innovation potential of the regions and nations of the UK will play an important part in achieving the government’s goal of building an economy that works for everyone. The government recognises the importance of strengthening regional innovation ecosystems to support regional economic growth. Going forward DSIT will build on lessons learned from successful regional innovation funding programmes (e.g. the Innovation Accelerators pilot programme, the Strength in Places Fund, and Innovate UK’s Launchpads) to develop a new programme as part of the second phase of the Spending Review.

It is important for local and national government to work together to align policy and funding levers in support of innovation.  Collaboration between national funders and regional partnerships of local leaders, industry, and research institutions will be essential for the successful delivery of our future approach. The English Devolution White Paper outlines commitments to develop stronger connections between Strategic Authorities and UK Research and Innovation.

DSIT’s view is that developing innovation clusters across the UK will be key to driving innovation, productivity, and regional growth. The government is testing various targeted approaches to support the development of clusters, with early insights showing promising results, and is working to improve the Innovation Clusters Map to build on previous work to set out a comprehensive picture of firm-level innovation activity across UK clusters.

In summary, the government is committed to creating an environment that promotes innovation and its adoption within the economy. The UK has a strong tech ecosystem, with significant achievements in creating unicorns and attracting venture capital. DSIT is working across government to address the challenges faced by innovation-focused researchers and businesses in spinning out or scaling up, and to unlock investment at scale for innovative science and technology companies to support regional growth.

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

Q1.1: How effective are the government’s policies in supporting the innovation ecosystem across the UK’s nations and regions, particularly through commercialisation initiatives?

DSIT’s purpose is to improve people's lives by maximising the potential of science and technology. One of its core objectives is to accelerate innovation, investment and productivity through world-class science, research and development (R&D). This is because the strength of the UK’s R&D system is vital to the prosperity and wellbeing of our citizens and central to delivering the government’s five missions and the milestones in the plan for change.

The government provides systemic support for the national innovation ecosystem that drives growth across all regions and nations of the UK. This includes support for commercialisation of research and technology, which covers a broad range of activity – from support for start-ups and university spin-outs, to university-business collaboration and support for existing companies to develop and commercialise technologies.

National investment in R&D is rising to a record £20.4 billion in 2025/26 and includes funding a network of globally and nationally significant infrastructures, including the Catapult network.

Public Sector Research Establishments (PSREs) are an integral part of the national research and innovation system that we fund. They are geographically diverse, and include large organisations such as the Met Office and smaller organisations like Forest Research.[1]  PSREs deliver both local and national economic benefits; for example:

• The Met Office has supported the development of a world-leading meteorological science cluster around its Exeter headquarters, and generates £18 of benefits for the UK economy for every £1 of funding it receives.[2]
• The National Physical Laboratory has accelerated innovation in precision engineering and created high value jobs by providing advanced metrology expertise through the Advanced Machinery and Productivity Institute, working with partners in Greater Manchester and West Yorkshire.

Support for research performing organisations, including UK universities, includes programmes such as Higher Education Innovation Funding, currently worth £280 million a year, and the £60 million Regional Innovation Fund in 2023/24. National support is also provided for the development of research and innovation talent, including through our National Academies.

Our investment in the UK’s ecosystem creates positive impacts in many ways. Every £1 Innovate UK invests in grants for business innovation returns over £3.61 in direct business benefit including for small and medium-sized enterprises (SMEs). Businesses that invest in innovation and R&D have increased productivity. On average, for every £1 a business spends on R&D, its annual productivity will be 20p higher, and the wider economy also benefits from an equal boost in productivity[3].

We are also creating new ways for the UK’s research and innovation ecosystem to deliver impact. The new R&D Missions Programme will address specific challenges faced by the government’s five missions, that need to be overcome to deliver the milestones in the Plan for Change. It will partner with private and third-sector organisations to achieve this and turn scientific advancements into real-world benefits, improving people’s lives and livelihoods across the UK.

As well as systemic interventions we continue to direct targeted funding towards innovation clusters across the country. This is because we recognise the importance of strengthening regional innovation ecosystems to support regional economic growth. Budget 2024 committed to funding across 2025/26 for existing successful programmes.  As set out in the English Devolution White Paper, we will build on lessons learned from successful regional innovation funding programmes to develop a new programme as part of the second phase of the Spending Review, such as:

• Innovation Accelerators: A pilot programme providing funding and wider support for Glasgow City Region, Greater Manchester and the West Midlands to boost their innovation ecosystems. This was extended for a further year in the Budget.
• Strength in Places Fund: Investing £312 million into 12 programmes that are turning regional research strengths into valuable innovations in areas as diverse as maritime transport, the dairy supply chain, and infectious disease control.
• Launchpads: £80 million to build on local innovation strengths and support SMEs to deliver jobs, growth and high productivity.

Collaboration between national funders and partnerships of local leaders, industry and research and innovation institutions is essential to successful delivery of these programmes. We are also collaborating with the devolved governments in Scotland, Wales and Northern Ireland on innovation and economic growth and (as our response to Q1.2 sets out) delivering the commitments made in the English Devolution White Paper to strengthen the roles of local leaders and institutions.

To support these partnerships, national data and information about innovation is made available to help investors, policymakers and others to better understand, engage with and invest in the UK’s innovation ecosystem. This includes the annual R&D publications by the Office of National Statistics (ONS)[4], sharing details of UK Research and Innovation’s (UKRI’s) investments through its Gateway to Research portal[5] and its annual regional investment breakdowns, and the Innovation Clusters Map published by DSIT in February 2024.[6]

DSIT plays an important role in supporting sectors such as Life Sciences and Artificial Intelligence to flourish in the UK.  The Artificial Intelligence Opportunities Action Plan,[7] published in January 2025, sets out key steps to laying the foundations for AI to grow across the UK, working in collaboration with local partners.  These include forging new AI Growth Zones to encourage the development of cutting-edge AI datacentres in areas of the country with plentiful power.  The first such zone will be in Culham, Oxfordshire.

Q1.2: How should devolution be harnessed to support innovation across the regions and nations, and what role should local government play in supporting research and development?

Our goal is to build an economy that works for everyone, and unlocking the innovation potential of the regions and nations of the UK is fundamental to that.

Through the English Devolution White Paper[8], we have committed to developing stronger direct connections between Mayoral Strategic Authorities (MSAs) and UKRI, building on the progress made in delivering previously agreed devolution deals. For example, UKRI will extend its regional partnerships and network of embedded points of contact with MSAs that are committed to work collaboratively on innovation and Innovate UK will collaborate with MSAs to produce joint plans that shape long-term innovation strategies and investments in places.

We have also committed to build on the lessons learned from the successful Innovation Accelerator pilots (and other programmes such as the Strength in Places Fund) to develop a new regional innovation funding programme as part of the second phase of the Spending Review. This will allow local leaders to develop bespoke innovation support offers for their regions and deliver these in partnership with UKRI, based on their capability and the maturity of their local innovation ecosystems. Key part of this will be local and national government working together to align all our policy and funding levers in support of innovation.

These and the other commitments DSIT and UKRI have made through the White Paper will support effective innovation partnerships in England to tailor policies and coordinate action to the needs of different places based on a deep understanding of regional economies. Together with other devolved policies that help to sustain local economic ecosystems – for example, those related to skills, planning and business support – they will help regions to unlock their innovation potential, and ensure their communities benefit from innovation-led growth through raising living standards in every part of the UK, in line with the Government’s Plan for Change.

For Scotland, Wales and Northern Ireland, responsibility for innovation and economic growth falls jointly to the UK Government and Devolved Governments – in large part through Innovate UK and the devolved research councils in each nation.  Following the 2024 general election, and in preparation for the second phase of the multi-year Spending Review, DSIT has been exploring with Devolved Governments opportunities for collaboration and alignment on innovation-led growth across the UK.

Q1.3: How do factors such as the tax system, regulatory frameworks and standards influence the success of start-ups, spin-outs, and other innovation-driven businesses?

For innovative firms to thrive, they need an environment that promotes innovation and its adoption within the economy.

The Government is committed to supporting the economy and removing barriers to inclusive economic growth, ensuring that the UK is one of the best places in the world for businesses to start, scale and stay as we aim to deliver the highest sustained growth in the G7 as set out in the Government’s Plan for Change.  There is a strong case for government intervention to support R&D on the basis that it generates positive spillover effects, boosts growth and productivity, and stimulates private investment in R&D.

The UK has the largest tech ecosystem in Europe and is in the top five largest tech ecosystems in the world. Since 2000, the UK has created 161 unicorns (companies worth over $1 billion in valuation) which is more than France, Germany and Sweden combined. The UK has the world’s third largest VC market behind the US and China raising £72 billion between 2021-23. In 2023, UK tech startups raised $21.3 billion, more than France ($9.2 billion) and Germany ($8.2 billion) combined.

The Government accepts the findings of the independent spinouts review.[9] We want to help universities realise the potential of their brilliant research in the real world; details are outlined in response to Q1.4. 

According to the UK Innovation Survey 2023[10], 37.3% of innovative businesses consider “meeting regulatory requirement” a highly important driver of innovation, compared to 16.5% who consider “UK Government regulations” a highly important barrier to innovation. According to the Business perceptions survey 2022[11], innovative businesses are nearly twice as likely to say that regulations that prevented or hindered the implementation of a new or significantly improved product was a challenge to their business, compared to non-innovative businesses (33% vs. 18%). Moreover, around a half (49%) agreed that the overall level of regulation in the UK was an obstacle to their business success, this was the case compared to 44% of non-innovative businesses. The most common reason for this was because they felt they had to spend too much time on compliance.

The Regulatory Innovation Office has been established to update regulation, speed up approvals, and ensure different regulatory bodies work together smoothly for technologies and innovations. It will inform the Government of regulatory barriers to innovation, set priorities for regulators that align with the Government’s broader ambitions and support regulators to develop the capability they need to meet them and grow the economy.

The UK’s R&D tax reliefs have an important role to play in supporting R&D in a fiscally sustainable way.  At Autumn Budget 2024, the Government made a number of commitments on R&D tax reliefs as part of the Corporate Tax Roadmap to provide stability and certainty to support investment decisions. This included a commitment to maintaining the generosity of the rates in both the merged R&D Expenditure Credit scheme and the Enhanced Support for R&D Intensive SMEs (ERIS). Combined with the commitment to cap the headline rate of corporation tax, this means that companies doing qualifying R&D will continue to receive between £15 to £27 for every £100 spent on R&D. ERIS alone will provide around £1.3 billion per annum to roughly 20,000 R&D intensive SMEs.

Q1.4: What challenges do innovation-focused researchers and businesses face in spinning-out or scaling-up, such as accessing venture capital, infrastructure and intellectual property rights.

Innovation-focused researchers and businesses in the UK face significant challenges in spinning out or scaling up, particularly in accessing venture capital and growth finance. Despite progress, such as closing the venture capital gap with the US and leading in fintech, barriers persist. As set out in Invest 2035: the UK’s Modern Industrial Strategy Green Paper,[12] these include risk aversion, information gaps, regional disparities in finance availability, and sector-specific hurdles like capital intensity and technology risks. These challenges are particularly acute for SMEs, which often face higher costs and limited access to finance.

The HSBC Innovation Banking and Dealroom Q3 2024 UK Innovation Update highlights additional barriers in ‘physical’ sectors like defence tech, semiconductors, and climate tech. While investor interest in these sectors is growing, their complexity limits the pool of investors with the expertise to conduct proper due diligence. This can result in conservative pricing or outright withdrawal of investment, further constraining business scalability.

To address these issues, the government has implemented various measures. The British Business Bank provides SMEs with debt and equity products; Innovate UK leverages private capital through grants and investments; and the Pensions Investment Review seeks to unlock additional funding for growth. For international investors, the expanded Office for Investment will work to remove barriers, while the National Wealth Fund is expected to unlock billions in private investment. Recent reforms, such as the Financial Conduct Authority’s updated listing rules, aim to enhance flexibility and competitiveness, helping UK firms scale globally.

The independent review of university spin-outs published in November 2023 described challenges facing spin-out companies. Many of these are shared with other innovative high-growth companies generally, such as the access to finance issues described above. The report described specific barriers to spin-outs relating to the process of licensing intellectual property (IP) out of universities. It concluded that there were challenges with the length of time the process took, and some universities were taking excessively high equity shares and royalty rates. Finally, it reported a lack of translational ‘proof-of-concept' funding for academic researchers.

The government has implemented changes to improve these and monitored universities’ response to the review. As of November 2024, 49 universities had adopted the review’s recommended range of licensing terms. Research England has also funded a series of pilot projects for shared technology transfer (that is, IP licensing) functions between multiple universities, allowing those with fewer capabilities to pool resources or learn from more experienced universities. The government has also announced £40 million for a new proof-of-concept funding programme.

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

Q2.1: How effective are regional innovation hubs and clusters in supporting regional growth and prosperity for local communities?

There is a long-established link between R&D and economic outcomes at the firm[13] and national level[14] and innovation is key to raising living standards in every part of the UK. All regions and nations of the UK have seen productivity gains from innovation via their innovative firms, though outcomes differ by region[15].  As different places have different needs and capabilities they require different approaches to maximise impact.

The UK research and innovation ecosystem is made up of clusters; groups of firms, research capabilities, skills, and related industries that benefit from being based in the same location. These are sometimes anchored by universities or other major institutions, many of which receive significant public support.  Clusters have a positive impact on driving innovation, productivity and regional growth. The interactions between actors in a cluster facilitates knowledge transfer and firms are more productive and innovative. Supporting clusters to reach their potential will be vital to delivering the government’s growth mission, ensuring working people have more money in their pocket.

The government is testing a range of targeted approaches to supporting innovation-led growth, as referenced in response to Q1.1.  As many of these are in progress (for example, the Strength in Places Fund and Innovation Accelerators launched in 2019 and 2022, respectively), embedded evaluations are at an early stage; formal evaluation of their impact will become available in the longer term.  Early insight is promising; for example, the Innovation Accelerator pilot is strongly on course to achieve its co-investment target of 1:1 during its lifetime and exceed its 2:1 target in the longer term.

Q2.2: How regional cluster growth can best be measured, mapped, and monitored to help inform local leadership and evidence-based policymaking in Whitehall.

Understanding the dynamics, growth and evolution of innovation clusters is essential for shaping effective regional policies and evidence-based decision-making in local and central government. By looking at clusters and firm-level data, we can improve the quality of our decisions about where to target public support and encourage more private and third sector investment in innovation. The government is working with local partners to draw on local insights and bring together qualitative and quantitative evidence to understand the sectoral clusters that exist across the UK. 

DSIT is working to improve previous work building a comprehensive picture of firm-level innovation activity across UK clusters, and intends to publish an update of the 2024 Innovation Cluster Map, responding to feedback received to date.[16] This will include further improvements to its functionality, sector coverage and cluster level data. Future iterations of the map could also facilitate longitudinal analysis, allowing users to track the evolution of clusters over time on a range of indicators identifying economic performance and innovation activity. This capability would enable a deeper understanding of high growth clusters and changes in cluster characteristics. 

Informed by the Innovation Clusters Map and other insights, the government will explore how to build on existing place-based initiatives to support high-potential clusters.  The industrial strategy will coordinate sectoral and business environment policies to overcome place-based barriers in key clusters and enhance their attractiveness as destinations for private investment.

Q2.3: Would unlocking investment at scale for innovative science and technology companies support regional growth, and how could this be done?

Unlocking investment at scale for innovative science and technology companies is crucial for driving regional growth and raising living standards in every part of the UK. This would create high-quality jobs in innovative sectors, diversify local economies to reduce their dependence on traditional sectors, and foster regional innovation clusters that drive collaboration and competitiveness.

The government has already taken significant steps to boost investment. In support of scale-up and growth, we have:

• Launched a remodel of the UK Infrastructure Bank as the new National Wealth Fund and provided £5.8 billion of additional funding. Its total capitalisation is now £27.8 billion.
• Announced reforms to the British Business Bank, including launching the new vehicle ‘British Growth Partnerships’. This will enable the Bank to better mobilise the UK’s deep pools of institutional capital.
• Launched a landmark Pension Investment Review, which is exploring ways to increase investment into productive and growth assets. 
• Taken steps to encourage inward investment in regional business opportunities.  For example:
• At the International Investment Summit, firms invested over £24 billion in our data centre sector. That will create good new jobs in communities across the country.
• ARIA’s Activation Partner call has encouraged overseas organisations to establish new operations in the UK, including two of the world’s most successful deep tech venture capital funds.

By combining existing government initiatives with targeted measures, the UK can unlock investment to drive regional growth. This approach will foster innovation, create resilient economies, and support a balanced national economic future.

Q2.4: Should there be region-specific innovation and growth policies, and what should local government’s role be in this?

The English Devolution White Paper published in December 2024 set out how the government will empower local leaders and communities in England to deliver growth for their areas and raise living standards in every part of the country.  As set out in response to Q1.2, this includes clear commitments to strengthen partnership working between MSAs and UKRI to support regional innovation-led growth and better inform decisions through local insights.

MSAs will set out a long-term vision for growth in their region over the next decade and a roadmap for how this can be achieved in Local Growth Plans. These will galvanise action and investment, setting out a pipeline of investment opportunities to be unlocked through the right mix of public and private investment. Foundation Strategic Authorities also have an important role to play in driving local growth. They will set out a vision for growth in their area, building on existing local economic strategies where these exist.

Respect for devolution and collaboration with the Devolved Governments in Scotland, Wales and Northern Ireland remains central to the government’s approach to rebuilding the country and achieving its long-term missions.

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

Q3.1: What more can be done to ensure that innovation investments deliver tangible outcomes for both local and national economies, in terms of productivity and growth, and how should this be assessed?

As outlined in response to Q2.2, the Government is strengthening partnerships between UKRI and local leaders to drive regional economic growth. 

Increased investment in R&D drives innovation, which produces new technologies, products, services and processes. This leads to increased firm productivity and generates benefits for the wider population, including greater opportunities for high-skilled employment, as well as health, social and cultural benefits for local communities. This is why innovation is a key to our ambition to raise living standards in every part of the United Kingdom.

The benefits accrued at a local level will depend on a wider set of characteristics – for example, whether the local firms can absorb the type of R&D being produced, the sectoral composition of the local area, and the local labour and skills markets.  Evidence demonstrates that building new clusters from nothing does not work; while supporting collaboration between industry and academia works but is constrained by the absorptive capacity of the local innovation ecosystem.[17] 

Effective monitoring and evaluation of the impact of innovation investments and policy evaluations are important to ensure that lessons learned inform future policy design.  Further information about metrics is set out in response to Q4.2.

Q3.2: To what extent do Catapults support technology diffusion, and drive both national and regional growth?

Research suggests that engaging with Catapults provides an immediate and sustained improvement of the performance of firms, helping them to adopt new innovations and technologies, and leading to faster employment and turnover growth – especially for smaller, high-tech companies, and firms in the services industry.[18]

Driving the adoption of transformative technology is an inherent feature of the Catapult model: from Energy Systems Catapult’s Net Zero Living Demonstrators, which support adoption of net zero technologies in cities, to Digital Catapult’s Bridge AI programme that enables the adoption of AI in sectors such as agriculture and construction. Catapults’ unique combination of facilities and expertise supports SMEs to test out and assess the benefits of new technology or innovative processes that they would otherwise not be able to take a risk on. Catapults also connect larger businesses with innovators to trial potentially disruptive innovations in a safe but realistic environment. This enables those businesses to build the internal business case for significant investment in adoption, driving innovation through their supply chain, and opening new markets through which to diffuse their innovations.

Catapults also accelerate the growth of innovation clusters. Local knowledge spillovers from Catapult centres improve employment and turnover growth, increase labour productivity, and stimulate new start-ups in the immediate proximity of their centres.[19] For example, Cell and Gene Therapy Catapult has supported the creation of Europe’s largest cell and gene therapy cluster in Stevenage, with over 1,000 jobs, 45 companies and 75% of UK cell and gene therapy developers. Similarly, Compound Semiconductor Applications Catapult is at the heart the world's first compound semiconductor cluster in Newport, which integrates nearby universities’ research excellence with regional supply chains in advanced semiconductor manufacturing.

Q3.3: How well are universities and businesses coordinating efforts to develop and commercialise research, including the role of spin-outs and collaborative R&D projects?

The UK attracts the second most investment into university spin-outs of any country (after the USA) and when research resource is considered, their performance is now competitive with the USA in terms of patents, spinouts and income from intellectual property.[20] Specific issues relating to university spin-outs and government’s response are discussed in response to Q1.4.

The use of different datasets makes comparisons challenging, but university spin-outs attract a larger proportion of UK venture capital investment than US universities.[21] They also receive a similar but slightly larger share of their total research funding from industry sources.[22]

The Higher Education Statistics Authority publish data on university-business interaction, summarised in the National Centre for Universities and Business’ ‘State of the Relationship’ report. Despite some headline figures decreasing in recent reporting rounds, such as number of university interactions with businesses, the overall trend is of continued strong performance. For example, in England interactions with SMEs were 9% below the 5-year average in 2022-23, but income from these interactions was 4% above which could suggest a shift in focus to high-value interactions.

Universities’ ability to maintain a good level of business interaction and income despite financial headwinds in the private and university sectors demonstrates the strong ecosystem of collaboration in the UK.

Section 4: The Committee also welcomes submissions on the following points:

Q4.2: Is the £20.4 billion research and development budget delivering value for money and economic growth, and what metrics should be used to evaluate its effectiveness?

Total Government investment in R&D is rising to a record allocation of £20.4bn in 2025/26.  Even though the Government inherited an extremely difficult fiscal position, the Government is clear that R&D is fundamental to kickstarting economic growth and delivering its five missions. This settlement provides the critical investment needed to support the UK’s R&D ambitions.  DSIT will work closely with the sector to ensure effective prioritisation of this settlement, ahead of announcing further details on the allocation of the R&D budget in due course.  

Most national and international studies conclude that increase in RDI spend is associated with economic growth[23].  New DSIT research has found that UK public R&D has been estimated, six years after the investment is made, to have an average rate of return of 40%[24].

While measuring the impacts of R&D programmes is inherently challenging because of the long-term and dispersed nature of the benefits, metrics to track outputs can be used such as looking at the impacts on businesses who receive R&D grants. For example, analysis of all Innovate UK grants since 2004 and data from 35,000 businesses found that £1 of grant funding directly creates £3.04 of private benefits to recipient firms.[25] 

The Government monitors R&D metrics at both the programme level and systems level. Tracking the impact of R&D investments is challenging; outcomes and impacts are realised over a long time-horizon, and impacts are often spread over the whole economy rather than in a specific area or business. DSIT has published new research to help improve the quality of R&D evaluations by showing different methodologies for handling specific challenges of R&D evaluation[26].

To monitor progress, we measure system wide metrics annually, or as frequently as data are available. As outlined in the table below, we use metrics for R&D intensity, knowledge creation, innovation and commercialisation. Where data are available, we also look at data by region.

DSIT requires programme-level monitoring and evaluation plans as a condition of its funding. These plans include metrics tracking long-term impacts and short-term outcomes used to track progress, which vary by programme. Programmes have short term metrics to measure their progress towards the impacts because these impacts will often only be realised in the long term. Short term metrics could include (but are not limited to) the number of research collaborations and prototypes as well as metrics around implementation and take up of the programmes. Economic growth-related metrics include private sector investment leveraged, productivity increases and number of jobs created.

Q4.3: How are funding bodies such as UKRI and ARIA contributing to the UK’s innovation ecosystem and delivering the government’s growth missions?

UKRI is the national funder of research and innovation. UKRI plays a pivotal role in supporting the UK’s world-leading research and innovation ecosystem, backing 58,000 academics, researchers, and innovators across 3,700 public and private organisations. All of UKRI’s nine constituent councils provide support for innovation, and it is primary focus of Innovate UK, the UK's innovation agency. UKRI will be providing separate evidence to the enquiry.

ARIA is an independent research body, custom built to fund high-risk, high-reward scientific research. Ensuring that research breakthroughs translate into impact is a focus of ARIA. To enable this, ARIA selected its first set of Activation Partners in October 2024. Activation Partners will amplify the impact of ARIA-funded research, working across the whole of the UK and bringing together different parts of the UK R&D ecosystem. Activation Partners will embed science entrepreneurship across ARIA’s portfolio, helping spark latent ideas, empower talent, support new ventures and provide insights and connectivity across ARIA’s opportunity spaces.  This has already led to at least five US organisations establishing their operations in the UK (including two of the world’s most successful deep tech venture capital funds).

Q4.4: How does the UK’s innovation ecosystem compare to those of other countries, and what lessons can the UK learn from international models in terms of commercialising research and innovation to benefit both regional and national economies?

The UK consistently achieves high global rankings for innovation. For example, it was ranked as the fifth most innovative economy in 2024 among the 133 economies featured in the Global Innovation Index (behind Switzerland, Sweden, USA and Singapore), and second among G7 nations.[27] The UK ranks highly on market sophistication (3rd), knowledge and technology outputs (5th) and human capital and research (7th). It is renowned for its higher education system, boasting 4 of the top 10 ranked universities in the world.

The UK has frequently looked abroad for inspiration on science and technology policy. For example:

• The Catapult network is partly inspired by Germany’s Fraunhofer institutes.
• Innovate UK’s academic commercialisation programme ICURe was originally inspired by the US National Science Foundation’s i-Corps programme.
• The creation of ARIA was inspired by the various iterations of ARPA in the USA.

Each of these programmes has been inspired by international comparisons, but developed into distinct approaches to suit the innovation ecosystem within the UK.

One of the roles of the FCDO’s Science & Innovation Network, with dedicated officials located at embassies around the world, is to bring back insights on the ecosystems of other countries.

23 January 2025