Written evidence submitted by the University of Oxford (IGR0076)

Call for Evidence

Science, Innovation and Technology Select Committee - Innovation, growth and the regions

University of Oxford

The University of Oxford is committed to leading the world in research, teaching, and innovation to benefit society both in the UK and globally. Oxford’s researchers collaborate with academic, commercial, and cultural partners across the globe to advance high-quality research and deliver innovative outcomes that have far-reaching social, policy, and economic impacts.

In 2022/23, the University secured £787 million from external research funders—more than any other UK university—and leads the nation in university spinouts, having created over 300 companies to date. These achievements have cemented Oxford’s reputation as one of Europe’s most entrepreneurial universities.

Beyond its global influence, the University plays a vital role in anchoring Oxfordshire’s regional innovation ecosystem, contributing talent, economic opportunities, and a commitment to sustained, equitable, and inclusive growth that benefits all residents of Oxfordshire. Achieving these ambitions requires active participation in public policy reviews and evidence-gathering initiatives to drive positive change in an increasingly dynamic global market.

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

The innovation ecosystem in Oxfordshire, particularly the commercialisation activities of Oxford University and its tech transfer office, Oxford University Innovation Ltd (OUI), stands to gain significantly from government efforts to establish a pro-innovation regulatory environment. While the UK’s tax system and regulatory frameworks already provide valuable support to start-ups and university spinouts, further enhancements are needed to optimise these structures and policy instruments, driving greater innovation and economic growth.

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

Government policies over the past decade have undoubtedly played a significant role in the University’s outstanding success in commercialising research outputs. The University’s technology transfer office, a UK leader in patent filings, facilitates the creation of 15 spinout companies each year on average. Since 2015, the number of spinouts has risen by 166%, accompanied by an impressive 687% increase in capital raised. In the period between August 2023 and July 2024 alone, Oxford University spinouts collectively secured £872.1 million in funding.

A recent analysis underscores the far-reaching economic impact of the University’s spinouts. In 2021–2022, these companies contributed an estimated £3.8 billion to the UK economy, including £2.4 billion in the South East of England. The corresponding Gross Value Added (GVA) was £1.8 billion nationally, with £1.1 billion generated in the broader South East region. Additionally, Oxford spinouts supported over 31,600 jobs across the UK, with 17,200 of these based in the South East.

Beyond spinouts, the University’s economic impact extends further. When accounting for science parks, broader knowledge exchange activities, and the global impact of the Oxford-AstraZeneca Covid-19 vaccine, the University’s total contribution to the UK economy in 2021–2022 is calculated at £6.6 billion. This figure represents only part of the total economic impact associated with Oxford University’s activities.

To sustain and build on this momentum, a supportive regulatory framework is essential. Entrepreneurs need an environment that facilitates scaling up by reducing bureaucratic barriers, providing clear guidance, and implementing innovation-friendly regulations. Reform in these areas is crucial to ensuring university-developed technologies can transition effectively into market-ready solutions, driving further economic and societal impact.

In addition to regulatory reform, policy intervention in Proof-of-Concept funding could have a transformative effect, particularly through devolution to support regionally focused innovation. An Oxford University-commissioned benchmarking report on innovation ecosystems identified Proof-of-Concept funding as critical for stimulating commercialisation by building confidence in concepts prior to spinning out. The November 2023 Independent Review of University Spin-out Companies[1] echoed this finding, advocating for increased funding aligned with the timing and integration of commercialisation support and venture-building programmes. However, the £40 million spinout Proof-of-Concept fund announced in the 2024 Autumn Budget[2] for England falls short of meeting current demand for de-risking emerging innovative technologies and services.

Models developed by Scottish Enterprise and Research Ireland offer valuable templates for enhancing Proof-of-Concept funding in England. Scottish Enterprise provides project-based funding programmes, while Research Ireland offers challenge-based programmes, both delivering multi-year support ranging from £250,000 to £1 million. Adopting such approaches could significantly strengthen support for emerging innovations and ensure their successful transition to market.

Additionally, funding support for collaborative initiatives has been instrumental in enabling the research-to-translation pipeline. For example, the UK SPINE project, funded by Research England with £6.5 million, established a knowledge exchange network that brought together six institutions—the University of Oxford, University of Sussex, University of Birmingham, University of Dundee, and the Francis Crick Institute—to tackle the challenges of ageing. Between 2018 and 2023, the network funded over 40 projects, resulting in five new methods, more than 10 targets, four new compounds, and two human trials currently underway.

Oxford University is also fostering similar collaborations, including a partnership with Queen Mary University focused on cancer trials, and a civic data partnership with the University of Liverpool to address critical gaps in population health and systems approaches to data and responsible AI.

In parallel, Oxford University Innovations Ltd is leading a consortium of five institutions in a £1.5 million bid titled “Seed Funding, Training, and Support for Social Ventures.” This initiative aims to strengthen and amplify the growth of university-led social ventures. Currently, social ventures contribute £60 billion to the economy and have created two million jobs.

• 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?
• 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.

Over many years, Oxford University has shaped an innovation ecosystem that has fostered the development of clusters in life sciences, artificial intelligence, quantum technologies, space technologies, and clean energy. These clusters are now deeply embedded in the region, contributing to its reputation as a hub of innovation. Recognising the commercial potential of its research and the increasing need for capital, Oxford University established Oxford Science Enterprises Ltd (OSE) in 2015 to fund and build transformational businesses based on the University’s intellectual property. This independent company, in its unique partnership with the University, has invested £0.8 billion in over 100 companies, attracting more than £1.7 billion in co-investment from 300 global partners. Prior to OSE's formation, Oxford generated approximately 4–5 spinout companies annually. However, the access to capital provided by OSE has unlocked the University’s latent potential, with spinout creation averaging 15 companies per year. This demonstrates the transformational impact of dedicated regional funds on the commercialisation of research.

Despite this success, concerns persist regarding the projected investment needs of £2 billion to £5 billion for Oxford spinouts over the next five years, particularly in capital-intensive fields like quantum technologies and climate mitigation technologies where availability of scale-up capital, especially from Series B onwards, is limited. Meeting this demand, along with providing the talent and infrastructure required to support growing businesses, relies heavily on maintaining tax incentives for R&D and investment, such as the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS). In the UK, introducing more flexible financial instruments like revenue-based financing, government-backed equity stakes, and outcome-based loans could encourage strategic investments, particularly in early-stage ventures. In the US, for example, revenue-based financing has been successful in supporting start-ups without requiring equity dilution, providing companies with greater operational flexibility.

A critical resource enabling universities in England to support spinouts and de-risk early-stage technologies is Research England’s Higher Education Innovation Funding[3] (HEIF). Sustaining this funding is essential for regional and national economic growth and maintaining the UK’s competitive edge. Furthermore, Oxford University would encourage the British Business Bank to expand current pilot projects focused on skills development for individuals interested in becoming angel investors, particularly from under-represented groups. Initiatives such as those delivered by Mint Ventures, a women-led angel investment group, provide a valuable template for increasing the diversity and size of the business angel pool in the UK.

Innovation-focused researchers and businesses face significant challenges, including access to capital, innovation infrastructure (such as real estate) and a skilled talent pool. Planning regulations must be reformed to enable regions to develop or expand innovation real estate at a pace that matches demand. For example, Oxfordshire faces a shortfall of over 1 million square feet of innovation-related laboratory and office space, with a pipeline need for 4.47 million square feet. Public-private partnerships have a vital role to play in addressing these gaps. A notable example is the May 2024 announcement of an initial £125 million fund by The Crown Estate, OSE and Pioneer Group to acquire 100,000 square feet of life sciences space in central Oxford[4]. This partnership has long-term ambitions to invest up to £1.5 billion in support of the UK’s science, technology and innovation sectors. Another partnership between OSE and Precision Health Technology Accelerator in Birmingham aims to help high-growth health technology and life sciences companies to scale, primarily through access to high-quality lab and innovation space, while also catalysing cross-regional collaboration between academics and enterprises.

The development of innovation real estate is a cornerstone of investment readiness and forms part of a broader system designed to attract investors. However, inadequate investment in transport connectivity and slow infrastructure development in Oxfordshire present significant barriers to inward investment and talent retention. Addressing these challenges will require coordinated efforts between national and local governments to ensure the region continues to thrive as a global hub for innovation.

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

Oxford University identifies with the government’s definition of clusters as areas characterised by strong concentrations of employment, output, high productivity, and innovation, either within concentrated spatial areas or across broader regions spanning administrative boundaries.

• How effective are regional innovation hubs and clusters in supporting regional growth and prosperity for local communities?

Regional innovation hubs and high-tech clusters have a profound impact on local communities, regional growth, and national prosperity. Oxfordshire stands as a prime example of an innovation-driven region, anchored by world-class institutions such as the University of Oxford, Harwell, and Culham. This concentration of knowledge and entrepreneurship has delivered substantial economic contributions. The county is home to 2,950 high-tech businesses, 364 R&D-intensive companies founded since 2013, and approximately 29,000 employees in high-tech enterprises, including 12,000 in R&D roles (Oxfordshire’s Innovation Engine 2023; Advanced Oxford, 2023[5]).

The region’s ecosystem of world-leading research, high-tech clusters, and access to skilled talent has attracted significant corporate investment. For example, Moderna Therapeutics Inc., a leading US pharmaceutical and biotechnology company, has chosen Harwell as the site for its Moderna Innovation and Technology Centre[6]. This decision was driven by access to local talent, collaborative opportunities with Oxford University, and synergies with over 70 life sciences organisations in the region.

Similarly, GlaxoSmithKline’s (GSK) 2021 partnership with Oxford University to establish the Institute of Molecular and Computational Medicine[7], supported by an initial £30 million investment, highlights the strategic value of such clusters. Novo Nordisk’s 2017 commitment of £115 million over 10 years, including co-locating staff at Oxford University to advance Type II diabetes research, again underscores the appeal of Oxfordshire’s innovation ecosystem.

Long-term collaborations, such as the 50-year partnership between Rolls-Royce and Oxford University, exemplify the enduring benefits of sustained investment in research and innovation. These partnerships demonstrate the critical importance of government support for regional clusters, university research, and funding across the innovation system. Continued investment is essential not only to maintain Oxfordshire’s position as a global leader in innovation but also to drive corporate and investor engagement, ensuring both regional and national prosperity.

• How regional Cluster growth can best be measured, mapped, and monitored to help inform local leadership and evidence-based policymaking in Whitehall.

Regional cluster growth in Oxfordshire can be effectively measured, mapped, and monitored through a range of indicators and collaborative oversight mechanisms. Key measures include tracking the number of spinouts and startups originating from Oxford University, currently exceeding 300, and their economic contributions such as capital raised (£872.1 million in 2023–2024) and employment generated. The demand for innovation space, exemplified by Oxford’s science parks and a pipeline for 4.47 million square feet of innovation-related real estate, is a vital proxy for growth. R&D outputs, including patents filed and intellectual property income, alongside high-tech employment figures (29,000 roles, including 12,000 in R&D), further capture the vibrancy and future potential of the cluster. Efforts undertaken by local councils in collaboration with regional Higher Education partners to map spatial and sectoral concentrations in areas like life sciences and health technologies, clean energy, space applications, quantum technologies, , and creative industries, will aid future local planning for infrastructure development and a cohesive narrative between stakeholders to articulate a clarity of opportunity for potential investors. Oversight should involve key organisations like Oxford University, Oxford University Innovation Ltd (OUI), Oxford Science Enterprise Ltd (OSE), the Oxfordshire Local Enterprise Partnership (OxLEP), and local councils, employing collaborative councils and policy evaluation mechanisms to align with local needs and government strategies. Oxford University together with OUI and OSE would monitor and report the volume and impact of patents filed, intellectual property income, and collaborative research agreement, while local authorities and business associations (e.g., Advanced Oxford) could collaborate on tracking broader economic indicators, such as employment, investment levels and wage growth in cluster industries, reflecting the economic benefits to the local population. By leveraging multi-dimensional measures, Oxfordshire’s cluster growth can be comprehensively tracked, enabling local leadership and the UK government to design evidence-based policies that promote regional prosperity and global competitiveness. This approach also ensures that regional growth benefits local communities equitably.

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

Unlocking investment at scale would undeniably support local growth by enhancing the capacity of regional clusters to act as engines of innovation, enabling them to attract global talent, capital, and businesses. Government could choose to intervene in any number of ways, including:

• Strengthen existing innovation ecosystems
• Expand Proof-of-Concept funding: Increased Proof-of-Concept funding is essential for de-risking early-stage technologies.
• Support high-tech clusters: Regions like Oxfordshire, with established innovation clusters in life sciences, clean energy, and quantum technologies, require targeted investment to maintain their competitive edge.
• Pro-innovation regulation: Create a regulatory environment that supports scaling-up innovative technologies without stifling experimentation or commercialisation.
• Enhance access to capital
• Tax incentives for investment: Strengthening schemes for tax relief alongside R&D tax credits incentivises private investors to fund innovative businesses.
• Regional investment funds: Establish regionally focused investment funds, potentially co-funded by government, private investors, and universities, to directly address the funding gap faced by spinouts and scale-ups.
• Build infrastructure for innovation
• Streamline planning processes: Reform regulations to reduce bureaucracy and minimise planning delays, thereby accelerate delivery of innovation infrastructure.
• Transport connectivity: Investment in regional transport infrastructure enhances access to talent and facilitates collaboration across clusters, a key factor for businesses considering relocation or expansion.
• Foster a skilled talent pool
• Develop industry-academic links: Support partnerships between universities and industries to create training and employment pathways for high-tech talent.
• Incentivise talent retention: Introduce policies that make regions attractive for domestic and international talent, such as housing affordability initiatives and enhanced quality of life measures.

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

Region-specific innovation and growth policies have the potential to catalyse regional growth by leveraging the strengths of established clusters. A coordinated effort between government, private sector, and academic institutions—focused on funding, infrastructure, talent, and policy reform—will ensure that regions like Oxfordshire can continue to thrive as hubs of innovation and economic prosperity. The emerging industrial strategy as introduced by the Invest 2035 green paper provides a focus for growth policies that could transform regions with specific expertise and strength in R&D. For instance, the opportunity for Oxfordshire to generate momentum and achieve comparative advantage that government (and business) seeks could be found in:

Advanced Manufacturing and Clean Energy Technologies

Manufacturing is a key driver of regional economic growth and high-quality jobs, while clean energy technologies are critical for achieving Net Zero targets and enhancing energy security. Research at Oxford University underpins government’s goals of economic resilience and sustainability through innovations in energy storage, renewable technologies, and fusion energy, for example.

Digital and Artificial Intelligence (AI) 

Digital technologies and AI are transformative, increasing productivity across sectors such as healthcare, finance, and manufacturing. AI also presents opportunities for international leadership and solutions to national security and cybersecurity challenges. 

Life Sciences and Health Technologies 

Life sciences drive economic growth and enhance public health resilience. Addressing challenges such as ageing populations and global health threats requires advances in engineering biology, drug discovery, and vaccine development. Oxfordshire’s world-class biomedical research infrastructure supports breakthroughs in life sciences, reinforcing the nation’s position as a global hub for health innovation. 

Creative Industries and Digital Humanities 

Creative industries are vital for economic growth, exports, and cultural influence. With increasing digital consumption, there is significant growth potential in areas such as gaming, digital media, education, and virtual reality (VR) applications. Interdisciplinary research and capabilities in digital humanities, media technologies, and interactive content within universities support advancements in VR/AR and digital content creation, contributing to the global expansion of the creative sector.

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

• 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?

Many innovations from universities remain at a low Technology Readiness Level (TRL), requiring significant further development and funding to reach a commercially viable stage. These early-stage technologies often lack the demonstration projects or scalable prototypes needed to attract private sector interest. Their early-stage development, uncertain market potential, and the often-extended periods required for maturation classify university-developed technologies as high-risk for investors seeking quicker returns. This risk is further heightened for some investors by shifting public funding priorities, which can leave certain high-tech sectors or technologies without adequate support, further diminishing their commercialisation appeal to the private sector.

Although significant strides have been made in recent years to overcome barriers relating to Intellectual Property (IP) issues and to improve understanding between universities, their technology transfer offices, and the private sector, more still needs to be done. It is essential to educate all parties about the differing needs, priorities, and timelines required for effective collaboration and successful commercial arrangements.

Furthermore, the importance of process and service innovation, deeply rooted in the social sciences, must not be overlooked. Innovation in this area plays a critical role in enhancing public services, professional practices, and governance across sectors such as education, healthcare, social work, and local government. Oxford University acts as a hub joining innovation and service practice in several sectors. This integration has produced tangible benefits for regional prosperity and quality of life, including the attraction of businesses to the region.

• To what extent do Catapults support technology diffusion, and drive both national and regional growth?

Catapults, such as the Satellite Applications Catapult in Oxfordshire, are pivotal in driving technology diffusion and fostering both regional and national growth. By bridging the gap between academia and industry, they facilitate the commercialisation of cutting-edge technologies, offering expertise, state-of-the-art facilities, and collaborative networks that support businesses, particularly SMEs. Regional clusters anchored by Catapults, like Oxfordshire’s space technology hub, attract investment, create high-quality jobs, and enhance local economies. Nationally, Catapults scale innovations across sectors, aligning their activities with key priorities such as decarbonisation and economic resilience, while strengthening the UK’s global competitiveness in fields like satellite applications. To maximise their impact, sustained funding, expanded regional outreach, and stronger public-private collaboration are essential, ensuring the benefits of innovation extend across the country.

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

Oxford University will seek to continuously improve its efforts to coordinate the translation and commercialisation of its research and has been very successful in this endeavour to date. The 2015 arrival of OSE heralded a step-change in such coordination and its impact has been articulated elsewhere in this document. Oxford will, however, continue to seek additional investors to complement OSE, specifically those that may bring additional expertise to commercial exploitation and scale-up.

From the University’s perspective, the coordination of efforts with businesses for the commercialisation of research is a multifaceted endeavour. For major collaborative projects and programmes with businesses, such as the Oxford-Harrington Rare Disease Centre[8], the Ellison Institute of Technology[9], or the Apollo Therapeutics[10] agreement, Oxford adopts governance structures that enable co-steered decision-making frameworks. These ensure alignment and mutual benefit for all parties involved.

Business development functions within the University play an important role in managing such collaborative partnerships, while also seeking to cultivate and facilitate new research and innovation collaborations across the business, policy, and third sectors. The University’s Translational Research Office, which supports the medical sciences, plays a pivotal role, particularly through its Entrepreneurs-in-Residence programme. This initiative aids commercial cooperation and success by connecting early-stage research with industry expertise, providing invaluable guidance to bridge the gap between academic discovery and practical application.

Oxford University Innovation (OUI) complements these efforts through the Oxford Innovation Society, which brings together a diverse array of businesses dedicated to the commercialisation of research and fostering ecosystem growth.

In addition, the Committee welcomes submissions on the following points:

• What is the relationship between investment in innovation and economic growth, both regionally and nationally?
• 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?

The scale of public funding for world-leading research, from which disruptive technologies and transformative services emerge, is not keeping pace with the cost of maintaining and enhancing this excellence. In 2022-23, the latest year for which UKRI data is available, the funding gap between income and costs for research totalled £5.3 billion across the sector. Furthermore, while the UK’s £20.4 billion research R&D budget represents a significant commitment, it falls short compared to leading global innovators like the US and Germany, whose investments as a percentage of GDP exceed the UK’s[11]. To fully realise value for money and drive economic growth, this funding must address not only fundamental research but also the translation of discoveries into commercial opportunities that benefit both regional and national economies.

The effectiveness of the R&D budget should be evaluated using a balanced set of metrics that capture its wide-ranging impacts. These include measuring the economic return on investment (ROI) by assessing the direct and indirect benefits of public R&D spending, such as GDP growth, job creation, and increased inward investment in R&D-intensive sectors. It is also essential to track commercialisation outcomes, such as the number of patents, licences, and spinouts generated, alongside the scale of venture capital attracted to support emerging technologies and their success in scaling up and penetrating markets. Regional impact should be a key consideration, focusing on the development of innovation clusters, reducing regional economic disparities, and creating high-value jobs outside established hubs. Furthermore, the strength and outcomes of collaborative partnerships between academia, industry, and government must be examined, particularly in terms of fostering knowledge exchange and co-innovation. Finally, societal and environmental impacts should be evaluated, including contributions to achieving Net Zero goals, improving public health, and delivering technological solutions to address pressing societal challenges.

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

UKRI and ARIA, as public funding bodies, play distinct but complementary roles in bolstering the UK’s innovation ecosystem and advancing the government’s growth missions. UKRI supports the breadth of research and innovation, providing funding that spans from discovery science to pre-seed investment, ensuring a robust pipeline of ideas and technologies across disciplines. It underpins the foundational research necessary for long-term innovation while fostering collaboration between academia and industry to drive knowledge exchange and economic impact. ARIA, on the other hand, has a focused mandate to undertake high-risk, high-reward projects, operating with significant flexibility and a dedicated budget that allows it to pursue transformative breakthroughs. Unlike UKRI’s broad remit, ARIA’s approach targets disruptive innovation with the potential to deliver paradigm-shifting advancements in technology and science. Together, these bodies contribute to the UK’s innovation ecosystem by addressing both immediate and future challenges, supporting regional growth, and ensuring the nation remains globally competitive in science and technology.

• 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?

While Boston and San Francisco are renowned for their rapid growth and concentration of high-tech industries, their models have also contributed to significant economic disparities and affordability crises within their regions[12], creating challenges in social cohesion and inclusivity. Oxford University, as a central pillar of the UK’s innovation landscape, offers a compelling alternative by adopting the concept of "inclusive innovation." This approach prioritises shared prosperity and regional economic growth, ensuring that the benefits of innovation extend beyond a small elite to include local communities and a broader base of stakeholders. An ongoing study of social science innovation within local ecosystems, commissioned at Oxford University, suggests that inclusive and responsible innovation thrives when supported by strong social science hubs. Such expertise, when deployed from the outset and aligned with local government initiatives, can develop metrics and indices to assess, monitor, and extend the impact of innovation initiatives across all segments of the population. These indices might include measures of poverty, educational and health disadvantage, representation, and democratic participation, tailored to both regional and sub-regional contexts. By focusing on inclusive growth, Oxford seeks to avoid the pitfalls of US hubs, embedding equity and sustainability into its innovation strategy.

Cultural differences between the US and the UK are also key to understanding the contrasts between their innovation ecosystems. In the US, ecosystems are more mature, and the commercialisation of research and innovation is largely driven by the private sector. By contrast, ecosystems in Europe are less mature and depend more heavily on government intervention. A recent benchmarking study of innovation ecosystems conducted by Oxford University highlighted that entrepreneurship skills are often embedded in the curriculum in the US, whereas such initiatives in the UK tend to be delivered on an ad hoc basis. This results in a smaller pipeline of entrepreneurially minded individuals in the UK.

Another significant difference lies in funding models. In the US, many entrepreneurship initiatives are supported through philanthropy, reflecting a strong culture of charitable giving. In the UK, where this giving culture is less prevalent, universities often rely on government funding, such as the Higher Education Innovation Fund (HEIF), to support entrepreneurial skills development. Despite these constraints, Oxford has established a dedicated entrepreneurship support programme, EnSpire, which has made considerable progress in just two years. This initiative has created a student community of 4,000 members and provided training to 400 students, helping to cultivate the next generation of innovators and entrepreneurs.

24 January 2025