Written evidence from Yorkshire Universities (SUK0034)

Summary:

• Yorkshire Universities (YU) welcomes the House of Lords Science and Technology Committee inquiry into "Financing and Scaling UK Science and Technology: Innovation, Investment, Industry”.
• YU is a place-based partnership of twelve higher education institutions in Yorkshire & the Humber using our collective influence to strengthen knowledge, skills and civic leadership in Yorkshire. YU would welcome the opportunity to work with Government to share our experiences of partnership working and to help to shape place-based innovation ecosystems that support the needs of their local areas whilst delivering national economic growth.
• We would encourage the government to consider ways to strengthen engagement and partnerships between higher education institutions, policy makers, businesses and communities.
• The government should adopt a place-based approach to ensure the benefits of science and technology are felt across the UK. A new approach to devolved innovation funding to strengthen place-based innovation ecosystems would enable higher education institutions, policy-makers, businesses and communities to work in partnership to deliver against shared priorities.
• The government should invest to ensure that universities are on a stable financial footing so they can continue to work collaboratively with policy makers, other skills providers (such as further education colleges), and businesses, to deliver and expand training to ensure the workforce of the future is equipped with the skills that the UK will need to achieve its national science and technology ambitions.
• Whist we recognise the value of the dual support system for higher education research & innovation, and we acknowledge the importance of benchmarking exercises such as REF and KEF, it is vital that any changes to the funding and incentive structures for higher education institutional funding do not result in increased bureaucracy.
• We see an opportunity to grow and improve strategic advantage for the UK through better coordination between higher education institutions and inward investment functions.
• There is potential value in some portion of Innovate UK’s budget being devolved to support innovation in line with regional and local economic priorities and needs.
• Regions of the UK with less developed innovation ecosystems require devolved resources to enable them to develop and deliver autonomous strategies for the growth of their spin-out and enterprise ecosystems.

Scaling UK science and technology

What can the UK do to ensure that science and technology developed in the UK has the maximum economic and strategic benefit to the UK?

Strengthen engagement and partnerships between higher education institutions, policy makers, businesses and communities. The government should consider supporting dynamic science, technology and innovation ecosystems across the UK to facilitate the translation of research into policies and innovations for the benefit of UK citizens. By building effective relationships between academics and policy-makers, it is possible to develop evidence-informed policy that leads to better outcomes for citizens and the economy. Involving businesses and citizens in this process ensures that policies stimulate innovation whilst driving economic growth and delivering broader benefits in areas such as environmental sustainability and health. The Yorkshire Policy Engagement and Research Network (Y-PERN) and Yorkshire Policy Innovation Partnership (Y-PIP), are examples of innovative programmes that are enhancing collaboration between university academics and policymakers in Yorkshire and the Humber to develop evidence-based policies that benefit local communities. This engagement is vital in ensuring that the benefits of novel technologies, such as AI, are equitably distributed and do not simply exacerbate existing inequalities in wealth and skills. These programmes are underpinned by Yorkshire Universities (YU), a partnership of all twelve Higher Education Institutions across the region. Through a longstanding commitment to partnership working, Yorkshire has established value-adding relationships between different stakeholders in the regional innovation ecosystem. The government should consider how to fund and support the strengthening of local and regional innovation ecosystems through capacity building, partnership working and co-ordination.

Adopt a place-based approach to ensure the benefits of science and technology are felt across the UK. Central government should work with UK regions and devolved nations, through devolution agreements and other mechanisms, to ensure alignment between the national Industrial Strategy, science & technology policies and regional economic plans. Significant spatial inequalities persist in the UK, and there is a large and growing productivity gap between the UK’s second tier cities and London[1]. Meanwhile, the latest funding data from UKRI demonstrates that research and innovation funding is unevenly distributed across the UK, with Yorkshire & the Humber experiencing both relatively low levels of investment per person and a decrease in per capita funding at a time when all other areas of the UK have seen UKRI funding increases[2]. There is considerable potential for the UK’s regions and local areas to stimulate latent opportunity and demand and thus make a greater contribution to overall national economic growth, if some of the systemic barriers to innovation are lowered or removed. Investment should also target areas of comparative advantage that can deliver significant regional economic, social, environmental and cultural benefits, for example by investing in innovation clusters, aligned to the region's higher education, research & innovation strengths, capabilities and assets.

Strengthening place-based approaches would also ensure that the economic and societal benefits of science and technology were more equitably felt across the country. YU welcomes the publication of government strategies and plans, such as the Devolution White Paper[3] and Industrial Strategy Green Paper[4], that recognise that more needs to be done to harness the value of different places and local and regional economies. Through YU’s Memorandum of Understanding with Yorkshire & Humber Councils[5], and building on the capability of Y-PERN and Y-PIP, Yorkshire is ideally placed to be a ‘living lab’ for devolution, testing and refining models to engage research with policy makers, businesses and communities at different geographic scales. It is essential that any place-based approach reflects the various scales of economic geography – from neighbourhoods and communities, to Local Authorities, to Mayoral Combined Authorities and also larger pan-regional partnerships – all of which have different research and innovation needs. A new approach to devolved innovation funding to strengthen place-based innovation ecosystems would enable higher education institutions, policy-makers, businesses and communities to work in partnership to deliver against shared priorities. For example, in West Yorkshire, a new compact has been established between the Combined Authority and university partners setting out a commitment to work together on shared priorities. These include plans for an 'Innovation Centre of Excellence' to foster a more interconnected innovation ecosystem, within which universities will play a key facilitating role alongside being major providers of insight, talent, facilities and new ventures. YU would welcome the opportunity to work with government to share our experiences of partnership working and to help to shape place-based innovation ecosystems that support the needs of their local areas whilst delivering national economic growth.

The higher education sector plays a vital role in developing skills that are aligned to the needs of science- and technology-intensive sectors. Across Yorkshire, a wide range of taught undergraduate and graduate degree programmes are delivered in conjunction with business and public sector bodies to ensure that graduates emerge from their studies equipped with the skills to meet the evolving needs of potential employers. Opportunities for placements, internships and collaborative projects enable students to develop practical experience and enhance their employability after they graduate. By collaborating with businesses and policy makers on curriculum development, universities can ensure a pipeline of highly skilled graduates to meet the needs of the priority growth clusters and sectors. Provision of excellent doctoral training across the region provides a talent pipeline of highly-skilled researchers. Yorkshire benefits from a diverse range of higher education provision, including small-specialist, arts-based institutions; mid-sized, applied universities; and large, research-intensive universities. This diversity sees the region produce over 65,000 graduates per year with a rich mix of specialist and cross-cutting skills to support the UK’s science and technology ambitions. In addition to degree courses, universities offer a range of flexible and modular training to help businesses improve skills in areas such as entrepreneurship, leadership and investment readiness – all of which help the development and scale-up of innovative businesses. Furthermore, universities play a crucial role in improving social mobility, ensuring that career pathways in science and technology are open to everybody.

However, the financial challenges faced by universities mean that there are risks to the ongoing provision of science and technology-related skills support from the higher education sector, with damaging consequences for economic growth. The government should invest to ensure that universities are on a stable financial footing and can continue to work collaboratively with policy makers, other skills providers (such as further education colleges), and businesses, to deliver and expand training to ensure the workforce of the future is equipped with the skills that the UK will need to achieve its national science and technology ambitions. Confidence about their future financial situation will enable universities to invest in the development of longer-term solutions, such as clearer mechanisms for businesses to articulate their skills needs, and novel approaches to increase porosity between academic and business sectors for such knowledge exchange purposes.

Strategic priorities for UK science and technology in a changing world

YU recognises the value of the dual support model for research and innovation, combining strategic institutional funding (such as QR and HEIF) with competitive grants. It is essential that investment in these funding modes is maintained, with QR underpinning the UK’s world-class research, and HEIF generating a return on investment of just over £10 for every £1 invested[6]. We also acknowledge the importance of benchmarking exercises, such as the Research Excellence Framework (REF) and Knowledge Exchange Framework (KEF), in enabling the quality and impact of research and innovation at UK higher education institutions to be assessed. However, the REF creates a significant administrative burden for universities, and it is vital that any changes to the funding and incentive structures for institutional funding do not result in increased bureaucracy.

Although academic engagement with external partners is incentivised by REF (particularly within Impact Case Studies) and KEF, there can still be tensions around academic career pathways, where progression tends to be linked to academic outputs, such as publications. There is currently insufficient systemic incentive to encourage and expand academic engagement with policy-makers or businesses, although this is a priority for the current Secretary of State for Education, who has called on universities to play a greater civic role and increase their contribution to economic growth. We would encourage the government to consider carefully how academic careers are incentivised when setting strategic aspirations for the higher education sector, further developing existing mechanisms such as REF, KEF, HEIF and Impact Acceleration Accounts and drawing on funding mechanisms that have worked beyond UKRI, such as the Royal Academy of Engineering’s Industrial Fellowships.

The UK research and innovation landscape

There is an opportunity to grow and improve strategic advantage for the UK through better coordination between higher education institutions and inward investment functions. By taking a strategic place-based approach to attract inward investment to key clusters and regions, underpinned by R&D capability there is an opportunity to stimulate commercialisation and maximise economic impact. Recent government interventions, such as Investment Zones and Freeports, have helped policy makers, universities and businesses come together to develop innovation and commercialisation strategies based on local strengths and priorities. There is an opportunity for the government to learn from previous and current interventions to inform the development of any future place-based approaches to innovation and commercialisation. Place-based partnerships, such as YU, play a valuable role in articulating science and technology strengths and specialisms at a geographic scale that is attractive to overseas investors. Similar partnerships are developing in other locations around the UK in response to local demand. These partnerships have the potential to deliver benefits for the UK more widely, so the government should consider how place-based higher education partnerships could be supported as part of the national innovation landscape.

Innovate UK has a place-based strategy but has very limited place-based funding mechanisms. There is potential value in some portion of Innovate UK’s budget being devolved to support innovation in line with regional and local economic priorities and needs. This could be used to address systemic issues within local innovation ecosystems, which will vary between different places in the UK. Having the flexibility to tailor funds to local need would enable places to focus on the challenges for early-stage commercialisation in their area and develop bespoke solutions. This funding mechanism could fulfil the government’s commitment to a regional innovation fund, as set out in the Devolution White Paper. We would encourage the government to actively engage with the higher education sector, including YU and its members, in the design and development of any such devolved innovation funds. Crucial will be to ensure that any new or enhanced placed-based approach by Innovate UK builds on existing good practice and successful impact, particularly with local and regional business and industry.

Alongside this, we would encourage sustained investment in Innovate UK funding mechanisms to develop confidence and skills in the commercialisation of research (such as iCURE and thematic accelerators) and to enable collaboration between universities and innovative businesses (such as Knowledge Transfer Partnerships). Institutional funds for commercialisation, through HEIF and Impact Acceleration Accounts, must also be maintained to enable universities to undertake the early proof of market and proof of concept studies that are vital for the successful commercialisation of research. Coverage across the UK of Catapult centres is unequal and, whilst these are national organisations, their role in connecting and engaging across regions is unclear. Other similar types of organisations, such as the National Biofilms Centre and NAPIC could broaden their reach and increase the support that they provide in specific sectors.

Spin-outs and start-ups from universities in Yorkshire make a positive contribution to the regional economy, generating £160 million in turnover and securing £23 million in external investment in 2021/22[7]. Spin-outs that retain some university ownership in Yorkshire perform well compared to national counterparts, with these firms having higher average turnover per firm and employing higher numbers of people compared to spin-outs in most other parts of the UK. For example, University of Sheffield spinouts now account for almost 20% of all the equity fundraising in the whole of South Yorkshire on an annual basis, and the institution is among the top five universities in the UK in terms of the number of equity deals. Successful spin-outs are supported by investors such as Northern Gritstone, an investment company supporting technology entrepreneurs, academics and inventors based in the North of England.

Despite Yorkshire’s considerable commercialisation strengths and successes, there is a major disparity in access to finance between spin-outs in Yorkshire, and those elsewhere in the UK. Yorkshire ranks 11th of the twelve regions and devolved nations in the UK for the overall value of external investment received by spin-outs, and 10th for the average value of external investment per spin-out. The Independent Review of Spin-outs[8] found evidence of investors encouraging companies to move from their founding location, with the greatest number of relocating spin-outs moving to the ‘Golden Triangle’ of London, Oxford or Cambridge. So not only are spin-outs in Yorkshire under-invested, those that do receive investment are at risk of being drawn away from the region as they scale and grow, further exacerbating the split between North and South. This data highlights the challenge of scaling spin-outs in regions of the UK with less developed innovation ecosystems and points to the need for devolved resources to enable regions to develop and deliver autonomous strategies for the growth of their spin-out and enterprise ecosystems.