Written evidence submitted by Queen's University Belfast (INI0002)

Northern Ireland Affairs Committee Inquiry

Investment in NI

Response – Queen’s University Belfast

Introduction

Queen's University Belfast is one of the leading universities in the UK with a distinguished heritage and history. Today, the University is ranked in the top 250 in the world (Times Higher Education World University Rankings 2022), and is a member of the Russell Group of UK research intensive universities, combining excellence in research and education with a student-centred ethos.

Queen's is a driver of innovation and talent based on excellence. We are globally connected and networked with strategic partnerships across the world, helping us to expand our impact on wider society locally, nationally and globally.

Queen’s University has recently published a new Strategic Plan[1], which sets out the University’s ambition for the next ten years to shape a better world through life-changing education and research.

Summary

As the UK economy begins to emerge from the turbulence created by Covid-19 and transitions to the post-Brexit regulatory landscape, the Government has placed R&D at the heart of its plans for growth. It aspires for the UK to become a global ‘science superpower’ by 2030 and, in the recent Spending Review, it committed to a significant increase in public spending on R&D over the next three years[2] as part of ambitious plans to increase whole-economy R&D spend as a proportion of GDP to 2.4%.

Northern Ireland (NI) faces a particularly challenging economic and societal context, as identified by the Committee in the launch announcement for this inquiry. It lags behind the rest of the UK in a number of key economic measures, including levels of productivity per person, wages and employment, economic inactivity, and reliance on the public purse.[3] With respect to R&D – which the Government and wider global evidence points to as a key driver of economic growth – our levels of public and private investment are among the lowest in the UK[4].

Source: The Missing £4 Billion: Making R&D work for the whole UK (nesta.org.uk)

Despite these challenges, there is reason for optimism. There is burgeoning potential for research and innovation to play a central role in economic growth, built upon research excellence in our universities, UK-leading capability in innovation and enterprise, and a knowledge economy that punches well above its weight.[5] Major investments, including several City Deals, and commitments from the Government to ‘level up’ economic imbalances across the country, present opportunities that can be capitalised upon over the coming years to drive genuine transformational change in the regional economy.

But, these opportunities need to be harnessed effectively. Major investments won’t solve the problems in and of themselves, it’s about how they are directed. We need to capitalise upon this potential by delivering public interventions that help:

• modernise and grow our regional economy so that it enables and encourages the generation of new ideas, discoveries and innovations;
• incentivise and facilitate R&D activity and innovation in the private sector;
• equip the future workforce with the skills demanded by the market;
• and provide an attractive value offer to new investors and market entrants.

It is in this context that we argue that a significant increase in public investment in R&D is critical to the future of the regional economy in NI and, therefore, attracting further investment into NI. The interventions identified by the Committee (i.e. City Deals, Levelling Up Fund, Shared Prosperity Fund) are, without doubt, important, but a step change in investment is required to drive systemic change in our economy.

Additional funding must be ring-fenced for R&D activity, with major investments deployed strategically and aligned with existing and nascent strengths in the region, major societal challenges that speak to government policy priorities, and market and customer demand.

Universities play a pivotal role in the national research, innovation and skills ecosystem and are therefore central to economic development strategies. Given the aforementioned challenges in NI, they play a disproportionately important role regionally in stimulating public and private R&D intensity, and have a proven track record of shepherding ideas and innovations into real economic benefit. Crucially, our universities act as long-term, sustainable anchor institutions that help connect key partners and priorities, e.g. across education and skills, knowledge creation and translation etc.

Recommendations

1) Increased ring-fenced investment for R&D in NI with local autonomy on decision-making

The 2021 Spending Review announced £5.2bn additional public investment in R&D between 2021 and 2025, including a significant uplift for Innovate UK that will see its budget increase to £1.1bn and up to £800m through the new Advanced Research and Innovation Agency (ARIA) by 2026. Also announced was c. £2.6bn through the Shared Prosperity Fund over the next three years and additional funding for the British Business Bank, with c. £70m specifically for projects in NI. Further information on future calls to the ‘Levelling Up Fund’ is anticipated in the near future.

In “The Missing £4 Billion”, published by NESTA in May 2020, the authors highlight evidence that differences in regional economic performance in the UK has been exacerbated by regional imbalances in R&D spending, and estimate that NI requires additional public spending of more than £250m to genuinely level up with areas with more intensive R&D activity. The Campaign for Science and Engineering (CaSE), who are leading current lobbying efforts for increased public R&D investment in the UK, have also argued for the importance of maximising regional R&D intensity.[6]

To realise the vision of a thriving, modern, knowledge-based economy, there needs to be a significant increase in public R&D investment in NI, delivered through a coordinated, consolidated and efficient approach that addresses to the specific economic and societal context of the region. It should be aligned to nascent strengths and opportunities, delivered through programmes with a proven track record of success, and informed by input from all relevant stakeholders.

Due to the mechanisms of devolved government, additional public investment for national policy priorities can be utilised regionally for different purposes. Naturally, this reflects the variable priorities of regional administrations; however, given the aforementioned regional imbalances, the UK’s broader scientific ambitions, and the role of R&D in driving economic growth to level up across the UK, it is critical that additional public investment in this area is ring-fenced for R&D.

The ‘Levelling Up’ agenda is critical to addressing wider economic and productivity challenges across the UK. National ambitions for R&D spend are unrealistic without balanced growth and investment across the broader geographic spread. Previous efforts to address regional R&D imbalances have sometimes fall short of their ambitions, and there are concerns this could be the case once more.[7] At the time of writing, a White Paper on Levelling Up is eagerly anticipated by the HE sector to better understand the broader strategic approach to this important policy agenda, and the role of universities in it.

Much of the additional investment announced recently by the UK government focuses on translational activities to bring existing research to market; however, we need to always look ahead to the societal challenges and economic priorities of the future. Investment in long-term experimental or discovery research, primarily delivered through universities in NI, is critical. At a minimum, this should involve a substantial uplift in the quality-related (QR) block grant for research in NI – an area over which we have devolved control; and, consideration should be given to how ARIA’s work to address ‘moon shot’ challenges will interact with research in the devolved regions.

2) Consolidate investments through regional partnership models aligned to long-term strategy

Increased public investment in R&D is only effective if directed appropriately. To drive systemic change of the level required, it is critical that multiple sectors and stakeholders work in concert to deliver a common strategic plan tailored to the region.

Partnership-based models for regional cooperation facilitate a better understanding of challenges specific to the region, joint solutions and ensure that investments are targeted towards existing areas of strength and opportunity. Currently, NI lacks established structures to do this, meaning that some large investments are delivered inefficiently and inconsistently.

A recent report published by the Higher Education Policy Institute (HEPI)[8] makes the case for much of this, based on three place-based case studies to demonstrate how universities have played an anchor role in delivering long-term economic development in a region. These cover San Diego, when civic leaders decided to look east instead of west to build on the advantages of the Pacific Century, and Lincoln and Värmland where historic industries, agriculture and paper, have been supported to enter the tech-age, generating innovations that have demonstrated global significance.

The report argues for a nuanced approach to Levelling Up, tailored to the existing assets of a region, through a partnership-based approach to policy and funding that brings together leaders and stakeholders in the local ecosystem under a shared, long-term vision, operating through permeable and flexible structures. It highlights the importance of building clusters around a particular sector through an agglomeration of expertise, knowledge, commercial activity, and coordinating across local and central government to crowd in investment and spend large pots of funding strategically, rather than thinly spread across discrete projects and priorities.

In a recent blogpost[9], Professor Richard Jones – an informed commentator on regional economic growth – argues for that regional innovation deals are a potentially effective way of delivering major investments regionally to maximise impact on regional productivity. He argues: “cities and regions would develop a strong institution to implement an evidence-based local innovation strategy …  based on a coalition of private sector actors, local government and regional R&D assets … give central government and its agencies confidence that there was a trusted local partner that would take responsibility for implementing an innovation strategy and developing the region’s innovation ecosystem”.

Recently a model for this has begun to emerge organically as an ancillary benefit to investment in the Belfast Region City Deal (BRCD). Innovation City Belfast provides a potential forum through which future regional R&D investments, arising from the Levelling Up agenda, can be delivered in a consolidated manner to achieve broader benefits. The partnership has been formed by six of the city’s key institutions: Belfast City Council, Belfast Harbour, Catalyst, Queen’s University Belfast and Ulster University, with Invest Northern Ireland as an advisory partner. Together, they are committed to delivering an ambitious long-term plan that will maximise the impact of the £1 billion Belfast Region City Deal which includes an investment of £230 million in university research centres and £120 million in digital innovation. 

The recent announcement of successful first round bids to the Levelling Up Fund (totalling £1.7bn) is one example of an occurrence where this sort of structure might have been beneficial. Projects in the first tranche were a mixture of individual priorities, not clearly linked to a broader over-arching regional strategy. A whole-system regional partnership, interacting with national policymakers, could ensure funding is deployed strategically for maximum benefit

3) Stimulate private R&D activity by investing in publicly-funded enterprise programmes that help our SME and micro business economy across the innovation ecosystem

To gain maximum return from increased public R&D investment, and attract further investment in NI, we need to do more to stimulate innovation in what is a low productivity private sector. Universities in NI have an impressive record of commercialising outputs from their research base. Notably, Queen’s has been ranked as the most entrepreneurial university in the UK, and pound-for-pound our universities are more efficient at turning research into economic wealth through e.g. early-stage start-up creation.

Universities also play a critical role in developing the innovation capacity of existing businesses, for example through Knowledge Transfer Partnerships (KTP) that link business need with academic and research expertise – of which Queen’s is the UK’s leading provider. Initiatives such as KTP often act as an important first step for SMEs and micro-businesses engaging with the R&D ecosystem.

Queen’s generates significant economic value for NI from its commercialisation activity (£25m+ in 2019-20) and Octopus Ventures Entrepreneurial Impact Ranking found Queen’s commercialisation ecosystem to be the UK’s most effective in 2019 and 2020. As measured by HE-BCI figures, Queen’s has generated, on average, £7m in IP income and £15m in IP revenue per annum over the past six years, ranking top 10 in the UK on both measures. Spin-outs have drawn down £85m p.a. in investment (top 5 in UK), achieved £224m in turnover (top 3), and employ 1,961 FTE staff (top 3). The University has instigated over 90 spin-out companies, three of which (Kainos, Andor Technology and Fusion Antibodies) have been publicly listed on the London Stock Exchange. These outcomes have been achieved from a smaller research income base, relative to UK peers, in a region with the lowest levels of R&D investment in the UK.  

In recent years, Queen’s has emerged as a leader in delivering innovation and enterprise training across the UK. Notably, this includes its role in leading key Innovate UK programmes, including their core university commercialisation programme – iCURE – which supports early-career researchers determine whether there is a market for their products or services; and now - Scaling the Edge – which helps SMEs accelerate business product concepts and bring them to market.

UK-leading expertise and know-how for developing innovation and enterprise culture exists in NI, with our universities playing a leading role in delivering these programmes. This puts local industry in a privileged position, and highlights an opportunity to address lagging R&D and innovation activity in NI. There is a clear case for scaling up existing programmes and/ or investing in new programmes specifically aimed at businesses in NI to cultivate a more innovative and enterprising culture within the industry base.

Not only does this mean that businesses in the region have access to best-in-class enterprise training programmes, but provides us with a mechanism to prepare them for wider UK funding programmes. If we effectively align the different training and funding programmes that exist regionally (e.g. via universities, Invest NI, DfE), we can put our businesses in a stronger position when it comes to applications to larger-scale UK funding programmes e.g. via Innovate UK, Industrial Strategy.

Alongside providing access to these schemes and expertise, it is important that businesses have the right incentives to engage in R&D and innovation activity, particularly from a financial perspective. At present there are a range of grant funding or tax credit mechanisms that businesses can avail of for this activity, but it is unclear how these all align and integrate. More work is required to understand existing barriers to businesses engaging in R&D and innovation activity, including looking at there are clear cost effective incentives for businesses to engage in these activities, particularly for the smallest firms.

4) Use new public investment in R&D to scale up existing programmes that have proven to be effective in driving innovation-led growth, and ensure that funders can engage at a regional level

New public investment brings a need to devise programmes and funding models through which it can be deployed; however, rather than creating new mechanisms with inevitable administrative costs, we should double-down on existing programmes and initiatives that have been proven to be effective and ensure that regions such as NI can genuinely engage. This will more efficiently drive returns from public investment, and offer an attractive value proposition for the private sector to invest.

For example, the Strength in Places Fund (SiPF) has been well-received as a model for investing in innovation-led regional growth. Indeed, two projects led out of NI were funded through the first call.[10] These act as useful case studies of how long-term partnership and commitment from multiple stakeholders can deliver genuine economic outcomes for the region. For example, Seagate Technology, a genuinely global firm with 42,000 employees worldwide, leads the Smart Nano NI consortium.[11] Their role in the region would not have been possible without long-term, committed and strategic partnership with Queen’s and other stakeholders over a number of years, which has involved funding and R&D activity across the research and innovation pipeline (e.g. PhDs, Chairs, SME engagement etc.). The SiPF award, and the opportunities for scale-up presented by initiatives such as BRCD, will secure their role in the region for years to come. Traditionally, there are limited opportunities for businesses in NI to engage at this scale, and we need to see more SiPF-type programmes made available on a wider and more regular basis.

There is a valuable mix of funding opportunities to support businesses at different stages of their development – from Innovation Vouchers through Knowledge Transfer Partnerships to Innovate UK awards, and HEIF plays a significant supporting role alongside regional development funding. These have operated successfully for a number of years, and provide a ready-made opportunity to scale up. Aligned to HEIF, there are also examples of funding streams that have proven to be particularly effective in other parts of the UK, but for various reasons have not been adopted NI. One example of this is the Connecting Capability Fund (CCF) which supports university collaboration in commercialisation through competitive projects and formula funds. The CCF aims to share good practice and capacity internally across the higher education sector, forge external technological, industrial and regional partnerships, and deliver the Government's Industrial Strategy priorities.

EU structural funds have also historically been critical to regional economic development in the UK, and the government’s commitment to replacing this with the UK Shared Prosperity Fund is to be welcomed. It is critical that further details on the Fund, and how regional funding consortia will access it, are published as soon as possible.

Aligned to this, the Levelling Up agenda should address how we can enhance the capacity of funders (e.g. UKRI/ Innovate UK) to engage more directly at a regional level to understand the local context and links it to broader national R&D policy. How do we ensure that regions such as NI can link into UK-wide R&D collaboration initiatives as genuine co-equal partners, e.g. through the Catapult network. In November 2021, an analysis undertaken by academics at the University of Birmingham found there was no clear link between Innovate UK funding of R&D collaborations and Levelling Up. They argue that increased public spending on R&D collaborations must be focused in areas outside the ‘golden triangle’ to “capture the benefits of [its] effect on economic prosperity”.[12]

5) Bridge the strategic divide between R&D and skills – recognising that a qualified workforce with relevant skills is critical to economic growth and development

Talented people with relevant skills aligned to sectoral strengths are critical to successful economic growth and innovation and addressing low levels of productivity. This is the primary concern of any firm seeking to invest in NI, and a fundamental requirement for any sector we wish to scale up in the region. Skills development and the wider research and innovation ecosystem must be seen as inter-connected by policymakers in developing economic development strategies. This further emphasises the importance of the aforementioned partnership approach, particularly in aligning strategies and priorities across government, industry, education and training.

This is a challenge for NI, with a significant proportion of young people choosing to leave the region for education or work, many of whom ultimately do not return. There are various reasons for this – including lack of employment opportunities and limits placed on student recruitment in NI to universities. A lack of skilled graduates in the workforce is linked to lower levels of productivity.

We need to strengthen NI’s skills pipeline in key sectors, and we need a strategic approach that connects this with areas of economic strength. There are various ways of doing this, including grant systems that intervene in particular sectors to encourage people to train or re-train, but ultimately we need to address the broader HE funding model which limits the amount of skilled graduates in the region, to ensure we can grow student numbers and consequently productivity and innovation.

We need a long-term strategic approach to cultivating a highly-skilled workforce, tackling key questions through a partnership approach - what are the skills we need, what sectors are they aligned to, why do people leave, why do they come here, why do they stay etc. We need to ensure that the tertiary education system is sufficiently fluid to allow students to transition between, e.g. traditional university based degrees and further education colleges, and that employers are supported to engage more proactively in developing the broader education and skills agenda to fit their needs.

6) Stimulating mutually beneficial partnerships beyond NI and the UK

To attract inward investment to NI, it is important that we build mutually beneficial collaborative relationships with a range of partners beyond the UK. These relationships draw international attention to the region and provide an opportunity for us to showcase our strengths. Critically, these partnerships must be managed in a strategic and structured manner through the aforementioned regional collaborations, e.g. Innovation City Belfast, so that we present a clear ‘pitch’ for investment.

The research and innovation base in NI has a track record in catalysing initiatives that lead ultimately lead to foreign direct investment in the region, or playing a central role in driving collaborations that put NI on the global stage. This ranges from purely academic collaborations with international universities, to collaborative research projects with multinational firms, to commercialisation outcomes that have seen our ideas and discoveries applied in industrial settings and utilised across the world.

For example, during the period 2015-2020 Queen’s received 1,042 awards involving EU and international collaboration and/ or funding with a total value of £172m, including 103 H2020 awards (£36m) with c. 700 partner organisations in 52 countries. The percentage of income from EU funders is higher than research-intensive comparators (relative to FTE) and in line with sector income. International co-authorship of academic papers has risen from 59% in 2016 to 65% in 2019 – the highest proportion in the Russell Group. Commercially, we recently entered into a collaboration and licensing agreement with the global biopharmaceutical company Ipsen relating to a cutting-edge preclinical stage first-in-class FLIP inhibitor programme.[13]

However, all this requires time, resource and risk-sharing to build these partnerships over the long term. Currently, there is uncertainty in the UK system in this area. There is ongoing confusion about whether NI will join the EU successor to Horizon 2020 – Horizon Europe – coupled with significant funding cuts to overseas aid (and therefore international research).

A critical area to scale up R&D activity and attract investment to NI relates to our partnerships across the island of Ireland. Universities in Northern Ireland and the Republic of Ireland have distinct strengths, but there is mutual benefit in providing structures through which they can work together, particularly in research and innovation. Mobility of individuals and ideas across institutions and jurisdictions is a hallmark of a successful research ecosystem, but at present we lack structures and mechanisms to facilitate this on an all-island basis.  

A recent discussion paper published by the Royal Irish Academy on the future of research and innovation on the island[14] identifies this as a challenge and argues for the establishment of an all-island Research and Innovation Advisory Council to address this. It is through such a body that universities could advise on policy and programmes to facilitate greater mobility, collaboration and sharing through the research and innovation ecosystem on the island. 

Greater coordination of UK-Ireland partnerships, along with an appropriate scale of investment, would ensure not only delivery of solutions for major challenges but also drive economic growth where Queen’s has such a strong track record in industry collaboration, skills provision, and innovation and entrepreneurship. Collaborative research across the island of Ireland has been ongoing for many years, supported through the US-Ireland R&D Partnership Programme (which specifically includes NI), EU funding and most recently SFI-DfE Covid-19 Rapid Response Call. There is now a real opportunity to establish a network of industry-academic centres at scale in our defined areas of complementary strength that would produce world-leading societal, environmental and economic impact. Plans are in progress for all-island centres in infectious diseases, cancer research, food integrity, cybersecurity, and climate and biodiversity.  

December 2021

Research Policy Office