Levelling Up Research and Development
Date published:
The Government’s Levelling Up White Paper outlines 12 missions, the second of which is targeting R&D.
The mission states:
By 2030, domestic public investment in R&D outside the Greater South East will increase by at least 40%, and over the Spending Review period by at least one third. This additional government funding will seek to leverage at least twice as much private sector investment over the long term to stimulate innovation and productivity growth.
The White Paper outlines the problem this mission is trying to address, pointing to the fact 54% of R&D spending in the UK occurring in London, the South East and the East of England and that this agglomeration of R&D is going in the wrong direction and has increased by a percentage point since 2017.
The North East traditionally lags behind other regions when it comes to R&D tax credit claims – in the pre-pandemic 2018-19 tax year just 2,000 of the 62,000 claims across the UK came from the North East.
The scale of the issue is also clear from this chart, featured early in the White Paper.
The White Paper sets out a number of ways in which the Government intends to address the uneven nature of R&D spending, but they broadly fall into two categories:
- A focus on specific high potential sectors or clusters
- Redirecting public sector spending and using procurement processes to foster innovation
So, what’s the North East angle on high potential clusters?
The White Paper mentions offshore renewable energy in the North East specifically as one of “many high-potential innovation clusters across all parts of the UK”. It also touches on a broader set of activity tied to Net Zero, in particular the £33m Driving the Electric Revolution programme which has a presence centred on Newcastle and Sunderland.
In its section on ‘Explaining Economic Geographies’ the paper also highlights automotive, advanced manufacturing and life sciences, universities and research centres, low carbon energy and chemical and the Teesside Freeport as opportunities for the region.
On public spending and procurement the paper leans on a number of government departments to do better with how and where they spend money.
BEIS are to make levellign up one of the key objectives of its R&D investment strategy, increasing the proportion of investment outside of the Greater South East to 55% of its total by 2024/25.
The Department for Health and Social Care, Department for Transport, Department for Environment, Food and Rural Affairs, and Ministry of Defence are all similarly expected to spread their investment more evenly across the UK.
There’s also a specific commitment for Innovate UK’s funding to increase by 36% in real terms, and for greater collaboration between national bodies and local leaders.
Overall, all the messages are positive but how these promises translate into reality only time will tell.
The economics of agglomeration mean businesses, skills and investment in the same or related sectors tend to congregate in certain areas, where innovative or profitable work is already going on – challenging that magnetism will be difficult.
Arlen Pettitt
Knowledge Development Manager
Photo by Skye Studios on Unsplash