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The devolution debate comes to innovation policy

Last week's 'One Nation Science' speech from Jo Johnson, the new Science Minister, heralded a new direction for science and innovation policy, highlighting the role it might play in redressing the UK’s geographic imbalance. Although we await what this means for the Government's spending decisions, it’s a clear signal that the devolution debate is coming to innovation policy.

Johnson’s approach to innovation policy is one ‘that promotes and protects our reputation for world-class science, and also drives growth and raises productivity for the whole of the UK.' Although he’s careful to say that research funding will still be awarded on the basis of excellence, there is reference to Innovate UK’s role in investing locally in areas of strength to help support the development of clusters, and further information on the newly announced Science and Innovation Audits to help local areas identify emerging scientific strengths.

Until now, innovation policy has been mostly left out of the discourse on devolution. It’s currently developed and delivered at a national level, and has been since the closure of the Regional Development Agencies in 2012. There are many reasons for this, not least that the vast bulk of the science and innovation budget goes to Higher Education Institutions, based on an assessment of excellence rather than economic need. And of course, the Haldane Principle prevents Government from directing science spend. Government support for innovation within businesses remains largely a national policy, delivered by Innovate UK, who also operate nationally.

This does rather contrast with the widespread rhetoric on the importance of local ‘ecosystems’ for creating innovation-led economic growth in areas of the UK outside London - for example with the ‘Northern Powerhouse’. Many of the 39 Local Enterprise Partnerships (LEPs) have identified innovation as a priority for their areas, and all have drafted innovation strategies to access European funding that highlight their local comparative advantages (the EU refers to this as smart specialisation).

But so far, the debate on devolution has failed to match these ambitions for local innovation-led regeneration and growth. It’s been focused on process and level of autonomy - rather than what could be achieved by these additional powers, and how local control and co-ordination of policy could lead to better outcomes for those areas. With innovation-led growth at the centre of city and LEP plans, it seems reasonable to expect a discussion on how to make innovation policy more effective at a local level.

This isn't solely about devolving decisions on innovation policy from the national level, or leaving it where it is. The more nuanced question lies in how nationally-set innovation policy interacts with other policies in one place: how well does Government support to help businesses innovate mix with other business support tools, and with planning, transport and housing policy to come together holistically to promote growth in an area. And whether there are ways we could make this work more effectively – with devolution of innovation policy potentially one of part of the solution.

To answer this, we will need better evidence of the local impact of innovation policy. Last week, Nesta hosted a roundtable with the What Works Centre for Local Economic Growth, where we discussed their new evidence review on the local economic impacts of innovation policy (to be released shortly – here's a summary of the discussion). The What Works Centre have pulled together evidence from 41 impact evaluations of various innovation policies such as direct grants, loans and R&D tax credits, but it was apparent that this is an area sadly lacking in hard conclusions about what difference these policies are making.

In the coming months Nesta will be looking some of these issues - from how we create better data and evidence on where innovation is happening, to the role of innovation policy at a local and regional level.


Jen Rae

Jen Rae

Jen Rae

Head of UK Innovation Policy

Jen Rae was a policy advisor on innovation and economic growth for Nesta’s Policy and Research team.

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