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Innovation policy needs redesigning to benefit more people and places

This blog was originally published by Research Fortnight.

Last month, the Commons Science and Technology Committee released its long-awaited review of the balance of R&D spending across disciplines, sectors and places in the UK. This followed a year of written and oral evidence sessions from experts in research, science and innovation policy, and the final report really got to the heart of the trade-offs made in prioritising public funding for research and innovation.

It was extremely pleasing to see the committee recognise the geographic imbalance of R&D funding, where spending is heavily skewed towards southeast England. The rhetoric of place-based innovation policy has been growing in recent years, but has lacked concrete initiatives to really deliver innovation policy differently.

The Committee’s main recommendation is to scale up the Strength in Places Fund, the flagship funding pot for regional excellence run by UK Research and Innovation and the Department for Business, Energy and Industrial Strategy.

This feels like a no-brainer. The current iteration, with a budget of £236 million, is a drop in the ocean of UK R&D spending, and in the words of the committee “too modest to drive any significant rebalancing”.

But to focus on Strength in Places feels like more of the same, and at Nesta we think it’s time to go further.

We’re arguing for a bigger, more comprehensive support package, based on devolving up to 25 per cent of the UK’s R&D budget. Money should go directly to cities and regions to support their strengths in research and innovation, kickstarting a new wave of innovation-led growth across the country.

Such an initiative would give cities and regions a unique opportunity to experiment with ways to promote innovation. Part of this involves taking advantage of their capacity to join up innovation to other policies, such as transport, business support, regulation and government procurement.

It was extremely pleasing to see the committee recognise the geographic imbalance of R&D funding

Forthcoming Nesta research looks at one such method: the role of cities as innovation testbeds. These can show the benefits of new technologies for citizens, while providing opportunities for industrial specialism. The clusters and supply chains developed from the autonomous vehicle testbed in Milton Keynes is one example.

One problem is a lack of understanding of the UK’s emerging innovation strengths, which need as much support, if not more, as established, recognised strengths. The lack of geographic detail and the time-lag of traditional data sources and statistics, such as patents, academic publications and business surveys, contribute to an out-of-date, static picture that is too slow to spot where new industries could be growing.

Nesta has pioneered one answer to this, by using innovation mapping tools and sources such as online data to understand where and how innovation is happening. We’re doing this for emerging, fast-growing industries such virtual and augmented reality, sometimes known as the immersive economy. Similar methods can identify clusters of expertise, and map innovation in a specific area.

We’re also using these techniques to look at skills provision, another vitally important part of local innovation systems, using online job ads to see the changing demand for skills at city and local level. Mapping local innovation systems will help policymakers understand how to support potential industries of the future and help to ensure that people are equipped with skills that match their opportunities.

Another consideration is that collectively we have very little evidence of what policy interventions work at a regional and local level to support innovation. A review by the initiative set up to address this question, the What Works Centre for Local Economic Growth, found few high-quality evaluations that robustly point to positive outcomes on economic growth.

It would be a mistake to see this as an argument to do nothing. Evaluation of economic development and innovation policies is tricky to do and has been historically under-resourced. A reinvigorated approach to place-based innovation policy is a chance to pilot and evaluate policy interventions, ranging from which types of business support are most effective to how to best foster collaboration between businesses and universities.

Finally, additional funding and powers need to be matched with investment in the capabilities of institutions at a local level. For too long, local authorities, Local Enterprise Partnerships and Combined Authorities have been under-resourced in terms of their capacity for analysis, strategy and delivery. It’s time to really support innovation-led growth across the UK, so that more people and places feel the benefits of innovation.


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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