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The Missing £4 Billion

The UK’s geographical imbalances in economic performance are exacerbated by regional imbalances in R&D spending. This report sets out why this has happened and how to harness R&D to redress longstanding regional economic inequality.

Introduction by Jen Rae, Head of Innovation Policy, Cities and Regions at Nesta

For many people and places across the UK, the economy never really recovered from the 2008 recession. The COVID-19 pandemic has brought new disruption which is likely to worsen regional economic inequality.

The UK’s expenditure on Research and Development (R&D) has historically been low compared to other countries. The Government has committed to significantly increasing R&D spending by 2025. This matters because R&D leads to innovation, creating productive industries and well paid jobs.

But the UK’s R&D spending, both public and private, is regionally imbalanced. Additional investment is essential, but decisions on how and where this is spent must be made differently.

The report’s analysis is striking. As our online data visualisation demonstrates, while some places are doing well others have lost out.

The authors estimate that many parts of the UK have missed out government R&D spending, to the tune of £4 billion each year., and this money could have leveraged a further £8 billion from the private sector.

The UK needs a change in direction for UK innovation policy. The UK’s nations, cities and regions, need resources and capacity to build and develop their own innovation priorities. Institutions like UK Research and Innovation must take on new responsibilities for geographical rebalancing.

As the UK recovers from the COVID-19 pandemic, there is a rare moment to redress this imbalance and build a more resilient UK economy with innovation at its centre.


Tom Forth

Tom Forth is Head of Data at The Open Data Institute Leeds and a Director and co-founder of The Data City.

Richard Jones

Richard Jones is Professor of Materials Physics and Innovation Policy at the University of Manchester