“Science Superpower: the UK’s Global Science Strategy beyond Horizon Europe”

Last Wednesday the Science Minister, George Freeman MP, gave a wide ranging speech with this title, on the current state of UK science policy at the think-tank Onward. A video of the speech can be watched on YouTube here. As a response to the speech, there was a panel discussion the following day, featuring Prof Sir John Bell, Lord David Willetts, James Phillips, Tabitha Goldstaub, Priya Guha and and myself, chaired by Onward’s Adam Hawksbee. This is also available to watch on YouTube. This, more or less, is what I said in my opening statement.

Hello. I’m Richard Jones, talking to you from Oldham Town Hall – which I think is very on-brand for Onward, and indeed for myself…

I want to start where the Minister finished – what are we talking about, when we talk about being a “Science Superpower”? This is part of that broader question of how the UK finds its place in the world.

The UK represents a little less than 3% of the world’s high tech economy. It’s not the USA, it’s not China. But the UK does have a real potential competitive advantage in the strength of its science base – it is genuinely outperforming, at least (and this qualification is important) when it is judged on purely academic metrics.

The challenge – and this is the “Innovation Nation” aspect that the Minister stresses – is applying that science strength to the critical issues the UK – and the world – faces. These challenges include:

  • The UK’s more than a decade long stagnation in productivity growth;
  • The wrenching economic transition we face to achieve a net zero energy economy;
  • Ensuring good health outcomes for our citizens;
  • National security in an increasingly dangerous world.

To begin with productivity, it can’t be stressed too much how the stagnation of productivity growth after 2008 underlies pretty much all the difficulties the country faces – stagnant wages, the persistent fiscal deficit, the difficulties we’re seeing in funding public services to the standard people expect

As the Minister said, to get economic growth back we need to be accelerating progress in high tech sectors

But there’s a paradox here – the economist Diane Coyle, from the Productivity Institute, has analysed the productivity slowdown, and finds the biggest contributors to the slowdown are precisely those high-tech sectors that we think should be our strength. [Source: Coyle & Mei, Diagnosing the UK Productivity Slowdown: Which Sectors Matter and Why?]

In Pharmaceuticals, productivity growth was 0.6% a year on average between 1998 and 2008. But between 2009-2019 pharma industry productivity actually fell, by 0.2% a year on average.

So, we need to do things differently.

Money is important, and the government’s spending uplift is real, significant in scale, and to be welcomed.

I welcome ARIA as a chance to try and experiment with different funding mechanisms.

But from the perspective of Oldham, the biggest and most welcome change the minister talked about was the new focus on place and clusters across the UK

The UK is two nations – a high performing Northern European economy in the Greater Southeast. And beyond, in the North, The Midlands, Wales – we have places with economies comparable to southern Italy or Portugal. Our big cities – like Birmingham, Greater Manchester and Glasgow – have productivity below the UK average. This isn’t normal – in most developed countries, its the big cities that drive the national economy. Why can’t Manchester be more like Munich, a similar size city, that’s one of Germany’s innovation hubs? If it was, it would generate about £40 billion a year more value for the UK.

This is a huge waste of potential. We need to identify nascent clusters, and work with those places to build up their innovation capacity, build industrial R&D, attract in investment from outside, and give people in places like Oldham the opportunity that the Minister talks about to take part in this high tech economy.

But money isn’t everything. For example, we do health research to support the health of our citizens as well as to create economic value. The Oxford vaccine was a brilliant example of this.

But even pre-pandemic, a man born in Oldham 2016-2018 could expect to live in good health for 58 years. For a man in Oxfordshire, healthy life expectancy was 68.3 years! [Source: Health state life expectancy at birth and at age 65 years by local areas, UK, ONS.]

Ten lost years for Oldhamites! The human cost of those years of ill-health and premature death is huge. But so is the economic cost – this ill-health is a major contributor to the productivity gap in Oldham and places like it, all across the UK

That’s something R&D should do something about – this truly would be “innovation for the nation”.

We have to do things differently. We need to apply our science to address the big strategic problems the UK faces, and we need that to be an effort that the whole nation takes part in – and benefits from.

None of this should take away from the power of great research centres like Cambridge and Oxford – that really is a supercluster, a massive asset for the nation.

The question is, how can we build on that and spread the benefits across the rest of the country? There are plenty of great spin-outs from Cambridge and Oxford. We need them to scale-up in the UK, and not feel they have to move to Germany, or California, to succeed. So why shouldn’t their first factory be in Rochdale or Rotherham, or Dudley or Stoke-on-Trent?

So yes, let’s aspire to be an innovation nation, but to build that, we need innovation cities and innovation regions all across the UK.

For (much) more on this, see my Productivity Institute paper Science and innovation policy for hard times: an overview of the UK’s Research and Development landscape.

2022 Books roundup

2022 was a thoroughly depressing year; here are some of the books I’ve read that have helped me (I hope) to put last year’s world events in some kind of context.

Helen Thompson could not have been luckier – or, perhaps, more farsighted – in the timing of her book’s release. Disorder: hard times in the 21st century is a survey of the continuing influence of fossil fuel energy on geopolitics, so couldn’t be more timely, given the impact of Russia’s invasion of Ukraine on natural gas and oil supplies to Western Europe and beyond. The importance of securing national energy supplies runs through history of the world in the 20th century in both peace and war; we continue to see examples of the deeply grubby political entanglements the need for oil has drawn Western powers into. All this, by the way, provides a strong secondary argument, beyond climate change, for accelerating the transition to low carbon energy sources.

The presence of large reserves of oil in a country isn’t an unmixed blessing – we’re growing more familiar with the idea of a “resource curse”, blighting both the politics and long term economic prospects of countries whose economies depend on exploiting natural resources. Alexander Etkind’s book Natures Evil: a cultural history of natural resources is a deep history of how the materials we rely on shape political economies. It has a Eurasian perspective that is very timely, but less familiar to me, and takes the idea of a resource curse much further back in time, covering furs and peat as well as the more familiar story of oil.

With more attention starting to focus on the world’s other potential geopolitical flashpoint – the Taiwan Straits – Chris Miller’s Chip War: the fight for the world’s most critical technology – is a great explanation of why Taiwan, through the semiconductor company TSMC, came to be so central to the world’s economy. This book – which has rightly won glowing reviews – is a history of the ubiquitous chip – the silicon integrated circuits that make up the memory and microprocessor chips at the heart of computers, mobile phones – and, increasingly, all kinds of other durable goods, including cars. The focus of the book is on business history, but it doesn’t shy away from the crucial technical details – the manufacturing processes and the tools that enable them, notably the development of extreme UV lithography and the rise of the Dutch company ASML. Excellent though the book is, its business focus did make me reflect that (as far as I’m aware) there’s a huge gap in the market for a popular science book explaining how these remarkable technologies all work – and perhaps speculating on what might come next.

Slouching to Utopia: an economic history of the 20th century, by Brad DeLong, is an elegy for a period of unparalleled technological advance and economic growth that seems, in the last decade, to have come to an end. For DeLong, it was the development of the industrial R&D laboratory towards the end of the 19th century that launched a long century, from 1870-2010, of unparalleled growth in material prosperity. The focus is on political economy, rather than the material and technological basis of growth (for the latter, Vaclav Smil’s pair of books Creating the Twentieth Century and Transforming the Twentieth Century are essential). But there is a welcome focus on the material substrate of information and communication technology rather than the more visible world of software (in contrast, for example, to Robert Gordon’s book The Rise and Fall of American Growth, which I reviewed rather critically here).

Though I am very sympathetic to many of the arguments in the book, ultimately it left me somewhat disappointed. Having rightly stressed the importance of industrial R&D as the driver of the technological change, this theme was not really strongly developed, with little discussion of the changing institutional landscape of innovation around the world. I also wish the book had a more rigorous editor – the prose lapses on occasion into self-indulgence and the book would have been better had it been a third shorter.

In contrast, Vaclav Smil’s latest book – How the World Really Works: A Scientist’s Guide to Our Past, Present and Future – clearly had an excellent editor. It’s a very compelling summary of a couple of decades of Smil’s prolific output. It’s not a boast about my own learning to say that I knew pretty much everything in this book before I read it; simply a consequence of having read so many of Smil’s previous, more academic books. The core of Smil’s argument is to stress, through quantification, how much we depend on fossil fuels, for energy, for food (through the Haber-Bosch process), and for the basic materials that underlie our world – ammonia, plastics, concrete and steel. These chapters are great, forceful, data-heavy and succinct, though the chapter on risk is less convincing.

Despite the editor, Smil’s own voice comes through strongly, sceptical, occasionally curmudgeonly, laying out the facts, but prone to occasional outbreaks of scathing judgement (he really dislikes SUVs!). Perhaps he overdoes the pessimism about the speed with which new technology can be introduced, but his message about the scale and the wrenching impact of the transition we need to go through, to move away from our fossil fuel economy, is a vital one.

Science and innovation policy for hard times: an overview of the UK’s Research and Development landscape

A revised and tidied up version of my blogpost series, An Index of Issues in UK Science and Innovation Policy, has now been published as a Productivity Insights Paper under the auspices of The Productivity Institute. My thanks to Bart van Ark for encouraging me to do this, and to Krystyna Rudzki for editing the draft.

Download the PDF here: Science and innovation policy for hard times: an overview of the UK’s Research and Development landscape

Science and innovation policy for hard times

This is the concluding section of my 8-part survey of the issues facing the UK’s science and innovation system, An Index of Issues in UK Science and Innovation Policy.

The earlier sections were:
1. The Strategic Context
2. Some Overarching Questions
3. The Institutional Landscape
4. Science priorities: who decides?
5. UK Research and Innovation
6. UK Government Departmental Research
7. Horizon Europe (and what might replace it) and ARIA

8.1. A “science superpower”? Understanding the UK’s place in the world.

The idea that the UK is a “science superpower” has been a feature of government rhetoric for some time, most recently repeated in the Autumn Statement speech. What might this mean?

If we measure superpower status by the share of world resources devoted to R&D (both public and private) by single countries, there are only two science superpowers today – the USA and China, with a 30% and 24% share of science spending (OECD MSTI figures for 2019 adjusted for purchasing power parity, including all OECD countries plus China, Taiwan, Russia, Singapore, Argentina and Romania). If we take the EU as a single entity, that might add a third, with a 16% share (2019 figure, but excluding UK). The UK’s share is 2.5% – thus a respectable medium size science power, less than Japan (8.2%) and Korea (4.8%), between France (3.1%) and Canada (1.4%).

It’s often argued, though, that the UK achieves better results from a given amount of science investment than other countries. The primary outputs of academic science are scientific papers, and we can make an estimate of a paper’s significance by asking how often it is cited by other papers. So another measure of the UK’s scientific impact – the most flattering to the UK, it turns out – is to ask what fraction of the world’s most highly cited papers originate from the UK.

By this measure, the two leading scientific superpowers are, once again, the USA and China, with 32% and 24% shares respectively; on this measure the EU collectively, at 29%, does better than China. The UK scores well by this measure, at 13.4%, doing substantially better than higher spending countries like Japan (3.1%) and Korea (2.7%).

A strong science enterprise – however measured – doesn’t necessarily by itself translate into wider kinds of national and state power. Before taking the “science superpower” rhetoric serious we need to ask how these measures of scientific activity and scientific activity translate into other measures of power, hard or soft.

Even though measuring the success of our academic enterprise by its impact on other academics may seem somewhat self-referential, it does have some consequences in supporting the global reputation of the UK’s universities. This attracts overseas students, in turn bringing three benefits: a direct and material economic contribution to the balance of payments, worth £17.6 bn in 2019, a substantial subsidy to the research enterprise itself, and, for those students who stay, a source of talented immigrants who subsequently contribute positively to the economy.

The transnational nature of science is also significant here; having a strong national scientific enterprise provides a connection to this wider international network and strengthens the nation’s ability to benefit from insight and discoveries made elsewhere.

But how effective is the UK at converting its science prowess into hard economic power? One measure of this is the share of world economic value added in knowledge and technology intensive businesses. According to the USA’s NSF, the UK’s share of value added in this set of high productivity manufacturing and services industries that rely on science and technology is 2.6%. We can compare this with the USA (25%), China (25%), and the EU (18%). Other comparator countries include Japan (7.9%), Korea (3.7%) and Canada (1.2%).

Does it make sense to call the UK a science superpower? Both on the input measure of the fraction of the world’s science resources devoted to science, and on the size of the industry base this science underpins, the UK is an order of magnitude smaller than the world leaders. In the historian David Edgerton’s very apt formulation, the UK is a large Canada, not a small USA.

Where the UK does outperform is in the academic impact of its scientific output. This does confer some non-negligible soft power benefits of itself. The question to ask now is whether more can be done to deploy this advantage to address the big challenges the nation now faces.

8.2. The UK can’t do everything

The UK’s current problems are multidimensional and its resources are constrained. With less than 3% of the world’s research and development resources, no matter how effectively these resources are deployed, the UK will have to be selective in the strategic choices it makes about research priorities.

In some areas, the UK may have some special advantages, either because the problems/opportunities are specific to the UK, or because history has given the UK a comparative advantage in a particular area. One example of the former might be the development of technologies for exploiting deep-water floating offshore wind power. In the latter category, I believe the UK does retain an absolute advantage in researching nuclear fusion power.

In other areas, the UK will do best by being part of larger transnational research efforts. At the applied end, these can be in effect led by multinational companies with a significant presence in the UK. Formal inter-governmental collaborations are effective in areas of “big science” – which combine fundamental science goals with large scale technology development. For example, in high energy physics the UK has an important presence in CERN, and in radio astronomy the Square Kilometer Array is based in the UK. Horizon Europe offered the opportunity to take part in trans-European public/private collaborations on a number of different scales, and if the UK isn’t able to associate with Horizon Europe other ways of developing international collaborations will have to be built.

But there will remain areas of technology where the UK has lost so much capability that the prospect of catching up with the world frontier is probably unrealistic. Perhaps the hardware side of CMOS silicon technology is in this category (though significant capability in design remains).

8.3. Some pitfalls of strategic and “mission driven” R&D in the UK

One recently influential approach to defining research priorities links them to large-scale “missions”, connected to significant areas of societal need – for example, adapting to climate change, or ensuring food security. This has been a significant new element in the design of the current EU Horizon Programme (see EU Missions in Horizon Europe).

For this approach to succeed, there needs to be a match between the science policy “missions” and a wider, long term, national strategy. In my view, there also needs to be a connection to the specific and concrete engineering outcomes that are needed to make an impact on wider society.

In the UK, there have been some moves in this direction. The research councils in 2011 collectively defined six major cross-council themes (Digital Economy; Energy; Global Food Security; Global Uncertainties; Lifelong Health and Wellbeing; Living with Environmental Change), and steered research resources into (mostly interdisciplinary) projects in these areas. More recently, UKRI’s Industrial Strategy Challenge Fund was funded from a “National Productivity Investment Fund” introduced in the 2016 Autumn Statement and explicitly linked to the Industrial Strategy.

These previous initiatives illustrate three pitfalls of strategic or “mission driven” R&D policy.

  • The areas of focus may be explicitly attached to a national strategy, but that strategy proves to be too short-lived, and the research programmes it inspires outlive the strategy itself. The Industrial Strategy Challenge Fund was linked to the 2017 Industrial Strategy, but this strategy was scrapped in 2021, despite the fact that the government was still controlled by the same political party.
  • Research priorities may be connected to a lasting national priority, but the areas of focus within that priority are not sufficiently specified. This leads to a research effort that risks being too diffuse, lacking a commitment to a few specific technologies and not sufficiently connected to implementation at scale. In my view, this has probably been the case in too much research in support of low-carbon energy.
  • In the absence of a well-articulated strategy from central government, agencies such as Research Councils and Innovate UK guess what they think the national strategy ought to be, and create programmes in support of that guess. This then risks lacking legitimacy, longevity, and wider join-up across government.

In summary, mission driven science and innovation policy needs to be informed by carefully thought through national strategy that commands wide support, is applied across government, and is sustained over the long-term.

8.4. Getting serious about national strategy

The UK won’t be able to use the strengths of its R&D system to solve its problems unless there is a settled, long-term view about what it wants to achieve. What kind of country does the UK want to be in 2050? How does it see its place in the world? In short, it needs a strategy.

A national strategy needs to cut across a number of areas. There needs to be an industrial strategy, about how the country makes a living in the world, how it ensures the prosperity of its citizens and generates the funds needed to pay for its public services. An energy strategy is needed to navigate the wrenching economic transition that the 2050 Net Zero target implies. As our health and social care system buckles under the short-term aftermath of the pandemic, and faces the long-term challenge of an ageing population, a health and well-being strategy will be needed to define the technological and organisational innovation needed to yield an affordable and humane health and social care system. And, after the lull that followed the end of the cold war, a strategy to ensure national security in an increasingly threatening world must return to prominence.

These strategies need to reflect the real challenges that the UK faces, as outlined in the first part of this series. The goals of industrial strategy must be to restore productivity growth and to address the UK’s regional economic imbalances. Innovation and skills must be a central part of this, and given the condition large parts of the UK find themselves in, there need to be conscious efforts to rebuild innovation and manufacturing capacity in economically lagging regions. There needs to be a focus on increasing the volume of high value exports (both goods and services) that are competitive on world markets. The goal here should be to start to close the balance of payments gap, but in addition international competitive pressure will also bring productivity improvements.

An energy strategy needs to address both the supply and demand side to achieve a net zero system by 2050, and to guarantee security of supply. It needs to take a whole systems view at the outset, and to be discriminating in deciding which aspects of the necessary technologies can be developed in the UK, and which will be sourced externally. Again, the key will be specificity. For example, it is not enough to simply promote hydrogen as a solution to the net zero problem – it’s a question of specifying how it is made, what it is used for, and identifying which technological problems are the ones that the UK is in a good position to focus on and benefit from, whether that might be electrolysis, manufacture of synthetic aviation fuel, or whatever.

A health and well-being strategy needs to clarify the existing conceptual confusion about whether the purpose of a “Life Sciences Strategy” is to create high value products for export, or to improve the delivery of health and social care services to the citizens of the UK. Both are important, and in a well-thought through strategy each can support the other. But they are distinct purposes, and success in one does not necessarily translate to success in the other.

Finally, a security strategy should build on the welcome recognition of the 2021 Integrated Review that UK national security needs to be underpinned by science and technology. The traditional focus of security strategy is on hard power, and this year’s international events remind us that this remains important. But we have also learnt that the resilience of the material base of economy can’t be taken for granted. We need a better understanding of the vulnerabilities of the supply chains for critical goods (including food and essential commodities).

The structure of government leads to a tendency for strategies in each of these areas to be developed independently of each other. But it’s important to understand the way these strategies interact with each other. We won’t have any industry if we don’t have reliable and affordable low carbon energy sources. Places can’t improve their economic performance if large fractions of their citizens can’t take part in the labour market due to long-term ill-health. Strategic investments in the defence industry can have much wider economic spillover benefits.

For this reason it is not enough for individual strategies to be left to individual government departments. Nor is our highly centralised, London-based government in a position to understand the specific needs and opportunities to be found in different parts of the country – there needs to be more involvement of devolved nation and city-region governments. The strategy needs to be truly national.

8.5. Being prepared for the unexpected

Not all science should be driven by a mission-driven strategy. It is important to maintain the health of the basic disciplines, because this provides resilience in the face of unwelcome surprises. In 2019, we didn’t realise how important it would be to have some epidemiologists to turn to. Continuing support for the core disciplines of physical, biological and medical science, engineering, social science and the humanities should remain a core mission of the research councils, the strength of our universities is something we should preserve and be proud of, and their role in training the researchers of the future will remain central.

Science and innovation policy also needs to be able to create the conditions that produce welcome surprises, and then exploit them. We do need to be able to experiment in funding mechanisms and in institutional forms. We need to support creative and driven individuals, and to recognise the new opportunities that new discoveries anywhere in the world might offer. We do need to be flexible in finding ways to translate new discoveries into implemented engineering solutions, into systems that work in the world. This spirit of experimentation could be at the heart of the new agency ARIA, while the rest of the system should be flexible enough to adapt and scale up any new ways of working that emerge from these experiments.

8.7 Building a national strategy that endures

A national strategy of the kind I called for above isn’t something that can be designed by the research community; it needs a much wider range of perspectives if, as is necessary, it’s going to be supported by a wide consensus across the political system and wider society. But innovation will play a key role in overcoming our difficulties, so there needs to be some structure to make sure insights from the R&D system are central to the formulation and execution of this strategy.

The new National Science and Technology Council, supported by the Office for Science and Technology Strategy, could play an important role here. Its position at the heart of government could give it the necessary weight to coordinate activities across all government departments. It would be a positive step if there was a cross-party commitment to keep this body at the heart of government; it was unfortunate that with the Prime Ministerial changes over the summer and autumn the body was downgraded and subsequently restored. To work effectively its relationships with the Government Office for Science, the Council for Science and Technology need to be clarified.

UKRI should be able to act as an important two-way conduit between the research and development community and the National Science and Technology Council. It should be a powerful mechanism for conveying the latest insights and results from science and technology to inform the development of national strategy. In turn, its own priorities for the research it supports should be driven by that national strategy. To fulfil this function, UKRI will be have to develop the strategic coherence that the Grant Review has found to be currently lacking.

The 2017 Industrial Strategy introduced the Industrial Strategy Council as an advisory body; this was abruptly wound up in 2021. There is a proposal to reconstitute the Industrial Strategy Council as a statutory body, with a similar status, official but independent of government, to the Office of Budgetary Responsibility or the Climate Change Committee. This would be a positive way of subjecting policy to a degree of independent scrutiny, holding the government of the day to account, and ensuring some of the continuity that has been lacking in recent years.

8.8 A science and innovation system for hard times

Internationally, the last few years have seen a jolting series of shocks to the optimism that had set in after the end of the cold war. We’ve had a worldwide pandemic, there’s an ongoing war in Europe involving a nuclear armed state, we’ve seen demonstrations of the fragility of global supply chains, while the effects of climate change are becoming ever more obvious.

The economic statistics show decreasing rates of productivity growth in all developed countries; there’s a sense of the worldwide innovation system beginning to stall. And yet one can’t fail to be excited by rapid progress in many areas of technology; in artificial intelligence, in the rapid development and deployment of mRNA vaccines, in the promise of new quantum technologies, to give just a few examples. The promise of new technology remains, yet the connection to the economic growth and rising living standards that we came to take for granted in the post-war period seems to be broken.

The UK demonstrates this contrast acutely. Despite some real strengths in its R&D system, its economic performance has fallen well behind key comparator nations. Shortcomings in its infrastructure and its healthcare system are all too obvious, while its energy security looks more precarious than for many years. There are profound disparities in regional economic performance, which hold back the whole country.

If there was ever a time when we could think of science as being an ornament to a prosperous society, those times have passed. Instead, we need to think of science and technology as the means by which our society becomes more prosperous and secure – and adapt our science and technology system so it is best able to achieve that goal.

From self-stratifying films to levelling up: A random walk through polymer physics and science policy

After more than two and a half years at the University of Manchester, last week I finally got round to giving an in-person inaugural lecture, which is now available to watch on Youtube. The abstract follows:

How could you make a paint-on solar cell? How could you propel a nanobot? Should the public worry about the world being consumed by “grey goo”, as portrayed by the most futuristic visions of nanotechnology? Is the highly unbalanced regional economy of the UK connected to the very uneven distribution of government R&D funding?

In this lecture I will attempt to draw together some themes both from my career as an experimental polymer physicist, and from my attempts to influence national science and innovation policy. From polymer physics, I’ll discuss the way phase separation in thin polymer films is affected by the presence of surfaces and interfaces, and how in some circumstances this can result in films that “self-stratify” – spontaneously separating into two layers, a favourable morphology for an organic solar cell. I’ll recall the public controversies around nanotechnology in the 2000s. There were some interesting scientific misconceptions underlying these debates, and addressing these suggested some new scientific directions, such as the discovery of new mechanisms for self-propelling nano- and micro- scale particles in fluids. Finally, I will cover some issues around the economics of innovation and the UK’s current problems of stagnant productivity and regional inequality, reflecting on my experience as a scientist attempting to influence national political debates.

An index of issues in UK science and innovation policy – part 1: the strategic context

We’re in the mid-term of a government that’s placed a lot of emphasis on science and innovation for the future of the country. There’s been a lot of rhetorical ambition and some snappy slogans (“science superpower”, “innovation nation”). There’s also been a lot of change in the way the nation’s science system is wired up, and much of that change is yet to work through. In this series of four posts, I’m going to try to give an overview of where this process of change has got to and what is yet to evolve. I’ll be covering a lot of ground, so the posts will form more of an index of issues than a comprehensive discussion; each item I’ll mention will undoubtedly deserve a longer piece of its own.

Since any strategy should begin with a clear view of what one is trying to achieve, the first part of the series, below, will think about the wider challenges the UK government faces, asking what problems we need our science and innovation system to contribute to solving.

The second part will discuss some big questions about how the UK’s science and innovation system works.

  • How research intensive should the UK economy be?
  • Do we have the right balance between basic research and more applied development?
  • Is the overall productivity of the research enterprise – in the UK and globally – growing, or falling?
  • What’s the relationship of geography to innovation?
  • How can national and regional economies be best equipped to take advantage of advances in science and technology made elsewhere?

The third instalment will get into the details of the UK’s R&D system as it is currently evolving, discussing what is changing, and what is yet to be resolved.

  • In government support of R&D, what’s the right balance between direct commissioning and tax incentives?
  • How well are the government’s agencies for supporting R&D (e.g. UK Research and Innovation, InnovateUK, the new agency ARIA, EU funding (or whatever replaces it), government departments) working, and how should they develop?
  • Is the UK’s landscape of institutions where R&D is carried out optimal?
  • Is the connection between policies for skills development and policies for innovation working well enough?
  • How can a national government influence business R&D largely carried out by multinational companies?
  • What should we make of the government’s focus on “missions” and “technologies” to organise innovation policy?
  • How should the government use science and innovation policy to reduce the UK’s regional productivity disparities?
  • Can the new National Science & Technology Council effectively develop national strategy for science and innovation, and convert that into implementable policy across the whole of government?

Finally, I’ll sum up by asking what it might mean for the UK to be a “science superpower”. Given the UK’s current position in the world as a medium size economy, accounting for about 2-3% of the worlds added value from knowledge & technology intensive industries, what is a realistic aspiration for the UK’s science and innovation system?

With that introduction, on to part 1 of this series of blogposts.

1. What problem(s) are we trying to solve?

1.1. Getting the UK economy growing again

The UK’s most serious economic problem now is its lack of productivity growth. As I’ve discussed many times here, after many decades in which productivity grew at a steady rate, a little more than 2% a year, this growth was arrested after the global financial crisis in 2008; since then productivity has been more or less stagnant. This translates directly into a stagnation in average wages, as the first plot shows – this is the painful backdrop to the current “cost of living crisis”.

Productivity and average wages since 2000. From Build Back Better: our plan for growth, HMT, March 2021

This stagnation almost certainly has more than one cause. There may be some general factors affecting all developed economies. Progress in some areas of technology may be slowing; the exponential growth in computer power that came from the combination of Moore’s law and Dennard scaling came to an end in the mid-2000s, for example. But, while productivity growth in all developed countries has slowed, the stagnation has been more pronounced in the UK than any other advanced economy except Italy.

Structural effects specific to the UK include the rapid fall-off of North Sea oil and gas production since the early 2000s, and the unwinding of the bubble in financial services that burst in the global financial crisis. The combination of North Sea oil and the financial services boom may have led to a touch of “Dutch disease”, squeezing other sectors such as manufacturing. There have been difficulties in specific sectors that the UK has been specialised in – notably pharmaceuticals.

There’s an effect of some policy choices over the last decade; macroeconomists focus on the role of demand in driving productivity growth, so the effects of the fiscal consolidation of the early 2010s may themselves have contributed. Other economists highlight the beneficial role of international trade in driving productivity growth, so the choice to impose additional frictions on international trade will give an additional headwind over coming years.

But the fundamental driver of productivity growth is innovation, which finds ways of reducing the inputs needed to produced existing goods and services, and develops entirely new, highly valued goods and services. Not all innovation arises from formal research and development, but it is striking that the UK’s decline in productivity growth follows a period in which the overall R&D intensity of the UK economy declined substantially, and that the UK’s weak performance in productivity growth compared to international comparator countries is correlated with comparatively low R&D intensity.

In terms of productivity, the UK is a highly divided country. The Greater Southeast – London, the Southeast, parts of East Anglia – has an economy with a comparable level of productivity to other high performing Northern European economies, but most of the rest of the country more closely resembles Southern Italy, Spain or Portugal. Moreover, the UK’s large second tier cities – Birmingham, Manchester, Glasgow etc – instead of being drivers of the national economy, actually have levels of productivity below the national average.

Without a recovery of productivity growth, wages will continue to stagnate, living standards will fall, and it will be impossible for governments to provide public services of a quality that people have come to expect. It will not be possible for one corner of the nation to carry the economy of the whole country, so it should be a priority to raise the productivity of those parts that are currently lagging behind their potential – particularly the UK’s large, second tier cities. This is the pre-eminent economic driver that the development of science and innovation policy needs to focus on.

1.2. Managing the energy transition to net zero

All western economies and lifestyles depend on the availability of cheap, abundant energy – and this has been supplied by fossil fuels, which still account for around 80% of our energy supplies. But our dependence on fossil fuels has driven accelerating and potentially disruptive climate change. There’s widespread agreement about the need for our energy system to make a transition to one that stabilises the output of greenhouse gases, and in the UK a commitment to producing net zero greenhouse gases by 2050 is rightly enshrined in legislation. But it isn’t clear to me that policy makers and politicians fully understand the scale of this challenge.

The UK has made some good progress in decarbonising its energy economy, but naturally the UK has done the easy bits first. We’ve exported much of our heavy industry, shifted electricity generation from coal to gas, and we now get roughly half of our electricity generation from a combination of burning biomass, offshore wind and the continuing operation of legacy nuclear power stations.

What remains will be much more difficult. The majority of our energy use still comes from directly burning oil and gas, for transport and domestic and industrial heat. We need to reduce demand by much more focus on energy efficiency, especially in heating. This will need a major drive to retrofit existing commercial and residential buildings, and a large scale programme building out new, zero-carbon social housing, with the remaining heating needs being met by electric heat pumps

The transition to electric vehicles needs to accelerate; heavy goods vehicles and shipping may need to transition to hydrogen or ammonia, while in my view long-haul aviation will only be viable powered by synthetic, zero carbon hydrocarbons (e-fuels). These new fuels themselves need to be synthesised in a zero carbon way – hydrogen by electrolysis using renewable energy and/or high temperature process heat from high temperature nuclear reactors, synthetic hydrocarbons from green hydrogen and carbon dioxide captured directly from the atmosphere.

In addition to being totally decarbonising our electricity supply, we’ll need to substantially expand it to accommodate this transition from directly burnt oil and gas to electricity. The heavy lifting in the UK will likely be done by offshore wind, including floating offshore wind. In addition to intermittent renewables, we’ll need both more storage capacity, and sources of zero carbon firm power. For the latter, the choice is between continuing to burn gas, but with carbon capture and storage, and a bigger programme of nuclear new build. For why I think the latter route is both preferable and more likely, see my earlier post: Carbon Capture and Storage: technically possible, but politically and economically a bad idea. We should support fusion R&D (where the UK has a genuine comparative advantage) in case it works, though it isn’t likely, in my view, to make a substantial contribution to the 2050 net zero target.

This is a daunting list, combining some established technologies, some that exist but aren’t yet cheap or deployable at scale enough, some that exist only in principle. The scale of the transition is wrenching, and like all big changes, it will produce winners and losers, both at a national level and geopolitically. We need innovation to drive down the cost of the new, cleaner technologies to the point at which economic forces drive the transition more than political ones.

1.3. Keeping the nation secure in a more dangerous world

We now have a full-scale European war involving a nuclear-armed adversary, reminding us forcefully that one of the primary duties of a state is to keep its people secure. The 2021 Integrated Review of Security, Defence, Development and Foreign Policy reasserted the importance of science and technology as a source of strategic advantage and as a central part of national security. Although the war in Ukraine has called into question some of the assumptions of the Integrated Review, with a painful reminder that the security of our European neighbourhood can’t be taken for granted, this emphasis on security as a key motivation for the state’s involvement in science and technology will surely only strengthen.

The Ukraine war has also reminded us that the geopolitics of energy never went away, and that the resilience of the material base of the economy and our lives can’t be taken for granted. Since the end of the Cold War and the subsequent deepening of globalisation, we have become complacent about the degree of our dependence, as a small country, on imports for energy, food, materials and finished goods. Of course, our prosperity depends greatly on our international trade, so a North Korea-style Juche-UK policy would be ridiculous – but the pandemic reminded us of our dependence on other countries for some essential items like PPE and pharmaceutical precursors, as well as teaching us how sensitive our complex global supply chains have become, with the effects of disruptions in obscure corners rippling out worldwide.


UK government research and development spending by socio-economic objective, for selected sectors. Data: Eurostat (GBARD)

After the end of the Cold War, one of the ways in which we cashed in the “peace dividend” was by reducing the amount of R&D devoted to defense, as my last post discussed in more detail. We’re in a different world now, so, as I wrote there, priorities for the government’s R&D spending will inevitably and rightly be different, with more emphasis on food and energy security, rebuilding sovereign capabilities in some areas of manufacturing; as well as a return to higher spending directly on defence R&D, including new threats to cybersecurity.

1.4. Keeping an ageing population healthy

The pandemic has been a traumatic experience for the nation, with more than 175,000 deaths to date. As the UK went into the pandemic, there was some optimism that its strong position in life sciences would place it in a better position to weather the pandemic than other countries. As it turned out, its record was mixed. On the one hand, there was a successful rapid vaccination programme; on the other, the pandemic was unforgiving in the way it revealed and exacerbated widespread health inequalities.


Life expectancies at birth for males and females in 2020 for England. These are not predictions of how long a baby born in 2020 will live; instead they represent an estimate of the average number of years a baby born in 2020 would live if they experienced the age-specific mortality rates for 2020 throughout their life. Data from Public Health England.

A more complete reckoning of the strengths and weaknesses of the UK’s pandemic response awaits a full inquiry. The plot shows the impact of the pandemic on life expectancies. What is interesting, though concerning, is that even before the pandemic the rate of increase in life expectancies that we’d seen in 1980’s, 90’s and 2000’s had already, after 2010, begun to stall.

The paradox here is that this slow-down in the rate of improvement of life expectancy follows soon after the substantial increase in R&D devoted to health. As always, there are probably many factors at play here. But there is a conceptual muddle, in my view, about the way the UK thinks about its “Life Sciences Strategy”. The problem is that this strategy has two, largely separate, goals, which are sometimes in tension.

One objective of a life sciences strategy is to do the research needed to improve the way healthcare is delivered to the UK’s population, and to address the broader determinants of the health of the public. The other is to support the UK’s pharmaceutical and biotechnology industries. These are important areas of comparative advantage for the UK economy, strong exporting sectors. But in recent years, as I’ve already mentioned, productivity growth in the pharmaceutical sector has markedly slowed down, and given the UK’s specialisation in pharma, this underperformance has made a material contribution to the UK’s overall productivity problem, as demonstrated by this recent research.

So while it is an entirely appropriate piece of industrial strategy to support the pharmaceutical and biotechnology sectors, it’s important also to think about the wider innovation needs of the health and social care system. Nor should we expect the pandemic we have just been through to be the last, so we should pay some attention to making sure we’re better prepared for the next one.

As other priorities for R&D – like national security and net zero – become more pressing, it is going to be more important than ever to be clear about how we set our strategic priorities.

To come next: part 2 – Some overarching questions about the UK’s research & innovation system.

Science and innovation policy in a new age of insecurity

It’s conventional to date the end of the Cold War to the break-up of the USSR, in 1991. Around that time, people started talking about a “Peace Dividend” – the economic benefits that would come as economies like the UK stood down from the partial war footing that they’d been operating under for the previous half-century. In the early 1980’s, the UK was spending more than 5% of its GDP on defence; in the late 80’s there was an easing of international tension, so by 1990 the fraction had already dropped to 4%. The end of the Cold War saw a literal cashing in of the peace dividend, with a fall in defence spending to around 2.5% in the 2000’s. The Coalition’s austerity policies bore down further on defence, with its share of GDP reaching a low point of 1.9% in 2017 [1].

But I’d argue that there was more to the post-cold-war peace dividend than the simple “guns or butter” argument, by which direct spending on the military could be redirected towards social programmes or to lower taxation. In the apparent absence of external threats, there is less pressure on governments to worry about the security of key inputs to the life of the nation. Rather than worrying about the security of food or energy supplies, there was a conviction that these things could be left to a globalising world market. Industries once thought of as “strategic” – such as semiconductors – could be left to fend for themselves, and if that led to their dismemberment and sale to foreign companies (as happened to GEC/ Marconi), then that could be rationalised as simply the benign outcome of the market efficiently allocating resources. Finally, in the apparent absence of external threats, for a government with an ideological prior for reducing the size of the state, a general run-down of state capacity seemed, if not an actual goal, to be an acceptable policy side-effect.

Things look different now. The invasion of Ukraine has brought Russia and NATO close to direct confrontation, and the resulting call for economic sanctions against Russia has shone a spotlight on the degree to which Europe has come to depend on Russia for supplies of oil and gas. This all takes place against the background of what’s starting to look like a chronic world polycrisis. As the effects of climate change become more obvious, we will see patterns of agriculture disrupted, stress on water supplies, people and communities driven from their homes. We’ll have to be more realistic about confronting the scale and speed of the necessary transition of our energy economy to net zero greenhouse gas emissions, and the economic and political disruptions that will lead to. And the pandemic that’s dominated our lives for the last couple of years isn’t likely to be the last.

The assumptions that became conventional wisdom in the benign years of the 1990s are now obsolete. I’m not convinced that politicians and opinion formers fully understand this yet. We not starting from a great place; the UK’s economy is already well into a second decade of very poor productivity growth, as I’ve been pointing out here for some time. This has led to a long period in which wages have stagnated; this is about to combine with a burst of inflation to produce an unprecedented drop in people’s real living standards. We are going to see increases in defence spending; there is more talk of resilience. But the talk of many senior politicians seems to speak more of a hope of a return to those benign years, more of a clinging on to old nostrums than a real willingness to rethink political and economic principles for these new times.

I don’t have any confidence that I know what those new political and economic principles should be. Here I’m just going to make some observations relevant to the narrower world of science and innovation policy. How might this new environment affect the priorities the state chooses for the science and innovation it supports?

UK government research and development spending by socio-economic objective, for selected sectors. Data: Eurostat (GBARD)

My plot shows the way the division of UK government R&D between different socio-economic goals has evolved since 2004 [2]. The big story over the last twenty years has been the run down of defence R&D, and the increase in R&D related to health – another under-appreciated dimension of the peace dividend. In the heyday of the UK’s postwar “Warfare State” (as the historian David Edgerton has called it [3]), defence accounted for more than half of government R&D spending. As late as 2004, defence still accounted for 30% of the government’s expenditure, but by 2019 this fraction had fallen to 11%.

As for those other sectors that the warfare state would have regarded as of strategic importance – energy, agriculture and industrial production – by the mid-2000s, their shares of R&D had been run down to a few percent, or, in the case of energy, a fraction of a percent. Since then there has been some recovery – in the mid-2000’s, the government’s chief scientific advisor, Sir David King, very much aware of the issue of climate change, was instrumental in restoring some growth in energy R&D from the very low base it had reached. Meanwhile industrial strategy has made a slow and halting comeback, with increased government funding to agencies such as InnovateUK and collaborative initiatives in support of the aerospace and automotive sectors.

Now, the security of the nation, using that word in its broadest sense, no longer seems something we can take for granted. This will inevitably and rightly affect priorities for the government’s R&D spending. More emphasis on food and energy security, with a focus on driving down the cost of the transition to net zero; rebuilding sovereign capabilities in some areas of manufacturing; as well as a return to higher spending directly on defence R&D (including new threats to cybersecurity); these shifts seem inevitable and probably need to happen on a faster time-scale than many will be comfortable with. We won’t return to the world of the Warfare State, nor should we, but I don’t think the institutions we currently have are the right ones for a science and innovation policy driven by security and national resilience.

[1] Defense as fraction of GDP: SIPRI
[2] Gbard data from Eurostat.
[3] David Edgerton, Warfare State: Britain 1920 – 1970 (CUP). Historic defence R&D figures quoted on p259.

Levelling Up Research and Development

The government published its long-awaited “Levelling Up” White Paper on February 2nd. This is a much expanded version of a piece I wrote for Research Fortnight, “Levelling Up R&D is about spreading power as well as money”, in which I look at the implications of the White Paper for research and development.

What do the government mean by “levelling up”?

It’s fair to say that the Levelling Up White Paper, published after a long delay last week, struggled to compete with other political events for the front pages, and what comment there was about it focused, somewhat unfairly, on its great length, its thumbnail history of 9 millennia of urbanism, and its invitation to compare our Northern and Midland cities with renaissance Florence. But for those interested in the UK’s research and development landscape, it would be wrong to underestimate its significance.

For those who have been wondering what “levelling up” actually means, the White Paper does offer some concrete answers. Correctly, in my view, it puts the UK’s regional disparities in productivity centre stage. It offers some detailed analysis of the UK’s regional problem; for all that “industrial strategy” is not a “brand” currently in fashion with the government, the mark of the prematurely terminated Industrial Strategy Council, as transmitted through the person of Andy Haldane, now head of the government’s “Levelling Up Task Force”, is clear. In addition to much discussion of the data, there is an analytical framework based on a consideration of different types of capital, their unequal distribution across the country, and – crucially – a discussion of the vicious circles that can lead places into a self-reinforcing decline.

The role of research and development in levelling up

Research and development, together with skills, contribute to a place’s “intangible capital”, and, echoing an argument myself, Tom Forth and others have been making for some time, the connection is made between the unbalanced distribution of government R&D expenditure across the country and regional disparities in economic performance. Under the overarching goal of boosting “productivity, pay, jobs and living standards by growing the private sector, especially in those places where they are lagging”, one of the 12 “Levelling Up Missions” promises that public investment in R&D outside the Greater South East will grow by 40% by 2030, and by one third in the current spending review period (i.e. by FY24/25). The aspiration is that this increase in public sector R&D should “crowd in” roughly double the amount of private sector R&D.

Although it’s been pointed out that in many areas the Levelling Up White Paper isn’t supported by new money, this is not actually true for R&D. The October 2021 Comprehensive Spending Review did commit the government to a substantial rise in government R&D spending – about £5 billion, taking spending from a bit less than £15 billion to £20 billion. The commitment to a spending uplift of a third outside the Greater SE doesn’t, therefore, represent a real rebalancing of the current situation, and it actually represents a dilution of the commitment of the October Spending Review, which promised that “an increased share of the record increase in government spending on R&D over the SR21 period is invested outside the Greater South East”.

Given that the CSR commitment is reiterated in the White Paper, perhaps we should regard these targets as represents a floor to to the ambition, and they do at least mean that the current imbalances won’t get any worse. To be fair to those managing science funding agencies, it should also be recognised that, given that they have already taken on substantial multi-year commitments, changing the overall distribution of funding isn’t something that can happen very quickly.

Where is this new money going? It’s important to remember that, although academics tend to focus on the research councils, much public R&D is carried out by government departments. When we look at where the uplift in funding is concentrated, we find that the core UKRI budget, comprising the research councils and block grants to universities and research councils, does have an increase of £1.1 bn between 21/22 and 24/25, a 23% increase in cash terms. In percentage terms, though, the really big winners are departments like the Ministry of Defence, The Department of Health and Social Care, and the agency Innovate UK, which between them see an increase of 64%, representing a £2.7bn cash uplift.

If the promised one third increase in R&D spending outside the Greater Southeast is to be funded from the uplift committed in the spending review, much of the heavy lifting will need to be done by these more mission focused and applied funding streams. However, it is fair to say that the details of how this commitment will be met are not yet fully fleshed out in the White Paper.

How UKRI can support levelling up (and why it should)

UKRI gets a new organisational objective, to “Deliver economic, social, and cultural benefits from research and innovation to all of our citizens, including by developing research and innovation strengths across the UK in support of levelling up”, and an instruction to increase consideration of local growth criteria and impact in R&D fund design. It will be interesting to see how the organisation responds to this new mandate. Some may feel that UKRI shouldn’t take explicit measures to rebalance the distribution of R&D across the country, as this might compromise its primary commitment to funding excellence in science. I would certainly agree that UKRI needs to avoid funding poor quality research, but I’d make two points about the question of excellence.

The first is to point out that, for many in the research community, the most prominent funder of purely excellence based research for the UK at the moment isn’t part of UKRI at all, but is the European Research Council, with its mission to “support investigator-driven frontier research across all fields, on the basis of scientific excellence”. The ERC delivers this mission through the rigorous peer-review, by acknowledged international experts, of proposals whose quality is driven up by healthy competition from a whole continent’s worth of leading scientists. Much of UKRI funding, in contrast, is influenced by strategic priorities set by the research councils themselves. Of course, the UK’s ongoing participation in the ERC, like other parts of the EU Horizon programme, is now under serious question, but that’s another story. Perhaps the most important lesson we can take from the success of ERC in supporting excellence, though, is that it is entirely people-focused. Places aren’t excellent, people are.

The second point is to note that UKRI’s current aspiration is to be a steward of the whole research system. This stewardship certainly should include supporting excellent researchers wherever they are to be found, but it should also involve creating the environments that support those researchers. Research councils have in the past, quite correctly, taken on some responsibility for building those environments, so it is a natural extension of those activities to widen the range of places which do provide those environments. They can do this by building capacity, and by developing partnerships.

UKRI has a responsibility for maintaining the capacity of the UK system to do good research. This starts with helping to provide the infrastructure for that research, whether that is by providing funding for strategic equipment in universities, (in England) the block grant support to universities through quality related funding (QR) from Research England, through to creating and supporting entire research institutes. Research councils have rightly intervened to maintain the UK viability of some fields of research deemed strategically important. And there is a continuous, entirely justified, commitment to support the talent pipeline for research, and supporting good training environments for PhD students has become an increasingly important part of the research council’s business. It is a natural extension to UKRI’s stewardship of the UK’s future research capacity to give more weight to the geographical dimension of building that capacity.

Partnership remains another very important dimension of UKRI’s work, both internal and external. The whole point of creating UKRI as a single organisation was to promote more partnership working between the component parts of the organisation, the research councils, Research England, and Innovate UK. Research councils like EPSRC are rightly proud of the large proportion of their grants that involve some partnership with industry, and high profile recent initiatives include EPSRC’s Prosperity Partnerships, large scale research programmes with matched funding from industry, to deliver a research agenda co-created by academic and industrial researchers.

It’s welcome that the most recent prosperity partnership call offers an invitation to articulate the degree to which these partnerships support place-based outcomes, such as attracting inward investment to specific regions or otherwise supporting regional economic growth. It would be a natural extension to include regional bodies more explicitly as partners for research council supported research, and as co-creators of research strategy, in the way that R&D intensive companies currently engage with UKRI.

Innovate UK has different drivers from the research councils; as an explicitly “business led” agency one might expect there to be some correlation between the regional distribution of business R&D and Innovate UK’s investments. The relationship is shown in my figure –regions to the left of the line receive more Innovate UK money than you would expect from a simple correlation with business R&D, regions on the right receive less.


A comparison of Innovate UK expenditure with business R&D for 2018. Innovate UK data from UKRI, regional business R&D data from ONS BERD statistics.

This distribution doesn’t immediately suggest a straightforward explanation. One might wonder whether it reflects industrial sectors that are particularly well organised to receive support from Innovate UK – perhaps the importance of automotive for the West Midlands and aerospace for the South West and East Midlands is reflected in the above average Innovate UK support for those regions.

Another factor in determining these spending patterns is the location of the Catapult Centres. These receive core funding directly from Innovate UK, as well as participating in joint projects with industry that receive partial funding from Innovate UK, so the regional distribution of Innovate UK funding probably to some extent reflects the location of Catapult Centres.

It’s possible that the high London figure to some extent reflects spending being registered at Head Offices rather than in the R&D centres where the work is actually carried out. I don’t have an obvious explanation for the relatively low level of spending in the South East and East.

The expectation of a correlation between existing business R&D spend and Innovate UK investments rests on the idea that Innovate UK should be led by the business R&D landscape as it is, rather than trying to shape it. But if the goal of “levelling up” is to increase productivity in underperforming regions, then perhaps the goals of innovation policy should include the use of applied R&D, together with other interventions to promote innovation diffusion and workforce development, explicitly to develop innovation and manufacturing capacity, as Eoin O’Sullivan and I have argued in our recent submission to the Nurse review. As we outline in our paper, this could be done by Innovate UK through the Catapult Network, but this would require some explicit modifications in their mission and in the selection criteria for new Catapults.

One programme run by UKRI in recent years is designed to build regional capacity in this way, through partnership with research organisations and industry in particular places. This is the “Strength in Places Fund”, administered as a partnership between Innovate UK and Research England. I believe this scheme has been a success in the collaborations it has generated, although the bureaucracy surrounding it has been frustrating. It’s very disappointing that the White Paper lacked any commitment to continue this scheme, currently the only explicitly place-based funding instrument run by UKRI. Hopefully this will be remedied in the ongoing detailed discussions of the CSR settlement; if not it will inevitably interpreted as a signal of the UKRI’s lack of commitment to addressing regional R&D imbalances.

R&D for levelling up health inequalities

Turning to non-UKRI funding streams, one that does receive a very substantial uplift is the National Institute of Health Research, the research arm of the Department of Health and Social Care. The White Paper, entirely correctly, draws attention to the shocking disparities in health outcomes across the country, which amount to about a decade of life expectancy between the most and least prosperous parts of the country, and sets as another of the 12 “Levelling Up missions” the goal of narrowing this gap. I believe these health inequalities are not just morally unacceptable in a prosperous country, they are themselves direct contributors to productivity gaps. Further details of how this aspect of levelling up will have to wait until another White Paper, promised for later in the year.

Narrowing these gaps should be a key focus of the National Institute of Health Research – yet of all the research funding agencies, this is the one whose funding is most concentrated, not just in the Greater Southeast, but specifically in London. There is in the White Paper a commitment that NIHR will “bring clinical and applied research to under-served areas and communities in England with major health needs to reduce health disparities”, but the targets are currently vague. This refocusing NIHR on the urgent problem of health inequality needs to go further and faster.

Innovation policy to support levelling up needs to be co-created with cities, regions and nations

But making a material change in the distribution of R&D funding using existing mechanisms will always be a hard and slow process. Tom Forth and I, in our 2020 NESTA paper “The Missing Four Billion”, argued that to make a real difference, it will be necessary to devolve significant funding to nations, cities and regions. To make an impact on productivity, R&D interventions need to work with the grain of the existing regional economic base, and even the best central government departments and agencies, in Whitehall or Swindon, can’t be expected to have the local knowledge and develop the partnerships that would make this work. Ultimately, developing an effective regional innovation strategy is a matter of finding out who is doing the innovating, and helping them do more of it.

On the other hand, the necessary organizational and analytical capacity to make good decisions about innovation don’t always exist or aren’t fully developed in our cities and regions. Our answer to this dilemma was the idea of an “Innovation Deal”, where central government work with cities and regions to develop this capacity, in return for substantial devolution of innovation funding.

The White Paper does take a tentative step in this direction. Three “Innovation Accelerators” have been announced, with £100m of funding over three years going to three pilot areas, Greater Manchester, the West Midlands, and Glasgow City-Region. The idea is that national and local government, together with industry and R&D institutions in those cities, will work together to develop projects to improve the strength of the existing R&D base and maximise its economic impact, to attract new investment from international companies at the technological frontier, and to improve the diffusion of technology into the existing business base.

In Greater Manchester, we’ve been preparing for such a programme. The organisation “Innovation Greater Manchester”, which brings together the private sector, universities and the Mayoral Combined Authority, has been developing a pipeline of rigorously tested investment opportunities aimed at driving productivity across the whole of GM. This needs to support not just the city centre economy, where digital and creative industries are currently thriving, but the economies of GM’s outlying boroughs like Rochdale, Bury and Oldham, which are amongst the most deprived communities of the Northwest. Here, initiatives like the Advanced Machinery and Productivity Institute (supported by the Strength in Places Fund) will help existing innovative manufacturing businesses to develop and grow. Innovation GM will work with central government to develop its “Innovation Accelerator” as an exemplar of locally informed innovation policy.

R&D is an important element of the productivity-enhancing investments that should be at the centre of the levelling-up agenda, and it’s right that the Levelling Up White Paper sets as one of its missions the need to increase the R&D intensity – both public and private – of those parts of the country currently not fulfilling their economic potential. Work does remain to translate some of the high level commitments on R&D spending into changes in the way government departments and agencies spend their R&D budgets.

In addition to this, I believe that co-creation – and ultimately devolution – of innovation programmes with city-regions will be important, to incorporate local knowledge about the existing economy, and ultimately to assign local responsibility for the outcomes. Innovation Accelerators are a good first step to develop the institutional landscape for this to work, and I hope that this initiative can soon be rolled out to include other areas of the UK.

Will the government’s interest in regional economic disparities be sustained for the long-term?

Finally, one of the most telling sections of the Levelling Up White Paper is a history of 100 years of local growth policy, with the comment “spatial policy in the UK has, by contrast, been characterised by endemic policy churn…. By some counts, there were almost 40 different schemes or bodies introduced to boost local or regional growth between 1975 and 2015, roughly one every 12 months.” Surely no-one can argue with the White Paper’s call for policies to be applied consistently at sufficient scale over the medium to long term. Addressing the UK’s fundamental problems of disparities in regional economic performance must surely take a project that will take decades, and it’s realistic that the White Paper defines milestones for 2030.

But what will be the longevity of this White Paper itself? Of course, 2030 is beyond the life of this government – but given the prevailing political instability, some may doubt that the “Levelling Up” agenda will even last the year. It’s odd that a central manifesto commitment of a government elected with an 80 seat majority should be in doubt, but it’s not clear that enthusiasm for the agenda is universally shared across the ruling party. Many influential people and institutions doubt that the reduction of the UK’s regional economic disparities is possible or even desirable. In fact, many people and institutions benefit from the current state of affairs, and there’s a surprisingly large constituency for economic stagnation.

So I wouldn’t be surprised if some people in government and its agencies will be tempted to drag their feet, in the hope that if they wait long enough the entire “levelling up” craze will go away. Naturally, I think this would be wrong in principle – the role of regional economic disparities in the UK’s current economic difficulties, and the resulting societal instability, has become more and more obvious and widely acknowledged. I suspect that such foot-dragging would be politically unwise too.

What’s missing in the UK’s R&D landscape – institutions to build innovation capacity

The UK government has commissioned a new review of the institutional landscape in which research, development and innovation (RD&I) is carried out, led by Sir Paul Nurse. In response to an invitation for views, Eoin O’Sullivan, from Cambridge University’s Institute for Manufacturing, and I submitted this brief paper:
The role of intermediate RD&I institutes in building regional and sectoral innovation capabilities (PDF).

Our paper argues that what’s underdeveloped in the UK’s research landscape are research and development institutes whose mission goes beyond just doing applied research, to encompass a wider range of activities to build the innovation and manufacturing capabilities of regional economies that are currently underperforming. There are many international examples of this kind of institution, which carry out workforce development and innovation diffusion functions as well as applied research, and there are lessons from these other countries that the UK could usefully learn.

Here’s the first section of our paper:

The place of intermediate institutions in the UK’s RD&I landscape

National innovation systems have a complex landscape of different types of research institutes with different missions and goals. These include both research universities and institutes devoted to fundamental science, and public sector research establishments (PSREs), which support government strategic goals. A majority of research, development and innovation takes place in the private sector, in firms’ own laboratories, and in for-profit contract research organisations. It is this private sector innovation that most directly drives productivity growth. Public and private sector R&D can be connected in intermediate RD&I institutes, which carry out more applied research, often as a public/private partnerships, as well as taking a wider role in building regional and sectoral private sector capability, through the promotion of innovation diffusion and skills development.

In the absence of government intervention, the private sector will systematically invest less in R&D than would be optimal for the whole economy, due to the inability of firms to capture all of the benefits. This market failure provides the justification for government investment in R&D. In many successful innovation economies, intermediate RD&I institutes play a vital role. Examples include the Fraunhofer Institutes in Germany, the Industrial Research and Technology Institute in Taiwan, and VTT in Finland.

In the UK, basic research is carried out in a strong university base, supplemented by some stand-alone institutes, such as the Laboratory of Molecular Biology at Cambridge and the Crick Institute in London. The PSRE sector has diminished in size over the past few decades, because of privatisations and absorption of some institutes into universities, but it retains some strong institutions such as the National Physical Laboratory and the Meteorological Office.

The perceived weakness of the UK’s landscape in intermediate research and innovation institutions led to the development of the Catapult Network in the 2010’s, modelled in some respects on Germany’s Fraunhofer network, though not as yet commensurate with it in scale.

Discussion of the purpose of Intermediate RD&I institutions in the UK, such as the Catapult Network, has focused on their role carrying out applied research in collaboration with industry. The purpose of this note (which summarises the argument of a longer working paper current under preparation for the Productivity Institute) is to draw attention to the wider range of functions that such institutions carry out in other nations, and in particular their role in supporting economic development in regions with lower productivity.

The rest of the paper can be found here: The role of intermediate RD&I institutes in building regional and sectoral innovation capabilities (PDF).

Video of my lecture on “levelling up” R&D

On the 9 February I did a lecture at the think-tank Policy Exchange, on the subject “Can we level up research and innovation?”.

The talk had three parts:

  • On the relationship between Research and Development, productivity and regional growth: why it’s important to level up R&D;
  • On levelling up R&D in the White Paper: what government has committed to – and what remains to be done;
  • On levelling up R&D in practice in a city region: Innovation Greater Manchester and the Innovation Accelerator pilot.
  • The lecture can be watched on YouTube here, and the slides can be downloaded here: (PDF) Levelling up R&D.